Totnes Biofuel Hub & Community Transport Study A Technical & Financial Analysis Oct 2012 Photo: Ref:

2 Contents 1.Objectives & reasons for investigation 2.Process 3.Quantification 4.Hub Requirements 5.Options Analysis 6.Community Transport Financial Analysis 7.Conclusion 8.Next Steps

3 the ability to utilise locally-produced used cooking oil (UCO) to power community transport solutions through the creation of a “bio fuels hub” Key Study Objective where The ‘hub’ is a central place where community transport vehicles are maintained and stored, biofuel is produced and the generation of electricity takes place. To investigate

4 1.Environmental Damage: Poured down the drains it causes environmental damage 2.Economic Cost: Water companies increase water charges to cover costs of cleaning 3.Economic Loss: UCO collection and non-usage creates a loss in economic value from the community 4.Fuel substitute: UCO converted to bio diesel has 90% the calorific value of normal diesel (Abuhabya, A et al, 2010) and significantly lower localised emissions Why investigate the opportunity for UCO?

5 Quantify Available Oil Business Analysis Options Analysis Establish hub requirements Purpose of this process is to develop and model a financially sustainable business structure that has clear economic benefits. Figure 1: Report analysis process

6 Significant discrepancy in the available data Report utilises lowest value of 6.06 litres / household, which implies 26,000 litres / year for Totnes, Bridgetown & Dartington Requires further localised study, although EU study in progress. Potentially use Transition Streets model for study purposes Financial model allows for more detailed figures to be utilised easily Step 1: UCO Quantification - Residential

7 Step 1: UCO Quantification - Business Figure 2: Annual UCO arisings for relevant businesses in Totnes & Dartington (from study, 2012)

8 Although many businesses have a relationship with South West Edible Oils, many said they would be happy to supply a UCO scheme for community benefit. Issues: Currently paid £0.16 / litre for collectible UCO Contracts can be as long as 1 year Legal issues need to be addressed i.e. paperwork Step 1: UCO Quantification - Business Total Potential UCO arisings44,880 litres / year Currently collected by Totnes Rickshaw Company 4,072 litres / year Table 1: Estimated UCO arisings from local businesses

9 Business and financial model developed for possible hub Minimum medium term revenues required in excess of £40,000 per year Given supply profile, requires a minimum sale price per litre of bio diesel of £0.94 per litre after taxes for positive net present value (NPV) Step 2: Hub Requirements

10 Step 3: Options Analysis Figure 3: Comparison of financial cash flows associated with each potential option The analysis shown assumes that the bus can hold 17 people, is 60% full on average, is travelling 130 miles per day and charges customers £0.15 per mile. £6.73 £0.50£0.70 £0.49

11 Step 4a: Developing the community bus model Figure 4: Community buses that could be supported by projected UCO supply Assumes new bus required for every 130 passenger miles / day available from biodiesel and cost approx. £35,000.

12 Step 4b: Sensitivity Analysis Figure 5: NPV sensitivity analysis to utilisation rate and price Key points are to the right and above the purple area for positive project NPVs.

13 Step 4c: Financial Analysis Figure 6: 100% biodiesel financial sensitivity to financing type Requires buses to run 7 days per week with fixed utilisation rate of 60%. How can we reduce risk of financial position?

14 Step 4d: Membership Financing Options Table 2: Sensitivity of membership cost per person per year such that annual NPV equals zero i.e. minimum charge Big Lemon annual cost £300 per year Yet larger student population Key is to determine routes required by community No. of Members Price (£ / year) £804£402£268£201£161£134 Equiv. £ / day £2.20£1.10£0.73£0.55£0.44£0.37

15 Supply: Analysis indicates a supply of 40,000 litres of biodiesel is achievable although residential element is big unknown. Wholesale collection: Opportunity exists to develop local business Biofuel hub sustainability: Production and sale as either fuel and / or for energy generation does not provide financial sustainability Community transport: Is the only viable option yet highly sensitive to utilisation rates and prices paid as well as business cost factors Membership Model: Could provide a valuable de-risking of community transport option yet dependent upon routes chosen Conclusions

16 Workstreams to determine the key assumptions and development of full business plan, to include: Supply: Research into residential potential arisings Hub costs: development of specific cost profile of hub incl. decision on utilisation of existing assets in community e.g. Bob the Bus, biodiesel production facilities etc. Residential collection incentives: Discussionswith SWW regarding potential incentive programme for residential UCO collection Community Transport Requirements: research into key areas such as: o routes that community requires and demand functions i.e. passenger miles / day o passenger price sensitivity o membership potential Proposed Next Steps

Thank You. 17

Appendix 18

19 Appendix 1: UCO Emissions versus diesel Figure A1: Average emission impacts of biodiesel for heavy-duty highway engines (EPA, 2002)