FEASIBILITY STUDY OF BIOMASS-BASED …FEASIBILITY STUDY OF BIOMASS-BASED COMBINED HEAT AND POWER PROJECT IN CANADIAN SAWMILL PLANT By Gerry M. Desrochers B.A.Sc., University of British

FEASIBILITY STUDY OF BIOMASS-BASED COMBINED HEAT AND POWER

PROJECT IN CANADIAN SAWMILL PLANT

By

Gerry M. Desrochers

B.A.Sc., University of British Columbia, CAN 1991

A Dissertation Submitted to the

School of Engineering and Information Technology

of

Murdoch University, Western Australia

in Partial Fulfillment of the Requirements for the Degree of

Master of Science

in Renewable Energy

2015

ii

DECLARATION OF ORIGINALITY

I hereby certify that I am the sole author of this dissertation and that no part of this

dissertation has been published or submitted for publication.

I certify that, to the best of my knowledge, my dissertation does not infringe upon

anyone’s copyright nor violate any proprietary rights and that any ideas, techniques,

quotations, or any other material from the work of other people included in my

dissertation, published or otherwise, are fully acknowledged in accordance with the

standard referencing practices.

I declare that this is a true copy of my dissertation, including any final revisions, as

approved by my dissertation committee and the Graduate Studies office, and that this

dissertation has not been submitted for a higher degree to any other University or

Institution.

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ABSTRACT

This aim of this dissertation is to investigate the feasibility of biomass-based CHP

generation at a specific sawmill located in Alberta, Canada. Although sawmills consume

a relatively modest amount of energy compared to other heavy industries, they are

uniquely positioned to benefit from combined heat and power (CHP) systems: a ready

supply (in many cases an excess of) cheap fuel fiber is available as a by-product of

lumber production; the heat produced can be used in the lumber drying process and the

electrical energy generated can be used directly in mill operations or exported to the grid

for profit; the entire process can reduce mill GHG emissions and generate additional

revenue in the form of carbon credits.

The focus of this paper is to understand and quantify energy use and excess biomass

availability at the West Fraser Timber Ltd. sawmill in Sundre Alberta, conduct a

technical review of biomass conversion and power generation technologies for the mill,

and use this knowledge to carry out a technical and economic feasibility study to

determine the best overall CHP project for the site.

The Sundre sawmill has a considerable inventory of residuals on site: like many sawmills

in Alberta, the combination of changing markets, a slow economy and increasingly

stringent environmental regulations have created challenges for Sundre around wood

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waste utilization and disposal. Technologies exist to deal with this situation: Sundre’s

existing direct combustion furnace with thermal fluid heat transfer (TFH) system has

capacity to consume surplus fibre; other newer, more advanced technologies such as

gasification are also able to efficiently and cost-effectively convert biomass to heat for

power generation. Organic Rankine Cycle (ORC) engines are shown to be economical in

utilizing excess thermal energy from these TFH’s to produce electrical power. However,

most other power generation technologies utilizing biomass as feedstock are not feasible

for Sundre due to the requirement for complex and costly biogas cleaning (for internal

combustion or gas turbine engines) or high operating costs and an inability to cost-

effectively size for the site (steam turbines, Stirling engines).

This paper shows that an ORC installation in the range of 1.5MW is economically

attractive for Sundre. If feedstock supply increases significantly in the future (due to mill

expansion, market changes or equipment changes), it is marginally viable to add more

TFH capacity (either furnace or gasification style) to utilize this feedstock. It was noted

however that careful consideration must be given to fibre allocation to the CHP system to

ensure high-value sales revenues are preserved and return on investment is maximized.

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ACKNOWLEDGEMENTS

I would like to express my sincere gratitude to the Murdoch University for helping me

realize a vision to study and work within the sustainable energy field. I would also like to

thank my academic advisor Dr. Xianpeng Gao for his guidance, encouragement, and

numerous helpful suggestions throughout the development of this paper. To Rod Albers,

Dave Needham and Keith Carter, my thanks for first suggesting and then fully supporting

a dissertation topic that was interesting, challenging and relevant to real-world

applications: for this I am most grateful. Many thanks as well to everyone at the Sundre

sawmill for the time you afforded me gathering information in support of this work. My

sincere appreciation to Elijah, Gillian and Tom for their invaluable help with graphics

and presentation material; thanks also to Mohammed Raza for his assistance with data

collection. Most of all, I am indebted to my son, Ben and my daughter, Renae, and my

incredible wife, Brenda: the submission of this dissertation is the culmination of a path

that began with much change and uncertainty, one that saw our family move from

Canada to Australia and back, into new homes, new schools and alternative occupations.

For your patience, understanding and unwavering support throughout the pursuit of this

credential and our shared desire to be part of the global solution – thank you: this is for

you.

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TABLE OF CONTENTS

DECLARATION OF ORIGINALITY ............................................................................... ii

ABSTRACT ....................................................................................................................... iii

ACKNOWLEDGEMENTS ................................................................................................ v

TABLE OF CONTENTS ................................................................................................... vi

LIST OF TABLES ........................................................................................................... viii

LIST OF FIGURES ........................................................................................................... ix

CHAPTER 1 - Introduction ................................................................................................ 1

1.1 Background and Motive ....................................................................................... 1

1.2 Scope and Objectives ........................................................................................... 4

1.3 Methodology ........................................................................................................ 5

1.4 Structure of the Dissertation ................................................................................. 7

CHAPTER 2 - Sawmill Projects in Context ....................................................................... 9

2.1 West Fraser Operations – Canada ........................................................................ 9

2.2 Alberta Electricity Market .................................................................................. 11

2.3 Alberta Business Climate in Brief ...................................................................... 15

2.4 Bioenergy Developments – Wood Products Industry ........................................ 16

CHAPTER 3 - CHP Systems: Technology Review ......................................................... 22

3.1 Sawmilling: Process Overview ......................................................................... 22

3.2 Wood as Biomass Resource ............................................................................... 27

3.3 Technology Comparison: Thermal Conversion of Biomass .............................. 31

3.3.1 Direct Combustion ...................................................................................... 33

3.3.2 Gasification ................................................................................................. 35

3.4 Technology Comparison: Power Generation ..................................................... 44

3.4.1 Organic Rankine Cycle Turbine ................................................................. 46

3.4.2 Steam Rankine Cycle Turbine .................................................................... 51

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3.4.3 Stirling Engines ........................................................................................... 56

CHAPTER 4 - CHP Systems: Economic Analysis........................................................... 61

4.1 General ............................................................................................................... 61

4.2 Energy & Economic Model Development ......................................................... 62

4.3 Sundre: Mill Profile ............................................................................................ 66

4.3.1 Site Overview.............................................................................................. 66

4.3.2 Energy Use .................................................................................................. 70

4.4 Sundre: Proposed CHP Projects ......................................................................... 76

4.4.1 Base Case .................................................................................................... 78

4.4.2 Option 1 – MinORC.................................................................................... 83

4.4.3 Option 2 – MidORC.................................................................................... 90

4.4.4 Option 3 – ORC+CDK ............................................................................... 95

4.4.6 Option 4 – ORCmax+DC ........................................................................... 99

4.4.7 Option 5 – ORCmax+GT .......................................................................... 104

4.4.8 Summary: CHP Options ........................................................................... 108

CHAPTER 5 – Conclusions & Recommendations ......................................................... 109

REFERENCES ............................................................................................................... 112

APPENDICES ................................................................................................................ 116

APPENDIX A Equipment Costs ............................................................................... 117

APPENDIX B Model: Validation & Base Case ........................................................ 124

APPENDIX C Model: Option1-minORC .................................................................. 132

APPENDIX D Model: Option2-midORC ................................................................. 141

APPENDIX E Model: Option3-ORC+CDK ............................................................. 149

APPENDIX F Model: Option4-ORCmax+DC .......................................................... 156

APPENDIX G Model: Option5-ORCmax+GT ......................................................... 164

APPENDIX H Biomass Properties: FPI Data ........................................................... 167

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LIST OF TABLES

Table 1 List of West Fraser Operations: Alberta ............................................................ 10

Table 2 Select Bioenergy Projects – Western Canada .................................................... 19

Table 3 Wood Moisture Content vs Heat Value and Burner Efficiency ........................ 30

Table 4 Calorific Values of BC Softwood: FPI Report Excerpts ................................... 31

Table 5 Direct Air Emissions from Various Power Plants, by Boiler Type ................... 36

Table 6 Typical Product Gas Composition – Gasification Process ................................ 37

Table 7 Vendor Equipment Price List ............................................................................ 62

Table 8 IRR Summary - Project Options ...................................................................... 108

Note: All Figures and Tables without source reference indicate author as source.

ix

LIST OF FIGURES

Figure 1 CHP Process Flow .............................................................................................. 1

Figure 2 Biomass Opportunities: Log yard Waste, Beehive Burner Phase-out ................ 2

Figure 3 Turboden ORC, similar to West Fraser Installation, Chetwynd BC .................. 3

Figure 4 West Fraser Timber Ltd: Canadian Operations .................................................. 9

Figure 5 Overview: Alberta Power System in 2014 ....................................................... 12

Figure 6 Monthly Average Pool Price: Alberta Electricity ............................................ 13

Figure 7 Peak Shaving with Power on Demand (POD) .................................................. 14

Figure 8 ORC Equipment: Turboden 2MW Unit ........................................................... 17

Figure 9 Gasification Plant: 15MW Thermal, at UNBC Prince George ........................ 18

Figure 10 USNR Continuous Drying Kiln (CDK) .......................................................... 20

Figure 11 Biomass Rotary Dryer ..................................................................................... 21

Figure 12 Hog Fuel (debarker residuals) at Sundre Sawmill, Alberta ............................. 22

Figure 13 Sawmill Process Flow & Residuals Generation .............................................. 23

Figure 14 Sundre Sawmill: Drying Kilns ........................................................................ 24

Figure 15 Typical Sawmill Residual Volumes – as Percentage of Log Volume............. 26

Figure 16 Bioenergy Resource, Biomass Photosynthesis / Combustion Chemistry ....... 27

Figure 17 Net Calorific Value vs Moisture Content ........................................................ 28

Figure 18 Biomass Conversion: Process Options ............................................................ 32

Figure 19 Sundre Sawmill TFH System with Moving Bed Furnace ............................... 33

Figure 20 Gasification Process: Syngas Scrubbing & End Use ...................................... 38

Figure 21 Enerkem’s MSW Gasification Plant in Edmonton Alberta ............................. 41

Figure 22 Nexterra Gasification Plant: Kruger Products Tissue Mill – BC .................... 42

Figure 23 UNBC Gasification Plant ................................................................................ 43

Figure 24 ORC Process in Biomass CHP Configuration - with TFH.............................. 47

Figure 25 Schematic Illustration of 1000kWe (1MW) ORC Module ............................. 47

Figure 26 ORC Partial Load Efficiency........................................................................... 49

Figure 27 ORC Construction Site: February 2014 - Chetwynd Sawmill, BC ................. 51

Figure 28 Steam Turbine Thermodynamic Cycle ............................................................ 52

Figure 29 Bioenergy Steam Plants in BC ........................................................................ 55

Figure 30 Stirling Engine: Schematic of Integrated CHP System ................................... 56

Figure 31 Stirling DK: 35kW Model Rebuild ................................................................. 57

Figure 32 Stirling DK Engine: 140kW CHP Project, Municipality of Tabarz Germany 58

Figure 33 Stirling Engine & Gasifier CHP System ......................................................... 60

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Figure 34 Stirling Engine CHP with Gasification - 35kW .............................................. 60

Figure 35 Sawmill Model – Flow Chart .......................................................................... 64

Figure 36 Sundre Sawmill: Ariel Photo (looking west)................................................... 67

Figure 37 Sundre Sawmill: Satellite Photo ...................................................................... 67

Figure 38 Sundre Sawmill Log Yard with Sawdust Inventory in Background ............... 68

Figure 39 Sawmill Average Hourly Load (MW) ............................................................. 71

Figure 40 Sawmill Average Daily Load (MW) ............................................................... 71

Figure 41 Sundre TFH Thermal Plant: 2x35MMBtu/h (right) with ESP (on left) .......... 73

Figure 42 Base Case: Residuals Flow .............................................................................. 78

Figure 43 FAT Table: Base Case ...................................................................................... 79

