Boiler Manual
Contents
1. Users follow the step by step format outlined in the spreadsheet The user will need to input estimates of the fuel costs and average boiler load The program will estimate potential variable cost savings associated with wood fuel With limited information most users can do a quick and dirty analysis however the quality of the results is directly related to the estimates that are used Consequently refined estimetes will ultimately be desired Like any spreadsheet VVood Fueled Boiler Financial Feasibility Consists of rows horizontal cells across the page and colunns vertical cells up and down the page Users must enter data where the code e gt or e gt gt is shown in colunn A The user enters the data in colunn C or multiple colunns In the initial assessment section in instances where the user wishes to ignore a particular fuel current or alternative they can simply leave colunm C blank Sample numbers are already entered in all entry cells mentioned above These numbers are provided for illustrative purposes In many cases these values represent a reasonable estimate for the value in question e g the estimates of gross Btu per unit of various fuel types and the typical associated boiler efficiency Fuel costs used in the programexarrples were reasonable point estimates in the Lake States region of the United States when the program was developed However it is likely the user s fuel co2. by definition a thermis 100 000 Btu for other fuels adjusting entry may be required Using the three inputs a calculation is made by the spreadsheet and appears in bolded text IN this case it was found that the calculated cost per net million Btu of natural gas was 8 536 For any current or alternative fuel choices entries are made in the same way Fuel Cost Estimations Summary The programdisplays the calculated cost per net million Btu for all of the 11 non wood fuels This appears in bold text at the bottomof each fuel analyzed and again with all fuels displayed together beginning at cell B112 at the end of this first subsection for quick comparison NOTE These calculated fuel values are only meaningful if the three entries have been considered and appropriately modified to represent the users circumstance C te calculate for natural gas What is the cost per therm or EF for this tuel What is the assumed MILLOM grass Btu per therm What is the assumed met boiler efficiency in 7 Calculated cost per net MILLION Btu of natural e gt Signifies needed input User determines 0 68788 ET values to input 100 Bold text shows calculated output gas la 2 Wood Fueled Boiler Financial Feasibility User s M anual GLOSSARY Altemate Fuel A commercially available resource capable of providing energy but different fromthat currently in use for a given operation British Thermal Unit BTU The qua
3. 5011 E M 1 i HED s 156 EB 293 18 416 a Da PRE H1 KS J55 t 1 i Yi ERLE i TI H li Tu j TEAR amp 5118477 ANNUAL FUEL COSTS ESTIMATION The next section of the spreadsheet is titled Preliminary Economic Analysis Initial Assessment Estimation of Fuel Costs Per Year and Comparison of Current or Alternate Fuel with Wood or Bark Fueled Boiler Systen see row 128 This section will first develop an estimate of the average cost annual basis for Current or alternate and the wood fuel systems This will then provide a basis to compare the current or altemate fueled systemto one that uses wood or bark for fuel In this section users provide the following information for each system e The cost per net million Btu of fuel e The net daily Btu in million Btu required for operation e The number of days that the boiler is used during a one year cycle The cost per net million Btu of fuel has already been estimated The net daily Btu in million Btu required for operation may be known or it can be estimated if other data is known This would during a one year cycle the boiler efficiency and the annual fuel bill For illustration consider the section beginning after the explanatory text in row 128 where the entries and calculations appear see AGURE 2 below NOTE Brown lines and text are not in the spreadsheet They are presented here to highlight the various aspects of data
4. Savings as an offsetting factor Within NPV analysis a negative number could be achieved in circumstances that exhibit savings with the wood fueled system that is insufficient to recover the investment plus interest Continuing fromhere other costs of wood fueled boiler operations are examined The programis building on previous calculations and using them to generate related outputs For some variables the spreadsheet has the user provide estimates for each year in the 20 year period of analysis This permits change over time in variables such as fuel costs other variable costs fixed costs and load The first year or period of the analysis is likely to be a partial year as the boiler system would not likely be in place on day one of the year Consequently the programtreats year two as the first full year Summary of Inputs Into Analysis for Period 2 First Full Year The items in column E under the label Entry are reflecting a relative address of items which are in colunn C under the label Calculated If you change nothing these calculated values will become the entry values for the first full year period or year 2 of the following financial analysis If adjustments to first full year values year 2 are desired they can be made directly within the Entry area of colunm E This structure with an attached link that may be easily broken un k Average E of enmployeca working with boil
