Biomass Furnaces for Heating Poultry Houses November 2008

Biomass Furnaces for Heating Poultry Houses November 2008 By Jim Wimberly Bio. Energy Systems LLC Fayetteville, AR

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

Presentation Overview v Understanding the problem…expensive propane consumption v Displacing propane with biomass v Technical considerations v Economics considerations v Other considerations

Displacing Propane v The amount of energy required for space heating varies… Ø Within a flock

Displacing Propane v The amount of energy required for space heating varies… Ø Ø Within a flock From flock to flock

Displacing Propane v The amount of energy required for space heating varies… Ø Ø Ø Within a flock From flock to flock From year to year average = 6, 000 (? ) range high low 0 1 2 3 4 5 6 Gallons / year (thousands) 7

Displacing Propane v Propane is convenient. Ø But it’s the #1 expense for growers -- and it’s getting more expensive… ~$2. 20 in April 2008 residential @ Savoy wholesale

Anticipating future propane prices? $4 Average annual escalation since ’ 98 = 14. 4% $4. 93 $3. 29 Future escalation if @ 14. 4% $ / gallon $3 $2 $1 0 1999 2002 2005 2008 2011 2014

Displacing Propane v What’s a realistic target displacement level of propane? @ $2. 20/gal, value of propane displaced $11, 200 / year @ 85% of total consumption, propane displaced 5, 100 gal/yr 85% average = 6, 000 range high low 0 furnace 1 system 2 heat energy 3 output 4 5 6 Total required for a 40’x 400’ house = Gallons / year (thousands) ~250, 000 Btu / hour 7

Displacing Propane…conclusions v target displacement rate = 85% of propane consumed v target displaced quantity = 5, 100 gallons/year v value of displaced propane = $11, 200/year v required output size of furnace = 250, 000 Btu/hour v note: these figures are for the assumed “typical” broiler house in northwest Arkansas

What are the Key Selection Criteria for a Furnace? v Technically viable Ø Ø v Economically feasible Ø Ø v Do the numbers work? Is it a good investment? Environmentally acceptable Ø v Is it proven? Will it stand up to conditions in a poultry house? Are there any significant issues that must be addressed? The “hassle factor” Ø Ø Does it require lots of TLC to keep it going? How much maintenance will be needed?

What’s included in a biomass furnace system? fuel storage, handling and in-feed combustor, including heat exchanger & ash management hot air distribution Flue Poultry House Heat Exchanger Auger to Hot Air Distribution System Hopper Combustion Chamber Instrumentation & controls

Farm Options: Single-house system Furnace outside the poultry house Furnace inside the poultry house Heat distribution system Furnace Fuel supply

System Options: Multi-house system

What are the Primary Fuel Options? v Cordwood v Corn v Raw litter v Pelletized litter v Raw sawdust v Wood (& other) pellets v Baled biomass v *Coal* Pellet furnace; Prim, AR; 1995.

Economics: Key Factors to Consider v Price of propane Ø And the assumed annual escalation rate v Amount of propane displaced v Price of biomass fuel v System service life v System efficiency Pellet furnace; Savoy, AR; ~1998. An economic analysis should be performed for each individual farm considering an investment in a bioenergy system

Fuel Economics: example calculations of fuel costs @ 85% displ. = 8, 400 x 93% = 5, 100 x 91, 000 / 1, 000 = 464, 000 / 7, 800 / 2, 000 = 30 / 0. 65 = 46 x $140 = $6, 400 / 464

Economics: Sensitivities v Let’s look at key sensitivities for a wood pellet-fired system v First, let’s review the “base case” assumptions: Ø Ø Ø Ø 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

$22 160 $17 120 $11 $6 Tons / year $000 / year (@$160/ton) Sensitivity: Pellets Required vs. System Efficiency $24, 200 152 Conclusion: Overall system efficiency fundamentally affects the economics of the furnace systems $12, 100 76 80 $8, 100 51 40 $0 For wood pellet fuel @ base-case assumptions 0 0% 20% 40% 60% Overall system efficiency $6, 100 38 80% $4, 900 30 100%

