3234 Chapter 26 



Fuel costs, however, are only one consideration in the total economic picture. 

 Wood-fired boilers cost more and are more expensive to maintain than oil or gas- 

 fired units. Koch and Mullen (1971) indicated that a steam boiler for burning 

 bark and oil would cost about twice as much as a boiler using oil only. Similar 

 cost comparisons have been noted by Corder ( 1 973) . Salo et al . ( 1 978) estimated 

 capital costs for installing new wood-fired steam boilers at about $ 13 million and 

 $25 million for 155,000 and 387,000 Ib/hr units. Annual operating and mainte- 

 nance costs were projected at 1 .4 and 2.8 million dollars. To retrofit an oil-fired 

 boiler (1400 Bbl/day) to an 850 ovendry ton/day wood-fired unit would result in 

 an additional capital investment of $21.5 million and an increase in annual 

 operating and maintenance costs of $2.3 million, but would decrease fuel costs 

 $4.2 million annually (1978 basis). 



The economics of changing to wood fuel will be site-specific. Pingrey and 

 Waggoner ( 1 978) and Salo et al . ( 1 978) indicate there is general lack of econom- 

 ic incentive to change based on fuel savings alone. Salo et al. suggest an early 

 retirement tax credit or an investment tax credit to encourage the use of wood as 

 a fuel. 



The economics of converting the pine-site hardwoods to other energy-related 

 products is subject to considerable uncertainty because most of the conversion 

 processes are not yet widely used. Additionally, costs of harvesting such hard- 

 woods with conventional equipment are sometimes excessive. Several studies 

 have been made to estimate the cost of converting wood into various energy 

 forms, and the projected costs vary considerably. For example, the projected 

 price of methanol from wood ranges from 400/gallon to 980/gallon. Such differ- 

 ences occur because different variables are used in the models to make the 

 projections. The most obvious variables include feedstock cost, production plant 

 size, and the amount of return on investment. 



In a Mitre Corp. study, Salo et al. (1978) estimate the plant gate selling prices 

 for various wood-derived energy products in order to assess the near-term 

 potential (table 26-18). These values should be considered optimistic as feed- 

 stock costs are very low and a 10 percent rate of return was used on all products 

 for comparison purposes. For the methanol, ammonia, and ethanol, this rate 

 would probably be too low to be attractive to a private enterprise. The conclusion 

 was that direct combustion of wood fuel is probably the best option for the forest 

 products industry. The study indicated that thorough gasification of wood to low 

 Btu gas should be studied to determine the potential of such gasification for 

 large-scale industrial applications such as pulp mills. 



Stanford Research Institute is preparing an economic report on wood energy 

 processes likely to achieve commercialization by 1985 (table 26-19) (Schooley 

 et al. 1978). The base case assumes feedstock cost of $30/dry ton while the 

 optimistic case assumes $20/dry ton. The model assumes no subsidies or tax 

 incentives and 15 percent return on investment. 



In 1981 the Solar Research Institute (Flaim and Hill 1981) found that metha- 

 nol from forest biomass could be produced at a total cost, including maintenance 