5. The value entered should be greater than the calculated average requirement In sizing the wood boiler the size should be greater than the average daily load to accommodate higher than average demand e g winter season versus suntrer season load However the boiler size cannot be made so large that the ninimum load is a very small percentage of the total capacity Wood fueled boilers do not operate well at very low loads This underscores the need to involve trained professionals in the analysis A table in this section beginning at row 218 provides boiler information For a given boiler size this table provides approximete installed cost estirrates for wood fueled boilers designed to burn either green wood bark fuel or dry wood bark fuel The table provides rough estimates that will not precisely match most wood bark fueled boiler system costs Also it IS important to remember these average costs will change over tine Consequently these are only generalized estimations of what night be expected as a cost for an installed wood bark fuel boiler system including the low pressure steam boiler the fuel stoker and combustion device flue gas cleaning system steam piping with water side auxiliaries assembly installation start up and operator training As a rule of thumb for each 50 horsepower of the boiler system an area of approximately 2 000 cubic feet is required for wood fuel receiving netering and storage for a three day f
6. entry and interpretation NOTE The example shows the calculations made using both ways if all input data are known or with an estimate based on fuel cost per year In most cases one orthe other would be entered by the user COM PARISON OF SYSTEMS Information developed thus far allows the program a basis to compare the current or alternate fuel with the wood or bark fueled system Entries are required for both systems as follows Altemate Non Wood or Bark Fueled System In this section simply input the requested data using the same prompt code as before e gt l N include the number of days thatthe boiler is used TOTAL JHCHEMEHTAL INITIAL IHVEATIKEMT IREL Lib A UTA 4715 000 APPAGE HET PRESENT J LJE OF TOTAL IVES MEATS ALL YEARS 421 o a Col OF Carte da e ee on KIP Escuadra A 00 l PRESENT YALUL GF AT HET CARH FLOR ATC MPA 120111 SU OF DEPRECIATIOA TOTAL FOR TEARS 1 401 Tio PRESENT VALUE OF AESIDUAL ASSET SUILITET TO CAPITAL EME TAX Fenr A HT PRESERT WALUE OF PMT LAL WORKING CAPITAL ti These are the values that were obtained previously and provided in bold text B APPROICIMA TT HMU MP O AFTIR TAE KET CASH ELO 10 Wood Fueled Boiler Financial Feasibility User s M anual to calculate for current or alternate system if above data are known Whata the cost per nel MILLION Btu of current fuer How many MILLIOM Btu net are required per Day Calculated Average Fuel Cost per day of boiler
7. is Calculated as the assumed MILLION gress Btu per green ton of fuel Whata the assumed net boler efficiency in 9 Calculated cost per net MILLION Btu of wood or bark boiler system is What es the estimated additional annual non fuel operating cost for the wood system What is the fraction of annual Btu needs to be supplied by the wood system i Calculated MILLION Btu net to be supplied from the wood system per YEAR is Calculated MILLION Btu met from the wood system per operational day is Calculated fuel cost per YEAR for the wood or bark boiler system is Calculated annual Btu needs to be supplied by a backup system 4 Calculated MILLION Btu net supplied from the backup system per YEAR Mat is the cost per net MILLION Btu of fuel for the backup boiler system 8 500 Calculated fuel cost per YEAR for the backup boiler system is 9 308 Calculated average TOTAL fuel cost per YEAR for the wood system is 501 0 e gt I ndicates fields where users are to input requested data Some of these inputs were calculated in the previous section and simply need to be carried down by the user Wood or Bark Fueled System Infomation will be entered in the section beginning in row 157 Continuing with the example provided in the spreadsheet you will see FIGURE 3 above beginning with the information for the current or alternate fuel and followed with entries for the wood fueled system Required entries for the wood fueled system