$22 160 $17 120 $11 Tons / year $000 / year (@$160/ton) Sensitivity: Pellets Required vs. System Efficiency 80 40 Key$6 factors affecting system $24, 200 152 Conclusion: Overall system efficiency fundamentally affects the economics of the furnace systems $12, 100 76 $8, 100 51 $6, 100 38 efficiency: Ø Furnace design 0 Ø Properation $0 Ø Effective furnace 0% 20% 40% 60% 80% maintenance Øwood Effective Overall system efficiency For pellet fuel @maintenance of base-case assumptions heat exchanger(s) $4, 900 30 100%

Sensitivity: Economics vs. System Efficiency $100, 000 $50, 000 Net benefit (cost) 0 -$50, 000 -$100, 000 0% For wood pellet fuel @ base-case assumptions 20% 40% 60% 80% Overall system efficiency 100%

Sensitivity: Economics vs. System Service Life $100, 000 $50, 000 Net benefit (cost) 0 -$50, 000 -$100, 000 4 For wood pellet fuel @ base-case assumptions 7 10 Service Life, years 13 16

Sensitivity: Economics vs. Capital Cost $100, 000 $50, 000 Net benefit (cost) 0 -$50, 000 -$100, 000 $10 For wood pellet fuel @ base-case assumptions $15 $20 capital cost (x 000) $25 $30

Sensitivity: Economics vs. Biomass Fuel Cost $100, 000 $50, 000 Net benefit (cost) 0 -$50, 000 -$100, 000 $120 For wood pellet fuel @ base-case assumptions $140 $160 $180 Cost of Wood Pellets, per ton delivered $200

Sensitivity: Economics vs. Propane Consumption $100, 000 $50, 000 Net benefit (cost) 0 -$50, 000 -$100, 000 4, 000 For wood pellet fuel @ base-case assumptions 5, 000 6, 000 7, 000 8, 000 Average Current Propane Consumption, gallons / year

Sensitivity: Economics vs. Propane Cost $100, 000 $50, 000 Net benefit (cost) 0 -$50, 000 -$100, 000 $1. 40 For wood pellet fuel @ base-case assumptions $1. 80 $2. 20 $2. 60 Cost of Propane, per gallon $3. 00

Sensitivity: Inflation Rate for Propane $100, 000 14. 4% @ 6, 000 gal / yr & 65% sys eff. & $160 / ton $50, 000 Net benefit (cost) 0 -$50, 000 -$100, 000 3% For wood pellet fuel @ base-case assumptions 5% 7% 9% 11% 13% Annual inflation rate of propane costs

Sensitivity: Inflation Rate for Propane $100, 000 @ 6, 000 gal / yr & 65% sys eff. & $160 / ton $50, 000 Net benefit (cost) 0 @ 4, 000 gal / yr & 50% sys eff. & $200 / ton -$50, 000 -$100, 000 3% 5% 7% 9% 11% 13% Annual inflation rate of propane costs

Economic Analyses … Conclusions v Key factors affect the economics of the system Ø Ø Ø Price of propane • And the assumed annual escalation rate Amount of propane displaced Price of biomass fuel System service life System efficiency v Some systems appear attractive, based on certain assumptions v Each situation requires making various assumptions and projections regarding future fuel prices v An economic analysis should be performed for each individual farm considering an investment in a bioenergy system

Environmental Considerations v Air emissions: these farm-scale systems are not currently regulated. v Ash: Ø Ø v 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 Ø Reduced moisture levels in the house lower ammonia levels • Better environment for the birds (& the operators) Ö Reduced mortality? Ö Improved feed conversion? Ö Shorter grow-out period? • Less Nitrogen in the air more Nitrogen in the litter Ö higher quality litter (= higher $$$ litter) 6. 8 pounds of H 2 O per gallon of propane burned

Jim Wimberly Bio. Energy Systems LLC Fayetteville, AR 479. 527. 0478 www. biomass 2. com Pellet furnace demo; Durham, AR; 1995.