The Club invested in a Bio Mass heating system five years ago to replace the old oil fired system, which was at the end of its useful life and costing £4k more in fuel costs compared to that of a new efficient oil fired boiler.
Funding for the bio mass project was provided by way of member loans, to be paid back in seven years by banking the surplus renewable Heat incentive (RHI) payments from OFGEM. The figures were based on receiving around £11K of RHI payment per year add the yearly fuel costs spend that the club would have paid out if we had still got an oil boiler then take off the actual pellet cost spend. This surplus then gets paid into the bio mass account to ensure that after 7 years the money accumulated covers the loan. The members loan account is currently on track to pay all those members who have loans.
The system was provided and installed by MiGeneration and consisted of two 50kw boilers and a 2.5ton fuel silo in a purpose made steel container. A pellet delivery and servicing agreement was also set up with this company. Unfortunately MiGeneration have since gone into receivership, but before they did, the fuel and service agreement was novated to Forest Fuels on the same terms and conditions, so at no detriment to the club.
The Bio mass committee, formed to undertake the delivery of the Bio mass project, believed they had a 7 year fuel and service agreement but I can find no contract to confirm this and have only found a five year agreement, which finished on October 21st2018. The initial fuel delivery agreement was set up so that the club were charged on a pence per kWh of heat generated, so it did not matter what amount of fuel it took to generate a kWh of heat. This put the onus on Forest Fuels to provide good quality pellets and to service the boiler properly to keep the boiler efficiency high and so use less fuel. The new fuel delivery agreement being offered by Forest Fuels is to charge for pellets by the ton and so puts the onus on the club to ensure the boilers are running efficiently and using less fuel to generate the heat required.
Reports from the General Manager (GM) were that the boilers were constantly breaking down and Forest Fuels had informed the GM that the boilers were running at about 55% efficiency and had come to the end of their useful life. This obviously raised concerns as the boilers installation handover certificates detailed that the boilers should be in service for 12 years and as Forest fuels had been servicing the boilers why was the efficiency so low. Also if any future fuel agreements would be on a cost per ton of pellets, based on the reported fuel efficiency, fuel spend would be 30% - 40% more than it would be if the boiler was performing at 85% - 90% efficiency (this is the expected efficiency of a bio mass boiler). This increase of fuel cost would have an effect on the ability to pay back the bio mass loan and reduce any future benefits of the RHI payments.
The aim of my investigation was to ascertain the true state and efficiency of the boilers to decide on a way forward.
I collated all the RHI payment information, all the fuel costs and all the heat meter readings for the last two years and analysed this information. Looking at the aggregated pellet usuage for 2017 and 2018 the overall seasonal efficiency of the boiler is 52.5% and 58% respectively, so the real performance is somewhere in between (55%). Based upon the figure of 6p/kWh the club has been paying for pellets, this equates to between £153 to £172 per tonne based on the amount of heat generated against the fuel weight used. Given that the pellet costs being offered for our current silo capacity is £290/tonne and for a 10 – 12 ton load is around £230 +VAT per tonne it is clear that this is has not been profitable for Forest Fuels and why fuel providers are now charging by this method and not by pence/kWh.
Options, assuming kWh usage stays the same
• Accept the new agreement from Forest fuels or another at £290/tonne – annual cost £17.5K. RHI payments have averaged at £11K over the five years, so the club would need to find the shortfall plus ensure the bio mass loan account remains on track to pay the loanees in two years time.
• Install a larger fuel silo (12tonne) bringing pellet costs down to around £240/tonne – annual cost £14K plus initial outlay for the new Silo (£10K). The club would need to find funding for the new Silo and RHI payments have averaged at £11K over the five years, so the club
would need to find the shortfall annually, plus ensure the bio mass loan account remains on track to pay the loanees in two years time..
• New Boiler and larger silo which reduces fuel usage due to improved efficiency and reduced fuel costs due to larger deliveries of fuel – annual cost £11K plus £80K initial outlay for new Boiler and Silo. The club would need to find funding for the new boiler and silo, the RHI payments would cover the fuel costs going forward, the club would need to ensure the bio mass account remains on track to pay the loanees in two years time and ensure future RHI payments covered the cost of the outlay of the new boiler and silo.
