Report Mali Zvornik

Report
Pre-Feasibility Studies on 4 Biomass plants for

District Heating Companies in Serbia
Client
Ministry of Mining and Energy

KfW Entwicklungsbank
Document title
Sub-report: Mali Zvornik
Document date
21.10.2015
Revision: 0
This report is an amendment to the previous studies prepared in

2014: Pre-Feasibility Studies on 15 Biomass CHP-plants for District
Heating Companies in Serbia
iC consulenten Ziviltechniker GesmbH

Schnbrunner Strasse 297, 1120 Vienna, Austria
T +43 1 521 69-0, F +43 1 521 69-180
office@ic-group.org, www.ic-group.org
FN 137252 t
EN ISO 9001
In association with
M:\52_CES\15187_KfW_Srb_4_DHC_HoB\5_Arbeit\Reports\151021_Report Mali Zvornik.docx

Pre-Feasibility Studies on 4 Biomass plants for District Heating Companies in Serbia iC consulenten
Sub-report: Mali Zvornik 21.10.2015
DOCUMENT CONTROL SHEET
PROJECT NUMBER: 52x15187 - Reference Number: 312-01-00603/2012-10
PREPARED BY: iC consulenten Ziviltechniker GesmbH

Felix Eckert
Schnbrunner Strasse 297, A-1120 Vienna, Austria
Tel: +43 1 521 69 - 267
Fax: +43 1 521 69 180
E-Mail: f.eckert@ic-group.org
PREPARED FOR: Ministry of Mining and Energy

Attn. Biljana Ramic
Reference Number: 312-01-00603/2012-10
Address: Kralja Milana Street 36, 11000 Belgrade, Serbia
Phone: +381-(0)11-3604518
Fax:
E-Mail: biljana.ramic@mre.gov.rs
PREPARED FOR: KfW Entwicklungsbank

Attn. Bodo Schmlling, Dept. LE a 3
Address: Palmengartenstr.5-9, 60325 Frankfurt am Main, Germany
Phone: + 49 69 7431-2307
Fax:
E-Mail: bodo.schmuelling@kfw.de
DATE: 21.10.2015
EDITOR: iC - ECKERT Felix, B. Brndle, M. Watzal, V. Milijic, P. Vasilijevic
Date Revision No. Editor Checked by Approved by Signature
21.10.2015 Rev. 0 B.Brndle et al. Eckert Helbl

xxx Rev. 1
xxx Rev. 2
Revision: 0 Page I
CONTENT
1. Executive Summary .......................................................................................................... 1

1.1. Data Collection ........................................................................................................................... 1
1.2. The project ................................................................................................................................. 1
1.3. Recommendation ....................................................................................................................... 2
2. Introduction ..................................................................................................................... 2
3. Heat Market Analyses ....................................................................................................... 3
3.1. Toplanas production statistics................................................................................................... 3
3.2. Urban development ................................................................................................................... 4
3.3. Current total heat load ............................................................................................................... 4
3.4. Current annual load duration curve ........................................................................................... 4
3.5. The forecasts on the heat load and load duration ..................................................................... 5
3.6. Potential future heat demand .................................................................................................... 7
4. Technical Design Concepts ................................................................................................ 8
4.1. Current situation ........................................................................................................................ 8
4.1.1. Heat generation.......................................................................................................................... 8
4.1.2. District heating network ............................................................................................................. 9
4.1.3. Individual Sub-stations ............................................................................................................. 10
4.2. Discussion of different concepts .............................................................................................. 11
4.3. Prefered design concept .......................................................................................................... 11
4.3.1. Description of preferred HoB concept ..................................................................................... 11
4.3.2. Project site and storage area.................................................................................................... 15
4.3.3. Operating regime ..................................................................................................................... 17
4.3.4. Backup system .......................................................................................................................... 18
4.3.5. On Site Biomass Logistic ........................................................................................................... 19
4.3.6. Environmental and social concerns.......................................................................................... 19
4.3.7. Complementary investments ................................................................................................... 20
5. Biomass procurement and valuation ............................................................................... 21
5.1. Supply of biomass and costs .................................................................................................... 22
5.2. Potential biomass suppliers ..................................................................................................... 25
5.3. Price evaluation of wood chip deliveries.................................................................................. 26
5.4. Key contract conditions for wood chips tendering .................................................................. 27
6. Cost estimate ................................................................................................................. 31
6.1. Investment costs ...................................................................................................................... 31
6.2. Complementary Investment Costs ........................................................................................... 32
Revision: 0 Page II
6.3. Operation and maintenance costs ........................................................................................... 32

7. Preliminary Financial Analyses ........................................................................................ 32
7.1. Financial cost benefit analysis .................................................................................................. 32
7.2. Economic cost benefit analysis ................................................................................................ 36
7.2.1. Economic performance ............................................................................................................ 36
7.2.2. Levelized Unit Costs LUC ....................................................................................................... 36
7.3. Sensitivity Analysis ................................................................................................................... 38
7.4. Tariff structure.......................................................................................................................... 39
7.5. DHCs current financial situation and debt capacity ................................................................ 40
7.5.1. Projection of financial statements ........................................................................................... 41
7.5.2. Evaluation of debt capacity ...................................................................................................... 46
7.5.3. Projection of implementation of the HOB project in the Toplana ........................................... 46
7.6. Municipalities financial situation and debt capacity ............................................................... 49
8. Institutional Analyses ..................................................................................................... 49
8.1. Internal organisation of the Toplanas ...................................................................................... 49
8.2. Staff capabilities and Institutional technical capacity .............................................................. 50
8.3. Future Training and Recruitment policy ................................................................................... 50
ANNEXE
Annex 1 Basic Characteristic table
TABLES
Table 1: Technical and economical key figures ....................................................................................... 2

