Building a carbon neutral distillery… meeting the energy challenge.

Our Principal Engineer, Andrew McGhee applies his 25 years of energy sector and distillery engineering experience to look at some of the answers.

We all know that emissions of CO2 have to be greatly reduced over the next very few years, and that distillers everywhere are working hard on how to achieve this.  The latest Environmental Strategy Report from the Scotch Whisky Association shows the distilling industry leading the charge, reporting that the 2020 target for reducing fossil fuel use has been smashed, with 28% of primary energy now coming from non-fossil fuels.

But there’s no getting away from the fact that distilling is an energy intensive process, so what is the beleaguered energy or environment manager to do?  The good news is that there are lots of options out there.  That’s also the bad news – because no single one of these options is “the best” in every situation.  So there’s a need for careful assessment (by that beleaguered energy manager) on a case-by-case basis.  We at re:heat – biomass installers and low carbon heat consultants – believe that there is a place for all of the options; that no individual option can do it all. If anyone tells you that that theirs is the best solution in every case, then you’re clearly talking to a salesman – not an engineer or sustainable energy professional.

Maximising energy efficiency across every stage of a process should be a given. Your insulation should be good, your steam leaks should be eliminated, and waste heat should be recovered and beneficially reused wherever practicable.  Apart from that, there are dozens of ways of reducing energy use, from the cheap & simple to the hugely complex and expensive.  Which ones are justified (or justifiable) on any particular site depends on the size of the site and the price of your energy, amongst other things.  But one universal truth is that however much you work on energy efficiency improvement, you’re still going to need a source of energy which is as close to zero carbon as possible.

So, what are the main options for carbon neutral heat?

Electrification.  It’s perfectly possible to generate heat from electricity – either directly or by using a heat pump.  Electrical heat is clean and easy – we use it every time we make a cup of tea or coffee.  Some will tell you it’s 100% efficient, but of course that is misleading.  The main problems with electrical heat are that it’s expensive, and the UK’s power grid simply can’t support generation and distribution on the scale required to fully decarbonise our heat, not to mention our transport.

The price problem can be reduced with high temperature (steam raising) heat pumps, however, they’re not widely used or proven yet in industrial applications.  Also, to qualify for RHI support, heat pumps can only use air or ground source – not waste process heat, and air/ground source high temperature heat pumps have low coefficients of performance due to the high temperature uplift required.

The other broader problem with the electrification of heat is a looming power generation squeeze in the UK.  Six of the UK’s 7 existing nuclear power stations and all of the coal fired stations are expected to shut down within the next 10 years, although there should be a new nuclear plant coming online soon – Hinkley C in Somerset, which is projected to begin providing power to the grid in around 2026, and will provide around 7% of the UK’s electricity needs.  But with the UK’s current nuclear fleet providing around 20%, you can see the problem.  Add to that an increasing demand from the electrification of transport, and the power squeeze is apparent.

Increased renewable generation – especially offshore wind – will fill some of the gap, but it’s doubtful whether the grid (generation or distribution) can support the widespread deployment of heat electrification without huge infrastructure investment.  Electrification of heat could be viable if you can generate power locally – tidal power on Islay or Scapa Flow for example, but these sorts of options are limited in scope and scale.  So, there is a place for some electrification of heat, but it is by no means the panacea for the 2020’s that some claim.

Hydrogen. Great fuel, zero emissions – what’s not to like?  Well, there is currently nowhere near enough of it to go round!  You can make it from water and electricity, but the poor energy conversion efficiency means you would be better off just using the electricity directly.  Really, hydrogen is an energy storage medium – not an energy source.  It’s also very expensive at the moment.  

As the hydrogen market develops over the next few years, supply will increase and prices will drop, but it’s probably a decade or more away from helping that poor energy manager, and the UK government has big ambitions for using hydrogen in the existing fossil gas grid.  The hydrogen industry needs support because it’s certainly a part of the future energy mix, but it’s not ready to help many people with 2030 emissions targets to meet, particularly if they’re off the gas grid.

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Biomass. People have been burning wood for thousands of years to raise heat, and in 2020 it still constitutes the world’s largest non-fossil source of energy.  It’s renewable, the technology is proven, there’s an established supply chain, and you can have a system up and running in a year.

As this opinion is coming from a biomass company, you’d expect us to claim that it’s the answer to everything, right?  Well, no, we don’t think it’s for everyone.  Again, there’s not enough wood available at present to cater for the entire distilling sector, and you really want to be in an area with an established forestry and wood products industry, because wood fuel is bulky. We wouldn’t recommend it in Shetland for example, but there’s no escaping the fact that wood is without doubt one of the most cost-effective emission reduction strategies which can be implemented at scale now. We’ll come to the debate about whether using wood is really helping lower CO2 emissions in part 2.

Biogas / bio-propane.  Both natural gas and LPG (propane) can be manufactured from biogenic origins, so that the CO2 released on combustion has previously been drawn from the atmosphere by plants. Both are chemically identical to their fossil equivalents, but again (are you getting the pattern yet?) there is not enough of either material available to satisfy the needs of the whole distilling industry.

Vegetable oils can also displace fuel oil in boilers for steam generation.  Some oils are cost competitive with fossil oil and proven in industrial application.  They do have one or two operational problems, but nothing that can’t be overcome.  However, the supply of vegetable fuels oil is very limited, and heat users will have to compete with the transport sector for the available resource.

Geothermal energy.  The deeper you drill, the hotter it gets.  Unfortunately, to get steam you have to go really deep, and the upfront capital cost gets quite daunting.  If you have a distillery in Iceland or Turkey, you probably know about this already, but there are a few areas in the UK with real geothermal potential. Worth checking out, but entirely dependent on local geology.

Biogenic carbon capture. For every 100 tonnes of CO2 which goes up the chimney from the boiler, over 30 tonnes is vented cold and pure from the fermentation process. That cold pure CO2 is ideal for re-use or sequestration.  You have to be careful where that CO2 goes, but with geological sequestration projects alive and kicking in the UK, there is potential there. Unfortunately, it’s probably too far out for your 2030 targets, but do I dare suggest that whisky production could viably have negative emissions in the future by making use of this mechanism?

Alternative raw materials.  Pea gin anyone?  A tip of the hat to Arbikie Distillery in Angus, but this is probably not able to be rolled out on a large scale – and definitely not in the making of scotch whisky!

The main point here is that there isn’t enough of any one of these resources to supply all of Scotland’s distilleries.  Most or all of these solutions are required if the industry – and not just individual distilleries – is to achieve carbon neutrality.

re:heat offer biomass solutions which are widely deployed and well proven in the distilling sector, so that’s what we’ll focus on in part 2 of this post, coming soon.

Email andrew@reheat.uk.com to find out more about carbon neutral distilling and the solutions on offer.

Is Biomass Still Feasible?

Back in the mists of time, before the Renewable Heat Incentive showed us all that wood actually burns, feasibility studies played a key role in establishing the technical and economic case for every biomass heating project.  They were considered such an important stage that Forestry Commission Scotland produced a 12 page ‘how to’ guide on producing one in 2011.  But for some reason they had disappeared from the decision-making process until very recently.

McMurdo Antarctic Station

I’ve personally completed at least a couple of hundred for any number of buildings, including sites as disparate as the US Antarctic bases at McMurdo Sound and the South Pole, through to Balfour Castle – the remote calendar house on Shapinsay.  So what happened?  Why did the previously critical step of the feasibility study disappear from the process of installing a biomass boiler, and what have been the implications?

As with most things in the sector, the answer lies with the RHI, which since it was introduced in November 2011 has been almost the only reason anyone has installed a wood-fired boiler.  Because the biomass industry was starting from such a low base, uptake was slow at first – the supply chain simply wasn’t in place to deliver much more than a few dozen new installations a month, and even a year after it was launched, monthly registrations were still below 200.

Feasibility studies were typically still a part of the decision-making process at this point, and crucially, there was no particular time pressure on customers to commit to a purchase.  All this changed in early 2013, when the unregulated nature of the sector and almost uniformly compelling economic case for biomass saw countless new companies pile in to the opportunity created by the RHI.  Such was the rate of installations that August 2013 saw the RHI hit a ‘degression trigger’ – a pre-determined point at which the per-kWh payments would be reduced for new projects to slow the sector down.

