Lumby District Heating System

David Dubois

Project Coordinator

A Community Futures East Kootenay Project

Friday, June 07, 2013

Village of Lumby

Biomass District Heating Business

Case

Prepared by:

Wood Waste 2 Rural Heat

Funding for Wood Waste 2 Rural Heat provided by:

Lumby District Heating System

2 | P a g e

Executive Summary The Village of Lumby is interested in developing a district heating system for buildings owned by the

White Valley Parks, Recreation and Arts Committee. The system would use wood chips to provide 80-

90% of the heat for the following buildings.

1) Village of Lumby Public Works

2) Pat Duke Arena

3) Curling Rink

4) Village of Lumby Office

5) Pool

6) Community Centre

These buildings currently use $59,000 a year in natural gas.

Ideally the heat plant would be located at the Village of Lumby Public Works yard but it is uncertain if

there is enough space. The system would have 200 kW of biomass heat boiler capacity. It would require

200 ODT of wood chips/year (30 tandem truckloads or 7 B’ Train Truck Loads) which could be supplied

by David Beerstra Trucking from Lumby. The system would require 360 m of trenching for the

distribution lines. The Village public works department has indicated they could provide the trenching as

an in-kind contribution to the project.

Primary District Heating System

The capital cost of the system would be $539,000. It will result in combined savings on fuel and carbon

offsets of $33,700. In order to be economically viable, it would require a grant of more than 25%. Gas

Tax funding is typically available at 60% of project cost. A 60% grant results in a simple payback (not


3 | P a g e

including cost of capital or inflation) of 3.2 years, a net present value of $312,000 and an internal rate of

return of 31%.

Economic Analysis of DH System

Scenario Alternate

Project Cost $539,000 $539,000 $307,000

Grant 25% 60% 60%

Grant Funding $134,750 $323,400 $184,200

Lumby In-Kind (Trenching) $108,000 $108,000 $50,000

White Valley Rec. Capital Cost $296,250 $107,600 $72,800

Total Yearly Savings $33,700 $33,700 $10,800

Simple Payback (Years) 8.8 3.2 6.7

NPV $124,000 $312,000 $62,000

IRR 10% 31% 14%

Primary

In the event that retrofit of existing buildings is too costly and/or space was not available in the public

works yard an alternate scenario has been developed. In the alternate scenario only the curling rink,

pool and Village office are connected to a 75 kW heat plant located adjacent to the curling rink. This

system would only require 155 m of trenching. The capital cost would be $307,000. It would result in

$10,800 in savings on natural gas and carbon offsets. It would require a 60% grant to be economically

viable. It would have a simple payback of 6.7 years, a net present value of $62,000 and an internal rate

of return of 14%.

Alternate DH Scenario


4 | P a g e

Table of Contents

Executive Summary ................................................................................................................................. 2

Background ............................................................................................................................................. 5

Energy Usage........................................................................................................................................... 5

District Heating System Concept .............................................................................................................. 7

Building Suitability ............................................................................................................................... 8

Alternate Scenario ............................................................................................................................... 9

Fuel Selection .................................................................................................................................... 10

Boiler Selection.................................................................................................................................. 11

Heat Storage...................................................................................................................................... 11

Heat Distribution ............................................................................................................................... 12

Biomass Heating System Economic Analysis .......................................................................................... 12

DH System Capital Cost ...................................................................................................................... 12

Heat Plant ...................................................................................................................................... 13

Distribution System ....................................................................................................................... 13

Operating & Maintenance Costs ........................................................................................................ 14

Fuel Cost ........................................................................................................................................ 14

Carbon Offsets ............................................................................................................................... 15

Financial Analysis ............................................................................................................................... 16

Potential Business Models ................................................................................................................. 17

Additional Considerations .................................................................................................................. 17

Conclusions ........................................................................................................................................... 17

Recommendations ................................................................................................................................ 18

Disclaimer ............................................................................................................................................. 18

Acknowledgements ............................................................................................................................... 19

Appendix 1 Energy Usage Data .............................................................................................................. 20


5 | P a g e

Background After viewing the Fink Machinery District Heating System in Enderby, the Village of Lumby expressed an

interest in developing a similar system for buildings owned by the White Valley Parks, Recreation and

Arts Committee. Village staff approached the Wood Waste 2 Rural Heat Project (WW2RH) about the

potential for a biomass fuelled district heat system (DH) in summer of 2012. In November of 2012,

WW2RH began work on developing a business case for the Village. This report is based on site visits

conducted in November 2012 and February 2013 and a number of meetings with Village staff and others

(Regional District, Tolko, and Chamber of Commerce). Data for this report was provided by Village staff.