Table 2: Current heat generation facilities ............................................................................................. 8
Table 3: Key data of the DH network ...................................................................................................... 9
Table 4: Main data of the boilers of the heating plant ......................................................................... 11
Table 5: Preconditions for the design of biomass HoBs........................................................................ 11
Table 6: Key data of the biomass HoB................................................................................................... 12
Table 7: Key data of the fossil fired back-up boiler............................................................................... 19
Table 8: Key data for the on-site biomass logistic................................................................................. 19
Table 9: Main data of the network to be replaced ............................................................................... 21
Table 10: Biomass equipment costs ...................................................................................................... 22
Table 11: Operational costs of wood chips procurement ..................................................................... 24
Table 12: Woody biomass buyers from Mali Zvornik municipality ....................................................... 25
Table 13: Wood chips producers in the area ........................................................................................ 25
Table 14: Sawmills from Mali Zvornik region ........................................................................................ 25
Table 15: Correction factors for wood chips prices .............................................................................. 29
Revision: 0 Page III

Table 16: Key tendering conditions for wood chips supply .................................................................. 30
Table 17: Investment costs for the heating station .............................................................................. 32
Table 18: Complementary investment costs......................................................................................... 32
Table 19: Approach for operation and maintenance costs................................................................... 32
Table 20: Projection of operations and Net Cash Flows (NCF) Variant HOB...................................... 33
Table 21: Projection of operations and Net Cash Flows (NCF) Variant HOB...................................... 35
Table 22: Economic Evaluation Format Variant HOB ......................................................................... 37
Table 23: Levelized Unit Cost Format Variant HOB ............................................................................ 37
Table 24: Summary of results................................................................................................................ 38
Table 25: Sensitivities on individual values of parameters ................................................................... 39
Table 26: Tariff rates ............................................................................................................................. 39
Table 27: Profit and loss statements ..................................................................................................... 40
Table 28: Balance Sheets....................................................................................................................... 41
Table 29: Projected Profit and Loss Statements WITHOUT project scenario .................................... 43
Table 30: Projected Balance Sheets WITHOUT project scenario ....................................................... 44
Table 31: Projected Free Cash Flows WITHOUT project scenario ...................................................... 45
Table 32: Projected Profit and Loss Statement Toplana WITH the project ....................................... 47
Table 33: Projected Balance Sheet Toplana WITH the project .......................................................... 48
FIGURES
Figure 1: Heat Production statistics of the last 3 years (according to toplanas data) ........................... 3
Figure 2: Connected square meters of the last 3 years .......................................................................... 4
Figure 3: Current load duration curve ..................................................................................................... 5
Figure 4: Future load duration curve of the first year............................................................................. 6
Figure 5: Future load duration curve at the end of the investigation period (year 20) .......................... 6
Figure 6: Forecast on the networks heat demand ................................................................................. 7
Figure 7: Forecast on fuel demand for the no project case .................................................................... 8
Figure 8: Network plan .......................................................................................................................... 10
Figure 9: Boiler capacities placed in the heat load curve of the first year ............................................ 12
Figure 10: Boilers capacities placed in the heat load curve at the end of the investigation period (year
20)............................................................................................................................................. 13
Figure 11: Forecast on fuel demands .................................................................................................... 13
Figure 12: Forecast on shares of heat generation by types of boilers .................................................. 14
Figure 13: Location of the new heating station .................................................................................... 15
Figure 14: Site for the biomass HOB plant ............................................................................................ 16
Figure 15: Site for fuel storage .............................................................................................................. 16
Figure 16: Site for the boiler house ....................................................................................................... 17
Figure 17: CO2 balance of the project ................................................................................................... 20
Figure 18: Expected price of wood chips .............................................................................................. 27
Figure 19: Fossil fuel price developments ............................................................................................. 33
Figure 20: Sensitivity of IRR on changes in key parameters.................................................................. 39
Figure 21: Organizational chart ............................................................................................................. 50
Revision: 0 Page IV
ABBREVIATIONS:
BOT Build-Operate-Transfer scheme

CAPEX Capital Expenditures
CO2 Carbon dioxide
CHP Combined heat and power plant
CPI Consumer Price Index
DBOT Design-Build-Operate-Transfer scheme
DH District heating
DHC District heating company, Toplana
DHW Domestic Hot Water
DSCR Debt Service Coverage Ratio
EBITDA Earnings before interest, taxes, depreciation and amortization
EIRR Economic Internal Rate of Return
EE Energy efficiency
ERU Emission Reduction Unit
ESDD Environmental and Social Due Diligence
ESCO Energy service company
FSC Forest Stewardship Council
GHG greenhouse gas
HoB Heating only boiler
IHS Individual Heating Substation
IRR Internal Rate of Return
ktoe thousand tons of oil equivalent (=11.63 MWh)
LUC Levelized Unit Costs
LFO Light fuel oil
LPG Liquefied petroleum gas
MoME Ministry of Mining and Energy
MWh Megawatt hours
MWt Megawatt, thermal
NOx Nitrogen oxide
NPV Net Present Value
OPEX Operational Expenditures
PEFC Programme for the Endorsement of Forest Certification
PPP Public private partnership
RSD Serbian Dinar
SO2 Sulfur dioxide
SPV Special purpose vehicle (or special purpose entity SPE)
ToR Terms of reference
U-factor or U-value, is the overall heat transfer coefficient
VAT Value added tax
Revision: 0 Page V
1. EXECUTIVE SUMMARY
1.1. DATA COLLECTION
Economical and technical data of the last 3 years have been collected to elaborate a
baseline. Reliable data to be provided by the DHC is:
Monthly fuel consumption