8. row This reflects a 20 year analysis As before entry numbers in the rows are included only for illustrative purposes Wood Fueled Boiler Financial Feasibility User s M anual Ed They should not be considered as suitable estimates for your analysis The exception is where data calculated in your initial assessment above is shown and clearly labeled as such The user should realize that this section of the spreadsheet is much more technical than the initial assessment section and it requires some very specific entry assumptions As a result many users confortable with the initial assessment section of the spreadsheet may desire expert assistance to continue with the follow on section or to seek expert assistance in checking assumptions and overall analysis To continue follow the e gt gt prompts and enter all the reguested data accurately for your company The first subsection utilizes employee related data inputs as they pertain to existing or alternate fueled boiler systems For illustrative purposes the spreadsheet displays what is seen in AGURE 5 found at the bottomof page 8 The second subsection applies to wood or bark fueled systers and once completed allows for comparisons between systems This section proceeds in the sare manner as the previous one by utilizing user inputs to generate necessary output Upon entering the requested data the user is presented with a summary section providing detailed i
9. steps of design and planning THIS MANUAL WAS PREPARED BY Robert Govett Professor College of Natural Resources University of Wisconsin Stevens Point Scott Bowe Assistant Professor Department of Forest Ecology and Management University of Wisconsin Madison Terry Mace Forest Products Utilization Specialist Wisconsin Department of Natural Resources Wood Fueled Boiler Financial Feasibility Users M anual E Steve Hubbard Consultant Hubbard Forest Solutions LLC John Rusty Dramm Utilization Specialist USDA Forest Service Funding for this manual was provided by the USDA Forest Service State and Private Forestry Morgantown West Virginia APPENDIX DISCUSSION OF SAMPLE WOOD FUELED BOILER FEASIBILITY ANALYSIS CASE The following sample case represents an actual case study analysis conducted in the Lake States region of the United States To maintain confidentiality he company name and specific location is not included and the conmpany sensitive circumstances have been slightly altered in the form of either data inputs or some assumptons related to costs sizes and loads These slight modifications are sufficient to disguise company identity and provide confidentiality However in aggregate they are not sufficient to significantly alter the case study results for any of these illustrations The case analysis provides the sample entries that are used in the standard model formof the Wood Fueled Boiler Finan
10. HONE 608 231 9333 EMAIL Tery maceadnr state wi us APPENDIX DISCUSSION OF SAMPLE WOOD FUELED BOILER FEASIBILITY ANALYSIS CASE Continued Assuming an approximately 150 horsepower wood fueled boiler would be installed capable of meeting average load of existing kilns while at approximate 50 of capacity and offering roomfor kiln expansion to at least 300 MBF and assuming the wood fueled system would represent an incremental investment of about 200 000 the estimated payback on the wood fueled system would be less than three years Even assuming the full cost of investment versus incremental cost is used as the basis of investment in the analysis the payback period would be less than five years and in both cases if kiln capacity were expanded the payback periods would be reduced Within the follow on preliminary assessment section of the model the data used in most cases represent and initial best guess with an effort to be somewhat conservative as a Starting point taking care to not consciously favor the installation of the wood fueled boiler The net result of this 20 year analysis was stll very favorable reflecting a significant positive net present value even assuming a 20 overall cost of capital discounting interest rate in the analysis This is of course is only a Starting point and the inputs would be refined in working with engineering professionals and others if the project is taken to the next
11. PUB FR 000 2004 WOOD FUELED BOILER FINANCIAL FEASIBILITY USER S MANUAL TABLE OF CONTENTS Fuel Cost Estimatlons for Current or Altemate Fuels Fuel Cost Estimations Summary Alternate Non Wood or Bark Fueled System Wood or Bark Fueled System Sunmary Average Annual Fuel Cost Savings with VVood Bark Fueled Boiler System Simplified Interpretation of the Initial Results Follow on Preliminary Assessment Sunnery of Inputs Into Analysis for Period 2 First Full Year Period Inputs Into Economic Model Capital Investments and Simplified Estimation of Depreciation Appencix Discussion of Sample Wood Fueled Boiler Feasibility Analysis Cace 12 ACKNOWLEDGEMENTS The authors wish to thank Lew McCreery ProgramLeader USDA Forest Service Northeastem Area State and Private Forestry for his technical support and the USDA Forest Service Northeastem Area Rural Development programfor the financial support that made this effort possible How to Get the Program Wood Fueled Boiler Financial Feasibility is a simple spreadsheet program designed for a personal computer Both the programand the instruction manual can be downloaded fromthe following web site htipyy forestwisc eolwfe publications htm If you do not have access to the web a copy of the programcan be obtained by contacting Terry Mace Forest Product Specialist WDNR Division of Forestry One Gifford Pinchot Drive Madison WI 53726 P