• Improve efficiency of existing set up to reduce fuel usage and source a fuel provider prepared to charge at pence/kWh. No funding to be found plus reduce the risk on fuel delivery costs.
So I concentrated on the last option as this would mean little or no funding required.
1. From my investigations with Bio mass specialists the boilers are of Romanian manufacture and are generally at the bottom end of the market on both quality and efficiency. I have met with various boiler service specialists and all have said that the existing boilers, whilst not the best in the market, should be able to continue working provided the cleaning and servicing regime is strictly adhered to. Ken our handyman currently cleans out the ash every couple of days, but a further in depth clean needs to be carried out and a once a month to clean the areas that Ken can’t get to. So in any servicing agreement that is set up I recommend it includes a monthly visit by the boiler servicing engineer to carry out an enhanced clean of the boilers and to ensure the boiler efficiency is high. I also recommend that Ken is given further training to ensure that between the monthly engineer visits the level of cleaning is more thorough. There would also need to be training given to someone else to cover for when Ken is off or on annual leave. The club has asked for volunteers from the membership to provide cover for Ken and Dale the head greenkeeper has offered one member of the greens staff to undertake the training also. I have confirmed above that the boilers have been working at about 55% efficiency, the Boilers should be running between 85% - 90% efficiency. By implementing a monthly visit of cleaning and checking I have been assured that boiler efficiency will increase. This can be monitored and reviewed by comparing fuel usage against heat generated. This yearly servicing and cleaning contract will cost in the region of £2500 per year.
2. The current fuel store set up is a 2.5 ton hopper that sits within the bio mass container, this feeds the pellets to the boilers by means of an auger. Because the hopper is small, our current fuel deliveries of around 1 -1.5 tonne, per delivery, would not be cost effective going forward. All fuel delivery providers I have contacted have informed me the more fuel that is delivered per visit the less cost per ton. As we would not be utilising the 12 ton capacity of a blown fuel lorry, deliveries could be sporadic, with us receiving small amounts of what is left in a lorry after a large fuel delivery elsewhere. A larger hopper should reduce the delivery costs substantially by around 25%. I have also found a fuel delivery company prepared to charge by the pence per kWh thus reducing the risk to the club, should boiler efficiency not reach 90%. However this offer is dependent on having a capability of receiving 9-10 ton of pellets per delivery. So it goes without saying that a larger hopper is required urgently to make any fuel delivery cost effective and less risky. I have obtained quotes from a number of specialists and the cost of a silo would be no greater than £10K to install a 12 ton wood pellet silo adjacent to the existing set up, giving us 14.5 ton capacity and being able to accept a 12 ton delivery of fuel (the most cost effective delivery). I am continuing negotiations on a fuel delivery agreement to get best long term value on a cost per kWh rather than a cost per ton.
3. Whilst carrying out my investigation it is clear that the existing pipework, water storage and pump set up needs surveying, given that the system has had many modifications and additions over the years and seems to struggle at times. Also by analysing the winter and summer heat demand I believe that based on the summer heat demand being just for water, heat is leaking out of the system somewhere. I recommend a full survey is undertaken with a full report of any findings and recommendations, this would cost in the region of £700 unless there is a member who is a qualified heating engineer and willing to do the survey free of charge. There are some easy wins of installing pipe insulation to the copper pipes in the old boiler house and to the pipe work from the bio mass container to the old boiler house which should improve things a little. However I do think our current pumps are not powerful enough to pump the water around the heating pipework and that we may
need an auxiliary pump somewhere on the heating pipework. Any survey should confirm these findings, as I am not a qualified heating engineer.
I believe if we implement a good servicing and cleaning regime and survey the existing pipe, water storage and pump set up, carrying out any recommendations, the boilers life should be extended and the clubhouse heating and hot water be sufficient. To ensure fuel costs are reduced to a level that would offer a financial surplus from the RHI payments going forward the club needs to invest in a larger Silo immediately. The board will discuss funding options and communicate these to the members shortly. If any member has any questions please contact the office and they will forward your details onto me and hopefully I can answer any query raised.
Facilities Director DPGC