Heat delivered to the end consumers (heat meters!)
Network length
Supplied square meters (connected area)
Boiler efficiencies (plausible values)
The only data based on measurements are the monthly natural gas demand of all 3
boilers and the consumed heat of each building as heat meters have been installed in
the last year which led to a significant decrease of the heat demand. The DH system is
characterized by well dimensioned generating facilities (6,6 MW boiler capacity) fuelled
with natural gas. The network shows a good capacity density, moderate heat density
and heat losses but high water losses. The network is very old and there is an urgent
need to replace the entire network. The DHC operates one network which was subject
of the investigation. Other characteristics are:
100% natural gas as fuel

no automatically controlled sub-stations
all buildings equipped with heat meters
heat consumption based billing
1.2. THE PROJECT
The project is to substitute the fossil fired boilers by a biomass boiler on wood chips. A
fossil fuelled boiler acts as back-up system. In the region there is more than sufficient
wood biomass available, there is a suitable green-field location available where a
connection to the heating network is possible.
The biomass HoB heating station is characterized by:
Wood chips as main fuel to substitute natural gas

Green field solution
Transport pipeline to the city centre required
Key figure Value

Heating capacity of biomass HoB 1,8 MW
Heating capacity of the fossil fired back-up boiler 5,5 MW
Share of biomass HoB on total heat production 84%
Yearly CO2 savings compared to no project 807 tons
Mean yearly heat generation 4,3 GWh
Mean yearly biomass demand 4,3 GWh
Mean yearly natural gas demand 0,7 GWh
CAPEX (in Mio. EUR) 2,15
Revision: 0 Page 1
Complementary Investment Costs (in Mio. EUR) 0,23

Financial IRR -3.4%
NPV in Mio. EUR -0.9
LUC in RSD/KWh 0.08
EIRR 3.5%
Table 1: Technical and economical key figures
1.3. RECOMMENDATION
It was considered to implement a new heating station based on biomass the north of
the city centre. The nominal capacity of the wood chips boiler is 1,8 MW to provide base
load heat and a 5,5 MW gas boiler as back-up boiler and to provide heat for peak load.
Currently natural gas is relatively cheap and the forecasts do not expect a significant
increase of the natural gas price within the near future. Therefor the avoided costs due
to the substitution of natural gas by biomass are currently too small to generate a
sufficient IRR for the investment project which is a precondition for the implementation
of this project. However a significant increase of the gas price in new future would
change the situation and would improve the viability of the project.
2. INTRODUCTION
The preparation of this study was assigned to the consultants by the Republic of Serbia
represented by the Ministry of Mining and Energy and the KfW Entwicklungsbank,
Germany.
This project forms part of the German Climate Technology Initiative (Deutsche
Klimatechnologieinitiative, DKTI) - a joint initiative by the German Federal Ministries of
Economic Cooperation and Development (BMZ) and Environment, Nature Conservation
and Nuclear Safety (BMU).
The project Promotion of Renewable Energies - Developing the Biomass Market in
Serbia" comprises a loan of up to EUR 100 m at a reduced interest rate along with a
grant of EUR 2 m for accompanying measures to be implemented by KfW
Entwicklungsbank as well as technical assistance of EUR 8 m to be implemented by GIZ.
The German Government committed the project with the overall volume of EUR 110 m
to the Serbian Government in late 2011.
Within this project for 15 district heating companies (DHC) pre-feasibility studies were
already prepared in 2013-2014 analysing biomass CHP projects and where not
appropriate also HoB projects. In the current stage additional 4 DHC were analysed
within a contract amendment but targeting on HoB projects only.
The project aims at facilitating the development of a market for biomass and supporting
the sustainable use of biomass in the generation of heat in Serbia.
The expected benefits of biomass utilisation for the generation of heat include
a) the reduction of fossil fuel consumption (mainly mazut and gas),
b) reducing overall CO2-emissions,
c) the improvement of overall energy efficiency,
d) reducing costs of heat production
Revision: 0 Page 2
e) the improvement of air quality

f) the possibility of expanding the district heating systems and
g) job creation.
Data collection was characterized by sending questionnaires to the DHC to collect

economical and technical data of the last 3 years. During subsequent meetings with the
representatives of the DHCs the questionnaires were discussed and the existing
generating facilities have been visited to get an overview of the current and future
situation. Subsequently the missing data could be incorporated and was checked in
terms of plausibility. Based on this information within the heat market assessment the
current and future heat load duration curves were elaborated as basis for sizing of the
biomass HoB boiler plant and available options were analysed.
The proposed project was calculated in regards of fuel demand development, CAPEX,
and OPEX. For the assessment of the financial end economic profitability the project
case was compared with the no project case, which represents the development of
costs with the same heat sales but (fossil) fuel- and operating costs without the new
investment. Therefore the results of the financial modelling show if the savings
(=avoided costs) are sufficient to refinance the investment.
3. HEAT MARKET ANALYSES
3.1. TOPLANAS PRODUCTION STATISTICS
The DHC operates one DH network with a gas fired boiler house situated in a big
residential building in the city centre.
5.000 MWh
4.500 MWh
4.000 MWh
3.500 MWh
3.000 MWh heat to
consumers
2.500 MWh
2.000 MWh Network
1.500 MWh losses
1.000 MWh
500 MWh
0 MWh
2012 2013 2014
Figure 1: Heat Production statistics of the last 3 years (according to toplanas data)
In the last year heat meters have been implemented to switch from square meter based
billing to heat consumed based billing. This measure has led to a significant decrease of
the consumed heat by approx. 20%.
Revision: 0 Page 3
3.2. URBAN DEVELOPMENT
There are no plans to create new city districts in the near future.
3.3. CURRENT TOTAL HEAT LOAD
As no capacities are measured the maximum heat load can be estimated by the
statements of the plant operators. Currently there are installed 3 gas boilers with a total
capacity of 6,6 MW. Only on very cold days these three boilers are operated like a last
year period of 18 days with an outside temperature of -25C. The outdoor design
temperature for dimensioning the heat demand of buildings is -18C. Therefor the
baseline of the maximum heat demand was estimated to be 5,5 MW.
35.000 m
30.000 m
25.000 m
20.000 m Public
Commercial
15.000 m
Private
10.000 m
5.000 m
0 m
2012 2013 2014
Figure 2: Connected square meters of the last 3 years
3.4. CURRENT ANNUAL LOAD DURATION CURVE
The current annual heat load curve is characterized by the operational regime. During
the night the DH system is shut down to be restarted in the next morning. Therefor the
heating period of 180 days or 4320 hours shows only 2850 operating hours.
Revision: 0 Page 4
6.000 kW
5.000 kW
4.000 kW
3.000 kW
2.000 kW
1.000 kW
0 kW
Figure 3: Current load duration curve
3.5. THE FORECASTS ON THE HEAT LOAD AND LOAD DURATION
After the implementation of the new heating station and the introduction of the new
operating regime as described in chapter 4.4.3 the heat load curves will have a different
shape. Because of the new operating regime (no shut offs during the nights) the total
heat consumed was considered to increase by 20%.
Revision: 0 Page 5
6.000 kW
5.000 kW
4.000 kW
3.000 kW
2.000 kW
1.000 kW
0 kW
Figure 4: Future load duration curve of the first year
Future energy efficiency measures on the buildings like thermal insulation for the
building envelope and new windows and doors have been considered by 1% less heating
energy and capacity per year. Therefor the heat capacity and heat demand will decrease
year by year which leads to a load duration curve as shown below.
6.000 kW
5.000 kW
4.000 kW
3.000 kW
2.000 kW
1.000 kW
0 kW
Figure 5: Future load duration curve at the end of the investigation period (year 20)
Revision: 0 Page 6
3.6. POTENTIAL FUTURE HEAT DEMAND
All buildings in Mali Zvornik are characterized by:
not being equipped with centralized warm water preparation systems and
not being equipped with centralized chillers and cold water distribution systems
for air conditioning.
Therefor no future potential for summer operation has been identified. The potential
future heat demand is characterized by:
connecting of approx. 20 family houses

