Lessons from Tipperary Energy Projects Biomass Projects

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