Figure 44 FAT Summary Table: Base Case .................................................................... 80

Figure 45 Energy Balance Sheet1: Base Case ................................................................. 80

Figure 46 Energy Balance Sheet2: Base Case ................................................................. 81

Figure 47 Cost Sheet: Base Case ..................................................................................... 81

Figure 48 PV Calculation: Base Case .............................................................................. 82

Figure 49 System Configuration: MinORC ..................................................................... 83

Figure 50 Summary of Fibre Allocations: Option 1 ........................................................ 84

Figure 51 Energy Summary: Option 1 ............................................................................. 85

Figure 52 Capital Costs Estimate: Option 1 .................................................................... 86

Figure 53 Annual Costs and Income Summary: Option 1 ............................................... 87

Figure 54 RETscreen Summary: Option 1....................................................................... 88

Figure 55 Sensitivity Analysis: Option 1 ......................................................................... 89

Figure 56 System Configuration: MidORC ..................................................................... 90

Figure 57 Summary of Fibre Allocations: Option 2 ........................................................ 91

Figure 58 Cost Analysis: Option 2................................................................................... 92

Figure 59 RETScreen Summary: Option 2 ...................................................................... 93


Figure 61 System Configuration: ORC + CDK ............................................................... 95

Figure 62 RETScreen Summary: Option 3 ...................................................................... 97


Figure 64 System Configuration: ORCmax+DC ............................................................. 99

Figure 65 Fibre Allocation Summary Table: Option 4 ................................................... 101

Figure 66 RETscreen Summary: Option 4..................................................................... 102

Figure 67 Sensitivity Analysis: Option 4 ....................................................................... 103

Figure 68 System Configuration: ORCmax+GT ........................................................... 104

Figure 69 RETscreen Summary: Option 5..................................................................... 106

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Figure 70 Sensitivity Analysis: Option 5 ....................................................................... 107

Figure 71 IRR Graph - Project Options ......................................................................... 108

1

CHAPTER 1 - Introduction

1.1 Background and Motive

This dissertation is being written to investigate the feasibility of biomass-fuelled

combined heat and power generation at the West Fraser Timber Ltd (WF) sawmill site in

Sundre, Alberta, Canada. Combined heat and power (CHP) is the simultaneous or

sequential generation of multiple types of useful energy from a single fuel source. This

differs from traditional energy systems based on standalone power generation operating

in parallel with dedicated process boilers or hot oil furnaces (as illustrated in Figure 1).

CHP is of interest to sawmill

operators because of the significant

potential cost savings associated

with increased system efficiencies –

often on the order of 30-35% (EPA

2007, 1). If the fuel source for the

CHP is biomass, other benefits may

include improved environmental

performance, greenhouse gas credits, and energy cost stability. Employment of new

biomass conversion technologies can also be strategic, extending benefits to include

product diversification which may support business expansion and the creation of new

profit centres.

Figure 1 CHP Process Flow Source: (RP 2015, 1)

2

For some sawmills - like West Fraser’s Sundre Alberta plant - realizing the benefits of

biomass-based CHP is of more than academic interest: there is some urgency to

developing and implementing new strategies for dealing with sawmill residuals. A recent

downturn in Alberta’s economy means traditional markets for sawmill residuals has all

but disappeared, resulting in large inventories of this material on site and serious

concerns around disposition of this material. Using landfills - costs aside - is simply no

longer an option as many municipalities have scaled back or completely closed traditional

industrial disposal sites. As well, new tougher environmental regulations in the province

prohibit incineration and the few remaining sawmills with disposal permits have been

mandated to phase out the infamous ‘beehive’ burner (see Figure 2 below) over the next

12-18 months, a move that will add still more fibre onto the market, further exacerbating

the problem.

Figure 2 Biomass Opportunities: Log yard Waste, Beehive Burner Phase-out Source: (IFS 2015, 1)

3

Fortunately, sawmills are uniquely positioned to benefit from biomass-based CHP

systems: a ready supply (and in the case of Sundre, an excess of) cheap fuel feedstock is

available as a by-product of lumber production. The heat produced can be used in the kiln

drying process and electricity energy generated can be used directly in mill operations or

exported to the grid for profit. The entire process can reduce mill GHG emissions,

generating additional revenue in the form of carbon credits. These sawmills operate on a

multi-shift basis with near-continuous operations, so thermal and electrical loads are a

good match, further improving the payback on any prospective CHP investment. The

timing is also right: West Fraser has gained valuable operating experience from the

success of recent projects utilizing new power generation technologies such as Organic

Rankine Cycle (ORC) turbines; the region has also seen a number of successful

commercial-scale gasification projects commissioned recently (see Figure 3 above).

Figure 3 Turboden ORC, similar to West Fraser Installation, Chetwynd BC

Nexterra Gasification System, Kruger Products Paper Mill, New Westminster BC (at right) Source: (PE 2015, 1), (Nexterra 2015, 1)

4

Coupling these systems to other energy-saving technologies such as the continuous

drying kilns (CDK) and rotary biomass dryers can further improve efficiency, making

CHP projects even more economically attractive.

1.2 Scope and Objectives

The scope of this paper includes operations-level technical and economic review of CHP

projects at the Sundre site only: regional-scale projects (i.e. centralized power production

facilities) are beyond the scope of this paper. Also, this report concerns itself primarily

with on-site energy conversion as the central strategy for dealing with excess fibre: other

projects aimed at creating entirely new products such as pellet fuels or activated carbon

materials are excluded from this study.

This main aim of this paper is to investigate the technical and economic feasibility of

biomass CHP generation at the Sundre sawmill. A variety of biomass conversion and

power generation technologies will be reviewed with particular attention paid to ORC

systems in order to leverage positive recent company experience utilizing this

technology. Key questions to be answered include:

What are the best biomass conversion and power generation technologies to use in

this application?

What CHP projects are economically feasible for the Sundre sawmill?

What is the best overall configuration of CHP projects for the mill to maximize

return on investment and utilization of biomass resources?

5

It is recognized that the cost and performance information presented here is for

preliminary economic screening purposes only: additional development work would be

required before proceeding with these projects in order to verify capital costs, operating

and maintenance expenses, and current / projected feedstock volumes as well as other key

design parameters.

The intended audience for this paper includes energy management professionals in

industry, researchers and West Fraser energy project planners. It is hoped that this report

will serve as a useful reference when considering CHP energy initiatives for sawmills.

1.3 Methodology

The information for this report was obtained through a combination of field work,

literature research, and project technical and economic modelling.

Field work

Site visits were made to the Sundre sawmill as well as other CHP installations in the

region employing relevant biomass conversion and power generation technologies. Field

interviews were carried out and company data was reviewed to develop a site energy

profile and ascertain feedstock properties and availability. The key questions to be

answered at this phase included:

How is energy used at the site?

What is the composition and availability of biomass feedstock on site?

6

Literature survey / research

Biomass conversion (BC) and power generation (PG) technologies were researched and

compared to the Thermal Fluid Heat (TFH) system in place at the mill as well as ORC

power generation technology in use elsewhere. The key question to be answered at this

phase was:

What other technologies are technically and economically feasible for biomass

conversion and power generation at Sundre? How do they compare to the baseline

technologies of TFH and ORC?

Economic Analysis & Modelling

Various CHP configurations were developed in this section and compared against a

baseline case to determine if the project was economic and warranted further

development.

A standard Life Cycle Cost (LCC) approach was used with initial capital costs, ongoing

maintenance and operating costs, revenue streams from the sale of electricity and fibre,

and other direct and indirect items tallied to obtain the Net Present Value (NPV) and

Internal Rate of Return (IRR) numbers used to compare projects.

In most cases estimates from suppliers were obtained for equipment pricing. Revenue

streams for energy, fibre costs, transport, and other operational costs were obtained using

company data. Maintenance and operating costs for newer, more advanced technologies

7

were more speculative in nature, with average values obtained from recent publications

provided by government agencies.

RETScreen software was employed to assist in presentation of summary financial data. A

sensitivity analysis was included to ascertain the effect of select variables on project rates

of return.

The primary questions addressed in this section included:

What CHP options are economically feasible?

What is the best overall CHP configuration?

1.4 Structure of the Dissertation

There are a total of five chapters in this dissertation (including this chapter).

Chapter 1 introduces the background and objectives of the present dissertation.

Chapter 2 gives a regional perspective of Sundre operations in Western Canada as

division of the West Fraser group. A brief review of Alberta’s deregulated energy market

is provided in this section as an aid to understanding electricity export revenue streams

and regulation around industrial power generation projects. Comments on the current

business climate in Alberta are included as well to highlight some of the drivers for

biomass utilization projects at Sundre.

8

Chapter 3 gives an introduction to sawmills and the lumber production process as

foundation for discussions around the Sundre mill energy profile. The properties of

sawmill feedstock as a bioenergy resource are reviewed in this section as well, along with

candidate biomass conversion and power generation technologies.

Chapter 4 presents the Sundre sawmill energy profile, identifies and quantifies the

biomass resource opportunity, and conducts an economic analysis of the base case and

proposed CHP systems.

Chapter 5 summarizes findings of the report and provide suggestions for continued

development and investigation in the area of sawmill biomass energy utilization and CHP

systems within the Canadian wood products industry.

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CHAPTER 2 - Sawmill Projects in Context

2.1 West Fraser Operations – Canada

The Sundre sawmill is located in the province of Alberta. Sundre is part of the West

Fraser Timber Ltd. group (see Figure 4 below for a map of Canadian operations). Based

in Quesnel, British Columbia, WF is one of the world’s largest forest products company,

producing over five billion board-feet of lumber annually (Record 2014, 1).

Figure 4 West Fraser Timber Ltd: Canadian Operations

10

WF’s core business is softwood lumber, with operations in 24 sawmills across British

Columbia (BC), Alberta (AB), and the southeastern USA. The company also produces

laminated veneer lumber (LVL), medium density fibreboard (MDF), as well as pulp and

newsprint (WF 2015, 1). Table 1 below provides a listing of WF’s Alberta operations,

including the Sundre sawmill. Brief notes on residuals disposition are provided as well,

highlighting common challenges around fibre utilization and disposal.

Table 1 List of West Fraser Operations: Alberta

Operation Plant Type Biomass Utilization

Current Issues / Opportunities

Blue Ridge

Lumber

Lumber

Mill

Chips to company pulp mill;

hog fuel to on-site furnace &

Whitecourt IPP; sawdust & shavings

to Ranger MDF

Anticipate excess hog, 40k ODT/yr

in near future (IPP takeaway

changes)

Edson Forest

Products

Lumber

Mill


Bark – to onsite energy system

Shavings & sawdust – to IPP

Excess hog at site – unable to

utilize: looking for burner extension

High Prairie

Forest

Products

Lumber

Mill


Residuals to on-site furnace, external

markets – DMI IPP; shavings bagged

Sawdust inventory increasing –

5kODT, May 2015 (result of O&G

downturn)

Hinton

Wood

Products

Lumber

Mill


Residuals to pulp mill

Inventory 50kODT+, May 2015

Sundre

Forest

Products

Lumber

Mill

Chips trucked to company pulp mill

– Hinton; shavings to external

contract

Residuals to on-site furnace, external

markets

Building inventory of mostly

sawdust – about 12k ODT, April

2015; some excess capacity exists -

furnace / hot oil system

Slave Lake

Pulp &

Veneer

Pulp &

Plywood

Bark to DAPP – IPP – 125gmts/yr;

15gmts to burner (winter)

Bark is low/ zero value product to

IPP; could go negative.

Edmonton

LVL

Plywood Chips to company pulp mill

Bark – to onsite furnace

None.

Hinton Pulp Pulp Mill Hog fuel from Hinton sawmill / site

screen mill

None.

Note: IPP= Independent Power Producer; ODT = Oven Dry Tons (2000 lbs); gmt = green metric tones

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2.2 Alberta Electricity Market

Overview

Since 2001, Alberta electricity markets have been deregulated. This means the price of

electricity is set by the economic principles of supply and demand: generators submit

offers in the price range of $0-$1000 per MWh and an automated energy trading system

(ETS) selects and orders bids from lowest to highest. This establishes on an hourly basis

the marginal price (also known as pool price) for electricity to create price signals in real

time (AESO-1 2015, 1).