effects on energy efficiency measures at buildings like insulation, new windows,
etc.
stabilization of network losses by replacement of pipes
The effect of the implementation of energy efficiency measures at the building has been
considered by a yearly decrease of heat demand and heating capacity of 1%. The aging
of the network has been considered by an increase of the heat losses by 2% per year.
5.000 MWh
Heat public & comm.
4.500 MWh Heat private
4.000 MWh Network losses
3.500 MWh
3.000 MWh
2.500 MWh
2.000 MWh
1.500 MWh
1.000 MWh
500 MWh
0 MWh
2016
2020
2015
2017
2018
2019
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Figure 6: Forecast on the networks heat demand
The effect of new connections and the changeover to a continuous operating regime (no
shut-downs during the nights) can clearly be seen by the peak of the years 2017 and
2018. The effect of the replacement of the network pipes (complementary investments)
can be seen by the decrease of the network losses in the year 2018.
Revision: 0 Page 7
4. TECHNICAL DESIGN CONCEPTS
4.1. CURRENT SITUATION
4.1.1. Heat generation
The heating plant is situated in the basement of a big residential building in the city
centre and comprises of 3 natural gas fired warm water boilers.
Boiler Fuel Commissioning Installed capacity

Toplota Zagreb Natural gas 1980 2,4 MW
Toplota Zagreb Natural gas 1986 2,4 MW 6,6 MW
EMO Celje Natural gas 1991 1,8 MW
Table 2: Current heat generation facilities
Only during very cold winter days and during the morning peak all 3 boilers are nearly
under full load in operation at the same time.
The chart below shoes the fuel demand of the 3 gas boilers for the no project case. The
operating licence for the 3 gas boilers will expire in 2018 which will lead to a definitely
shut down of the district heating system. Thats why the curve ends in 2018!
The subsequent scenario is that all buildings will be connected to the natural gas grid. A
central boiler in the basements will provide heat for an internal central heating system.
5.000 MWh
Biomass
4.500 MWh
Nat. gas
4.000 MWh
Coal
3.500 MWh Mazut
3.000 MWh
2.500 MWh
2.000 MWh
1.500 MWh
1.000 MWh
500 MWh
0 MWh
2015
2021
2027
2033
2016
2017
2018
2019
2020
2022
2023
2024
2025
2026
2028
2029
2030
2031
2032
2034
2035
2036
2037
Figure 7: Forecast on fuel demand for the no project case
Revision: 0 Page 8
4.1.2. District heating network
The district heating network was erected in the year 1980 and up till now nearly no
pipes have been exchanged.
Network characteristic Figure Comments

Connected capacity 5,3 MW Acc. to design standards
Capacity density 2,7 kW/m good
Heat density 1,6 MWh/m moderate
Heat losses 11% moderate
Water exchange rate 77/year Very high!
Age of the network 35 years Very old!
Table 3: Key data of the DH network
The figure below shows the existing network in red colour while the new transport
pipeline from the site of the new biomass heating station to the city centre (existing
heating station) is marked with violet colour.
Revision: 0 Page 9
Figure 8: Network plan
4.1.3. Individual Sub-stations
Currently there are no individual sub-stations installed. The stub pipes from the heating
mains are led directly into the building without any heat exchangers, regulating valves or
control systems. Heat meters have been installed last year which led to a significant
decrease of the end consumers heat demands.
Revision: 0 Page 10
4.2. DISCUSSION OF DIFFERENT CONCEPTS
There is only one concept for discussion. The existing natural gas boilers will be replaced
by a biomass heating station in the northern part of the city. As the licence for operating
the old natural gas boilers will elapse at the end of 2017 steps have to be implemented
to keep the system operational are possible.
Until summer 2017:
Replacement of the heating mains from the new site to the city centre
Installation of a containerized natural gas heating stations on the predicted site
of the biomass heating station
Until summer 2018:
Installation of the biomass heating station as described in the chapters below.
The above mentioned provisional natural gas boilers can be purchased and later on been
integrated into the new biomass boiler station or can be hired for the heating period of
2016/17 and then sent back to erect a biomass heating station with own natural gas
boilers for stand-by and for peak load provision.
4.3. PREFERED DESIGN CONCEPT
4.3.1. Description of preferred HoB concept
The preferred concept consists of a biomass boiler on wood chips to provide heat for the
base load or about 85% of total heat demand. A natural gas boiler shows the same
capacity like the peak load of the network to be able to provide the whole heat demand
even in cases of unplanned outages of the biomass boiler and to provide heat for the
networks peak load.
Type of boiler Fuel nom. capacity

