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Energy from sawmill waste in Honduras, Teupasenti case study; a report of USAID\Tegucigalpa and the Office of Energy and Infrastructure, Bureau for Research and Development, United States Agency for International Development

by Winrock International Inst. for Agricultural Development, Arlington, Va. (EUA). Biomass Energy Systems and Technology Project.
Series: Report - Winrock International Inst. for Agricultural Development (EUA).Publisher: Arlington, Va. (EUA) 1993Description: 130 p.Subject(s): COMBUSTIBLES | COSTOS DE PRODUCCION | DESECHOS DE LA MADERA | ESTUDIOS DE CASOS PRACTICOS | FUENTE DE ENERGIA | GENERACION DE ENERGIA | HONDURAS | IMPACTO AMBIENTAL | PROYECTOS DE DESARROLLO | CASE STUDIES | DEVELOPMENT PROJECTS | ENERGY GENERATION | ENERGY SOURCES | ENVIRONMENTAL IMPACT | FUELS | HONDURAS | PRODUCTION COSTS | WOOD RESIDUES | COMBUSTIBLE | COUT DE PRODUCTION | DECHET DE BOIS | ETUDE DE CAS | HONDURAS | IMPACT SUR L'ENVIRONNEMENT | PRODUCTION ENERGETIQUE | PROJET DE DEVELOPPEMENT | SOURCE D'ENERGIE In: Summary: This case study follows a more general assessment, completed in 1991, of the nation-wide potential for energy production from sawmill wastes in Honduras, and it presents a detailed examination of waste-wood energy options for a three million board-feet per year sawmill located in Teupasenti, El Paraiso Department. While waste-fired cogeneration is generally economical at larger installations, the vast majority of Honduran mills produce less than five million board-feet per year, so the purpose of this study is to establish whether a waste-wood energy system at a small sawmill is a profitable investment. If so, small sawmill owners throghout the country would have the opportunity to enhance their profits and at the same time provide needed electric power, environmental improvements, and rural employment. Of six alternative energy-system configurations developed for the Teupasenti sawmill site, three are designed for electricity production only during hours of peak-demand as defined by Empresa Nacional de Energía Eléctrica (ENEE), the national electric utility company, and three others are designed for continuous electricity generation, with operation timed to maximize output during peak times while maintaining efficient generation during off-peak hours. Both systems maximize peak period power generation, because of ENEENs expressed need for peak generating capacity in the future. The continuous operating system design is large enough to provide the sawmill with all of its peak power demand requirements (250 kW), in order to allow the facility to operate at full capacity during utility outages. All energy system designs provide for complete utilization of all of the wastewood produced by the sawmill. Under each of the two electric output schemes just described, the three remaining categories reflect alternative amounts of steam-heated lumber drying as part of the sawmills operation. Dry kilns are relatively rare in Honduras, where most lumber products are sold in green form. However, they offer several important benefits to sawmills, including cost savings on shipments, higher-grade lumber products with improved quality, and easier access to export markets that restrict entry of green lumber. For all of this reasons, as well as the fact that installation of a wastewood-fired energy system automatically provides a source of steam that can be used to heat a dry kiln, it is likely that any sawmill that is contemplating a wastewood energy system would also consider a dry kiln as part of the total energy system. For the purpose of this case study two dry kiln designs are considered, one that is sized to dry all of the high-grade lumber produced by the sawmill (single track), and one that is sized to dry all of the sawmills primary lumber (double track). The option of not drying lumber also is included among the alternatives. Financial analysis indicates that none of the of the six base-case system configurations meets acceptable investment criteria, defined here as a minimum real return on total investment of ten percent per year. The return calculation is predicated on an assumed price for exported power that ENEE might consider advantageous to pay, based on estimated utility avoided cost for generation. It does not reflect any possible net savings to the local transmission and distribution system, nor does it take into account environmental quality improvements and other economic externalities. At higher prices, which may prevail in the future as avoided costs increase, or as national policy intervenes to promote wastewood cogeneration for its social and environmental benefits, this and other power generation projects like it could be more advantageous. For the system to break even at a ten percent per year real cost of capital, the utility would have to pay an average of between Lempiras (Lps.) 0.68 and Lps. 1.15 per kilowatt hour for surplus power at the sawmill. If ENEE were prepared to pay a level Lps. 800 annually per kilowatt for the sawmills contribution to generating capacity, the system would then require a more modest, but still substantial Lps. 0.55 to Lps. 0.95 per kilowatt hour to provide the same return on investment. The capital costs of all of the system configurations are based on the purchase of new equipment for all components. Extensive use of high-quality, reconditioned used equipment could allow a drop in total project capital cost of as much as thirty percent of the levels estimated for the base-case configurations. Cost savings of this magnitude could make some configurations profitable at todays ENEE avoided costs, provided system reliability and longevity are not significantly compromised. At capacities between 300 and 475 kilowatts, the systems considered here suffer from adverse scale economies and from the fact that they represent high capital, low fuel cost options, which are generally profitable only if they produce revenues all day throughout the year. If a generator operates only intermittently or must compete with low-cost hydropower for much of the time, it will not easily pay for itself. Larger-scale systems may represent more viable investment opportunities for the handful of much larger sawmills in Honduras, especially if they are credited with the variety of additional benefits they could provide, including: 1. Improved disposal of solid wastes, with reductions in air and water pollution, 2. Decreased dependence on imported fossil fuels, 3. Reduced need for the development of new electric generating capacity on the part of ENEE, 4. Development of rural employment and industrialization opportunities.
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This case study follows a more general assessment, completed in 1991, of the nation-wide potential for energy production from sawmill wastes in Honduras, and it presents a detailed examination of waste-wood energy options for a three million board-feet per year sawmill located in Teupasenti, El Paraiso Department. While waste-fired cogeneration is generally economical at larger installations, the vast majority of Honduran mills produce less than five million board-feet per year, so the purpose of this study is to establish whether a waste-wood energy system at a small sawmill is a profitable investment. If so, small sawmill owners throghout the country would have the opportunity to enhance their profits and at the same time provide needed electric power, environmental improvements, and rural employment. Of six alternative energy-system configurations developed for the Teupasenti sawmill site, three are designed for electricity production only during hours of peak-demand as defined by Empresa Nacional de Energía Eléctrica (ENEE), the national electric utility company, and three others are designed for continuous electricity generation, with operation timed to maximize output during peak times while maintaining efficient generation during off-peak hours. Both systems maximize peak period power generation, because of ENEENs expressed need for peak generating capacity in the future. The continuous operating system design is large enough to provide the sawmill with all of its peak power demand requirements (250 kW), in order to allow the facility to operate at full capacity during utility outages. All energy system designs provide for complete utilization of all of the wastewood produced by the sawmill. Under each of the two electric output schemes just described, the three remaining categories reflect alternative amounts of steam-heated lumber drying as part of the sawmills operation. Dry kilns are relatively rare in Honduras, where most lumber products are sold in green form. However, they offer several important benefits to sawmills, including cost savings on shipments, higher-grade lumber products with improved quality, and easier access to export markets that restrict entry of green lumber. For all of this reasons, as well as the fact that installation of a wastewood-fired energy system automatically provides a source of steam that can be used to heat a dry kiln, it is likely that any sawmill that is contemplating a wastewood energy system would also consider a dry kiln as part of the total energy system. For the purpose of this case study two dry kiln designs are considered, one that is sized to dry all of the high-grade lumber produced by the sawmill (single track), and one that is sized to dry all of the sawmills primary lumber (double track). The option of not drying lumber also is included among the alternatives. Financial analysis indicates that none of the of the six base-case system configurations meets acceptable investment criteria, defined here as a minimum real return on total investment of ten percent per year. The return calculation is predicated on an assumed price for exported power that ENEE might consider advantageous to pay, based on estimated utility avoided cost for generation. It does not reflect any possible net savings to the local transmission and distribution system, nor does it take into account environmental quality improvements and other economic externalities. At higher prices, which may prevail in the future as avoided costs increase, or as national policy intervenes to promote wastewood cogeneration for its social and environmental benefits, this and other power generation projects like it could be more advantageous. For the system to break even at a ten percent per year real cost of capital, the utility would have to pay an average of between Lempiras (Lps.) 0.68 and Lps. 1.15 per kilowatt hour for surplus power at the sawmill. If ENEE were prepared to pay a level Lps. 800 annually per kilowatt for the sawmills contribution to generating capacity, the system would then require a more modest, but still substantial Lps. 0.55 to Lps. 0.95 per kilowatt hour to provide the same return on investment. The capital costs of all of the system configurations are based on the purchase of new equipment for all components. Extensive use of high-quality, reconditioned used equipment could allow a drop in total project capital cost of as much as thirty percent of the levels estimated for the base-case configurations. Cost savings of this magnitude could make some configurations profitable at todays ENEE avoided costs, provided system reliability and longevity are not significantly compromised. At capacities between 300 and 475 kilowatts, the systems considered here suffer from adverse scale economies and from the fact that they represent high capital, low fuel cost options, which are generally profitable only if they produce revenues all day throughout the year. If a generator operates only intermittently or must compete with low-cost hydropower for much of the time, it will not easily pay for itself. Larger-scale systems may represent more viable investment opportunities for the handful of much larger sawmills in Honduras, especially if they are credited with the variety of additional benefits they could provide, including: 1. Improved disposal of solid wastes, with reductions in air and water pollution, 2. Decreased dependence on imported fossil fuels, 3. Reduced need for the development of new electric generating capacity on the part of ENEE, 4. Development of rural employment and industrialization opportunities.

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