The aim of deregulation has been to encourage efficiencies by introducing competition.

AESO – the Alberta Electric System Operator organization - was established to monitor

the grid, maintain the balance of supply and demand, and manage the ETS / pool price.

The majority of electricity in Alberta flows through the ETS pool, establishing revenue

for generators and cost of energy for consumers (Note: although Power Purchase

Agreements – PPA’s - are also employed, these are typically structured as ‘flow-through’

arrangements and hence heavily influenced by pool prices). A snapshot of Alberta’s

power system is shown in Figure 5, on the following page.

12

Distributed Generation

Distributed power generation installations in Alberta are reviewed and approved by the

Alberta Utilities Commission (AUC). Generation in a deregulated market means

Independent Power Producers (IPP) must compete for the right to sell to the grid for the

pool price. New plants are built with private capital, at the owner’s risk and benefit.

If the IPP plans to export to the grid, they are considered a large-scale customer –

regardless of plant size – and must follow the full AUC approval process (Note: under

new guidelines, IPP’s that are designing renewable energy plants with capacities of less

than 1MW are exempt). If a producer’s capacity is in excess of 5MW and they are

exporting power, they fall under the ‘must offer, must supply’ terms of connection

(unless a valid Acceptable Operational Reason (AOR) exists at the plant (AESO-1 2015,

2). If the installation is ‘behind the fence’ i.e. for site use only, the process is somewhat

simpler and avoids more involved public consultations and government reviews as well

as power delivery obligations.

Figure 5 Overview: Alberta Power System in 2014 Source: (AESO-2 2015, 2)

13

Market characteristics & trends

Two main challenges face large industrial consumers in the Alberta’s deregulated market:

price volatility and peak demand charges.

Referring to Figure 6 below we see the graph of minimum / maximum pool prices

(vertical bars) and average price (trend line) for the period 2010-2014. The pool price is

characterized by considerable variation, making monthly operating budgets and energy

revenues difficult to predict. Prices over the short term (hours / days) can range from $0-

$1000 per MWh, depending on weather and the status of the provinces’ 235 generating

units; longer term prices are more stable however, averaging out to rates that are almost

on par with neighbouring provinces.

Figure 6 Monthly Average Pool Price: Alberta Electricity Source: (AESO-3 2015, 1)

14

Pool prices have been in steady decline since 2013, coincident with the downturn in

Alberta’s oil and gas industry, ranging from a peak of almost $140/MWh in April of that

year to the current price of $30.57/MWh – the August 2015 average (AESO-3 2015, 1).

According to the Alberta Ministry of Finance, industry can expect power rates to remain

flat until mid-2016 with a slow steady recovery to historical averages ($50/MWh range)

by 2017 (Alberta 2015, 73).

Peak demand charges in Alberta are based on a fixed rate and tied to the maximum MW

level in a given month during an identified provincial peak period. On a daily basis, the

peak hours occur during the 4-8pm time frame. On a monthly basis, the peak day is

established (after the fact), by review of province-wide maximum demand levels.

Although AESO provides some forecasting tools on its website, it is largely a matter of

guesswork for industry to ascertain when the actual monthly peak day will occur so that

they may operationally

respond to minimize

charges i.e. shed loads or

activate on-site power on

demand systems (POD), as

shown in Figure 7 in an

effort to ‘shave’ the peak.

Current demand charges

Figure 7 Peak Shaving with Power on Demand (POD)

Source: (Arista 2015, 1)

15

for industrial customers are about $8000/MW. For an average size sawmill such as

Sundre (300MMfbm / year) with a 3-4 MW daily peak, this component of their monthly

energy bill may be $24,000-$32,000 or more, or about 15-20% of the site’s total power

bill.

Discussions with several mills indicate that peak demand charges are expected to increase

significantly over the next three years – at least into the $10,000/MW range. The

importance of including CHP peak power cost reductions into project payback

calculations was also reinforced.

2.3 Alberta Business Climate in Brief

Alberta’s petroleum industry downturn is expected to continue for the next 12-18 months

(Alberta 2015, 57). This in turn directly affects AB sawmill operations by reducing

demand for sawmill residuals (i.e. sawdust as industrial absorbent, particularly in the

petroleum industry) and reducing energy prices. This in turn causes low, zero or even

negative prices (must pay to take away) for hog fuel to IPP’s as sawmills become ‘price-

takers’ or, in some cases, must even pay to have residuals taken away.

In addition, sawmills continue to experience pressure from increasingly stringent

environmental regulations: landfills for excess residuals are costly or (as in Sundre’s

case) simply not available; the continued phase out of beehive burners is increasing

market supply of residuals, making removal by IPP’s even more competitive; and

16

proposals for new power plants face tougher pollution control standards, limiting the

range of technologies that can be used for biomass conversion and power generation.

2.4 Bioenergy Developments – Wood Products Industry

There have been a number of bioenergy projects in western Canada relevant to the

sawmill CHP project under consideration here. These include:

Power Generation: ORC Projects

ORC refers to an engine that utilizes comparatively low temperature heat to vaporize a

low-boiling point working fluid which is then expanded through a turbine to extract

power – as illustrated in Figure 8, following page (Note: ORCs are explained in greater

detail in Chapter 3). Although relatively common in Europe, ORCs units have only

recently reached commercial status in North America and are still classified as an

advanced technology.

Canada has seen a number of ORC projects become operational within the last 2-3 years

(see Table 2, page 19), most notably a pair of West Fraser 12MW installations in the

towns of Fraser Lake and Chetwynd in BC (WF2 2015, 1) as well as a 2.5MW plant at

the Nechako Lumber sawmill in Vanderhoof, BC (LSJ 2012,1).

17

Biomass Gasification

Other projects related to sawmill CHP include several advanced technology gasification

installations utilizing wood biomass as feedstock. The gasification process involves

heating biomass in a closed vessel in partial oxygen to create a synthetic gas (syngas)

which is then combusted directly to supply heat for immediate use. Alternatively, the

syngas can be put through a scrubber to remove impurities, creating a high-value biofuel

product for use in a variety of applications including power generation, transport fuel, or

chemical feedstock. Figure 9 below illustrates the gasification system in place at the

University of Northern British Columbia (UNBC) in Prince George, an installation which

Figure 8 ORC Equipment: Turboden 2MW Unit Source: (Turboden 2015, 7)

18

utilizes local sawmill waste to create steam for building heat on campus (Nexterra2 2015,

1). The gasification process is explained in greater detail in Chapter 3.

Figure 9 Gasification Plant: 15MW Thermal, at UNBC Prince George Source: (Nexterra2 2015, 1)

19

Table 2 Select Bioenergy Projects – Western Canada

Technology Company /

Location

Details Link

ORC Power West Fraser

Fraser Lake, BC

12 MW http://www.westfraser.com/produ

cts/bioenergy/current-initiatives

ORC Power West Fraser

Chetwynd, BC

12 MW http://www.westfraser.com/produ

cts/bioenergy/current-initiatives

ORC Power Nechako Lumber,

Vanderhoof, BC

2.5 MW - $6.8M project,

including $2.1M IFIT federal AT

funding

http://www.nrcan.gc.ca/forests/fe

deral-programs/15867

ORC Power Swan River, MB 100kW – MB PowerSmart

program & NRC Clean Energy

funding

http://www.canadianbiomassmagazine.ca/combustion/manitoba-

sawmill-using-orc-to-get-power-

from-biomass-3483

Gasification University of

Northern BC, Prince

George, BC

15MMBtu/h thermal only – to

boiler for building heat

http://www.nexterra.ca/files/university-northern-bc.php

Gasification University of BC

(UBC), Vancouver,

BC

2MW power with 35MMBtu/h

(approx) thermal; includes syngas

scrubber – to gas engine and

building heat

http://www.nexterra.ca/files/ubc.p

hp

Gasification Kruger Paper, New

Westminster, BC

52MMBtu/h (approx) thermal

only – for process heat

http://www.nexterra.ca/files/kruge

r-products.php

Gasification Tolko, Kamloops,

BC

11MW Thermal – process heat

for plywood plant

http://www.nexterra.ca/files/tolko-industries.php

Efficiency Measures

Continuous Drying Kilns

Another important development for sawmills is the advent of new, high-efficiency

counter-flow continuous drying kilns (CDK) – see Figure 10 following page for example.

This style of kiln does away with the loading and unloading of batch kilns and the

attendant heat loss whenever doors are opened and closed. The CDK kiln is extended

lengthwise and features a long parallel track moving with lumber charges moving in

opposite directions continuously (no doors). Heat flow is directed transversely, creating

complementary drying zones along the kiln’s length, with outgoing dry lumber giving up

its heat to incoming wet lumber.

20

Installed mainly for production throughput and quality improvements (LSJ2 2012, 1), the

continuous design of the CDK also results in significant energy reduction – on the order

of 25-30% over conventional batch kilns according to operators who have installed these

units. Since most WF sawmills heat their kilns using a biomass-fired thermal oil system,

the addition of CDK’s can be a cost-effective option for maximizing feedstock to any

proposed CHP plant.

Biomass Dryers

Biomass dryers can make use of rejected heat from process equipment to reduce the

moisture content of incoming feedstock and therefore either increases the capacity of

thermal conversion equipment or reduces the volume of feedstock required for a given

heat demand.

Figure 10 USNR Continuous Drying Kiln (CDK) Source: (USNR 2015, 1)

21

Various styles are available included the popular rotary drum dryer, such as the one

pictured in Figure 11 below; other styles include belt dryers and vaporization tables and

sheds.

Figure 11 Biomass Rotary Dryer Source: (Shanghai 2015, 1).

22

CHAPTER 3 - CHP Systems: Technology Review

3.1 Sawmilling: Process Overview

Sawmilling at the Sundre site (see Figure 12 below) is typical of western Canada sawmill

practice throughout WF’s British Columbia and Alberta operations.

Operations

Sawmills within the WF group typically produce dimension lumber for the US and

Pacific Rim markets. Their log diet consists mainly of SPF softwoods (spruce, pine, and

fir). Logs are brought in from a cut block already de-limbed (these residuals remain in

bush). Production for a medium size plant is in the 250-300 MMfbm range; large plants

may produce 450-500 MMfbm. (Note: MMfbm = million feet board measure; 1 fbm =

volume of wood, 1”x1”x12”). Operating hours are on the order of 8500-8700 hours per

year. Energy plants typically run 24/7 as it is not practical to cycle these units; sawmills

and planer mills run variable shift structures, depending on which area is the mill

production constraint.

Figure 12 Hog Fuel (debarker residuals) at Sundre Sawmill, Alberta

23

Physical Plant

Once stems (full length trunks) are cut to length at the mill infeed area, they become logs.

These logs then have the outer bark layer removed at debarkers, creating the first residual

stream of bark (also known as ‘hog fuel’).

Sawing logs creates green (wet) lumber with rough finish (to be planed smooth after

drying), in the process creating other residual streams including chips, sawdust and trim

blocks. The green (i.e. wet) lumber – with up to 50% moisture content (MC) - is then

dried in kilns which are heated using natural gas or thermal fluid heating (TFH) systems

(also known as ‘hot oil’ systems). Some installations may use steam heat from furnace /

Figure 13 Sawmill Process Flow & Residuals Generation

24

boiler system, although this is less common. Note: Moisture content values are explained

in greater detail next section.

Dried lumber is then sent to planer for final finishing and cut to length. The planer creates

mainly dry shavings, dry chips, sawdust, as well as trim blocks. Finished lumber is then

packaged and shipped to markets.

Energy Use

Sawmill electrical loads include mainly saw motors, chippers, blowers, and planer

machinery, along with some conveying equipment. As sawmill operations are steady on a

daily and annual basis, load fluctuations are generally minimal with little seasonal

variation.

Figure 14 Sundre Sawmill: Drying Kilns

25

Gas loads can be large if kilns are gas-fired, otherwise are typically quite low (used only

for space heating and small, auxiliary boilers and air makeup units). Seasonal variation,

due to the Canadian winter climate, is significant.

Sawmill shavings, sawdust, and bark are typically utilized as feedstock for TFH systems.

Demand is mainly for kiln drying, as mentioned previously, but some TFH capacity may

be extracted to meet other loads such as building heat. Considerable seasonal variation,

on the order of 20-30% is typical, again due to the change in outside air temperature

associated with winter conditions. Note that TFH efficiency may fall off in winter as

well, due to the accretion of snow on incoming feedstock (silos generally not covered).