Base load boiler on biomass Wood chips 1,8 MW
Fossil fired backup boiler Natural gas 5,5 MW
Table 4: Main data of the boilers of the heating plant
The design of the biomass boiler is based on following preconditions:
Minimum continuous load 25%

Time for revision works Summer
(no summer operation)
Boilers mean efficiency 85%
Table 5: Preconditions for the design of biomass HoBs
Revision: 0 Page 11
Nominal thermal capacity 1,80 MW

Fuel capacity 2,35 MW
Type of fuel Woody biomass:
90% wood chips
Max. 10% saw dust
Yearly fuel demand Up to 4,33 GWh or
1 550 tons or
6 200 piled m
Type of boiler Smoke tube type
warm water boiler
Firing system grate
Table 6: Key data of the biomass HoB
The figures below show the biomass boiler and the gas fired peak and stand-by boiler
placed in the load duration curve. As the biomass boiler cannot be continuously
operated below 25% of its nominal load, this boiler is operated about 75% of the whole
heating season.
6.000 kW
Biomass boiler
--
Gas boiler
5.000 kW
4.000 kW
3.000 kW
2.000 kW
1.000 kW
0 kW
Figure 9: Boiler capacities placed in the heat load curve of the first year
Revision: 0 Page 12
6.000 kW
Biomass boiler
--
Gas boiler
5.000 kW
4.000 kW
3.000 kW
2.000 kW
1.000 kW
0 kW
Figure 10: Boilers capacities placed in the heat load curve at the end of the investigation period
(year 20)
The figure below shows the future fuel demands. The effect of energy efficiency
measures can clearly be seen by the decrease of the fuel demand.
6.000 MWh
Biomass
5.000 MWh Nat. gas

Coal
4.000 MWh Mazut
3.000 MWh
2.000 MWh
1.000 MWh
0 MWh
2017
2032
2015
2016
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2033
2034
2035
2036
2037
Figure 11: Forecast on fuel demands
Revision: 0 Page 13
The figure below shoes the future heat production by boilers. When the new heating
station goes into operation over 80% of the total heat production is provided by the
biomass boiler. This share increases up to 85% at the end of the investigation period.
5.000 MWh
Biomass boiler
4.500 MWh
Gas boiler
4.000 MWh
Coal Boiler
3.500 MWh Mazut boiler
3.000 MWh
2.500 MWh
2.000 MWh
1.500 MWh
1.000 MWh
500 MWh
0 MWh
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Figure 12: Forecast on shares of heat generation by types of boilers
Revision: 0 Page 14
4.3.2. Project site and storage area
Figure 13: Location of the new heating station
The project site is situated in the northern part of Mali Zvornik between the football
ground, the national road and the river Drina. There is enough space for the boiler house
and the fuel storage. The existing network ends at the next residential building just
beside the football ground.
Revision: 0 Page 15
Figure 14: Site for the biomass HOB plant
Figure 15: Site for fuel storage
Revision: 0 Page 16
Figure 16: Site for the boiler house
4.3.3. Operating regime
The operating regime is characterized by two main issues:
Temperature regime of 90C for the supply flow and 70C for the return flow
System shut-down during the night
The temperature regime describes the temperatures of supply flow and return flow. The
supply flow should not exceed 110C otherwise the DH system would be subject to the
European pressure equipment directive (PED). Plants which are subject to the PED are
more expensive and have to undergo periodically tests to ensure the safety of the
technology. Also the staff members have to be of higher qualification, the plant operator
must be a qualified operator for steam generators.
The temperature difference between supply and return flow should be as high as
possible to decrease the volume flow of the circulating water in the system. By this
measure the circulating pumps will have the lowest possible electricity demand.
It is quite common in all Serbian DH companies to operate district heating systems only
during the day from 6 to 22 o clock. In the night the system is shut down to restart it in
the early morning. Only during very cold nights the system is operated continuously.
This operating regime leads to a cold system to be restarted in the morning. It is well
known that every cold start shortens the lifetime of thermal plants as well as of district
heating networks because of the periodically occurring thermal stress. Also the buildings
Revision: 0 Page 17
are cooled down during the night and have a higher heat demand in the morning to
reheat the cold walls.
So the strategy should be to operate the system continuously all over the heating
period. Biomass HoBs show the availability to be operated in the so called fire bed
preserving mode, which means all the system is kept warm and can be restarted in the
morning with a warm start. The network is kept warm by minimum operation of the
fossil boiler. The operation during the night will also increase the heat sales as the
customers will enjoy the increase of comfort of consuming heat also during the night on
a decreased in-house temperature level.
Following operating regime is recommended:
80C to max. 105C for the supply flow and 60C for the return flow
Continuous operation throughout the whole heating period without any shut-
downs during the nights
The above described temperature regime can only be maintained with means of
automatically controlled sub-stations in every building.
As no heat is needed in the summer time because of no centralized warm water

preparation and air conditioning, the HoB plant is operated only during the heating
period. Maintenance works will be carried out in the summer time.
Whenever the heat load of the network is lower than the minimum continuous capacity
of the biomass HoB, then the boiler has to be switched off and the heat at such low
network loads has to be generated by the fossil fired HoBs. This is why the biomass
boiler is operated only 75% of the whole heating period.
The operating mode is heat demand driven.
4.3.4. Backup system
Mali Zvornik is connected to the natural gas grid. A natural gas fired boiler with the same
capacity like the networks peak load capacity provides heat for the whole networks
heat demand in case of unplanned outages of the biomass boiler and heat for peak load.
Revision: 0 Page 18
Nominal thermal capacity 5,50 MW