This report summarises the current energy consumption of the following buildings as potential heat

clients and suitability for connection:

1) Village of Lumby Public Works

2) Pat Duke Arena

3) Curling Rink

4) Village of Lumby Office

5) Pool

6) Community Centre

This energy data has been used to estimate the boiler size for a biomass fueled DH. Two different

scenarios based on system layout and attached buildings have been considered. This report also

includes an estimate of the capital cost of the heating system as well as a summary of the economic

viability based on operations and maintenance costs.

Energy Usage Currently natural gas is the primary fuel used for heating

in Lumby. The Village of Lumby was able to provide

natural gas consumption data from Oct. 2009 to

November 20121. The data is summarised in Appendix 1.

All the buildings consume an average of 5200 GJ/yr 2. The

total cost of natural gas was $59,000/yr which equates to

$11.41/GJ.

1 Data for the swimming pool was only available for 2011 and 2012. In October 2010 the curling club became

responsible for paying their own natural gas bill, therefore the village was only able to provide data from Oct. 2009 until Oct. 2010. Natural gas usage in February for the curling rink was very low. This is assumed to be an anomaly and this was factored into the usage. 2 Gigajoules or GJ is a measure of energy. In BC Natural gas companies convert the volume of natural gas to an energy value. 1 GJ equals 948,000 BTU’s or 278 kWh.

District Heating System in Enderby


6 | P a g e

Table 1 Natural Gas Consumption Data by Building

BuildingEnergy Consumption

(GJ/Yr)

Yearly Energy Cost

($/Yr)

Natural Gas Cost

($/GJ)Percent of Demand

Pat Duke Arena 2372.4 $27,131.01 $11.44 45.6%

Pool 971.2 $10,243.97 $10.55 18.7%

Curl ing Club 910.9 $10,209.44 $11.21 17.5%

Community Centre 503.5 $6,065.77 $12.05 9.7%

Publ ic Works 339.1 $4,185.14 $12.34 6.5%

Vi l lage Office 103.5 $1,519.47 $14.68 2.0%

Total 5200.6 $59,354.81 $11.41

The largest consumer of natural gas is Pat Duke Arena followed by the pool and curling rink. These three

buildings represent over 80% of the actual consumption. The primary months of consumption for the

arena and curling rink are October through March. In addition to using natural gas for heating and hot

water, both buildings use natural gas for dehumidification. This is assumed to be 25% of the natural gas

usage. The result is only 4400 GJ is used for heat.

Figure 1 shows the hourly natural gas consumption rate for each of the buildings as well as the total. It is

worth noting that while the pool has a high demand it is in the summer (May through to September)

and as a result the overall heat demand is relatively consistent, which is ideal in sizing a biomass heating

system.

Figure 1 Hourly Energy Consumption

0

50

100

150

200

250

Ene

rgy

Co

nsu

mp

tio

n p

er h

ou

r kW

Public Works

Arena

Village Office

Community Centre

Pool

Curling Rink

Total


7 | P a g e

The energy content of softwood is 20.0 GJ/Oven Dry Tonne (ODT) 3 (Maker, 2004). Based on typical

efficiencies for natural gas fired and biomass heating equipment the DH would use approx. 200

BDT/year of wood chips. A typical highway B-train chip truck hauls approx. 26 ODT (A.J MacDonald,

2011). This means the DH would consume the equivalent of 7-8 B train truck loads per year or about one

every six weeks.

District Heating System Concept The original concept for the Village of Lumby DH system is to locate the biomass heating pant and fuel

storage at the existing public works building. Heat is then piped to the various client buildings identified

above. There was some interest in Charles Bloom Secondary School connecting to the system but the

current building infrastructure requires significant and costly upgrades to accept hot water heat. For this

reason they have been excluded from this study. The proposed layout for the DH is shown in Figure 32.

Figure 2 Initial Primary DH System Scenario

3 The energy content of biomass is highly dependent on moisture content therefore most people express it without moisture either as a bone dry tonne (BDT) or oven dry tonne (ODT).