Residuals

Wood chips are the highest value residual and are reserved exclusively for pulp mills for

use in the paper making process. Typical residual volumes by type are as shown in Figure

15, following page. Wood chip MC typically ranges from 35-50%.

Shavings are a medium value product and with their low moisture content (about 15-20%

- from planer mill, after lumber drying), are often a preferred fuel for power producers.

Shavings also serve as feedstock to MDF plants; some secondary markets include bagged

shavings for pets and bedding material for farm animals.

26

Sawdust is a medium / low value product which may be used as fuel on site or shipped to

nearby power plants. It is also used by MDF plants as feedstock and in secondary markets

as an industrial absorbent and backfilling; MC is typically in the 35-50% range.

Bark is a low value product, primarily used as fuel for on-site burners or nearby energy

plants. Some secondary markets exist in select locations where, if cleaned and screened,

the bark can be used as residential and commercial landscape material. MC of bark is

typically in the 40-60% range.

Figure 15 Typical Sawmill Residual Volumes – as Percentage of Log Volume Source: (BC Hydro 2013, 4)

27

3.2 Wood as Biomass Resource

Wood, like all biomass material, is composed mainly of carbon, hydrogen and oxygen (as

illustrated in Figure 16). Oxidation of the carbon releases energy (with some additional

heat from the oxidation of hydrogen). When burned, wood releases about 9000 BTU’s

per pound or about 21 MJ/kg heat energy, net calorific value (FAO 2015, 1). A picture of

typical sawmill feedstock, consisting mainly of sawdust and bark, is shown in Figure 16

below.

When comparing hardwoods to softwoods and even individual species, it is interesting to

note that there is little variation in the calorific value of the wood substance itself:

variation in energy content is primarily due to differences in resin content (resin has a

higher heat value – 40 MJ/kg) (FAO 2015, 1). This is why bark typically has a higher

heat value than the other residual streams. (Note: This may be offset somewhat however

by the high moisture content of bark).

Figure 16 Bioenergy Resource, Biomass Photosynthesis / Combustion Chemistry Source: (UC Davis 2015, 1) at left; (UNBC 2015, 1) at right

28

Understanding and quantifying the net calorific value of feedstock is a key design

parameter for CHP projects. Moisture content changes this value as energy that is spent

evaporating water is not available for thermal use. Water evaporation consumes about

2.44 MJ/kg of energy, some of which may be recovered if condensed out at some point in

the process but this is generally not the case in sawmills. In this document, the lower

heating value (LHV) is used where the latent heat of vaporization of water is not included

in energy calculations (Note: HHV, or higher heating value, implies a process where the

water vapour is condensed out).

Net calorific values (NCVo = 5.14 kWh/kg) as a function of moisture (M)

Figure 17 Net Calorific Value vs Moisture Content Source: (Francescato 2008, 25)

29

Moisture Content

Moisture content is the amount of free water contained within a sample of wood and is

expressed on wet or dry basis. MC determined by weighing a sample, drying it

completely and then weighing it again, per example calculations below;

Moisture on dry basis u (%)

This calculation expresses the mass of water present in relation to the mass of oven-dry

wood, where

𝑢 =𝑊𝑤 − 𝑊0

𝑊0𝑋 100

Moisture on wet basis M (%)

This calculation expresses the mass of water present in relation to the mass of fresh

wood. This measure is used in the marketing of wood fuels.

𝑀 =𝑊𝑤 − 𝑊0

𝑊𝑤𝑋 100

Where

Ww – wet weight of wood

W0 – oven-dry weight of wood

Example

Wet weight = 1.25 lbs

Dry weight = 1.00 lbs

MC Dry = 100 x (1.25-1.00)/1.00 = 25%

MC Wet = 100 x (1.25-1.00)/1.25 = 20%

(Note that “100% MC dry” means 1 lb of water per 1 lb of dry wood; same as 50% MC)

As noted previously, high MC reduces the net heating value of the feedstock, but it also

has a significant effect on combustion and burner efficiency, as shown in Table 3,

following page. Accordingly, when designing CHP plants, consideration should be given

30

to feedstock drying systems in order to improve overall system efficiency and feedstock

utilization.

The heat content and moisture characteristics of TFH feedstock for Sundre were obtained

by accessing data taken from other sawmill locations with substantially similar log supply

(due to costs involved, it was not deemed practical to carry out dedicated testing of

Sundre residuals). The properties of these samples were provided in a data file prepared

by a Canadian federal research group, Forest Products Innovations (FPI) and made

available to West Fraser. Relevant sections of the full FPI data file are provided in

appendices, including fuel ultimate analysis, particle size distribution, ash content, gross

calorific values, proximate analysis, ash fusion temperature, and elemental composition

analysis.

Table 3 Wood Moisture Content vs Heat Value and Burner Efficiency Source: (FAO 2015, 1)

31

A calorific value of 20.46 MJ/kg was used for fuel feedstock calculations in this report

(average of lower heating values, oven-dry – LHV OD column), based on data from

select locations, as provided in Table 4 below. [Note: feedstock residual stream MC

testing at Sundre correlated well with the FPI data].

3.3 Technology Comparison: Thermal Conversion of Biomass

Fundamentally, there are four methods to convert biomass into useful energy and fuel (as

illustrated in Figure 18, following page and described below:

1. Thermal conversion or direct combustion (burning) – produces heat, non-combustible

exhaust gas, carbon monoxide, particulate matter (PM), oxides of nitrogen and

possibly sulphur, as well as tar and soot

2. Thermochemical conversion – includes gasification which produces synthesis gas

(syngas) from all hydrocarbonaceous material; also torrefaction and pyrolysis to

produce other fuels

Table 4 Calorific Values of BC Softwood: FPI Report Excerpts

32

3. Biochemical conversion – includes anaerobic digestion or fermentation to produce

biogas; also direct conversion, to produce ethanol from biomass containing sugar.

Note: this process not possible for ligno-celluloses like wood

4. Chemical conversion – transesterfication of some natural oils: produce bio-diesel

fuels.

Of the four processes listed, only two - direct combustion (DC) and gasification

technologies (GT) - are practical in sawmill applications and have achieved commercial

status (gasification only just recently moving beyond demonstration projects). Both DC

and GT technologies are able to utilize sawmill feedstock to meet operational needs and

Figure 18 Biomass Conversion: Process Options Source: (Penn 2015, 1)

33

use equipment familiar and readily available to the wood products industry. DC and GT

processes are discussed in greater detail below.

3.3.1 Direct Combustion

Technology Description

Wood-fired furnaces and boilers are a well-developed technology, around since the 19th

century. They are conceptually simple, economical, and available in a wide variety of

configurations: a common wood stove is an everyday example of a simple direct

combustion furnace.

Figure 19 Sundre Sawmill TFH System with Moving Bed Furnace

34

Industrial furnaces, such as those used in sawmills for kiln and building heat, are

generally configured with thermal fluid heat (TFH) or steam heating systems to enable

transfer of thermal energy to various equipment and processes (see Figure 19, previous

page, for example of the Sundre system).

TFH units are rated in millions of BTU per hour output (MMBtu) or megawatts (MW).

Typical units found in WF sawmills range in size from 35 to 70MMBtu/hr. [Note:

1MMBtu/hr = 0.293 MW or 1056 MJ/hr].

Key components of the TFH unit include combustion bed (moving, fixed, or ‘fluidized’ –

heated particles in air suspension, in contact with fuel), combustion flue with radiant heat

exchanger, exhaust flue with conductive heat transfer, air blowers, and associated fuel

feed and ash takeaway conveyors. Generally included in the system are provisions for

emissions control such as electrostatic precipitators (ESP) to capture the large volume of

particulate matter (PM) present in flue gases.

Typical efficiencies for a well-maintained boiler system are on the order of 65-80%

(FAO 2015, 1) although as noted previously this value can be reduced significantly if the

incoming fuel has high moisture content. DC furnaces must run with considerable excess

air to ensure complete combustion and this has a negative effect on efficiency as a

significant portion of feedstock energy must go to heating of incoming air.

35

Sawmill Applications

Virtually all forest industry (sawmill, pulp mill, MDF, LVL) plants utilizing residuals for

thermal energy on site use some form of DC system. As noted previously, direct

combustion TFH systems are a relatively simple, familiar, economical, and readily-

available technology. The main drawback of a DC system is poor environmental

performance, particularly with respect to PM and NOx emissions as shown in Table 5,

following page (Note: other technologies provided in table for comparison purposes,

including GT systems). Also, burners are limited to providing thermal energy only: high

quality, versatile combustion products (gases or liquids) are not produced as part of the

combustion process.

3.3.2 Gasification


Gasification is the process of thermally breaking down biomass material in a partial

oxygen atmosphere using one or more enclosed reactor vessels. There are four stages in

the process: drying, pyrolysis, oxidation, and reduction. Once incoming material is heated

and dried, the feedstock undergoes pyrolysis where volatile components in the biomass

are vaporized in a series of complex chemical reactions at temperatures below 600C; in

the next two steps, solid chars are gasified at high temperature (oxidation and reduction –

600 to 800C), producing heat to sustain the process (BIOS 2015, 1).

36

The output from this thermal decomposition is synthetic gas or syngas, also known as

wood gas, producer gas, or biogas consisting mainly of hydrogen, carbon monoxide and

methane. Some char and condensable hydrocarbons (tar) are also generally produced as a

product of incomplete gasification (BIOS 2015, 1). Typical gas composition from the

gasification process is shown in Table 6, following page.

Table 5 Direct Air Emissions from Various Power Plants, by Boiler Type Source: (Union 2015, 1)

37

Gasification can make use of any suitable external oxidizing agent (air, O2, H20, CO2). If

the gasification process is carried out in one reactor vessel using air as the fumigator, the

result is low calorific gas, due to the diluent effect of the nitrogen present in the air; if the

gasification process is split, with pyrolysis occurring in one vessel that is externally

heated (i.e. by circulating hot sand) and gasification in another, the result is a gas with

significantly higher calorific content (two to three times as much, as shown in Table 6)

since there is no nitrogen dilution taking place.

The simplest utilization of syngas is to combust it directly, creating heat for use in

process or power generators capable of utilizing external heat sources (i.e. steam turbines,

ORC turbines and Stirling engines – where fuel is combusted outside the device itself). If

the gas is to be used as feedstock to create other chemicals or for use in more complex

power generation equipment (such as internal combustion engines, gas turbines or fuel

Table 6 Typical Product Gas Composition – Gasification Process Source: (BIOS 2015, 1)

38

cells), impurities need to be removed in order to prevent damage to downstream

equipment from erosion, corrosion, and deposits consisting of condensable hydrocarbons

(tar), particles (dust, ash, sand), alkali metals, nitrogen compounds, sulphur compounds,

halogen compounds, and other heavy metals.

Gas cleaning (see Figure 20 above) is a complex, costly process requiring considerable

additional plant beyond the basic gasification reactor vessel and oxidation / reduction

equipment. However once cleaned, syngas can be used in a wide range of heat and power

Figure 20 Gasification Process: Syngas Scrubbing & End Use Source: (BIOS 2015, 3)

39

applications. Synthesis of many other high-value chemical products is possible as well

using the hydrogen and carbon-rich product gas as a base material.

The main advantage of GT technology over DC technology is its strong environmental

performance and the ability to use a wide range of feedstocks to cleanly and efficiently

produce a high value fuel product. Gasification is a tightly controlled process: within the

gasifier and oxidizer phases, temperature, residence time and gas velocities are all

carefully regulated to reduce formation of particulate matter, volatile organic compounds,

carbon monoxide and nitrous oxides (IEA3 2015, 2). As a result, GT installations can

often operate with less emission abatement equipment and safely utilize fuels with higher

levels of contamination, facilitating permitting in environmentally sensitive areas.

Gasification technology has the ability to convert many waste streams including wood,

crop residue, municipal solid waste (MSW) and agricultural residues. With the higher

temperatures and pressures of GT, it is easier to separate noxious substances before

combustion, resulting in emission levels almost an order of magnitude lower than direct

combustion.

Barriers to GT include gas cleanup costs, additional complexity, need for tighter

operational controls, lack of industry experience with the technology and a limited range

of suppliers; GT is also less tolerant of feedstock variation, requiring some measure of

cleaning and homogenization to ensure smooth feeding into the reactor vessel (sealed

40

vessel requires plug screw arrangements or similar to maintain reactor integrity:

equipment is subject to fouling if foreign matter i.e. tramp metal embedded within

feedstock).


Despite its drawbacks, GT technology is moving forward and is now just achieving

commercial status, primarily for reasons related to environmental performance. The

majority of GT installations in Western Canada are pure thermal applications, with only a

few gas scrubber plants either in demonstration phase or built as major projects with

consortium funding.

The new $100 million GT biofuel plant in Edmonton Alberta (shown in Figure 21,

following page) is an example of a major GT project employing Enerkem gas scrubber

technology. Constructed in 2013, the plant is designed to utilize 100,000 tons of

municipal solid waste annually to produce an estimated 38 million litres of methanol for

use as transport fuel additive and chemical base stock (Enerkem 2015, 1). At this early

stage, the project appears to be a success, employing environmentally-friendly

gasification technology to address waste disposal challenges while simultaneously

leveraging Alberta’s expertise in petroleum and chemical processing to turn waste into a

high value energy product.

41

Such a plant for the forest industry might be envisioned within the context of a major

strategic initiative, one that would see a large, centralized gasification facility constructed

in order to process wood waste from surrounding mills to create methanol and other high

value energy products.

One example of a GT thermal plant used in the wood products industry includes Kruger

Paper Product’s new plant (see cutaway illustration, Figure 22, following page),

constructed in New Westminster, BC in 2012. The strong environmental performance of

GT technology was apparently a key factor in Kruger’s ability to receive approval to

Figure 21 Enerkem’s MSW Gasification Plant in Edmonton Alberta Source: (Enerkem 2015, 1)

42

build this facility in the center of a large metropolitan area, according to one manager for

the project.

Other GT sites the region include a plywood plant in Kamloops (Tolko), a CHP

installation at the University of British Columbia in Vancouver (GT with gas scrubber

and gas engines) and a district heating system at the University of Northern BC in Prince

Figure 22 Nexterra Gasification Plant: Kruger Products Tissue Mill – BC Source: (Nexterra 2015, 1)

43

George (for building heat only). For further information, links to these projects are

provided in Table 2, Chapter 2.

The UNBC installation is of interest to

this project as its feedstock is bark

(sourced from a local sawmill) and the

capacity of its Nexterra GT unit (see

Figure 23) is substantially similar to the

Deltech TFH furnace in use at the Sundre

sawmill. The UNBC plant is widely

considered a successful, cost-effective

installation with high availability,

offsetting almost 90% of the university’s

fossil fuel consumption (UNBC2 2015, 1).

Figure 23 UNBC Gasification Plant Source: (UNBC 2015, 1)

44

3.4 Technology Comparison: Power Generation

When discussing biomass-based CHP systems, it is the prime mover (power production

element) that defines the system i.e. Organic Rankine Cycle or Steam Turbine CHP.

Electrical power may be produced using a range of technologies, each of which is based

upon one of three energy transfer processes. (Note: strictly speaking there is a fourth

category which encompasses thermoelectric, piezoelectric, thermionic and thermo-

photovoltaic power generation devices; although interesting from a technical standpoint,

these systems are still in the early stages of development and as such will not be

considered further).

The list of the candidate power generation (PG) technologies for the Sundre CHP project

is as follows:

1. ORC turbines

2. Steam turbines

3. Stirling engines

4. Gas turbines (including micro-turbines)

5. Internal combustion engines (ICE’s – including gas, diesel, natural gas)

6. Fuel cells

ORC turbines, steam turbines and Stirling engines are all technologies that employ

external combustion systems i.e. ones in which thermal energy is transferred from some

outside process to the engine itself. External combustion CHP systems are the simplest

from a technical perspective for use in sawmill applications: with combustion-fired steam

boiler or TFH systems already in place for kiln heating, it becomes a relatively

45

straightforward matter to include an additional circulation loop for power generation

equipment.

Gas turbines and ICE’s are technologies that employ internal combustion to transfer

energy to the engine for power generation. Fuel cells generate power via a chemical

rather than combustion process but are similar to gas turbines and ICE’s with respect to

their requirement for a suitable fuel source: these devices are unable to process thermal

energy directly and must be provided energy by other means. Accordingly, internal

combustion and chemical PG systems (as noted previously) which seek to utilize biomass

as an energy source require an additional, significant step – production of clean fuel

suitable for use within the device itself. Although gas scrubbing creates a high quality

fuel with considerable downstream flexibility in terms of power generation, it is a process

that adds considerable cost and complexity to the system.

Gasification systems with syngas scrubbers are just moving from pilot to commercial

stage and do hold considerable potential: many government agencies and advanced

technology funding organizations view these systems as very promising and provide high

levels of support to encourage development. Canada’s National Research Council (NRC)

Industrial Research Assistance Program (IRAP) group and Alberta’s Ministry of Energy

are two examples of organizations that have developed detailed biomass utilization

strategies specifically targeting gasification and biofuel production (NRC 2015, 1)

(NRC2 2015, 1) (Alberta 2015, 1).

46

However, given their high cost, uncertain performance and the requirement for complex

chemical processing, gasification technology with gas cleanup is not currently considered

feasible for the sawmill CHP application here. It therefore follows that gas turbines,

internal combustion engines and fuel cells - power generation technologies requiring

clean, highly processed fuels - must be also be excluded from further consideration.

3.4.1 Organic Rankine Cycle Turbine


An Organic Rankine cycle (ORC) turbine is a thermodynamic device that operates on the

same principle as a steam turbine engine except that instead of water as a working fluid,

the ORC uses a high molecular mass organic fluid circulating in a closed cycle. The

engine does not directly convert fuel: heat from an external source is transferred to a

working fluid which is vaporized, slightly superheated then expanded in turbine

connected to a generator to create power. The working fluid is circulated through a

condenser to be cooled and returned to the start of the cycle (see Figures 24 & 25 for

ORC process diagram and system illustration, following page).

Working fluids used are typically hydrocarbons such as iso-pentane, toluene, or silicon

oil (BIOS2 2015, 1) that have a lower boiling point, higher vapour pressure and higher

mass flow compared to water and readily vaporize at low temperatures. As a result, ORC

turbines are more efficient than Steam Rankine cycle (SRC) turbines at extracting energy

47

Figure 24 ORC Process in Biomass CHP Configuration - with TFH Source: (BIOS2 2015, 1)

Figure 25 Schematic Illustration of 1000kWe (1MW) ORC Module Source: (IEA 2015, 7)

48

from low temperature heat sources in the range of 250-350C. This makes them ideal for

power generation utilizing heat from geothermal, pipeline compressor and some solar

thermal systems (Turboden 2015, 6).

Inlet and outlet temperatures can be designed for specific purposes such as maximum

power generation or maximum heat recover, to suit downstream processes. Typical

efficiencies range from 16-20% for power applications and 12-15% for CHP systems

(Turboden 2015, 17). Overall ORC system efficiencies can be further increased by

utilizing the low temperature heat at the condenser i.e. for building heat or process

drying. And because condenser heat temperatures are relatively low, ORCs can often be

used with air-coolers – ideal for locations without access to water.

ORCs are economical in small sub-megawatt packages, in the size range of 500kW to

4MW; custom units up to 15MW can also be designed to suit particular installations

(although condenser cooling can be problematic at this scale). ORCs also have very good

part-load characteristics: for instance, at 40% of power, electrical efficiency can still be

as high as 85% or more as illustrated in Figure 26 following page.

Because ORC’s operate at comparatively low temperatures and pressures (often 300C or

less, at near-atmospheric) boiler supervision is typically not required (BIOS2 2015, 1).

Equipment operation is, in many respects, akin to refrigeration equipment and can

generally be run with remote computer monitoring. Low temperatures and pressures also

49

translate into slow rotational speeds for ORC equipment and reduced mechanical stress,

increasing reliability and reducing O&M costs.

Since an ORC does not directly convert fuel – any suitable heat source will suffice – it

means a wide variety of fuels are available for conversion, from solar, geothermal, waste

process or equipment heat to biomass combustion or gasification.

One downside to ORC’s includes the need for additional considerations around

containment of and the general safety requirements associated with handling volatile

organic fluids (Urbanek 2002, 4). Another is that although ORC’s have been used in

Europe since the early 1990’s, they are still considered an advanced technology in North

America: industry experience with ORCs is limited, as is the choice for suppliers.

Figure 26 ORC Partial Load Efficiency

50


ORC’s can be a good match for use within the sawmill industry. Many sawmills use

furnace-fired hot oil systems (TFH’s) to provide heat to kilns for lumber drying: if excess

capacity exists, it is a relatively simple matter to circulate a secondary oil circuit to an

ORC to generate perhaps 1.5-2MW of power (assuming medium size, 250-300MMfbm

sawmill). In addition, condenser heat may be used for space heating or biomass feedstock

drying to improve overall system efficiency. And since ORC’s are still considered an

advanced technology in North America, demonstration funding may be available for

some installations.

As noted earlier, West Fraser has recently constructed two large (12MW) ORC plants in

BC - one in Chetwynd and the other in Fraser Lake (see author’s photos, Figure 27 on

following page, of Chetwynd plant under construction - February 2014). Both plants are

considered an economic, technical and environmental success (ORC projects removed

the last two WF beehive burners in Canada) and the company is reviewing other locations

where ORC technology might prove beneficial.

Other ORC plants in Western Canada include a 2.5MW installation at the Nechako

sawmill in Vanderhoof BC and a smaller, 100kW demonstration-scale unit at the Swan

River Spruce Products company in the province of Manitoba (refer to Table 2, Chapter 2

for details).

51

3.4.2 Steam Rankine Cycle Turbine


The Steam Rankine cycle (SRC) is a thermodynamic device operating on a principle

similar to the ORC engine described above (see Figure 28, following page). SRC’s, or

steam turbines, are the most common power generation device today and have been

Figure 27 ORC Construction Site: February 2014 - Chetwynd Sawmill, BC

52

available since the early 1900’s. The majority of the USA’s power generation comes

from coal-fired steam turbine systems and many new bioenergy systems under

construction are based on the SRC.

The main components of an SRC include a steam generation system (boiler), turbine,

generator, and condenser. Like the ORC, a SRC engine does not directly convert fuel:

instead, thermal energy is transferred from another heat generation process to create high

pressure, high temp steam which is then directed through the turbine to do mechanical

work, rotating a generator to produce electrical energy. Low pressure steam exits to a

condenser at vacuum and liquid water is then pumped back to the boiler, where the cycle

repeats (BIOS3 2015, 1).

Figure 28 Steam Turbine Thermodynamic Cycle Source: (Ohio 2015, 1)

53

Steam turbines are comparatively complex equipment requiring considerable plant,

pressure rated equipment resistant to corrosion, and high levels of supervision due to the

temperatures and pressures involved and the need for vacuum condensing to achieve

efficiency. Typical requirements include live steam at over 500C and 20-100 bar at inlet

and 25C and 0.05-0.6 bar at outlet (BIOS3, 1). The steam side of the process alone

requires a boiler, evaporator, super-heater and economiser, along with water conditioning

equipment.

Different types of turbines are available, depending on process requirements: a

condensing turbine is used to extract the most electrical power, with backpressure

turbines used where high pressure steam is a primary for process (EPA 2007, 64). SRC

capacities span from low megawatts to over 250MW but due to equipment and operator

requirements, are generally only economic above 25 or 30MW.

Electrical efficiencies are in the range of 18-30% (BIOS3 2015, 1), but overall system

efficiencies can be much higher when steam turbines are coupled to gas turbines in a

combined cycle configuration. Here, hot turbine exhaust is used to generate steam which

in turn powers the SRC. In these systems, overall efficiencies can reach 45-50% or more.

The main advantage of a steam turbine is that the technology is familiar and system costs

are well understood. Like ORC’s, because the source of heat for the turbine is separate

from the power production component, a variety of heat sources can be used – provided

54

they are at high temperature and able to deliver the required quality steam. Steam

turbines are very reliable and maintenance costs are comparatively low (except for the

need to maintain rated pressure vessels).

Downsides to SRC’s are their cost, complexity, need for certified operators, and the

difficulties around building small-scale generation plants that are economic.