12. Payrodl jk ihe Wind Puelo Spaen Per MILLS Bu Met 13 ax increase in Total Other Venable Coste With fe Wood Puaka Syrien Par WELLEN Ete Met MFIs 45 a increase in Total Piard Costs Wh the Wood Fused Bitar in Tola Fran Capital Investments and Simplified Estimation of Depredation Where an analysis is conducted as an incremental analysis the incremental investment associated with the wood or bark fueled systemshould be used Note that the model estimates depreciation for investments in the different property classes using the MACRS GDS system with 200 DB and half year convention To do this the total INITIAL investment in the different property classes is simply entered in column C as appropriate If any other depreciation method is desired the appropriate values for non depreciable property and working capital should still be entered and any other appropriate depreciation values may be directly entered in either of the two rows labeled Other Depreciation in Year In the capital investment summary note that all standard Year 4 investments including Year 4 working Capital are entered automatically Total investments in all other years if any must be manually entered SUMMARY In the section titled Financial Summary Analysis data provided and key variable items calculated fromthe data are used Also the user enters data for four additional criterion Calculations for Wood Fueled Boiler Financial Feasibil
13. accept a realistic value for incremental investment is acceptable then the operational cost savings associated with a wood or bark fueled boiler could justify the required incremental investment at this time If this is the case further analysis is justified Follow on Preliminary Assessment In this section the spreadsheet program builds further on previous sections Here the program will provide a fairly detailed estimate of operations for a 20 year analysis period to include the net present value of the expected change in after tax net cash flow associated with the wood fueled boiler This the NPV of the ATNCF is the final calculation at the end of the spreadsheet Unlike the payback method this does include an interest cost of capital which considers the time value of money This section also includes much more detailed analysis to consider the effects of loans depreciation taxes and the changes in an array of key variables over time Users with a familiarity of this type of analysis will find this section Straightforward Those without much experience will want to pay close attention to the prompts in the spreadsheet For a user continuing on it is recommended to scan the spreadsheet for an appreciation of the information required for the follow on On rows where the code e e gt is shown in colunn A an entry is to be made in one or more colunmns In sore areas entries may be required in 20 colunms for a single
14. adsheet does a simple payback analysis Payback analysis is often used in preliminary analyses for many reasons Chief among these it is simple Payback estimates the number of years periods that would be required to recoup the investment There are some technical problems associated with payback analysis including that it does not consider the time value of money Consequentl y payback analysis should not be used as sole decision criteria Following the example provided the next two entry prompts ask users to enter the Estimated Incremental Investment for the Wood or Bark Boiler System and The Maximum Payback Period in Years Required to Recover Incremental Investment Desired calculated output as always appears as bold text and numbers The first of these results is the payback period in vears for the estimated incremental investment cell C 271 What this means in this example is that the incremental investment of 200 000 would be recovered without considering time value of money in about 2 4 years The second of these results is a value for the estimated maximum incremental investment that could be justified for the wood or bark boiler system value in cell C 275 What this means is that for the maximum acceptable payback period as specified by the decision maker in this example seven years a maximum incremental investment of about 590 000 could be justified If only a shorter payback perio
15. cial Feasibility spreadsheet program The case was an analysis conducted for a secondary forest products manufacturer The company has lumber dry kiln capacity of approximately 200 MBF multiple kilns all used to dry hardwood lumber This capacity is Currently served by an approximately 200 horsepower natural gas boiler which can also be fueled by kerosene The existing boiler is of an age and in a condition where it is not desirable as a primary boiler but it is Suitable as a back up boiler Additional capacity for potential near future kiln expansion is desired Fuel costs for existing fuels are typical for an industrial customer of that size in the area Wood fuel for the wood fueled boiler would primarily be purchased from local companies in a well developed local market with adequate supply in a green dry mixture An estimated 60 million net Btu are required per day year round on average The cost per net million Btu is estimated to be approximately 8 50 at current natural gas prices with the existing boiler system at average efficiency Assuming a delivered price of 27 50 per green ton of wood fuel at an average of approximately 35 Moisture content green basis the fuel cost for the wood fired boiler is estimated to be less than approximately 3 50 per net nillion Btu or about 40 of the fuel cost using natural gas Assuming the existing natural gas fired boiler is due to be replaced regardless and the existing bo
