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Biomass - Procuring & Contracting for Success

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Lessons from Tipperary Energy Projects Biomass Projects …

Lessons from Tipperary Energy Projects Biomass Projects

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  • 1. Procuring and Contracting for Success Lessons from Tipperary’s Projects Paul Kenny, B.E. C. Eng. Chief Executive Tipperary Energy Agency Smart Eco Hub 26/03/14
  • 2. • Biomass installed as subcontract to large construction project in 2008 in Tipp. • Subcontractor and main contractor not aligned. • Biomass design, integration and execution poor. • Still “managing” and upgrading. There has to be a better way!! “biomass is crap” – Ireland “biomass is the norm” – EU TEA & LESC: initial
  • 3. • TEA directly contracted 4 Biomass LESC since 2011. (550,360,400 and 80 KW) • Aided a further 1.6MW (1.1MW built). • All biomass boilers running well, on budget delivering 60% saving. • Lots of problems that ESCO solved. • ESCO’s rewarded for high quality work. • 80% RES-H for NTCC TEA & LESC
  • 4. Thurles Leisure Centre & Source Arts Centre Heat load in kWh 1,500,000 Biomass cost €47,000 Equivalent LPG cost @55c/litre €115,000 Saving €68,000 Simple Payback in Months 30 10 Yr NPV €377,035 10 Yr IRR 59% • Contract: Design, Supply & Install plant & supply all heat & operate & maintain Case Studies
  • 5. Coolbawn Water Treatment Plant (EE & RE) Net Heat load in kWh 140,000 Biomass & EE ESCO cost for first 7 years €16,000 Equivalent Oil Cost €18,000 Saving over first 7 years of ESCO €20,300 Capital Cost to client €0 BEW Grant 35% CO2 Saving in Tonnes 47 • 7 yr Contract: Design, Supply, Finance & Install plant & supply all heat & operate & maintain (Energy efficiency and Renewable Energy) Case Studies
  • 6. • Short form for build + heat supply contract. • 2 stage – shorten to 2-4 players with demonstrated capability. • Life cycle procurement to get cheapest life cycle cost. • Let contractor size biomass / fossil share/ backup. • Let contractor provide fossil backup within price. • Let contractor maintain, fuel and worry. • Be clear you will pay for offloading this risk and get great value. • Contractor finance is not cheap. TEA advice on LESC
  • 7. • Risk Map. “known unknowns” • Assign risk to party best placed to deal with it. • Fuel price risk is expensive to offload. Index model? • Should supplier benefit/ suffer for changes beyond their control/ influence? • “unknown unknowns” • Clauses to manage • Renegotiate/ arbitrate • Floors/ ceilings • Termination Lessons - Risk
  • 8. TEA Projects 0 50,000 100,000 150,000 200,000 250,000 LIT Tipperary Thurles Leisure Centre Nenagh Leisure Centre Gurteen Agricultural College Coolbawn Water Treatment Plant Roscrea Leisure Centre Eurosperannum(€) Annual Heat Supply Cost (Oil vs Biomass) Annual heating cost – Biomass Annual Heating Cost Oil 63% savings, 3 year payback
  • 9. • Non profit, public good enterprise • Partnership approach • Energy management • Renewable energy and energy efficiency • Procurement, project mgmt. • Cost effective, value driven • Paul Kenny • Chief Executive • T: 052 7443090 • F: 052 7443012 • E: pkenny@tea.ie • W: www.tea.ie Tipperary Energy Agency

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