It is unlikely that it would be economic for even large (>500MMfbm/yr) sawmills to

operate an SRC plant. The majority of installations that are encountered within the wood

products group are based on larger, centralized power generation within a cluster of

company mills (i.e. pulp mill, LVL plant, sawmill, and MDF plant - to ensure sufficient

supply of feedstock) or for pulp mill use alone (usually in CHP mode to complement

processes requiring steam). An example of this is Weyerhaeuser’s 36MW Grande Prairie

power plant, located on a sawmill site but set up to pull in wood waste from several other

mills in the region (LSJ3 2012, 1).

More commonly, an Independent Power Producer (IPP) will strike a purchase agreement

for fibre with the forest product companies and construct a stand-alone SRC power plant

in partnership with the local utility. Examples of this arrangement include a 68MW plant

in Williams Lake, BC and a 36MW facility in Mackenzie BC (Vancouver 2014, 1). Two

new 40MW projects to be constructed in the towns of Merritt and Fort St. James, BC in

55

2016 are also based on conventional SRC technology (see Figure 29 below); project

budget for these two plants is about $235M each (Castanet 2014, 1).

Figure 29 Bioenergy Steam Plants in BC

Above: 3D illustration of 40MW SRC bioenergy plant, to be constructed in Merritt and Ft. St.

James.

Below: similar plant under construction in Mackenzie, BC ($100M - 36MW project by

Conifex); a large drying shed is being erected to provide cover for power plant feedstock.

Source: (Castanet 2014, 1)

56

3.4.3 Stirling Engines


Stirling engines are a heat engine based on the Stirling thermodynamic cycle. They are

similar to reciprocating internal combustion engines in design except their fuel, like the

SRC and ORC, is combusted externally rather than internally, as shown in Figure 30. The

heat energy from this source is transferred to an inert working gas (often helium) at 900-

1100C typical which is alternately compressed and expanded in cylinders in a closed

thermodynamic cycle to create rotary motion and drive a generator (BIOS4 2015, 1).

Stirling engines feature few moving parts: the main components include an external heat

supply, heat exchanger, pistons, and generator. The engine can run on almost any heat

source if temperatures of at least 1000C can be generated. This includes direct

combustion (any suitable fuel) or gasification of biomass or other material.

Figure 30 Stirling Engine: Schematic of Integrated CHP System Source: (BIOS4 2015, 2)

57

Stirling engines achieve electrical efficiencies of about 17-20% and overall efficiencies in

excess of 80%in CHP applications (BIOS4 2015, 2). Generating capacity of these engines

is low - on the order of 5-140kW - but units are scaleable and, like internal combustion

engines (ICE), can be arrayed in banks to increase output. But the power density ratio

remains low, due to the size of equipment needed to generate a given output compared to

other technologies.

Stirling engines are relatively simple in operation and can run without close supervision.

In addition, maintenance can typically be carried out with local resources, reducing O&M

costs (see photo below, Figure 31).

Because their fuel is externally combusted, Stirling engines (like ORCs and SRCs) are

able to use a wide variety of heat sources and the fuel conversion process can be more

Figure 31 Stirling DK: 35kW Model Rebuild Source: (Copenhagen 2015, 1), (NordicGreen 2015, 1).

58

closely controlled to ensure emissions are favourable. External heat sources also mean

the engine operates with reduced noise and vibration (no internal combustion), improving

availability and longevity (Stirling 2015, 1).

Challenges for Stirling engines in an industrial CHP application includes their small

power output range (no installations in the MW range as yet), and few commercial

installations. Some Stirling designs suffer from reliability issues, mainly around sealing

of the high pressure working gas across rotating elements; new designs avoid this

problem by hermetically sealing the entire engine (including generator) behind a static

seal, as shown in Figure 32 below (green cylindrical elements, either side of engine).

The most common problem with Stirling engines is fouling of the main heat exchanger,

particularly if the external heat source is based on direct combustion of woody biomass

Figure 32 Stirling DK Engine: 140kW CHP Project, Municipality of Tabarz Germany Source: (Renewables 2011, 1)

59

with high PM carryover; using clean-burning gasification systems can help avoid this

issue.


At first glance Stirling engines, like ORC’s (and to a lesser extent SRC’s) appear well-

suited to sawmill applications: the engines are simple and easy to maintain at the local

level and the readily available wood waste on site makes an ideal feedstock. But given

their low power production levels (largest installation worldwide is 140kW), it is unlikely

Stirling engines would be economic in this application. This may change in the future as

Stirling engines continue to develop and are offered in larger capacities: at the time of

this writing there are several projects under way in Europe and the UK to construct

wood-waste powered CHP plants in the low MW range using Stirling technology: high

efficiency, quiet operation, good environmental performance, flexible feedstock and ease

of maintenance are some of the main drivers for the development of these units (Stirling

2015, 1).

More practicable applications in the near term for Stirling engines in a wood products

setting may be in niche areas where utilization of a small waste stream of biomass is

desirable to avoid high landfill costs (e.g. sludge or reject fibre from pulp mill processes).

Coupled to a small, low emission, high-efficiency gasifier, such an installation could

prove economic and may qualify for advanced technology funding from programs such

as Canada’s federal IFIT agency (which specifically targets biomass gasification projects)

60

(NRC 2015, 1). Such a system could be laid out as illustrated in Figures 33 and 34 below,

using sludge or chip wash fibre as feedstock (instead of wood chips, as shown); waste

heat might go to process or alternatively feedstock dryers.

Figure 33 Stirling Engine & Gasifier CHP System Source: (Stirling2 2015, 1)

Figure 34 Stirling Engine CHP with Gasification - 35kW Source: (IEA2 2015, 12)

61

CHAPTER 4 - CHP Systems: Economic Analysis

4.1 General

In this section, various CHP configurations for the Sundre sawmill are analyzed for

financial feasibility. All configurations employ a standard Life Cycle Cost (LCC)

approach, converting costs to Net Present Values (NPV) with the calculated internal rate

of return (IRR) as the primary basis for comparison.

Note: condensed formatting is used selectively throughout this chapter to facilitate presentation and to

maintain integrity of computer model outputs and associated narratives.

Project Parameters – All Models

Financial Parameters

Inflation rate = 0%

Discount rate = 15%

Project life = 20 years

Effective income tax rate = 26%

Depreciation method = Declining balance, 35% per year

Depreciation tax basis = 26%, with ½ year rule, Year 1

Contingency – Capital costs = 10% typical

Market Pricing

US Exchange rate = 1.32

Euro Exchange rate = 1.5

Shavings sales = $26/t

Sawdust sales = $10/t

Bark sales = $20/t

Trucking Costs to Hinton = $45/t

Electricity export = $45 MWh

Peak demand charges = $8000/MW

62

Major Equipment Costs

Table 7 Vendor Equipment Price List

Notes 1. All prices Canadian dollars.

2. All prices +/- 30% (Note: for budget purposes only).

3. See appendix for supplier quotes & equipment details

4.2 Energy & Economic Model Development

To facilitate the economic analysis of the various CHP options, a spreadsheet model was

developed (see Figure 35, following page for flowchart) which contains the following

modules:

1. MAIN PAGE

2. MASS BALANCE

3. ENERGY BALANCE

4. COST ANALYSIS

5. FINANCIAL ANALYSIS

63

Module functions are explained in greater detail below; a full printout of model

validation pages is provided in appendices.

As an aid to understanding inputs, outputs and result sets from the model, screen shots

from the various modules are provided for a base case and selected options. Some options

make use of a condensed results set in the body of the report with full details available in

Appendices.

Model Development

Main page

The main page assigns values to a variety of global parameters such as mill operating

hours, exchange rates, and fibre sale prices.

64

Mass Balance (Fibre Allocation)

The mass balance page inputs log volumes for the mill and calculates residual volumes

based on historical percentages. These percentages are laid out in a file allocation table

(FAT) that can vary fibre flows allocated to sales, TFH and surplus by fibre type.

This portion of the spreadsheet was validated using 2014 mill data collected for GHG

accounting purposes and cross-checked against 2015 mill projections. Note: it is

understood this module would more correctly be considered a fibre allocation (vs mass

balance) table; a full mass balance for the mill would include all material flows,

emissions, water use, etc across mill boundaries (not required for this analysis).

Figure 35 Sawmill Model – Flow Chart

65

Energy Balance

The energy balance page uses fibre volumes as input and calculates thermal energy to the

TFH and kilns, totalling excess available for power generation. This module was

validated using 2014 data from Deltech TFH hourly data (hot oil temperature / flow) and

dump volumes of fuel feedstock to the TFH system (from Sundre GHG data file).

Bone-dry tons (bdt) are the residual volume measure used throughout the model. (Note:

bone dry tons = BDT or bdt; 1 imperial ton = 2000 lbs; 1 metric tonne = 2204 lbs or 908

kg).

Using dump volumes of feedstock in, along with an assumed calorific value of 20.46

MJ/kg (from Chapter 2), the spreadsheet calculates total energy supplied to the TFH

system. Comparing this to energy received at the kilns allows overall TFH system

efficiency to be calculated as well.

Cost Analysis

The module, along with an associated capital cost module, uses equipment cost tables and

other information to develop a complete cost estimate for the project including

engineering, equipment supply, install and commissioning.

Annual revenue streams and costs are also calculated in this module and include such

items as transport costs for surplus residuals shipped offsite, revenue from electricity

sales, demand charges, equipment maintenance and other annual and periodic costs.

Note: Revenue from shavings is considered part of the base case and is not included in

IRR calculations. However, deviations from this base case i.e. scenarios which divert this

higher value feedstock to the TFH are included as a loss in sales revenue. Revenue losses

from diversion of lower value sawdust and bark sales are not included when calculating

overall project IRR.

Financial Analysis

Information from the cost module is linked to the RETscreen program to calculate project

economics and carry out a sensitivity analysis. (Note: RETscreen is an energy project

feasibility analysis software package developed by NRC Canada – in use worldwide).

66

4.3 Sundre: Mill Profile

4.3.1 Site Overview

The Sundre sawmill currently produces about 280MMfbm of lumber annually, including

260MMfbm of standard SPF dimension lumber and 20MMfbm of high value pressure-

treated products. Mill lumber is sold into the North American and Pacific Rim

commodity markets; pressure-treated products are sold locally and to the USA.

The sawmill employs 250 people working variable shifts: the kilns and TFH energy plant

are the mill constraint and operate continuously (except for periodic maintenance

shutdowns totalling about 3-5 days per year); the planer mill is the next constraint,

operating 12 hour shifts most days of the week (11 shifts total).

The sawmill works on an 11 hour, 8 shifts per week posture. Site structures (see Figures

36 and 37 following page) include main office buildings, sawmill, planer mill, pressure

treatment buildings, an energy plant and five lumber drying kilns.

Markets – Sawmill Residuals

Site residuals include chips, shavings, sawdust, and bark. Wood chips are trucked north

to the company pulp mill in Hinton. Dry planer shavings are a high-value product sold

into the bag market for pets and livestock bedding material. Historically, sawdust

produced on site was sold to industrial customers – primarily the oil and gas sector as an

industrial absorbent / filler material – but with the recent downturn

67

Figure 36 Sundre Sawmill: Ariel Photo (looking west)

Figure 37 Sundre Sawmill: Satellite Photo

68

in the Alberta economy, demand for this product has fallen off dramatically, resulting in

large quantities of material being stockpiled on site (see Figure 38 below).

Bark mulch is a medium value product for the mill, with approximately half of the site’s

production being sold into the local landscape markets during the building season.

Although the majority of the remaining bark is used as feedstock for the TFH energy

plant, a significant percentage is not utilized and must be stockpiled. Reviewing mill

GHG data files, it was noted that sales of bark mulch have been trending down over the

last five years, from about 50% in 2010 to less than 30% in 2015.

Figure 38 Sundre Sawmill Log Yard with Sawdust Inventory in Background

69

The main challenge with residuals at Sundre is the difficulty of managing fibre volumes

under variable market conditions and dealing with the increasing inventory of bark and

sawdust on site (with attendant safety / fire concerns – bark particularly susceptible to

spontaneous combustion from the heat of decomposition).

If inventories cannot be reduced, it is presumed that at some point arrangements will be

made to truck excess fibre to the company mill at Hinton for disposition there. At a

transport cost of $45/ton, this would add significant expense to the mill’s operating

budget (estimated at $1.0 - 1.3 million dollars per year at current surplus rate).