Rather than having the desired effect, the fear of degression actually drove the number of installations up, and the relatively organic growth of late 2013/early 2014 – around 400 systems a month – turned into monthly peaks of over 1,000, then 1,500 and finally 2,200 biomass boiler registrations in December that year.  While a ten-fold increase in the installation rate of biomass boilers might sound like a good thing for meeting targets, there’s compelling evidence from industry and government research that a great many of the installations that happened in this period were simply not fit for purpose.

The insistent drum beat of the RHI and its quarterly degressions had the effect of removing the crucial feasibility study phase from almost every project that went ahead.  As 2014 progressed and the market overheated, the formal design process and – in some cases – even detailed quotations were skipped in the rush to complete the sale, installation and registration process.  I’ve seen half-page quotations for £200,000 engineering projects and layouts for projects in listed buildings scrawled on the back of envelopes dating from the boom years of the RHI.

So, on to the $64m question – is a biomass heating project still feasible?  Well, that crucial first step of a feasibility study will help to determine the technical and economic case for any project, and broadly speaking, biomass still makes sense for most off-gas applications.  The ‘shape’ of the RHI has changed in the last couple of years, there’s been the removal of tariff banding and the attendant loss of the sweet spots of 199kW and 999kW, as well as the doubling of the Tier 1 threshold to 3,066 full load hours.  This removes the incentive to design around the tariff structure, and means that installers can now provide a proposal which is untainted by the tail-wagging-the-dog perversities of the tariff bands.

A feasibility study for a project in 2019 will typically demonstrate an 8-12 year payback for most rural installations, and should also set out the various practicalities of taking a scheme forward – from fuel delivery vehicle access to planning permission requirements, boiler size to chimney height.  With the invariably high investment costs associated with biomass projects; the technical complexity associated with delivering a safe, efficient and easy-to-operate scheme; and the relatively complex legislative environment that often applies to rural projects, I’d argue that having a feasibility study carried out prior to taking a project forward is more important than ever.Ben Tansey meeting with Land Agent

The RHI closes to new applications on 31 March 2021, meaning the clock is ticking for those thinking of taking a project forward.  UK government are playing their cards very close to their chest when it comes post RHI-support for the decarbonisation of heat, but taking us to Net Zero carbon emissions by 2050 (and ideally a lot sooner) means something will invariably be required.  Most informed observers believe that this will be a combination of sticks and carrots – most likely a levy or tax imposed on fossil heating fuels which ratchets up year-on-year, coupled with reducing levels of financial support for those making the change to renewable sources of heat.  Over time the carrots will get smaller and the sticks will get bigger – both will deliver the desired outcome, it’s just a question of how much pain the end user will have to bear.

A Warm Welcome for RHI Ireland

A Warm Welcome for RHI Ireland, by Steve Luker, Principal Consultant

Steve Luker, Principal ConsultantMinister Naughten has just announced details about the RHI in Ireland, and we now know there are going to be four bands of payments for biomass produced heat.

The first 300/MWh will be paid at €56.60/MWh, the next 700MWh will be at €30.20/MWh, the next 9,000/MWh at €5.00/MWh and a final 40,000/MWh at €3.70/MWh. There are no payments above 50,000/MWh.

This is quite different from the GB and Northern Irish RHI schemes. To me this seems to be a sophisticated and sensible approach as there is no incentive to over or under size systems, or ‘sweet spots’ that have undermined schemes elsehwere. The size of systems can be dependent upon the heat load and its profile, as it should be. It is clear that the designers of the Irish RHI have learnt the lessons from the GB and Northern Ireland schemes, we should welcome this.

When thinking about the market opportunities, applications such as hospitals, hotels, schools and care homes should represent good places to start. Even better will be swimming pools that have lower peak loads, and base load applications should be attractive in all circumstances.  The trick will be to maximise the 1,000MWh covered by the two highest tariffs and make best use of the capital invested through running installations of around 300kW to 400kW at about 3,000 full load hours. Installations such as this can secure the €38,000 annually offered by the two highest tariffs, whereas a year a MW of capacity running at 1,000 full load hours only secures the same income – but would clearly cost a lot more to install.

