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

2. 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?

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

4. Displacing Propane The amount of energy required for space heating varies… Within a flock

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

6. Displacing Propane The amount of energy required for space heating varies… Within a flock From flock to flock From year to year 01234567 Gallons / year (thousands) low high range average = 6,000 (?)

7. Displacing Propane Propane is convenient. But its the #1 expense for growers -- and its getting more expensive… ~$2.20 in April 2008 wholesale residential @ Savoy

8. Anticipating future propane prices? $4 20022005200820112014 $3 $2 $1 0 1999 $ / gallon $3.29 Average annual escalation since 98 = 14.4% Future escalation if @ 14.4% $4.93

9. Displacing Propane Whats a realistic target displacement level of propane? 01234567 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 40x400 house = ~250,000 Btu / hour

10. 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

11. 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?

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

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

14. System Options: Multi-house system

15. 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

16. 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.

17. 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

18. Economics: Sensitivities Lets look at key sensitivities for a wood pellet-fired system First, lets 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

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

20. For wood pellet fuel @ base-case assumptions Sensitivity: Pellets Required vs. System Efficiency 160 20%40%60%80%100% 120 80 40 0 0% Overall system efficiency Tons / year 51 38 30 76 152 $22 $17 $11 $6 $000 / year (@$160/ton) $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)

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

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

23. For wood pellet fuel @ base-case assumptions Sensitivity: Economics vs. System Service Life $100,000 47101316 $50,000 0 -$50,000 -$100,000 Service Life, years Net benefit (cost)

24. 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)

25. 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)

26. For wood pellet fuel @ base-case assumptions Sensitivity: Economics vs. Distance from Pellet Mill $200 $150 $100 $50 $0 5075100125150 Cost of Wood Pellets, per ton delivered $/ton delivered 25

27. For wood pellet fuel @ base-case assumptions Sensitivity: Economics vs. Propane Consumption $100,000 4,0005,0006,0007,0008,000 $50,000 0 -$50,000 -$100,000 Average Current Propane Consumption, gallons / year Net benefit (cost)

28. 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)

29. 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

30. 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

31. 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

32. 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 H 2 O per gallon of propane burned

33. Conclusions Cordwood systems appear to be very attractive… IF youre willing to do manual loading and ash removal The corn option might be ok… IF you can get cheap corn (e.g., home-grown? cull corn?) Wood pellet systems appear attractive… Depending on delivered $$$/ton (distance from pellet mill?) Raw litter systems appear to be very attractive… But no such systems are commercially proven Pelletized litter systems do not appear economically attractive Bale burners appear attractive… if you can get low-cost bales The key economic factors vary from farm to farm

34. BioEnergy Systems LLC Fayetteville, AR 479.527.0478 www.biomass2.com Jim Wimberly Pellet furnace demo; Durham, AR; 1995.