Future Outlook

If log supply can be secured, the mill has plans to increase production to 300-330

MMfbm production over the next five years. CDK kilns are also being considered as a

means to increase throughput and improve lumber quality. The site has a moderate

amount of space available for new equipment: an ORC power plant and CDK kiln would

be easiest to place; biomass dryers and an expanded TFH system may pose some

challenges. It was noted that considerable capacity exists within the current water license

(fed from small pond on site), if required for power plant cooling.

70

4.3.2 Energy Use

Electricity

Typical of industrial plants operating in Alberta’s deregulated market, power costs for the

Sundre plant are highly variable: current energy prices are in the $26/MWh range, but the

average price of electricity in 2014 was about $45/MWh, with 2013 even higher.

Electricity costs are a significant portion of the mill’s cost to produce, currently making

up about 4% of mill variable costs (Note: historically this value was closer to 10%).

A review of Sundre hourly load data for 2014 (see Figures 39 and 40, following page)

shows a very flat, stable load pattern over daily and yearly operations with occasional

spikes (most likely related to short-duration upset conditions in the process). Loads at the

mill area as follows:

Average load = 3MW Peak load = 8.1MW

Base Load = 1.6MW Connected load =11.8MW

Natural Gas Usage

Natural gas is used primarily for space heating and several small, stand-alone package

boilers to provide heat for pressure treatment process. More heat is desired in several

areas of the mill including sawmill and sections of the planer mill. (Aside: providing

surplus hot oil for these areas from TFH plant was investigated recently but the long

supply / return lines made this proposal uneconomic – estimated at $2.5M for the sawmill

heat system alone).

71

Figure 39 Sawmill Average Hourly Load (MW)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

1 3 5 7 9 11 13 15 17 19 21 23

MW

Hour

SUN - Average Hourly Load (MW) - 2014

Figure 40 Sawmill Average Daily Load (MW)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

jan mar may jul sep nov

MW

SUN - Averge Daily Load (MW) - 2014

72

Natural gas demand averages 45,000 GJ/year. Cost for this fuel represents a relatively

small proportion of mill variable costs (about 5%). It is noted that gas prices in Alberta

are historically low, stable, and projected to remain so for the foreseeable future (Alberta

2015, 37). No DSM-related projects for gas are planned for the mill.

Bioenergy - Thermal Plant

The 70MMBtu/h TFH system at Sundre consists of two 35MMBtu/h Deltech-brand

direct-combustion furnaces equipped with hot oil heat exchangers delivering thermal

energy to the five lumber drying kilns on site. Associated TFH equipment includes a

large feedstock silo, infeed conveyors, various blowers, an ash removal system and a

large electrostatic precipitator (ESP) for particulate matter (PM) removal (see Figure 41,

following page).

TFH hot oil hourly output data (tracked remotely by Deltech Service Group) was used to

establish kiln demand and estimate overall system efficiencies. Of the 70MMBtu/h

installed TFH capacity, about 50% is utilized by the kilns with the remainder available

for other use. A single operator (Class 3) manages the TFH, supported by other certified

boiler operators (Class 3 & Class 4) working site. Discussion with operators confirmed

that on average, about half of the TFH capacity is utilized and that there are no

operational barriers to utilizing this excess capacity (about 35MMBtu/h) if required for a

CHP project. They did note however that approximately 20% more feedstock is required

to meet kiln demand when the weather is very cold, wet or snowy.

73

Current feed rate to the unit is about 6tph or 55,000 bdt per year to meet a kiln heat

demand of about 37MMBtu/h. Feedstock (FS) is comprised mainly of bark and sawdust,

with mix percentages between these two streams adjusted as required to optimize

combustion and manage site inventories. Figure 41 on following page provides a sawmill

flow diagram illustrating log inputs and residual outputs (2014 values).

Figure 41 Sundre TFH Thermal Plant: 2x35MMBtu/h (right) with ESP (on left)

74

Figure 41 Sawmill Residuals Flow Chart

50

,16

1

75

Summary: CHP Opportunity at Sundre

The main driver for a CHP project at Sundre is the desire to avoid the costs of trucking

surplus residuals off site and eliminate the safety hazard and material handling issues

associated with sawdust and bark inventories on site.

Strategies to achieve these aims could include:

1. Installation of an ORC power plant, sized

a. Minimally – to make use of excess feedstock only when available (i.e. site

‘disposal’ unit, with some electricity export revenue)

b. Maximally – for best power production / export revenue; achieved by shifting

fibre from sales to TFH (with added benefit of reducing efforts required to

manage variable residual sales throughout the year)

2. Installation of a CDK, not only for production and quality reasons but also to improve

kiln efficiency (free up TFH heat) to further maximize ORC power output and

revenue.

3. Installation of a hog fuel dryer – to maximize the calorific value of incoming fuel by

utilizing the waste heat from power generation equipment, effectively increasing the

feedstock available and power to ORC

4. Use of alternative technologies: if the efficiency measures above result in fibre

volumes in excess of existing TFH capacity, or if mill growth exceeds current TFH

capacity, or market conditions change (electricity pool prices increase, residual sales

decrease) consideration could be given to adding a second TFH system (either

standard Deltech-type combustion unit or a new low-emissions gasification TFH

unit).

76

4.4 Sundre: Proposed CHP Projects

Six different CHP system configurations were modelled to determine the best

combination of feedstock allocations and equipment that would maximize revenue and

the utilization of residuals.

The first configuration models the existing mill as a Base Case scenario with the

assumption that stockpiling of surplus fibre on site is no longer feasible and all excess

residuals must be trucked to a company mill in Hinton. The cost to dispose of surplus

residuals in this manner is calculated as an avoided cost in the revenue stream of all other

options. High-value shaving sales are preserved in the Base Case with just enough bark

and sawdust going to the TFH to meet demand. (Note: wood chip residuals are a high

value product reserved exclusively for pulp mill use only – excluded as feedstock from

all scenarios).

Option 1 looks at using only surplus bark and sawdust to power a small ORC (all

shavings remain with sales). Option 2 is a variation on this scenario, foregoing a

percentage of shavings sales just sufficient to utilize the full capacity of the TFH in order

to maximize power from the ORC. Although it is anticipated that on a $/ton basis,

shaving sales (and possibly some bark sales) will always be more profitable than the

revenue from electricity sales, analysis of these two scenarios will verify that assumption.

77

The next case, Option 3, focuses on the addition of a CDK as an efficiency measure to

increase available feedstock to the TFH in order to maximize capacity and ORC power

but also allow the return of some percentage of shavings from feedstock to sales. Note: it

is assumed the CDK is installed for production / quality reasons: no cost to CHP project.

The last two cases – Option 4 and Option 5 - present two variations of a high feedstock

availability scenario which is assumed to overrun existing TFH capacity necessitating

installation of an additional TFH unit (direct combustion or gasification style). It is

presumed this situation could also arise from a combination of events including

installation of high-efficiency equipment (i.e. a CDK) followed by an increase in mill

production coincident with loss of residual sales (i.e. shavings contract ends, markets for

bark and sawdust soften).

In summary, the six cases modelled for Sundre in this report include:

Base Case Existing system with surplus residuals trucked off site

Option 1 Min ORC: Shaving sales preserved; remaining residuals to ORC

Option 2 Mid ORC: Mix of residuals to achieve max TFH capacity

Option 3 ORC+CDK: ORC plus CDK

Option 4 ORCmaxDC: ORC with CDK plus additional TFH (furnace)

Option 5 ORCmaxGT: ORC with CDK plus additional TFH (gasification)

78

4.4.1 Base Case

System Configuration & Key Assumptions

Fibre flow as illustrated in Figure 42 above (Note: for clarity, sales & surplus

streams omitted from all other option schematics)

Log volume = 1,045,024 m^3, 2014 values

Fibre allocation

o 100% shavings to sales (high value)

o Remaining allocations: bark first to meet TFH demand (minimize site

stockpiles and attendant safety / fire issues), then sawdust

Surplus residuals trucked to Hinton (assumed at site limits for stockpiling)

Results

See Panels on following pages for model output / details. Note: All calculations on

annual basis

Fibre Allocation

114,953 tons of feedstock total available

o (bark, shavings, sawdust) (100%)

32,396 tons to shavings sales (28.2%)

54,558 tons required to meet TFH demand (47.5%)

27,999 tons surplus – trucked to Hinton (24.3%)

Figure 42 Base Case: Residuals Flow

79

Energy Balance

Total primary energy supply =110.9 Btu/h

TFH demand (kilns) = 37 Btu/h

Overall TFH efficiency = 33.4%

TFH utilization (demand/capacity) = 52.9%

Costs

Trucking costs for 27,999 tons of surplus @ $45/t = $1,259,935

PV = -$7,886,351 (20 year project life, 15% cost of capital)

Discussion

The present value of approximately -$7.9M is the basis of comparison for all other

scenarios. This is a very large number and on the order of cost of a small ORC (1-1.5MW

unit ~ $6-7M installed).

Figure 43 FAT Table: Base Case

80

This suggests that, independent of any other revenue streams (i.e. electricity sales), a

small ORC may be marginally economic utilized simply as an on-site residual ‘disposal’

system, activated as required to maintain optimum inventory levels and respond to

fluctuating fibre markets.

Figure 44 FAT Summary Table: Base Case

Figure 45 Energy Balance Sheet1: Base Case

81

Figure 46 Energy Balance Sheet2: Base Case

The ‘CHECK VALUE’ elements shown in yellow, Figure 46 above, indicate the

validation process used to match the known heat demand obtained from kiln hourly TFH

data to the calculated heat supply value obtained using input tons of feedstock, the

calorific value for feedstock, and assumed values for TFH combustion efficiency and

heat transfer losses (per Figure 45, previous page).

Figure 47 Cost Sheet: Base Case

82

Figure 48 PV Calculation: Base Case

~

83

4.4.2 Option 1 – MinORC


Energy flow as illustrated in Figure 43 above

Fibre allocation

o 100% shavings to sales (high value)

o All remaining feedstock to TFH

Surplus energy to ORC power generation

o ORC sizing: to nearest (larger) standard size, per equipment pricing table

o ORC efficiency = 17.3%

o Demand charge savings included in analysis

Results

See Panels on following pages for selected model outputs / details. All calculations are on

annual basis. (Note: some variation in base case values have been brought forward; these

are due to program rounding errors i.e. 54,464 tons TFH demand Option 1 vs 54,558

tons, Base Case).

Fibre Allocation

114,953 tons of feedstock available (100%)


82,557 tons to TFH (71.8%)

54,464 tons TFH demand (47.5%)

28,083 tons available for ORC (24.4%)

Energy Balance

Total primary energy supply =167.8 Btu/h

TFH demand (kilns) = 37 Btu/h

Figure 49 System Configuration: MinORC

84

Overall TFH efficiency = 33.4%

Max ORC power = .96MW

Selected ORC = 1.45MW (HRS power unit)

TFH utilization = 80.1%

Costs

Capital costs of system = $6,073,452 (includes 10% contingency)

NPV = $1,695,594

After-tax IRR = 20.0%

Simple Payback Period = 3.8 years

Electricity revenue = $358,851

Electricity revenue, $/ton =$12.70/ton

Avoided costs (trucking) = $1,264,169

Discussion

Overall, this option is economically attractive with good payback, IRR, and NPV

compared to the base case. The greatest sensitivity for IRR is around capital cost.

Electricity revenues of $12.70/ton give an approximate break point for deciding which

fibre should go to sales and which should be diverted to the TFH (for ORC power):

shaving sales should be preserved as much as possible; bark sales may or may not be

economically advantageous; sawdust appears to be best utilized as feedstock.

Figure 50 Summary of Fibre Allocations: Option 1

85

Figure 51 Energy Summary: Option 1

86

Figure 52 Capital Costs Estimate: Option 1

87

Figure 53 Annual Costs and Income Summary: Option 1

Note: ‘OTHER INCOME’ = peak demand savings + avoided shipping costs.

88

Figure 54 RETscreen Summary: Option 1

89

Figure 55 Sensitivity Analysis: Option 1

Note: Capex = System Capital Cost; Revenue = electricity sales; Opex = avoided costs,

O&M costs, other annual costs & revenue – all scenarios.