16. d could be accepted then the maximum acceptable investment would be smaller The following two interpretations can be applied to the generated output L If according to the decision criteria being used the payback period reguired to recover the incremental investment is excessively long then the operational cost savings associated with a wood or bark fueled boiler does not likely justify the investment at this time Likewise if according to the maximum payback period you would be willing to accept the maximum incremental investment is unrealistically low then the operational cost savings associated with a wood or bark fueled boiler does not likely justify the investment at this time Assuming as a result of analysis the wood fueled systemis rejected if circumstances change e g the existing system fails must be replaced costs of operation increase significantly or Major facility renovations are being considered then perhaps the analysis of a wood or bark fueled system should be reconsidered at that time 6 Wood Fueled Boiler Financial Feasibility User s M anual 2 If according to the decision criteria being used the payback period reguired to recover the incremental investment is short enough then the operational cost savings associated with a wood or bark fueled boiler could likely justify the required incremental investment at this time Similarly if according to the maximum payback period you would be willing to
17. e wood has dried after harvest etc About 80 ovendry MC is a reasonable estimate for many hardwoods Many softwoods and hardwoods such as aspen can exceed 100 Net Present Value NPV The benefits less the costs of a given itemover time A current value assigned to net benefits and derived using a discount rate Actual spreadsheet shows Years 1 through 20 HGURE 7 A 551 FINANCIAL SUMBLART ANAL TS 552 SEH MILL IDR im jaag THAT ARE REDURRE PER YEAR E 55d FULL GOST FORA THE FES IF CURRENT DA AL TERMATE FUEL WAS USED 555 TOTAL FUEL COST WITH TRE 000 HAEDO SYSTEM GAD BCE SA AAR ACHES IM VARJANT L IGE LOAST TII WOOD AS TTM SET AHHUKL IMOREASE IA OTHER VARAS E COST MATH 000 Ss TEM i OHPEESTIIHKAL COLT LAIKE BOCA MITE TEE VADI SETEM EST 559 OPERA TOAAL COST SARGS FOR THE 4000 SYSTEM Pu ALTEAKATE P L FOR YEAH EU aan Pita araceli jr opera ion oom ming sek eet ta narra ki Fi TOTAL FUEL COST SAVINGS WITH THE GOD FIRED SYSTEM MHO OTEA REVEL SES TOTAL IKCHEKSE 15 SOM ELIEL AE LOA TEKE Mr OOO STEM SEF TOTAL CREASE 1H FIRED COST TERS WTH WO SYSTEM Sel i TEMEST OH lOAN GES INCHEASE i ALT PROFIT BEFORE DEPRES 4 TAX AAS TT PAI SYST EEE TOTAL E PALO THO PONEASE ASSOCIATED WITH WD Seo TEM ne CHARGE IK TAXADLE DOE 4550 14 TEO RT ADD SS TEM SEB T E SER CHANGE IH japera arab AFTER TAX PROAT 4 055 AH TO MODO SESTTN E CHANGE if ingina AFTER TA HET CASH ELO ITTA MOOD SS TEM a cite er ees Or PAN panies oem firm HOT mubjari in capa gans
18. er relates dubes ist shif amg tal erp oe morra vein bole reied dues nd sii Average e ol emp krai ere kins velh bole relates duisg Sed att Avo E of employees working with Daler related dues 4th shi Oh A A TO Assumed F days boller m uted per pear Por anabi in id a EA ed OA de rage hane hour nage of ouier penis emploveet Frirgja banal kor ampiyan an a of bee Pouri wag C aime premum for emelopees 25 a H a base hiui woe Fonge benehts for oeerbrre hours ah of he merme hour moje TE Mhamai a a boa and pr hours par oht rn adn reir and re attached facilitates easy heuristic What if analyses After an initial run the analyst may wish to change some parameters of the economic analysis without changing the prior calculations This breakable link allows that to be done easily but retains the calculated original value for comparison and quickly identifies that such heuristic experimentation is being conducted Thus any or all of the key assumption variables calculated for use in the analysis may be directly modified to a desired value for illustration see FIGURE 6 found on page 9 Period Inputs into Economic Model The data under Entry in colunm E will automatically be reflected as the values for the first full year Year 2 in the subsequent entries An entry is required in all other cells of each row in each colunn for items in Year 4 and Year 8 thru Year 20 with entry as a percent of the item value en