8 | P a g e

The layout above works well with the layout of the park and future community plans. However based on

the location of the main heat supply line it may add to the cost of connecting Pat Duke Arena. An

alternate path is shown in Figure 3.

Figure 3 Primary DH System Scenario with Alternate Main Heat Supply Line Path

The initial concept was for the heating plant to be located at the existing public works yard with the

piping network extending to up the west side of Pat Duke Arena. After reviewing the site it was

determined that the majority of the heat loads are located on the eastside of the arena. For this reason

the main supply line was relocated to that side as a means to reduce cost and make for a simpler

installation.

Building Suitability

Figure 3 shows the six buildings that potentially could connect to the DH System. While it is technically

feasible to connect all of the buildings some are more suited than others. The Village office and

swimming pools would be very easy to connect as they are already using hydronic or hot water heating.

These installations would only require water to water heat exchangers at a relatively low cost of

approximately $1,000 each. The curling and public works office would be slightly more difficult. The

curling rink would have 3 potential heat loads that would require connection (forced air in the lobby,


9 | P a g e

overhead forced air in ice hall, domestic hot water). All of these would be relatively easy to convert at a

total cost of approx. $5,000. The public works building also has three loads (overhead forced heat in

each bay and domestic hot water). It is expected that the retrofit costs would be approx. $5000. The

community centre has 4 rooftop heating units. Each unit would require its own heat coil. This could be

costly and is estimated at $16-20,000. The arena has the largest number of connection points including

radiant overhead heating in the stands 3 forced air furnaces, 3 hot water tanks, and an overhead forced

air heating system. The cost of replacing all of these connections would be $18-30,000. These costs are

based on doing the retrofits at the same time as installing the DH system. If they are done on an

individual basis, the cost would be higher.

The cost of retrofitting a building in relation to the energy consumption is an important consideration in

determining which buildings should be connected to the DH system. Table 2 shows the ratio of yearly

energy cost as compared to retrofit cost. The pool is the most favorable or best suited. For every $1 of

retrofit cost (expense) there is $10.24 of energy cost (or revenue). The community centre only has $0.34

of potential revenue for every $1 of retrofit expense is therefore least favourable or is least suitable. The

arena and public works are marginally suitable while both the curling rink and Village office would be

good candidates.

Table 2 Energy Cost vs Retrofit Costs

BuildingHeating Energy

Consumption (GJ/Yr)

Yearly Energy Cost

($/Yr)Retrofit Cost

Ratio of Energy Cost

to Retrofit CostSuitability

Pat Duke Arena 1779.3 $20,348 $24,000 0.85 Marginal

Pool 971.2 $10,244 $1,000 10.24 Best

Curl ing Club 683.2 $7,657 $5,000 1.53 Good

Community Centre 503.5 $6,066 $18,000 0.34 Least

Publ ic Works 339.1 $4,185 $5,000 0.84 Marginal

Vi l lage Office 103.5 $1,519 $1,000 1.52 Good

Total 4379.8 $59,355 $54,000

While the overall retro fit costs are not significant they have a significant impact on the economic

viability of the over DH system.

In the initial concept for the system the heat plant (boiler) and chip storage shed are located at the

existing public works yard. Based on the current configuration there may not be sufficient space

available for both structures in the yard. A detailed survey of the public works yard including current

buildings would be needed to determine if there is sufficient space available for the new structures.

Village staff has indicated that the public works yard may be moved to a new location in the future and

the existing buildings could be converted to house the boiler and wood chip storage which would be

viable solution.

Alternate Scenario

The high cost of connecting the community centre, arena and public works building as well as the

potential lack of space for the plant impact on the viability of the primary scenario laid out above.


10 | P a g e

Therefore an alternative scenario that would only see the most suitable buildings connect by a smaller

heating system was developed.

Figure 4 DH System Alternate Scenario

In the alternate scenario the system would consume approximately 80 ODT of wood chips or about 3

truckloads. It would also be relatively easy to incorporate into the primary scenario when it is built.

Fuel Selection

A biomass based system can be fuelled by many different forms of fibre from pellets to bush grindings.

Different fuels have different properties. Generally speaking, the more processed the fuel; the higher

the energy content and the cost (i.e. chips are cheaper than pellets but you require more chips to get

the same energy value). Capital costs also go up for less processed fuel because of higher degrees of

variability and larger fuel volumes. Therefore any cost savings due to reduced fuel cost may not cover

the increased capital costs over the life of the project.