Fuel capacity 5,80 MW
Type of fuel Natural gas
Yearly fuel demand Up to 0,8 GWh or
83 000 normal m
Type of boiler Smoke tube type
warm water boiler
Firing system Low Nox gas burner
Table 7: Key data of the fossil fired back-up boiler
4.3.5. On Site Biomass Logistic
Wood chips will be delivered by semitrailers on site. The semitrailers have a

transportation capacity of 90 piled cubic meters or max. 22 tons and are equipped with
a moving floor for unloading. They unload the wood chips on the fuel yard while a wheel
loader puts the fuel to the foreseen storage place or into the storage building. The fuel is
piled up to max. 3-4 m to prevent self-ignition and can be stored outside or in a storage
building. When the fuel is stored outside, only a layer of 25 cm will become wet in the
case of rain or snow, however here a simple shed which is closed on 1-3 sides suitable to
pile wood chips up to 3-4 m height is considered. At least one side has to remain open
for manipulation with the wheel loader.
The on-site biomass storage has a capacity of 2 weeks demand to ensure the heat
production during the Christmas and New Year holydays.
Frequency of transport traffic 1 semitrailer per day

Storage capacity 860 m
Storage area 300 m
Table 8: Key data for the on-site biomass logistic
4.3.6. Environmental and social concerns
The calculation of CO2 savings considers the replacement of mazut or gas for heating by
biomass. The combustion of biomass releases the same amount of CO2 like the plant has
absorbed during its growth. Therefor biomass is defined to be a CO2 neutral fuel.
The combustion of 1 MWh of natural gas releases 207 kg CO2.

The combustion of 1 MWh of Mazut releases 280 kg CO2
Revision: 0 Page 19
1.200 tons
no project
with BM-HoB
1.000 tons
800 tons
600 tons
400 tons
200 tons
0 tons
2030
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2031
2032
2033
2034
2035
2036
2037
Figure 17: CO2 balance of the project
The implementation of the biomass HoB project will save about 800 tons of CO2 per year
compared to the no project case. The flue gases of the biomass plant will not affect the
air quality of the city as filter systems (e.g. electrostatic precipitators) will minimize the
particulate emissions.
4.3.7. Complementary investments
Complementary investments are necessary if urgent from a technical point of view or

highly profitable.
The existing network of Mali Zvornik is 35 years old and shows very high water losses.
The high water losses will require water treatment units (water softening plants) with a
quite high capacity which is easy to handle. But the water losses will increase
dramatically in the next future and the additional water needed cannot be treated
because of the limited capacity of the water treatment units. Tis will lead to hard
network water which will destroy the new boilers and will increase destroying the whole
network system. Therefor it is recommended to replace the entire network by new, pre-
insulated network pipes.
Revision: 0 Page 20
route
Existing network section DN
length
Heating mains north (to be replaced by transport pipeline) 150 300 m
Heating mains north (to be replaced by transport pipeline) 100 200 m
Heating mains east 100 300 m
Heating mains east 80 100 m
Heating mains south 100 200 m
Heating mains south 80 150 m
Heating mains/branches west 80 150 m
Branches and connections 32 600 m
total 2.000 m
Table 9: Main data of the network to be replaced
If the DHC decides not to invest into a new network then a 600 m long transport pipeline
(DN 250 - DN200) has to be built to connect the new heating station with the
distribution system of the old boiler plant in the city centre. This transport pipeline will
replace the existing network section heating mains north.
Automatically controlled Individual sub-stations are currently not needed from the
technical point of view. With means of controlled sub-stations a low return flow
temperature can be maintained which will save some electricity for the network pumps
and reduce a little bit the heat losses. As the prices for electricity and biomass are
relatively low in Serbia the installation of IHS is neither highly profitable nor even
profitable itself.
5. BIOMASS PROCUREMENT AND VALUATION
Biomass procurement and valuation is based on literature review, review of earlier

biomass supply studies1 and data procured from consultants field visits to Mali Zvornik
and interviews with state forest managers and sawmill operators. Considering the
required amount of wood chips for the DH plant in Mali Zvornik of total energy value of
4,350MWh per year or up to 1,600tons per year2 we can recommend the option of
buying wood chips from existing and future wood chips producers. This option
encompasses contracting wood chips supply on long term or annual term basis with
either existing or future wood chips producers. Apart from the wood pellet factories,
which have capacities for wood chips production, there are no specialized wood chips
producers in Mali Zvornik area. However, some of the existing sawmills may invest in
and develop capacities for wood chips production if the demand for wood chips
increases. In addition there are specialized wood chipping companies in other regions
who can organize the wood chips supply to Mali Zvornik DH plant.
Another hypothetical option is that the DH plant operator buys firewood, forest residues
and sawmill residues and process them at the DH plant site. This option would require
1
2015. Djakovic, D., Gvozdenac Urosevic, B., Urosevic, D. 2015. Logistics concept of district heating supply
with woody biomass (wood chips) in the municipalities of Prijepolje and Mali Zvornik. GIZ DKTI
2
Assuming wood chips maximal water content of 40% and lowest energy value of 2.80MWh/t.
Revision: 0 Page 21
that the DH plant operator procures the equipment necessary for wood chips
production or hires the wood chipping services and develops operations in raw woody
biomass supply, storage and processing. However, this would require additional
investments from the DH operator in biomass processing, manipulation and transport
capacities and investments in provision of storage space for woody biomass and wood
chips. This option would also require additional number of employees to be trained and
engaged in woody biomass mobilization, transport and processing. As quantities of the
required woody biomass may be too small for investment in such capacities it can be
economically not justified.
5.1. SUPPLY OF BIOMASS AND COSTS
Costs of wood chips supply include capital and operational costs. Capital costs include:
costs of woody biomass transport, processing, manipulation and transport
equipment procurement
investment costs in woody biomass storage, if required.
Necessary equipment for woody biomass transport encompasses costs of procurement