19. iler will be kept as a back up by installing a wood fueled boiler versus natural gas fueled boiler the incremental additional investment in the wood boiler in excess of the cost of a gas boiler of the sarre size would be equal to approximately 50 of the cost of the wood fueled system The difference in investment alternatives is the basis for investment costs to compare the operational savings which are in excess of approximately 100 000 per annumat current loads based on fuel costs only or about 85 000 per year when sorre additional operational costs are also considered NOTE Kiln expansion would increase annual fuel cost savings 112 Wood Fueled Boiler Financial Feasibility User s M anual INTRODUCTION Wood Fueled Boiler Financial Feasibility is a spreadsheet programdesigned for easy use on a personal computer This program provides a starting point for interested parties to perform financial feasibility analysis of a steamboiler systemfor space heating or process heat By allowing users to input the conditions applicable to their current or proposed fuel systems Wood Fueled Boiler Financial Feasibility provides an opportunity to compare wood or barkfuel as altemates to the existing fuel This program has been designed for use by most decision Makers seeking basic insight such as annual savings and potential payback of wood fuel More detailed financial feasibility estimates can also be done on a 20 year per
20. include delivered fuel cost moisture content heating values and information regarding the back up boiler system The final row in the Subsection gives the total fuel cost per year for the proposed wood system FIGURE 4 Summary Average Annual Fuel Cost Savings with Wood Bark Fueled Boiler System The previous section estimated the average annual fuel costs of the current or alternate and the wood fueled system The other primary thing to consider as a variable cost is the potential increase in variable cost with a wood system e g labor for fuel loading Rows 204 and 206 show the annual savings associated with the wood systemin both ways fuel cost only and total variable respectively see AGURE 4 below G a E 202 PRELIMINARY ECONOMIC ANALYSIS INITIAL ASSESSMENT ESTIMATION OF AVERAGE ANNUAL FUEL COST SAVINGS 205 WITH WOOD OR BARK FUELED BOILER SYSTEM 204 Calculated potential annual savings considering fuel cost differences ONLY 104 603 206 206 Calculated potential NET annual savings considering BOTH fuel and operational costs 84 603 O Wood Fueled Boiler Financial Feasibility User s M anual MB eo KAILI Oi Biu inal at ore ragum par TEAR j 447 ahe Coil per nal MILLION o of cura jor airada foe i MB ase Cont per nal MILLION Eto of wead or bark balar yt m dae Cost per nsi BLOM Bit of tial fer tee hackep bader epalem ars Frcten of arma Bl needs do be mopped by the wood system ig Pilars increase ir total
21. iod of analysis for those who have greater technical expertise and are more knowledgeable in conducting such analyses It is suggested that first time users read this manual and carefully examine all explanatory text in the spreadsheet related to entries calculations and interpretations prior to initial use of the spreadsheet Important Things to Keep in Mind This programis for preliminary financial analysis More robust models exist for very detailed analysis of biomass projects that extend beyond the scope of this program This programis not intended to replace technical systems analyses planning efforts or pro forma financial statements prepared by engineering accounting or other planning professionals Wood Fueled Boiler Financial Feasibility Users M anual E INITIAL ASSESSMENT Overview The spreadsheet is comprised of step by step sections that allow analysis to flow logically often building on previous sections Upon opening the programat the top of the spreadsheet the user will see a brief section of text followed by the calculation sections Important notes defining variable parameters and assunptions are provided directly in the program First time users should read the explanatory text provided in the program Getting Started For those experienced with spreadsheets using the initial assessment section of the program should be fairly easy with only limited and readily accessible user specific information
22. ity User s M anual O H mn IMPORTANT mumm note above CALCULATEO ENTRY 21 504 a 16 50 13 47 1651 i BD et uar criteria listed in bold text appear as yearly estimates extended out to 20 years Loan sunmary information is also calculated at this point and is displayed for easy user reference The last section of the spreadsheet illustrated in Figure 7 and Figure 8 found on page 10 is Calculation of Net Present Value of After Tax Net Cash Flow Associated with Wood or Bark Fueled System In this section the only user input is the Cost of Capital to Use as i discount interest rate which will be used in the NPV calculation The result of the initial assessment section of the spreadsheet provided a simplistic decision criteria of payback periods The result of the follow on section provides a much more sophisticated decision criteria and includes parameters of the time value of money in establishing a cost of capital and the increased sophistication of depreciation taxation change of variables over time etc In interpreting the decision criteria results of the net present value a positive number would justify the project Within payback analysis a savings with the wood system could appear attractive but ignore the cost of capital or tine value of money Within NPV analysis the result hinges heavily on the discount rate Consequently a large assuned cost of capital requires contrensurate increase IN