Although the devil will inevitably be in the detail, this scheme should be warmly welcomed by the industry and its potential customers. It is great to say it should help drive sensible design and investment choices and maximise the cost effective replacement of fossil fuel heat.

 

The 2016 non-domestic RHI reform and biomass heat

I think any comments about the RHI reform should start with the point that we are very lucky to have a 20 year output-based, state funded support mechanism for renewable heat.  Whatever its foibles and whatever our quibbles; its better than not having state funded support; it has made a major difference and will continue to do so.

The background to the reforms was that in November 2015 Government renewed its commitment to the ‘transition to a low carbon economy’ by confirming a continued budget for the RHI out to 2020/21.  This left the biomass industry hanging, and it wasn’t until March 2016 that Government set out its initial proposals for RHI reform.  Then finally on 14th December 2016, it published proposals for reform of the scheme following its consultation. These reforms will be implemented in April 2017.

Those 12 months of uncertainty have been unhelpful to say the least.  But as Government puts it :

By confirming the available budget up to 2020/21 and setting out a number of reforms to how the scheme will operate, the RHI now provides the level of certainty needed for consumers and industry to invest in renewable heating and for the market to transition towards being sustainable without Government support in future’.

It is of course most welcome that the proposed RHI reform is published and uncertainty has been removed.  This in itself will probably stimulate new investment and no doubt activate some dormant projects.  Although it is ironic that a scheme designed to grow renewable heat created uncertainty and reduced investment for a whole year.

The final comment ‘without Government support in the future’ is a clear signal that the RHI is not likely to be around after 2021, but as even mature biomass sectors elsewhere in Europe still benefit from support, there will need to be something post 2021.

In more specific terms, the reforms offer two things of note in terms of biomass heat :

  • Tariff guarantees, offering investors greater certainty regarding their tariffs earlier in the project cycle;
  • The three current biomass tariff bands will be replaced with a single tariff, which will be subject to tiering.  The Tier 1 tariff will be set at 2.91p/kWh and the Tier 2 tariff at 2.05p/kWh. Each plant will have a tier threshold equivalent to a 35% load factor.

My own immediate reaction was these reforms spell would spell the end of smaller biomass projects in mains gas areas and that only projects above 1MW would be strongly viable. But the 35% load factor is a more significant change than is first apparent.

Under the new single tariff and a 35% load factor the capacity of the biomass boiler is not such a good indicator of the viability as it was under the three bands of payments.

What will matter now is higher stable heat loads that get to the 3,000 full load hours. For example a 200kW scheme providing 600MWh of total annual heat (a small or medium sized secondary school for example) will get £17,500 a year RHI income.  Remember under the old scheme a 199KW scheme delivering 1,314 run hours got £8,106 a year RHI income: its all about ‘sweating the asset’.

It will be interesting to see how designers and installers go about getting to 3,000 run hours, and this will have significant implications for the sizing and specification of equipment that is capable and warrantied for longer harder working hours.  But actually it feels a sensible move in terms of directing investment and design/specification choices to make the most difference.  It will certainly be better than the 3 bands it replaces.

Furthermore the impact of the reforms above 1MW is unambiguously positive compared to before, so despite my initial reaction, I find myself wishing to congratulate the team who delivered the RHI reform.  Maybe there is even scope for a little focus of quality standards as we move forward?

 

The full RHI reform document is available to download here.

Delivering Renewable Heat – what have targets got to do with it?

Renewable Heat Targets by Steve Luker, Principal Consultant

Back in 2009 we set ourselves some very interesting renewables targets for 2020.  I never quite forgot them, but maybe others did? Theoretically of course they are binding, and you’ll certainly never hear a politician express a scintilla of doubt about this or that policy that will help us meet these targets.  But they get closer everyday.

So as we are only 4 years away, I wanted to examine where we are with the Renewable Heat Target and the role of biomass heat in delivering this.  For this blog I decided to focus on Scotland, as there is some interesting new data that allows a clear focus on this.

For some reason never made clear to me, the Scottish Renewable Heat Target for 2020 is 11%, whereas the UKs target is 12%.  If anyone knows why I’d be interested.