The smaller the system, the more important it is to use a consistent fuel. Larger systems are better able

to handle fluctuations in fuel size and moisture. The estimated boiler size for this system is relatively


11 | P a g e

small therefore it would be appropriate to use a relatively clean and consistent fuel like wood chips

similar in size to those shown in Figure 5 or wood pellets. All analysis will include wood pellets as a

reference.

Figure 5 Wood Chip Fuel

Boiler Selection

Biomass boilers operate best when they are operating at full capacity as much as possible. In order

maximise the operating time at full capacity the boiler is typically sized to the average heat demand and

not the peak demand. In the primary scenario the biomass heating capacity would be approximately

200 kW. It is assumed that this boiler would provide about 90% of the heat requirement. The existing

heating equipment in each building could be used to supply the remaining demand and act as backup.

Normally two 100 kW boilers would be recommended but because there is a significant summer load

with the pool one single boiler would be sufficient and operate efficiently. The total energy produced by

the biomass boiler would be 4000 GJ/year.

In the alternate scenario the heat demand would be based primarily on the demand to heat the pool

which is slightly higher than the estimated demand for the curling rink and Village office. The boiler

would be approximately 75 kW and it should supply about 1600 GJ of energy/year.

This is an estimate for preliminary system evaluation and budgeting purposes only.

Heat Storage

The heat storage tank is simply a large insulated tank that stores hot water. It allows for the supply of

heat at peak demands. The heat storage vessel allows for the installation of a smaller capacity boiler

system. Heat can be generated throughout the entire day instead of on demand during peak usage

times. Typically hot water storage is approximately 10 l/kW. For the primary scenario it would be 2000

litres (440 imperial gallons), in the alternate scenario heat storage would be 750 litres. The exact size of


12 | P a g e

the storage vessel would be determined by the system supplier. Based on the site visit and expected

configuration of the new system, the heat storage system will be located inside the boiler house.

Heat Distribution

Insulated hot water lines would be run underground from the biomass heating system to each building.

The overall heat load for the system is relatively small. The ground is flat with little elevation change and

none of the buildings should require high temperature hot water, so it is anticipated that PEX pre-

insulated pipe could be used to connect the buildings. In the primary scenario it is estimated that the

main hot water supply and return lines would be approximately 2”. In order minimise cost it is

anticipated that both the supply and return would be housed in a single carrier pipe. The secondary lines

would be ¾ inch, also in a single carrier pipe. The main heat supply line shown in Figure 2 Initial Primary

DH System Scenario and Figure 3 Primary DH System Scenario with Alternate Main Heat Supply Line

Path both have a similar length.

In the alternate scenario the main supply and return lines would be 1.5”. The secondary lines would be

¾ inch. Both the main and secondary would have the supply and return in a single carrier pipe. Table 3

shows the length of each pipe trench and the pipe size based on Figure 3 and Figure 4.

Table 3 DH Trench Length and Size

Trench Length (m) Size

Mainline 260 2"

Community Centre 10 3/4"

Curling Club 45 3/4"

Village Office 45 3/4"

Total 360

Mainline 70 1.5"

Curling Club 40 3/4"

Village Office 45 3/4"

Total 155

Scenario

Primary

Alternate

Normally each building would also include a meter to measure the amount of heat energy being

consumed and this would be used for billing. The cost of these meters can be expensive. The only client

that may need to be billed separately would be the curling club. A simpler solution may be a flat billing

or pricing based on their reduction in natural gas costs.

Biomass Heating System Economic Analysis

DH System Capital Cost

All cost estimates are for budgeting purposes only. Except as noted this report assumes typical

installation costs. These costs vary by area and contractor. Estimates from local contractors/suppliers

should be obtained prior to proceeding. The DH System capital cost can be broken down into two

components. The first is the heat plant, which would contain the boiler and fuel storage. The second is


13 | P a g e

for the distribution piping and retrofitting of existing buildings. The costing in this model assumes that

the Village would be operating as the general contractor and project manager.

The total capital cost for the entire DH system is estimated at $540,000 including a 10% contingency of

$50,000. The heat plant is 50% of the total cost while the distribution network is 40%. In the alternate

scenario the total capital cost is $310,000, also with a 10% contingency. The heat plant is 66% of the

total cost while the distribution network is 25%.

Heat Plant

The heat plant has a boiler house that would contain the boiler, pumps, heat storage, emissions control

devices and all system controls. The capital cost for the heat plant would be $281,000, for the primary

scenario. The capital costs for the alternate scenario is $205,000. The heat plant costs for the primary

and alternate scenarios are summarised in Table 4. The boiler house capital cost is based on a 20’

storage container (20’x8’). This is typical for most installations in BC. The chip storage for the heat plant

would be a simple 2 or 3 sided shed with a concrete floor. It should be large enough to accommodate

about 2 truckloads or a minimum of 3 weeks of fuel, whichever is larger. This amounts to approx. 600

ft2. David Beerstra Trucking (a local company) has the capacity to deliver 38 m3 or 53 m3 of wood chips

at one time. The capital cost of a pellet fueled heat plant has also been included for reference.

Table 4 DH System Capital Costs

Primary Alternate Pellets

Boi ler House $12,000 $12,000 $12,000

Fuel Storage $30,000 $30,000 $15,000

Boi ler $170,000 $94,000 $160,000

Insta l lation $34,000 $34,000 $27,000

Engineering $26,000 $26,000 $26,000

Misc $9,000 $9,000 $9,000

Total $281,000 $205,000 $249,000

Pipe $45,000 $15,000 $45,000

Trenching $108,000 $50,000 $108,000

Bui lding Retrofi ts $55,000 $7,000 $55,000

Total $208,000 $72,000 $208,000

Contingency $50,000 $30,000 $50,000

Total Capital Cost $539,000 $307,000 $507,000

Heat Plant

Cost

Distribution System

Distribution System

The capital cost for the distribution system included the commodity cost of the pipe and fittings, the

cost of trenching and finally the building retrofits. The trenching costs are based on hiring an outside

contractor to do the digging, backfilling, etc. Based on discussions with Village staff this is work that

could be done by public works. The capital cost of the primary scenario is $208,000. While the alternate

scenario is $72,000.


14 | P a g e

Operating & Maintenance Costs

The Operating and Maintenance costs have a number of components. The first cost is for personnel to

operate the system. Most systems are designed to be fully automatic requiring very little operator

support. Most facilities require about 1-2 hours per week to manage the fuel, emptying ash, and

periodic checks. This equates to a 0.1 FTE. Generally speaking this small amount of additional labour can

be absorbed by existing staff so no new personnel should be required. It is worth noting that the most

successful installations have a high degree of operator buy-in.

The second cost is for regular maintenance. The boiler will require annual service to clean the tubes,

check boiler function, lubricate, etc. This work could be done by onsite personnel but it may require

support from outside personnel. The cost was assumed at $4,000/year on the primary scenario and the

alternate scenario. It is worth noting that this cost is spread over the 20 year life of the boiler.

The system was also assumed to consume $500/year in electricity for pumping and auger systems in the

primary scenario. This drops to $200/year in the alternate scenario.

Fuel Cost

Fuel is the largest cost of operating the DH system. The fuel costs consist of the chips as well as the

natural gas required for back up. Wood chips are available from a number of sources including sawmills,

landfills, value added wood manufacturing, wildfire mitigation, slashpiles, etc. Wood chips and shavings

are being used by farmers, ranchers and others. David Beerstra Trucking charges $300 for a 38 m3 load

of wood shavings or $400 for a 53.5 m3 load. Each load is delivered using a tandem axle truck (no

trailer). Depending on the moisture content and the truck used this is about $34-39/tonne. Assuming

average moisture of 20% (based on discussions with Tolko) this is equals $2.56-2.70/GJ ($51-54/ODT). At

30% moisture the energy cost is $2.76-2.90/GJ ($55-58/ODT). This is summarised in Figure 6

Figure 6 Comparison of Energy Costs

In the primary scenario, the cost of wood chips (assuming 20% moisture and average cost of $2.63/GJ) is

$10,400/yr and the cost of natural gas would be $5,700/yr. The total yearly fuel cost is $16,100. In the

alternate scenario with the same assumptions as above, wood chips would cost $4,200 and natural gas

would be $2,200 for a total fuel cost of $6,400. The fuel costs for the business as usual (BAU) scenario is

$50,000/yr. and $19,400/yr. for the primary and alternate scenarios respectively.

$0.00

$2.50

$5.00

$7.50

$10.00

$12.50

$15.00

Wood Chips -

20% Moisture

Wood Chips -

30% Mositure

Natural Gas -

Primary

Natural Gas -

Alternate

Wood Pellets

Co

st

of

En

erg

y

$/

GJ

High

Low

Average


15 | P a g e

Table 5 contains the yearly operating costs for both the business as usual case as well as the primary and

alternate scenarios. Pellets have also been included as a comparison.

Table 5 Yearly Heating System Operating Costs

BAUWood Chips

20% Moisture

Wood Chips

30% MoisturePellets BAU

Wood Chips

20% Moisture

Wood Chips

30% Moisture

Natural Gas $50,200 $5,687 $5,687 $5,687 $19,421 $2,210 $2,210

Wood Chips $0 $10,394 $11,184 $31,181 $0 $4,171 $4,488

$0 $4,000 $4,000 $4,000 $0 $4,000 $4,000

$0 $500 $500 $500 $0 $200 $200

$50,200 $20,581 $21,371 $41,368 $19,421 $10,581 $10,898

$0 $29,619 $28,829 $8,832 $0 $8,840 $8,523Savings over BAU

Electricity

Total

Primary Scenario Alternate ScenarioCost Component

Fuel

Maitnenace

Figure 7 Comparison of Scenario Operating Costs and Savings

Carbon Offsets

Biomass under most circumstances can be considered carbon neutral. In the primary scenario the

project would reduce carbon emissions by 200 tonnes per year. The alternate scenario would reduce

carbon emissions by 80 tonnes per year. These amounts of carbon and would be very difficult to

monetise in current carbon markets. As a signatories of the Climate Action Charter the Village of Lumby

and Central Okanagan Regional District has committed to reducing their carbon footprint. The avoided

cost of not having to purchase offsets from Pacific Carbon Trust (valued at $25/tonne) is $4,100/yr and

$2,000/yr for the primary and alternate scenarios respectively. The curling club is not required to pay

offsets so their energy consumption has been removed from the above calculations.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

Primary

BAU

Primary

20%

Moisture

Primary

30%

Moisture

Pellets Alternate

BAU

Alternate

20%

Moisture

Alternate

30%

Moisture

Ye

arl

y O

pe

rati

ng

Co

sts

Savings

Electricity

Maintenance

Wood Chips

Natural Gas


16 | P a g e

Financial Analysis

Most DH systems generate revenue by selling heat to clients. This revenue must be sufficient to cover

expenses, provide for future plans and generate income. Currently all of the buildings, with the

exception of the curling rink are controlled by the Village of Lumby and the Regional District. Therefore

the analysis will be done based on savings and avoided costs. The analysis will look at three options for

each scenario. The first is with no grants, the second looks 25% grant funding and the third looks at 60%

grant funding (typical of gas tax funding) which is the most likely scenario. As was noted earlier Village of

Lumby public works staff should be able to complete the trenching for the DH system. These costs have

been estimated at $108,000 and $50,000 for the primary and alternate scenarios respectively, based on

typical construction estimates. The actual internal costs are significantly different. These costs represent

an in-kind contribution to the project and should be counted towards any potential leverage for funding.

In the primary case the savings are $29,600/yr. and the avoided carbon costs are $4,100/yr for a total

yearly cost reduction of $33,700. In the alternate scenario the total yearly reductions are $10,800. The

simple payback and net present value are calculated for both the primary and alternate scenarios and is

shown in Table 6. For simplicity the analysis does not include a cost of borrowing or inflation. The net

present value was calculated at 5% over 20 years which is the expected life of the boiler. For the primary

scenario the project is economically viable with a minimum of 25% grant. In the alternate scenario the

project is economically viable at 60% funding. Figure 8 shows the net present value of these three

options.

Table 6 Payback Summaries

Scenario Pellet

Project Cost $539,000 $539,000 $539,000 $507,000 $307,000 $307,000 $307,000

Grant 0% 25% 60% 60% 0% 25% 60%

Grant Funding $0 $134,750 $323,400 $304,200 $0 $76,750 $184,200

Lumby In-Kind

(Trenching)$108,000 $108,000 $108,000 $108,000 $50,000 $50,000 $50,000

White Valley Rec.

Capital Cost$431,000 $296,250 $107,600 $94,800 $257,000 $180,250 $72,800

Total Yearly Savings $33,700 $33,700 $33,700 $12,900 $10,800 $10,800 $10,800

Simple Payback

(Years)12.8 8.8 3.2 7.3 23.8 16.7 6.7

NPV -$11,000 $124,000 $312,000 $66,000 -$122,000 -$46,000 $62,000

IRR 5% 10% 31% 12% -2% 2% 14%

AlternatePrimary


17 | P a g e

Figure 8 Net Present Value

Potential Business Models

As was noted earlier this analysis is based on a breakeven perspective with Village of Lumby operating

the system. There could be the chance for someone else to own and or operate the system either in

conjunction with the White Valley Rec. Society (WVRC) or as a one hundred percent private enterprise.

A private company would not be able access grants as WVRC and therefore has a lower chance of being

economically viable. A public/private partnership would still be able to access grants and have a viable

project however this was outside the scope of this analysis

Additional Considerations

Currently there are no regulations regarding the use of biomass for comfort heating or space heating.

This may change as the BC Ministry of Environment is currently developing regulations in regards to

combustion of solid wood fuels such as wood chips. Depending on the system it may be determined by

the Ministry of the Environment that heating the pool is not comfort heating and thus require an air

quality permit. Depending on the conditions of the permit this could have a significant impact on the

economic viability of the system. As an example Lillooet has an air permit on their heating system

because of the pool. The permit requires quarterly testing when the pool is in operation. This equals two

tests per year at approximately $4000/test.

Conclusions 1) The estimated capital cost for a 200 kW DH system heating the public works building, Pat Duke

Arena, community centre, curling rink, Village office and Pool would be $530,000.

-400000

-300000

-200000

-100000

0

100000

200000

300000

400000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Primary - 25% Grant

Primary - 60% Grant

Alternate - 60% Grant


18 | P a g e

2) Savings from switching to wood chips would be $33,700 including $4,100 in avoided cost by not

purchasing offsets.

3) A minimum grant of 25% is required to make the system economically viable.

4) The system would require 360 m of trenching which could be supplied by The Village as an in-

kind contribution.

5) The system would consume 200 ODT of wood chips/year. Assuming the chips are supplied by

David Beerstra trucking this would be approximately one tandem truckload every week and a

half.

6) Due to potential space constraints at the public works yard as well as the capital cost of

retrofitting Pat Duke Arena and the Community Centre an alternate scenario was developed to

heat the pool, Village office and curling rink. The system would be 75 kW. It would cost

$307,000. When and if the Primary Scenario is developed the alternate scenario can be

included.

7) The alternate system would require a 60% grant to be economically viable.

Recommendations If the Village of Lumby is interested in proceeding I have the following recommendations.

1) A detailed site plan of the public works yard should be developed to determine if there would be

enough space to house a 20’ shipping container for the boiler as well as a wood chip storage

area. If there is not enough space than a different site should be selected.

2) A heating and ventilation (HVAC) contractor that specialises in hydronic heating should be

consulted to confirm the costs of retrofitting the buildings to connect to the DH system.

3) The Village should begin formal discussions with the Ministry of Environment in regards to what

if any potential permitting is required.

4) Determine the business structure for the DH system. Who will own it (public, private,

partnership) as well who is responsible for operation, etc.? This question has a significant impact

on funding.

If the Village of Lumby does wish to proceed, WW2RH is interested in continuing to support the Village

as they work thru the above recommendations. Once the Village has made a decision on issues #1 and

#4 above; WW2RH would be willing to update and refine this business analysis based on these

decisions. If desired, WW2RH can assist the Village in furthering refining the business case, help identify

potential funding sources and/or assist Village staff with the preparation of a Request For Proposals if

required.

Disclaimer Assumptions, conclusions and estimates for this report are based on available information and should

be used only for informational purposes. This report is a pre-feasibility study and should not be used for

engineering or design.


19 | P a g e

Acknowledgements The authors would like to thank Tom Kadla, Roger Huston and Jeri White from the Village of Lumby for

their help in preparing this report.

Funding for the Wood Waste 2 Rural Heat Project is provided by the Southern Interior Beetle Action

Coalition (SIBAC), the Columbia Basin Trust, the Government of BC, Cariboo Chilcotin Beetle Action

Coalition (CCBAC) and the Omenica Beetle Action Coalition (OBAC).


20 | P a g e

Appendix 1 Energy Usage Data

Data is available as a separate pdf file.

Documents

Lumby District Heating System