23. nformation about each boiler system For convenience results are shown in both monetary U S dollars and the percentage each criterion represents to the total payroll With these subsections completed the program provides the estimated annual wood or bark fueled boiler related labor costs for the first full year of operation These results appear in bold text beginning in cell C 374
24. ntity of heat which is required to increase the temperature of one pound of water one degree Fahrenheit Heat of Combustion The quantity of heat that is released when a measurable amount of a combustible substance is burned to formincombustible substances Examining the differences in heats of combustion for different fuel sources is a way to explore which is more economic Incremental Investment The difference in the costs of two systems For example the difference between wood boiler systems costs and an alternate fuel boilers costs e g the excess investment cost associated with the wood fueled system Wood Fueled Boiler Financial Feasibility User s M anual amp Moisture Content MC Green Basis The percentage of the total weight of wood plus water in the wood that is water This varies widely depending on the species and if the wood has dried somewhat after harvest In general a reasonable estimate for many hardwoods is about 44 to 45 MC ona green basis Sone dense hardwoods are lower Alternatively many softwoods and low density hardwoods such as aspen can exceed 50 MC Moisture Content MC Ovendry Basis The total moisture water in wood as a percentage of the weight of ovendry wood Frequently the ovendry basis MC percent will exceed 100 this simply means the water in green wood weighs more than the dry wood The ovendry basis MC varies widely with species and also within species e g if th
25. o proceed with some simple payback estimates SIMPLIFIED PAYBACK ESTIMATION FOR A WOOD OR BARK FUELED BOILER SYSTEM Overview In continuing on to the remaining sections of the spreadsheet program the user should be confortable with the assumptions and data Inputs required of the previous sections Also they should feel additional calculations are warranted to examine the financial feasibility of a wood or bark fueled boiler system in their operations The following sections expand earlier analysis however the user is reminded that calculations still only provide preliminary estimates If after running these calculations it is found that a wood fueled boiler system may appear to be economically attractive it is then suggested that the user further explore their options with experienced professionals instead of solely relying on this program In this section the same data entry format is used Where indicated users provide the requested information in colunn C and view generated output as bold text As before important notes are included directly in the spreadsheet Wood Fueled Boiler Financial Feasibility User s M anual The first step in creatng a sinplified payback estimation for a wood or bark fueled boiler system is to estimate the requirenents of such a system Examining the horsepower requirements of a wood system boiler begins this section Users are prompted to enter the assumed wood system boiler horsepower
26. operation Assumed days boler is used per year for analysis is Calculated Average Fuel Cost per Year current system User determines values to input to calculate for current system if the MILLION Btw net required per Day is NOT knewn BUT the Average Fuel Cost per Year with the current system S known What is the average Fuel Cost per Year current system Assumed 2 days boler is used per year for analysis is Calculated Average Fuel Cost per day of boiler operation What es the cost per net MILLON Btu of current fuel Calculated number of MILLION Btu e gt Signifies needed input Bold text shows calculated outputs Wood Fueled Boiler Financial Feasibility User s M anual 3 El What is the cost ger net MILUON Btu of current fuel Mica many MILLION Btu neli are required per Day Calculated Average Fuel Cost per day of boiler operation Assumed days bolar is used per year for analysis 157 Calculated MILLION Btu net that are required per TEAR Calculated Average Fuel Cost per Year current system T 8 500 FOR THE WOOD BARK FUELED SYSTEM te calculate for wood or bark fueled boiler system What ia the delmered cost per green ton for this fuel What is the green basis moisture content far this fuel as delivered Calculated ovendry basis moisture content for this fuel is Matis the assumed heat of combustion HH in Btu per dry pound of wood or bark Calculated fuel value in Btulb at meisture content for this fuel