90

4.4.3 Option 2 – MidORC



Fibre allocation

o All available feedstock to TFH to achieve 100% TFH utilization

o Allocation order: bark, sawdust, with shavings last

Surplus energy to ORC power generation

o ORC sizing: to nearest (larger) standard size



Results

See Panels on following pages for selected model outputs / details.

Fibre Allocation



103,038 tons to TFH (89.6%)



Energy Balance

Max ORC power = 1.67MW


TFH utilization =100%

Figure 56 System Configuration: MidORC

91

Costs

Capital costs of system = $7,470,540

NPV = -$811,949






Lost shavings sales =$-532,518

Discussion

The economics of this scenario are not as attractive as the first option: NPV is negative,

IRR is considerable lower (-7%), and the electricity sale price per ton is only marginally

higher. This confirms that the additional revenue from electricity sales and peak demand

charge reduction does not offset the loss of shaving sales from tons diverted to achieve

full utilization of the TFH / maximum ORC power.

Figure 57 Summary of Fibre Allocations: Option 2

92

Figure 58 Cost Analysis: Option 2

93

Figure 59 RETScreen Summary: Option 2

94


95

4.4.4 Option 3 – ORC+CDK



Installation of CDK as efficiency measure for CHP project

o Cost of CDK assumed = $0 for analysis here; (cost of installation / return

on investment borne assumed carried by production / quality payback)

o CDK replaces 2 of 5 kilns (40%), with 25% energy reduction for 10%

overall system efficiency improvement (additional to ORC)

Fibre allocation

o All shavings to sales to maximize fibre revenue

o Remainder of feedstock to TFH with surplus to ORC

ORC power generation

o ORC sizing: to nearest (larger) standard size



Results

See appendices for full model outputs / additional details and panels below for summary

information.

Figure 61 System Configuration: ORC + CDK

96

Fibre Allocation



82,557 tons to TFH (71.2%)



Energy Balance

Max ORC power = 1.15MW



Costs


NPV = $3,215,610

After-tax IRR = 24.3.0%





Lost shavings sales =$0

Discussion

The installation of a CDK with 25% efficiency improvement is shown to be very

attractive economically (assuming all costs of installation borne by production / quality –

typically the main driver for CDK installations within the West Fraser group), with an

overall system improvement in efficiency of about 10% . TFH utilization is also very

good (perhaps optimal) with a small amount (20%) of remaining capacity to handle

seasonal variations in demand.

97

Figure 62 RETScreen Summary: Option 3

98


99

4.4.6 Option 4 – ORCmax+DC



Scenario assumes mill growth with 15% increase in production

Shavings contract ends / market downturn – 100% of shavings available as

feedstock (no lost revenue assumed for economic calculations: new base case

assumes shavings cannot be sold)

One CDK installed per Option 3 – other project drivers (cost of CDK assumed =

$0 for analysis here; cost of installation / return on investment borne by

production / quality uplift); 10% overall TFH demand reduction

Fibre allocation: all feedstock residuals to TFH

Additional TFH required (DC style); existing TFH capacity exceeded

Surplus energy to ORC for power generation

Results

See appendices for full model outputs / additional details, panels below for summary

information.

Fibre Allocation

New log volume = 1,201,778 m^3 (approximately 345MMfbm)


Figure 64 System Configuration: ORCmax+DC

100

49,018 tons TFH demand to kilns (37.1%)


Energy Balance

Max ORC power = 2.86 MW

Selected ORC = 2.9 MW (HRS power unit – 2x1.45unit)


Additional TFH required = 19.8 Btu/h

Costs


New TFH – adder cost = $8,900,000 (included in above)

NPV = -$2,765,781



Electricity revenue = $1,059,161

Electricity revenue, $/ton = $12.3 /ton


Lost shavings sales = $0

Discussion

Although this scenario is more speculative than others, it is useful to see what costs are

involved if the mill if faced with the combination of significant production increase, new

equipment and changing residual markets. We note the IRR for this option is marginal

and costs for new equipment very high. Sensitivity analysis (see table and graphs on

panels, following pages) indicates capital costs as having the most impact on project

returns, reinforcing the need to fully investigate the lowest cost options for equipment.

101

Figure 65 Fibre Allocation Summary Table: Option 4

102


103


104

4.4.7 Option 5 – ORCmax+GT



Scenario identical to Option 4 with gasification TFH vs direct combustion unit

15% increase in mill production

100% of shavings available as feedstock; all feedstock residuals to TFH

One CDK installed (cost by others), per Option 3

Additional TFH required (GT style); existing TFH capacity (70MMBtu/h)

exceeded, with all surplus energy to ORC

Results

See appendices for full model outputs / additional details, panels below for summary

information.

Fibre Allocation

New log volume = 1,201,778 m^3 (approximately 345MMfbm)


49,018 tons TFH demand to kilns (37.1%)


Figure 68 System Configuration: ORCmax+GT

105

Energy Balance

Max ORC power = 2.86 MW

Selected ORC = 2.9 MW (HRS power unit – 2x1.45unit)


Additional TFH required = 19.8 Btu/h

Costs


New TFH – adder cost = $7,100,000 (included in above)

NPV = -$838,958



Electricity revenue = $1,059,161

Electricity revenue, $/ton = $12.3 /ton


Lost shavings sales = $0

Discussion

The results from this option are very similar to Option 4, with slightly better IRR. It is

noted that a gasification-style TFH will have better environmental performance and may

not require the same level of filtering equipment (electrostatic precipitator, etc) as a DC

system. In addition, as gasification is still considered an advanced technology in many

jurisdictions, this installation may qualify for provincial or federal funding (Note:

external contributions not included with this analysis).

106


107


108

4.4.8 Summary: CHP Options

Table 8 IRR Summary - Project Options

Scenario Description IRR Comments

Base Case Existing mill 0% Surplus residuals trucked off site

Option1 minORC 20.0% Keep shavings, surplus to TFH, 0.9MW ORC

power (1.45MWunit)

Option2 MidORC 13.0% TFH at max capacity with some shavings ~

1.7MW ORC power (2.23MW unit)

Option3 ORC+CDK 24.3% All shavings to sales, 10% uplift from ‘free’

CDK; 1.2MW ORC power (1.45MW unit)

Option4 ORCmax+DC 12.2% 15% mill growth, poor residual sales; all FS to

DC TFH; 2.9MW ORC power (2.9MW unit)

Option5 ORCmax+GT 14.1% 15% mill growth, poor residual sales; all FS to

GT TFH; 2.9MW ORC power (2.9MW unit)

Figure 71 IRR Graph - Project Options

0%

5%

10%

15%

20%

25%

Base Case Option1 Option2 Option3 Option4 Option5

0.0%

20.0%

13.0%

24.3%

12.2%

14.1%

CHP Project IRR

109

CHAPTER 5 – Conclusions & Recommendations

The Sundre sawmill has a considerable inventory of residuals on site. Like many

sawmills in Alberta, the combination of changing markets, a depressed economy and

increasingly tough environmental regulations have created challenges for the mill around

wood waste utilization and disposal.

Technologies exist to convert surplus residuals to heat and power: direct-fired thermal

fluid heat transfer (TFH) systems are common in sawmills and often have excess capacity

which can be used for power generation. Other newer, more advanced technologies such

as gasification are also now able to cleanly and cost-effectively convert biomass to heat

for power.

A review of available technologies suggested that Organic Rankine Cycle (ORC) engines

were the most feasible for utilizing excess thermal energy from sawmill TFH’s; ORC

units are cost-effective, commercially proven and readily available. It was discovered that

most other power generation technologies utilizing biomass as feedstock were not

practical in a small / medium-size sawmill application like Sundre due to the requirement

for complex and costly biogas cleaning (internal combustion or gas turbine engines) or

high operating costs and an inability to scale to site requirements (steam turbines, Stirling

engines).

110

As an aside, although Stirling engines were deemed unsuitable in this particular

application, these engines are nonetheless a promising technology which may be

economical in other CHP applications (i.e. small waste stream of chip wash residue or

pulp mill sludge); investigation into opportunities for the Stirling engine is recommended

as a possible topic of interest for other researchers.

Western Canada has seen the installation of several gasification and ORC projects

recently: detailed studies on the performance and economics of these installations would

be very helpful to planners considering biomass CHP projects and it is suggested that

these be considered as additional study topics.

The economic analysis carried out on the various CHP scenarios and comparison of

project rates of return indicates that Option1, a 1.45MW Turboden ORC unit is the most

cost-effective configuration for Sundre given current conditions. If a CDK installation is

planned for the mill in the near future, then Option3 becomes the preferred alternative.

One note: the analysis carried out here shows that electricity sales revenue on a per-ton

basis are generally very close to market prices for the various residual streams: fibre

allocation strategies must be chosen carefully to ensure that high-value sales (i.e.

shavings) and some medium-value sales (bark) are preserved in order to maximize

revenue for the site.

111

It was noted that in addition to providing payback in terms of electricity revenue and

avoided costs of trucking, an ORC should considerably simplify the management of

residual inventories for the site by introducing flexible fibre allocations between sales and

power, as determined by prevailing residual markets, pool prices and site inventory

levels.

ORC units operate with a considerable amount of reject heat: utilizing this heat for the

drying of incoming biomass may be economically attractive and it is recommended that

further studies be carried out to determine the feasibility of installing this equipment.

The analysis carried out in Options 4 & 5 shows that if feedstock supply increases

significantly in the future (due to major mill expansion, fibre market changes or

equipment changes), it is marginally feasible to add TFH capacity in order utilize all

available feedstock and maximize ORC power. In this case both a direct-combustion or

gasification-style TFH was considered suitable, with GT costs coming in slightly lower

than the DC system. It was noted that the GT unit would be preferable if environmental

considerations became a major factor (i.e. sensitive air shed) in the site permitting

process.

~

112

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116

APPENDICES

117

APPENDIX A Equipment Costs

DELTECH Equipment

118

APPENDIX A - contd

NEXTERRA Equipment

119

APPENDIX A - contd

120

APPENDIX A - contd

TURBODEN Equipment

121

APPENDIX A - contd

122

APPENDIX A - contd

123

APPENDIX A - contd

WELLONS Equipment

124

APPENDIX B Model: Validation & Base Case

1. Validation: File excerpts from sawmill main model file SMM-BaseCase&Validation

125

APPENDIX B – contd

2. Base Case: File excerpts from sawmill main model file SMM-BaseCase&Validation

126


127


128


129


130


131


132

APPENDIX C Model: Option1-minORC

133

APPENDIX C - contd

134

APPENDIX C - contd

135

APPENDIX C - contd

136

APPENDIX C - contd

137

APPENDIX C - contd

138

APPENDIX C - contd

139

APPENDIX C - contd

140

APPENDIX C - contd

-30% -15% 0% 15% 30%

Capex 29.0% 23.7% 20.0% 17.2% 14.9%

Revenue 18.6% 19.3% 20.0% 20.7% 21.4%

Opex 14.5% 17.3% 20.0% 22.6% 25.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

IRR

Fluctuation

IRR GTG

141

APPENDIX D Model: Option2-midORC

142

APPENDIX D – contd

143


144


145


146


147


148


149

APPENDIX E Model: Option3-ORC+CDK

150

APPENDIX E - contd

151

APPENDIX E – contd

152

APPENDIX E – contd

153

APPENDIX E - contd

154

APPENDIX E - contd

155

APPENDIX E - contd

156

APPENDIX F Model: Option4-ORCmax+DC

157

APPENDIX F – contd

158

APPENDIX F - contd

159

APPENDIX F - contd

160

APPENDIX F - contd

161

APPENDIX F - contd

162

APPENDIX F - contd

163

APPENDIX F - contd

164

APPENDIX G Model: Option5-ORCmax+GT

Note: all inputs / outputs identical to Option4 except as shown in panels below : see

Appendix F for details.

165

APPENDIX G – contd

166

APPENDIX G – contd

167

APPENDIX H Biomass Properties: FPI Data

168

APPENDIX H – cont’d

Documents

FEASIBILITY STUDY OF BIOMASS-BASED …FEASIBILITY STUDY OF BIOMASS-BASED COMBINED HEAT AND POWER PROJECT IN CANADIAN SAWMILL PLANT By Gerry M. Desrochers B.A.Sc., University of British