The inadequate transportation infrastructure and undeveloped markets for sawmill residues in southeast Alaska are among the factors that limit the use of this forest resource. This study considers the potential use of sawmill residues to supply two bioenergy systems that would produce thermal energy for (1) community heating and (2) a lumber dry kiln in Hoonah, Alaska. The proposed community heating system would be a direct combustion system, burning approximately 1,450 green tons (1.315 green metric kilotons) of wood fuel per year to provide heating for seven centrally located buildings in Hoonah. Additional sawmill residues would be used in another system to provide process heat for a proposed 25,000 board foot (41.3 m3) dry kiln. The Hoonah sawmill typically produces as much as 5 million board feet (8,255 m3) of lumber per year, primarily from western hemlock and Sitka spruce. The processing of this amount of lumber would result in an adequate volume of residue to provide a fuel source for the heating requirements of the proposed projects. Wood residue from the sawmill is assumed to be available at no cost other than for transportation. Use of wood fuel for community heating would save an estimated 65,000 gallons (2.47 kL) of heating oil per year. Avoided fuel costs would be approximately $91,500 per year based on No. 2 fuel oil at a market price of $1.40 per gallon ($0.37 per liter). Based on a project life of 25 years and a contingency rate of 25%, the expected after-tax internal rate of return (IRR) for the community heating portion of the project is 29.6%. Total installed costs for the 1,195,000 Btu/h (350 kWthermal) community heating system, including distribution piping and its installation and backup oil systems, are estimated to be $631,000. For the lumber dry kiln, in the second heat-generating system, economic results were less favorable, with expected energy savings of $82,900 per year and an after-tax IRR of 24.1% (also assuming 25% contingency). Estimated installed cost of the 1,536,000 Btu/h (450 kWthermal) dry kiln system with a backup oil system is $513,800.
Nicholls, David L.; Zerbe, John I.; Bergman, Richard D.; Crimp, Peter M. 2004. Use of wood energy for lumber drying and community heating in southeast Alaska. Gen. Tech. Rep. FPL-GTR-152. Madison, WI: U.S. Department of Agriculture, Forest Service, Forest Products Laboratory. 14 pages