Wood-Chip Heating Systems - Biomass Energy Resource Center

WOOD CHIP HEATING SYSTEMS
46
Berlin Elementary School, Berlin, Vermont
System Size: 1 MMBH
Manufacturer: Sylva Energy Systems
Photo at left shows boiler room addition to school and
ground-level loading doors (to right of boiler room).
Photo at right shows combustor (background) and
setting ( foreground). Boiler is located above setting.
Life-cycle costing also recognizes that different costs
may infl ate at different rates over time. For example,
competing fuels can be expected to infl ate in price at
different rates. Appropriate fuel price escalation rates
can be obtained from a variety of sources, including
state energy offi ces, utility regulatory bodies, and local
utilities.
When using infl ation rates and discount rates, you
should be consistent in applying either real or nominal
rates. Nominal rates include the rate of general
infl ation; real infl ation rates do not. For example, if oil
prices are expected to increase at a rate 2% greater than
general infl ation and general infl ation is 3%, then the
real oil price infl ation rate is 2% and the nominal rate
is 5%.
Once you have determined an appropriate discount
rate and infl ation rates, you can use life-cycle costing
to make judgments about the tradeoffs between
benefi ts and costs incurred at different points in time.
Simple payback and cash fl ow analyses cannot do this.
Life-cycle costing also enables you to evaluate on a
year-by-year basis the full range of benefi ts and costs
expected to be incurred over time.
The following section lays out some of the details
associated with performing a life-cycle cost analysis
of a potential biomass energy project. Software for
doing life-cycle cost analysis is available from a number
of sources, including the Building Life-Cycle Cost
(BLCC) computer software by the National Institute of
Standards and Technology (NIST). Prospective users of
commercial software for life-cycle cost analysis should
make sure that the methodology used meets their
particular objectives.
Life-Cycle Cost Assumptions and
Data Requirements
Choosing the right method for analyzing a
prospective investment in a biomass heating system is
the fi rst step in a good economic analysis. The second
step is using good assumptions in your analysis.
While particular software programs may require more
information, generally the important parameters
involved in doing a life-cycle costing analysis of a
wood-chip heating system are: