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Successful small and medium scale wood heating Key stakeholders Workshop New Forest, England, 9-10 March, 2011 Jyrki Raitila VTT Technical Research Centre.

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Presentation on theme: "Successful small and medium scale wood heating Key stakeholders Workshop New Forest, England, 9-10 March, 2011 Jyrki Raitila VTT Technical Research Centre."— Presentation transcript:

1 Successful small and medium scale wood heating Key stakeholders Workshop New Forest, England, 9-10 March, 2011 Jyrki Raitila VTT Technical Research Centre of Finland

2 2 16/02/2014 History and background of small and medium sized woodheat in Finland Started with small boilers ( kW) in early 90s Municipalities invested in bioheat systems Forest owners/farmers and co-operatives supplied wood chips Supplied heat mainly for municipal buildings Municipalities were key players in establishment of heating enterprises Later in the 90s farmers started becoming heat entrepreneurs themselves They realized it is the best way to add value to wood chips

3 3 16/02/2014 Small and medium size enterprises (SME) The number of sites has grown from 3 plants in 1992 to 455 in % managed by co-operative or limited companies, the rest by single entrepreneurs or a network of entrepreneurs (2009) 29 % were district heating plants, the rest single building heating plants (2009)

4 4 16/02/2014 SMEs today The total heat capacity 250 MW (2009) Annual growth 10% Average boiler capacity 550 kW, growing Number of industrial customers increasing 1,000,000 loose-m 3 (300,000 tonnes) of wood chips (7 % of the total in Finland) One plant needs 2,100 loose-m 3 (700 tonnes) of chips on average Heating container. Photo: Megakone Oy

5 5 16/02/2014 Wood fuel resources

6 6 16/02/2014 Wood is the best fuel source for SME plants Ownership of forests favors wood heating and entrepreneurship Private Farmer based Family forests Many forest owners are entrepreneurs already Used to play an important role in the owners economy Vast resources in our forests Finland has strong forest industry Uses and generates the most of wood based energy Effective supply chains of wood Use of wood energy in other sectors is growing fast Effective co-firing with other solid fuels

7 7 16/02/2014 Forest management Long silvicultural tradition Green gold – renewable Good management to maximize profit and benefit – like taking care of your investment Government incentives for management Subsidies for silviculture Subsidies for some investments Subsidies for planning Tax deductions Effective management ensures good timber quality Best revenues from timber sales Price of wood fuel on the increase Photo: Martti Kuusinen, Tapio

8 8 16/02/2014 Effective harvesting technology and methods

9 9 16/02/2014 Supply chains Small diameter trees from thinnings Pre-commercial and first thinnings; m 3 /ha (25-50 tonnes) Small trees are normally used at heating plants Forest machines smaller, agricultural machines can be used too Small harvester with an accumulating felling head Chipping with a tractor powered chipper Different feed stocks Logging residues, stumps, non- merchantable wood – large plants Small trees – small and medium sized heating plants

10 10 16/02/2014 Good business models and heating technology

11 11 16/02/2014 Value chain in the forest energy business Buying of stand Chipping at roadside Road transport Logging Bundling and forest transport Forest transport of loose residues Chipping at plant Combustion for energy Chipping at terminal /MWh In each business model it is important to consider which part(s) of the value chain one wants to deal with. Source: Sikanen 2009, University of Joensuu

12 12 16/02/2014 Examples of forest energy business models in Finland CHIPPING AND SHREDDING/GRINDING AND TRANSPORT Companies are specialized in using terminal-sized machines or effective chippers Based on contract work Transport often provided CHIPPING AND TRANSPORT Companies are specialized in chipping and transporting of chips Customers are heating plants and organizations supplying fuel for plants (BUYING) + HARVESTING + CHIPPING + TRANSPORT Specialized in harvesting, chipping and transporting energy wood (BUYING) + HARVESTING + CHIPPING + TRANSPORT + PRODUCTION AND SUPPLY OF HEAT Turnkey basis = management of the whole value chain Heating entrepreneurship Source: Sikanen 2009, University of Joensuu

13 13 16/02/2014 Heating technology Reliable domestic boiler technology Flexibility of fuels; blends, quality variation Easy to run and maintain Turnkey contracts; different parts of the system match each other Good service Enable unmanned operation

14 14 16/02/2014 Incentives

15 15 16/02/2014 Investment grants and subsidies Government can give max 35% investment grants to strategic and/or rural heating plant investments Harvesting of small trees subsidized for silvicultural reasons Chips made from small wood very good fuel for small heating plants No tax on energy generated with renewables (CHPs receive bonus) Strong R&D work supported by the government and companies A Ponsse harwarder. Photo: Ponsse Oy

16 16 16/02/2014 Observations & suggestions

17 17 16/02/2014 Woodfuel supply chains Right equipment and machines Mechanization should depend on volumes and markets Good training needed for operators Networking and contracting Every supplier does not need to own machines Integration with round wood harvesting More volume and efficiency

18 18 16/02/2014 Storage Feed stock Proper seasoning of woodfuel before processing Only short time storage as chips (biodegrading of chips) Chips Easy access to stores Good, robust conveyors

19 19 16/02/2014 Boilers: Sizing and technology Sizing in Finland: % of max output Smaller investment Better efficiency of boiler If sized to max capacity, summertime use difficult Simple robust technology in Finland Easy to maintain More flexibility in fuels Good control and monitor system

20 20 16/02/2014 Quality management Wood chip supply Good (proper) raw materials Good harvesting chains Good chippers Good storage pay for energy (MWh) Apply standards Agree on control methods Keep it simple and practical

21 21 16/02/2014 Business models Key questions Who invests? Who operates? Who gains profit?

22 22 16/02/2014 Business models (2) Large energy companies Strong business and know-how, a lot of own capital High demand for profit, low local involvement Municipal energy companies Strong local involvement and decision making Profit goes to municipality Local small enterprises Use own machines and resources (additional income) Learn by doing, limited to scale Co-operatives Strong local involvement and wide ownership Raw materials in own hands Limited to place, usually many passive members Source: Asko Puhakka, PKAMK

23 23 16/02/2014 VTT creates business from technology

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