Beyond the obvious question of whether we will actually meet the 11% target, it’s particularly interesting as the Scottish Government is embarking on an energy review and is setting out its objectives for post-2020.  Here’s my attempt to make sense of where we are now.

What do our Renewable Heat Targets imply?

If the Scottish Renewable Heat Target is going to be met by 2020, then 6,420GWhs of annual renewable heat output are needed by that date. At present, Scotland produces 3,031GWhs of renewable heat annually.  Biomass heat contributes 1,716GWhs of that total at present, and biomass CHP contributes most of the rest.

We can roughly calculate how many heat only biomass installations 1,716GWhs is equal to, as each MW of installed capacity provides around 2,600MWhs of heat output.  On that basis, the current biomass heat output represents roughly 660MW’s of installed capacity.  If it is helpful, that’s a bit like 1½ Eon Lockerbie biomass power stations spread over several thousand schools, care homes, swimming pools, rural estates and hospitals.

In present day cash terms it represents £561 million of investment in renewable heat capacity, which I’d say has taken around 15 years to deliver.  A great achievement, if somewhat modest compared to many other northern European countries.

Now, here’s the important bit:

If we simply assume biomass heat will constitute the same proportion of our renewable heat in 2020 (57%), and that the 6,420GWhs of heat is actually provided (the 11% target); then an additional 2,000GWhs of biomass heat must be provided by 2020.  I should say to assume biomass CHP provides a bit more is perfectly reasonable, but if you ‘do the math’ on all other forms of renewable heat (heat pumps and AD), you’ll quickly see they can’t deliver anything like what is needed – never mind making up any biomass shortfall.  In other words, biomass heat may well need to be more than 57%, but lets stick with this figure for now…

192 New MW a Year

So biomass heat has a key role to play in meeting our Renewable Heat Target, and for modelling purposes this can be split into 4 years, which requires 500GWhs of biomass heat output to be added annually.

That means 192MWs of new installed capacity must be added each year for 4 years.

Having got this far, I began to sense a ‘few issues’ about the scale of that challenge…

We know that 1MW of good quality biomass heat capacity costs about £850,000 to install.  As we need 192MWs a year, that requires annual capital investment to run at £163 million for 4 years in row, and £652 million in total : more than has been achieved in the last 15 years combined.

If we assume an average installation size of 250kW, it means 768 installation contracts a year, each worth about £212,500.  Bringing that down to monthly figures it comes to 64 installs a month with a monthly spend rate of £13.6 million.

Typically, each MW of biomass heat capacity creates 2 FTE jobs, so around 1,500 new jobs would be created if 2,000GWhs of biomass heat were produced. In employment terms that would make the sector over 10 times bigger than it is now.

Each scheme will take around 4 to 6 months to plan, design and install. Biomass heat installs require a range of design and contracting skills in M&E, civils, architecture, engineering and a co-ordination expert in biomass to oversee this.

Can we achieve our targets?

There are no reliable figures on how many companies are involved in the design and installation of biomass heat just now.  My own guess is that we have around 10 to 15 specialist biomass companies based in or operating in Scotland, with fewer than 150 direct employees in total. Many others are involved in services like M&E design and civils works, and get involved biomass heat installations alongside their day to day civils contracting, heating and plumbing etc.

Total sector capacity could probably expand quite quickly, but key skills shortages in specialist areas like biomass boiler specification/commissioning and fuel handling  system design will hamper progress.  However, even if demand were to actually run at 64 x 250kW installs a month, it is hard to see how the required capacity could be mobilised sufficiently quickly (i.e. early on in the 4 years we have remaining).

I have reached the clear conclusion that unless things change, the Scottish Government will fall way short of its 2020 renewable heat target.  I do have some thoughts on what could be done to help.  More to follow next week…

When pellets are not actually pellets

Cheap ‘Pellets’ – do they actually provide a saving, even in the short term?

When the re:heat engineers were asked if they could come and help with a re-commission of a boiler operating on a cheap batch of ‘wood pellets’ we responded with a cautious ‘well, we’ll come and have a look and see what we can do’.  As a customer focussed business, keen as ever to keep our clients happy, we thought we’d call in and take a look……… take a look at what we found: