Biomass Furnaces for Heating Poultry Houses

November 2008

By Jim Wimberly

BioEnergy Systems LLC

Fayetteville, AR

Presentation Objective

…To provide a better understanding of how to evaluate a biomass-fired furnace system prior to purchase What are the key factors to evaluate?

Presentation Overview

Understanding the problem…expensive propane consumption

Displacing propane with biomass

Technical considerations

Economics considerations

Other considerations

Displacing Propane

The amount of energy required for space heating varies… Within a flock

-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

1 49 97 145 193 241 289 337 385 433 481 529 577 625 673 721 769 817 865 913 961 1009 1057 1105 1153 1201 1249 1297

elapsed time (hours)

pro

pan

e co

nsu

mp

tio

n,

gal

/hr

Displacing Propane

The amount of energy required for space heating varies… Within a flock From flock to flock

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38

flock number

gallo

ns o

f pro

pane

use

d pe

r flo

ck

house 1 house 2 house 3 house 4

Displacing Propane

The amount of energy required for space heating varies… Within a flock From flock to flock From year to year

0 1 2 3 4 5 6 7

Gallons / year (thousands)

low

high

range

average = 6,000 (?)

Displacing Propane

Propane is convenient. But it’s the #1 expense for growers -- and it’s getting more expensive…

-

$0.50

$1.00

$1.50

$2.00

$2.50

May-90 Jan-93 Oct-95 Jul-98 Apr-01 Jan-04 Oct-06 Jul-09

pe

r g

all

on

residential wholesale

-

$0.50

$1.00

$1.50

$2.00

$2.50

May-90 Jan-93 Oct-95 Jul-98 Apr-01 Jan-04 Oct-06 Jul-09

pe

r g

all

on

residential wholesale Savoy

~$2.20 in April 2008

wholesale

residential

@ Savoy

Anticipating future propane prices?

$4

2002 2005 2008 2011 2014

$3

$2

$1

01999

$ /

gal

lon

$3.29

Averageannual

escalation since ’98 =

14.4%Future

escalation if @ 14.4%

$4.93

Displacing Propane

What’s a realistic target displacement level of propane?

0 1 2 3 4 5 6 7

Gallons / year (thousands)

low

high

range

average = 6,000

@ 85% of total consumption, propane displaced 5,100 gal/yr

@ $2.20/gal, value of propane displaced $11,200 / year

85%

Total furnace system heat energy output required for a 40’x400’ house =

~250,000 Btu / hour

Displacing Propane…conclusions

target displacement rate = 85% of propane consumed

target displaced quantity = 5,100 gallons/year

value of displaced propane = $11,200/year

required output size of furnace = 250,000 Btu/hour

note: these figures are for the assumed “typical” broiler house in northwest Arkansas

What are the Key Selection Criteria for a Furnace?

Technically viable Is it proven? Will it stand up to conditions in a poultry house?

Economically feasible Do the numbers work? Is it a good investment?

Environmentally acceptable Are there any significant issues that must be addressed?

The “hassle factor” Does it require lots of TLC to keep it going? How much maintenance will be needed?

What’s included in a biomass furnace system?

Heat Exchanger

CombustionChamber

Auger

Flue

Hopper

to Hot AirDistribution System

PoultryHouse

fuel storage, handling and in-feed combustor,

including heat exchanger & ash

management

hot air distribution

Instrumentation & controls

Farm Options: Single-house system

Furnace Fuel supply

Heat distribution system

Furnace outside the

poultry house

Furnace inside the

poultry house

System Options: Multi-house system

What are the Primary Fuel Options?

Pellet furnace;Prim, AR; 1995.

Corn

Raw litter

Pelletized litter

Wood (& other) pellets Baled biomass

*Coal*

Raw sawdust

Cordwood

Economics: Key Factors to Consider

Price of propane And the assumed annual escalation rate

Amount of propane displaced

Price of biomass fuel

System service life

System efficiency

An economic analysis should be performed for each individual

farm considering an investment in a

bioenergy system

Pellet furnace;Savoy, AR; ~1998.

energy content (HHV) 91,000 Btu/gal 8,400 Btu/lb

moisture content n/a 7%

energy content (LHV) 91,000 Btu/gal 7,800 Btu/lb

fuel consumed, gross 5,100 gal/year

energy required 464 MM Btu/yr 464 MM Btu/yr

fuel equivalent 5,100 gal/year 30 tons/yr

system efficiency 100% 65%

fuel required 5,100 gal/year 46 tons/yr

$/unit $2 /gal $140 /ton

$/year $11,200 /yr $6,400 /yr

$/MM Btu $24 /MM Btu $14 /MM Btu

LP wood pellets

Fuel Economics: example calculations of fuel costs@ 85% displ.

= 8,400 x 93%

= 5,100 x 91,000 / 1,000,000

= 464,000,000 / 7,800 / 2,000

= 30 / 0.65

= 46 x $140

= $6,400 / 464

Economics: Sensitivities

Let’s look at key sensitivities for a wood pellet-fired system

First, let’s review the “base case” assumptions: Current propane consumption = 6,000 gal / yr Current propane cost = $2.20 / gal Target propane displacement = 85% Energy content of wood pellets = 7,800 Btu / lb Overall system efficiency = 65% Cost of wood pellets, delivered = $160 / ton Capital cost, all-inclusive = $20,000 Financing costs (20% dn, 7.5% APR, 5 yrs) = $3,000 Service life = 10 years Maintenance & utilities = $400 / year (with 8% AIF) Inflation rate of propane = 7.0% per year Inflation rate of pellets = 2.5% per year Fuel support payment = $0

For wood pellet fuel @ base-case assumptions

Sensitivity: Pellets Required vs. System Efficiency

160

20% 40% 60% 80% 100%

120

80

40

00%

Overall system efficiency

To

ns /

yea

r

5138

30

76

152$22

$17

$11

$6$00

0 /

yea

r (@

$16

0/to

n)

$0

$8,100$6,100

$4,900

$12,100

$24,200 Conclusion:Overall system efficiency fundamentally affects the economics of the furnace

systems

For wood pellet fuel @ base-case assumptions

Sensitivity: Pellets Required vs. System Efficiency

160

20% 40% 60% 80% 100%

120

80

40

00%

Overall system efficiency

To

ns /

yea

r

5138

30

76

152$22

$17

$11

$6$00

0 /

yea

r (@

$16

0/to

n)

$0

$8,100$6,100

$4,900

$12,100

$24,200 Conclusion:Overall system efficiency fundamentally affects the economics of the furnace

systems

Key factors affecting system efficiency:

Furnace design Proper operation Effective furnace

maintenance Effective maintenance of

heat exchanger(s)

For wood pellet fuel @ base-case assumptions

Sensitivity: Economics vs. System Efficiency

$100,000

20% 40% 60% 80% 100%

$50,000

0

-$50,000

-$100,0000%

Overall system efficiency

Net benefit (cost)

For wood pellet fuel @ base-case assumptions

Sensitivity: Economics vs. System Service Life

$100,000

4 7 10 13 16

$50,000

0

-$50,000

-$100,000

Service Life, years

Net benefit (cost)

For wood pellet fuel @ base-case assumptions

Sensitivity: Economics vs. Capital Cost

$100,000

$10 $15 $20 $25 $30

$50,000

0

-$50,000

-$100,000

capital cost (x000)

Net benefit (cost)

For wood pellet fuel @ base-case assumptions

Sensitivity: Economics vs. Biomass Fuel Cost

$100,000

$50,000

0

-$50,000

-$100,000$120 $140 $160 $180 $200

Cost of Wood Pellets, per ton delivered

Net benefit (cost)

For wood pellet fuel @ base-case assumptions

Sensitivity: Economics vs. Propane Consumption

$100,000

4,000 5,000 6,000 7,000 8,000

$50,000

0

-$50,000

-$100,000

Average Current Propane Consumption, gallons / year

Net benefit (cost)

For wood pellet fuel @ base-case assumptions

Sensitivity: Economics vs. Propane Cost

$100,000

$50,000

0

-$50,000

-$100,000$1.40 $1.80 $2.20 $2.60 $3.00

Cost of Propane, per gallon

Net benefit (cost)

For wood pellet fuel @ base-case assumptions

Sensitivity: Inflation Rate for Propane

$100,000

5% 7% 9% 11% 13%

$50,000

0

-$50,000

-$100,000

Annual inflation rate of propane costs

Net benefit (cost)

3%

14.4%@ 6,000 gal / yr& 65% sys eff.& $160 / ton

Sensitivity: Inflation Rate for Propane

$100,000

5% 7% 9% 11% 13%

$50,000

0

-$50,000

-$100,000

Annual inflation rate of propane costs

Net benefit (cost)

3%

@ 4,000 gal / yr& 50% sys eff.& $200 / ton

@ 6,000 gal / yr& 65% sys eff.& $160 / ton

Economic Analyses … Conclusions

Key factors affect the economics of the system Price of propane

• And the assumed annual escalation rate Amount of propane displaced Price of biomass fuel System service life System efficiency

Some systems appear attractive, based on certain assumptions

Each situation requires making various assumptions and projections regarding future fuel prices

An economic analysis should be performed for each individual farm considering an investment in a bioenergy system

Environmental Considerations

Air emissions: these farm-scale systems are not currently regulated.

Ash: The ash needs to be effectively managed, regardless of fuel type. In particular, litter-derived ash would need to be managed.

• Essentially all of the P & K in the litter ends up in the ash

Benefits of dry heat Reduced moisture levels in the house lower ammonia levels

• Better environment for the birds (& the operators) Reduced mortality? Improved feed conversion? Shorter grow-out period?

• Less Nitrogen in the air more Nitrogen in the litter higher quality litter (= higher $$$ litter)

6.8 pounds of H2O per gallon of propane burned

BioEnergy Systems LLCFayetteville, AR

479.527.0478

www.biomass2.com

Jim Wimberly

Pellet furnace demo;Durham, AR; 1995.