1. Lidzbark Warmiński heating plant in RETScreen Software Justyna Pawilonis 28 March 2007 Lidzbark Warmiński

2. Presentation aims to present results of energy production and life-cycle costs analysis made for biomass heating plant in Lidzbark Warmiński with the use of RETScreen Energy Model.

3. There are a few cases when clean energy technology implementation should be considered: Efficiency measures and renewable energy system should be considered any time when is a need for a system that generates heat, power or cooling. The best moment for easy clean energy technology incorporation is during a major renovation or new construction. The project will be most attractive when conventional energy costs are high. The role of project stakeholders is significant in demonstration of keen interest and strong commitment because of people’s resistance and unfamiliarity with biomass technologies. It should be verified if the process of procuring permits and approvals is not too difficult. Biomass energy technologies tend to have high initial costs, so funding and financing must be available. And, for renewable energy system, the availability of a biomass resources is one of the key sactors in a prefeasibility assessment.

4. RETScreen Biomass Heating Project Model http://www.retscreen.net/

5. We have used the RETScreen Biomass Heating Project Model to make an investigation of the technical and financial feasibility of biomass heating project. We have made an analysis of the energy production and life-cycle costs of existing biomass heating plant in Lidzbark Warmiński. Generally, Ret-Screen model is addressed to investors who have investment cost dilemma. It helps the user, at the very early stage of the project to quickly and simply asses whether the potential for a clean energy project is sufficiently promising to do further investigation or even engineering and development work. This simple but useful tool can be utilized for an installation anywhere in the world ranging from individual buildings to large clusters of buildings connected by district heating.

6. . Biomass heating plant in Lidzbark Warmiński should supply heat to 7 public buildings: Reformatory Special Educative Centre Trade School Secondary School Residentail building Technical school Dormitory Total heated floor area is about 15 thou. square meters and total pipe length is about 1 kilometer.

7. Plan of heating infrastructure Trade School Special Educative Centre Reformatory BIOMASS HEATING PLANT Secondary School Residential building Technical school Dormitory

8. To conduct the analysis, we have provided the application’s heating design temperature and the number of heating degree days for each month. The software includes a large database of these parameters for sites around the world. Suwałki is located in the coldest part of Poland so the number of degree-days is quite high and heating design temperature is below 20 degree centigrate. We have also indicated the hot water requirement (18%) which was used to specify heating loads that remain constant during the year.

9. Site conditions (1)

10. The heating plant in Lidzbark Warmiński includes biomass heating boiler of 930 kW. Similar biomass boiler works only in winter time as a peak load installation. Optional oil Back-up Heating System can be used. Peak heating load is the sum of the peak heating loads for each building in district heating system. We have specified the peak heating load for each building on a per unit floor area basis. RET- Screen suggest values for this based on the heating design temperature and level of insulation in the building. Total heating energy demand of this system (5 941 MWh) was estimated by multiplying the peak heating load by the number of equivalent full load hours calculated on the basis of heating design temperature and the number of heating degree days for each month. Biomass boiler cover almost 100% of heat demand but only about 80% of peak heating load. It means that the buildings’ residents must accept lower interior temperatures (more probable) or use auxiliary (e.g. electric) heating equipment during a few coldest days.

11. Site conditions (2)

12. The pipe size was calculated automatically. The RETScreen model helped in the preliminary sizing and costing of district heating piping networks. Total district heating network costs were about 514 thou. złotych (ca. 130 000 euro).

13. Size and cost of DH piping networks

14. The detailed breakdown of initial and annual costs was made on the basis of data delivered by the heating plant operator. Total initial costs amounted to almost 2 million zlotych (about half million euro) and annual operation costs were about 0,59 million złotych (150 thou. euro).

15. Initial & annual costs

16. The investment was supported by a grant which covered almost 50% of the investment.(Incentives/Grants) The most important initial cost is energy equipment (about 50% make boilers’ costs). The most important operation cost is fuel cost (about 70%) (Annual Costs and Debt)

17. Financial Summary

18. The Internal Rate of Return is quite high and amounts to about 22%. (Financial Feasibility) The Net Present Value is positive and rather high (over 1,6 mill złotych)=(400 thous euro). The cumulative cash-flow becomes to be positive in the beginning of the fifth year of operation.

19. Cumulative Cash Flows Graph

20. The project profitability is highly dependant on operation (annual) costs (mainly fuel) and assumed avoided costs of heating energy. Initial costs play a moderate role and debt related costs seem to be hardly significant.

21. Net Present Value - NPV

22. Assuming the level of confidence at 90% the expected NPV should be in the range of -300 thous till 3.4 million zlotych. The most probable NPV is at the level of about 2 million złotych and the average expected value is on the level of about seventeen hundred (1.7 mill) zlotych. The risk of achieving a negative NPV is rather low (less than 5%).

23. Distribution of NPV

24. Conclusion The most important risk is high instability of biomass prices. In general, project looks quite promissing and overall investment risk seems not to be very high. EC Baltic Renewable Energy Center Institute for Fuels and Renwable Energy Jagiellońska 55 str., build. 6 03-301 Warsaw POLAND Tel: +48 22 51-00-235 www.ecbrec.pl