27. sts could be significantly different It is up to the user to examine all data values relative to their circumstances In particular all values for fuel costs should be examined and changed by the user if necessary Fuel Cost Estimations for Current or Altemate Fuels The first step in determining the economic feasibility of replacing your operation s current boiler systemfuel s and replacing it with wood or bark fuel is to input data regarding your current fuel The first section of the programallows the user to do this for 11 possible fuel sources User inputs are required for fuel costs Btu s per unit and net boiler efficiency however reasonable estimates are provided Using these inputs the program calculates an estimate of the cost per net million Btu for the various fuels Remerrber that entries are required for only the existing fuel or alternate to wood fuel that you are using or consider using in your analysis For illustrative B purposes only inputs for all 11 altemate fuels have been entered in the spreadsheet For example scroll down to the section beginning with row 75 To Calculate for Natural Gas In this subsection use AGURE 1 below for reference Note that for each row with e gt in colunm A a value was required to be entered by the user IN this case it was reasonably assumed that 68288 was currently an accurate cost estimate for a thermof natural gas and that boiler efficiency was 80
28. tered for Year 2 The percentage change entry format convention is used because it is generally easier These data will be transformed to values in the Key Production Data section BOILER RELATED PAYHOLL DATA EXISTING OA ALTERNATE SYSTEM AVERAGE 4 OF BOILER RELATED EXPLOYEES ALL SHIFTS COMBED Strange al daa nat duda Fee an employee mara boie r igied per year veras al parme hours per hier relied emplee per month bader is aperales AVERAGE E OF CWNERTIME HOURS PER BOER RELATED EXMPLOYTEE PER TEHE Gither baier related peral espace In lota dolar par ve SUMMARY OF ESTIMATED ANNUAL Bo OVERTIME FRINGE OTHER PAYROLL TOTAL PAYROLL BOILER RELATED LABOR HOAT OF BOILER OPERATION e gt gt nsert requested data The programruns calculations and displays results here Wood Fueled Boiler Financial Feasibility User s M anual Simplified Interpretation of the Initial Results In the event the calculated potential NET annual savings might be negative i e wood system has a higher annual cost or if the savings calculated for wood is a very small number then it probably does not make sense to spend considerable resources in further analysis at this time However if your circumstances change Significantly you may wish to investigate this again at a later date On the other hand in the event the calculated net annual savings considering fuel and operational costs is Significant then the user will probably wish t
29. toe SEN EL Ci re a El Lo Capa TL KT i CAPITAL GAINE FE nit CHANGE H AFTER TAE RET CASH FLOW ATA MOOD SYSTER MIHIMUM OAM Pec AL HERA FA AT Gh are A koi peed parar STI CHANGE IH WET KOO TOA TO RETA EA Mii OOO TEA HGURE 8 SUMMARY OF LOAN INFORMA TEO HELI PRIACIPAL DUE MINA PROP A EEPAVMEMT ADOITIORAL PRINCIPAL HEPATMEHT EHEIM PSPC AL OU INTEREST PA TMEMTS E FEAR A LE 1138 51 TEL Bld 5 1453 FIAT 4 kl es DES JERE Ei HN FEAR F JERA ki 51085 00M 15 537 21 300 FUE 150 den 547 Pll a 16 05D ATA E e ne ao oo 1400 414 443 HS 5 AE 15 Bl IZA TERR i 5158 258 FIN 245 i 117059 iid 443 TEA q 21 900 1335 t Bi 514 375 j 212 TT TE ch p 4109 587 2 OT 412 11975 ra sd k 2 brig lis i UST 4 477 E E wl 1813 16 314 E i TEAR BS 170 200 16 214 ki sina TTA 113 25 TERA i ai 306 4 01 MD 88 201 EIG W TE 418 A El E Fi 1113133 NTF 1471 RTO FEF EET Es PE i gt 158 ENSIA IEE 745 10 Wi p Sa IE 745 115 453 Ki JE EAA i 4154 775 CAL CLE ATION OF MET PRESEMT VALUE OF AFTER TAS MET CASH FLOW ASSOCIATED WITH WOOD OF HA FUELED SST EM m NEAR E ai Soy EA E kii 724 515 aa 6 Bi i 077 de pi kii Bea O 20 Hair 10 E fl 4G JERIA Bad Sd LT 245 ENT GTI 5 64 E Wl kl east 18 HEI Fl 117 HC EAR E 4137 106 A Aa k 510 477 110 653 H EAR E Fi 300 KEHTIB 358 HET AE 305 E
30. uel supply Where a wood or bark fueled systemis being considered as an altemate to another system which would need to be installed anyway e g the existing boiler needs to be replaced and the choice is between a wood fueled system or other non wood fueled system this is an incremental investment In this example the difference in the annual operational cost Savings associated with the wood or bark fuel would be considered against the difference in the total investment associated with the two systems i e the incremental investment in the wood system However if the existing systemis in good condition has considerable remaining life and does not currently require major costly repairs to extend the system life then the investment in the wood systemis essentially the full cost of the wood system less any salvage value plus any savings associated with avoided repairs immediately needed on the existing system This is a very simplified explanation of determining values to be considered in investment Many professions including business and engineering have extensive training in this area The professional assisting with follow on analysis should be well versed in this Also when considering investment altematives such as different types of boilers it is desirable that the economic lives of the two alternatives be the same Otherwise it will be necessary for the analyst to make appropriate adjustments This part of the spre
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