of trucks and trailer specialized for wood transport. Sawmills from Mali Zvornik area
already possess all the equipment necessary for wood and woody biomass transport.
Investment costs in processing woody biomass include wood chipper procurement costs
and procurement costs for equipment used for woody biomass and wood chips
manipulation encompass telescopic handler or a front loader or a tractor equipped with
loading extension. Transport capacities include trucks or tractors equipped with self-
unloading trailer for bulk cargo. Such trailers can be tipper trailers for trucks or tractors
or walking floor trailers for trucks.
Investment costs Capacity Price EUR
Wood chipper 10-20tons per hour 120,000-400,000
Telescoping handler 80-120kW, 3-5tons weight for 60,000 100,000

lifting
Truck (used) / 60,000 80,000
Tipper trailer (used) 40-50 cbm, 10-12tons 15,000-25,000
Walking floor trailer (used) 90-100 cbm, 22-23tons 15,000-25,000
Wood transport trailer with crane Up to 24tons 8,000-15,000

(used)
Table 10: Biomass equipment costs
Finally, supplier needs to organize woody biomass and wood chips storage. Existing
wood chips producers or sawmills selling sawmill residues already have open storage
space for raw woody biomass. Wood chips storing, on the other side, requires shed
open from at one to three sides with roof protecting wood chips from rain or snow.
Sides should be at least partly opened to facilitate air circulation and natural drying of
Revision: 0 Page 22
wood chips. Considering the fact that 40% water content of wood chips is required and
that most of wood chips produced in Serbia is from already dried sawmill residues,
provision of simple wood shed represents a suitable solution. Since existing or future
wood chips suppliers, already have paved storage locations investment costs for wood
chips storage are significantly reduced.
The DH plant also needs to organize wood chips storage with enough size to cover a 2
weekly demand for wood chips. For this purpose DH plant should also foresee a on site
storage facility as described in chapter 4.3.5. On Site Biomass Logistic.
Operational costs of wood chips procurement include:

costs of woody biomass mobilization
costs of woody biomass transport to the point of processing
costs related to woody biomass storing, chipping and manipulation;
costs of wood chips transport to incineration point;
Operational unit costs are presented in the table below.
Products/Prices State forests Private forests Sawmills
On stump On forest On stump On forest road/log At sawmill

road/log storage storage site
Firewood and long 4.521 26 36 EUR/ton 21-23 42 - 44 EUR/ton /

firewood EUR/ton EUR/ton
Cuttings 3-12EUR/ton 18-24EUR/ton Sold as Sold as firewood /

firewood
Forest residues 2-8EUR/ton / Sold as Sold as firewood /

firewood
Sawmill residues / / / / 25-35

EUR/ton
Services
Harvesting and 3-5 EUR/ton + 7-11 EUR/ton

wood extraction
3
Wood chipping 250-270 EUR/hour or 10-15 EUR/ton
Wood transport Up to 100km 11-15 EUR/ton
Unit costs
3
Market price of wood chipping services includes service providers margin, machinery amortization,
machinery procurement costs, fuel costs and costs of workers. As a service price it is based on chipping smaller
quantities of wood (up to 500tons) and also includes all other costs related to provision of chipping service
(transport of the machines, etc)
Revision: 0 Page 23
4
Wood chipping 4-6 EUR/ton
Woody biomass 1.5-3 EUR/ton

manipulation
Woody biomass 3-6 EUR/ton

and wood chips
transport
Table 11: Operational costs of wood chips procurement
Costs of woody biomass mobilization include costs of woody biomass procurement and
its delivery to a processing point. Forest biomass in Serbia can be bought from state
forest managers (in case of Mali Zvornik Public Enterprise Srbijasume) or private forests
owners (small scale forest owners of Manastirske sume doo, company managing church
forests of Sabac Parish) at following parities: at stump, next to stump or at the forest
road. Biomass mobilization encompass following processes: manual and chain saw
operations in wood harvesting and skidder or tractor operations in wood extraction to
the forest road. Second phase of transport from forest road to paved road or central
storage is also often required for further processing of wood and woody biomass. In
state forests, usual method of wood harvesting is wood product method, meaning that
all wood products are designed and manufactured at the harvesting point. This means
that in order to extract woody biomass, operator needs to collect it and organize
extraction of forest residues only. Other method is whole tree or part of the tree
method, meaning that whole wood or part of the wood is extracted to the point where
it is processed further. Application of this method means that woody biomass is
extracted together with other more valuable wood products, thus woody biomass
extraction costs are reduced. Second method, with some modifications is applied in
private forests. In both state and private forests, specialized harvesting companies hired
as subcontractors perform harvesting and wood extraction operations. Cost effective
woody biomass mobilization if either of methods is applied requires well developed
forest infrastructure optimal road density, which is not a case in Mali Zvornik area.
On the other hand, sawmill residues can be bought from sawmills situated at paved
roads. Those residues are packed and stored at sawmill sites, thus operations and costs
in order to mobilize sawmill resides are not needed. This is the main reasons why most
of woody biomass processors (including chipboard and wood pellet producers) prefer to
supply with sawmill residues. In addition sawmill residues are not fresh but naturally
dried, so water content difference between forest and sawmill residues is another
reason for buyers preference to sawmill residues.
Costs of woody biomass transport to the point of processing are linked to transporting
prices or fuel and truck maintenance and amortization costs. Same is with costs of wood
chips transport to incineration point. Costs of wood chipping and on storage
mobilization are also related to fuel, maintenance and amortization costs.
4
Wood chipping costs include direct costs of wood chipping, including fuel and man power costs. It is based on
the average costs of wood chips production.
Revision: 0 Page 24
5.2. POTENTIAL BIOMASS SUPPLIERS
Woody biomass supply in Mali Zvornik area is developing. While forest residues are
partially used for firewood production in private and state forests, forest residues are
not used for wood chips production. On the other hand almost all sawmill residues are
utilized. There are several wood pellet factories and one chipboard factory supplying
from Mali Zvornik area. Sawmill residues are also sold as firewood to local population.
Table below present most important buyers of sawmill residues from Mali Zvornik area.
No. Company Location
1 Kronospan Srb doo Lapovo
2 S biom Loznica
3 Pelet Vukovic Mali Zvornik
4 Swissecopellet doo Loznica
Table 12: Woody biomass buyers from Mali Zvornik municipality
Existing wood chips producers in Serbia, which can be expected to partake in supply of
Mali Zvornik DH plant are presented in table below.
1 Star Jela doo Prijepolje
2 Holz Tim doo Ivanjica
Table 13: Wood chips producers in the area
Also, several sawmills from Mali Zvornik can be interested to develop wood chips supply
to DH plant. There are listed in a table below.
1 Pobeda wood doo Mali Zvornik
2 Can Impex doo Mali Zvornik
3 Vesna doo Mali Zvornik
4 Sand doo Mali Zvornik
Table 14: Sawmills from Mali Zvornik region
As mentioned, wood pellet factories have all equipment needed for wood chips
production, however level of their interest to partake in w1ood chips supply will depend
Revision: 0 Page 25
on wood chips contracting price. Currently it is more financial viable for them to use
wood chips they produce in pellet production, however pellet market is instable and
export pellet prices for suppliers from Serbia selling to Italy are reducing due to the
competition from US, Canada, Baltic countries and Ukraine.
5.3. PRICE EVALUATION OF WOOD CHIP DELIVERIES
Price of wood chips delivery is depending on operating and investment costs. Serbian
wood chips market is developing, yet apart from chipboard and pellet factories, there no
significant wood chips buyers especially those buying wood chips for energy production.
In Serbian market, price of wood chips depend much on its properties. Price of
broadleaved softwood wood chips (poplar) is around 7.5-8EUR per bulk cbm (or 38-40
EUR per ton), price of conifer wood chips is 10-12 EUR per bulk cbm (40-50 EUR per ton),
while price of hardwood broadleaves (beech) is 15-18 EUR per bulk cbm (45-55 EUR per
ton). Since most of wood chips buyers in Serbia are not using it for energy production,
but for production of other products such as chipboard or wood pellet, water content is
not linked to the price. In practise, delivered wood chips water content range is from 20-
40%. As mentioned, currently, apart from wood pellet factories, there are no
operational wood chips producers in vicinity of Mali Zvornik. Closest operating wood
chips producers are over 150km away from Mali Zvornik, however those producers are
operating with mobile wood chippers and have developed transport capacities thus it
can be realistic they partake in supply.
Nevertheless, transport costs will reflect on the price. In case existing sawmills develop
their own wood chips production, investment costs in wood chipping processing
equipment will also reflect on the price. It is also important to stress that required
quantities of wood chips by DH plant Mali Zvornik might be too small to encourage
investments in wood chips production by existing sawmills or to reduce this investments
to a necessary minimum in terms of buying used machinery with smaller capacity. This
will increase operational unit costs of wood chips production. Price of woody biomass
and competition between woody biomass buyers is another important factor which may
reflect on end wood chips price. It is important to stress that most of the wood in Mali
Zvornik area is hardwood, being more expensive then softwood. It is also important to
stress that due to increased demand sawmill residues prices are growing. On the other
hand price of firewood and woody biomass is not increasing significantly. Still sawmill
residues represent most competitive raw material for wood chips production. It can be
expected that supply to Mali Zvornik organized by local sawmills or existing wood
chipping companies will focus on utilizing sawmill residues.
Chart below presents expected price of wood chips delivery to DH Mali Zvornik. Prices
are based on raw material prices and raw material costs presented in table 2. For
sawmills and wood chipping companies woody biomass price is calculated at 25EUR per
ton, as the market price wood chipping companies are paying for sawmill residues and
sawmills are selling their residues. For sawmills developing wood chipping business to
supply Mali Zvornik DH plant, transport costs for woody biomass, if assumed they will
use their own sawmill residues at sawmill and chipping site, are not calculated, while for
existing wood chipping companies supplying from other sawmills, transport costs of
woody biomass are calculated at 3EUR per ton, having in mind that they collect sawmill
residues and store it on wood chipping company location before wood chips production.
Revision: 0 Page 26
Wood chips delivered to DH plant 55

52
Margin and investment costs 15

15
Wood chips Transport 6

3
Manipulation 2
3
Chipping 4
6
Biomass transport 3
0
Woody biomass 25
25
0 10 20 30 40 50 60
Wood chippinng companies Sawmils in Mali Zvornik area EUR/ton
Figure 18: Expected price of wood chips
Having in mind that existing woody chipping companies will transport wood chips to DH
Mali Zvornik from distances over 150km transport costs of wood chips are calculated at
6EUR per ton, while for existing sawmills developing wood chips supply, transport costs
for wood chips will be lower due to their proximity. Transport costs for wood chips of
sawmills which can develop wood chips supply, to DH Mali Zvornik are calculated at
3EUR per ton. On the other hand unit costs of wood chips manipulation and wood
chipping, are dependent on production capacities higher the production is, lower the
costs are. For existing wood chipping companies, costs of wood chips manipulation are
calculated at 2EUR per ton, while for local sawmills those costs are calculated at 3EUR
per ton. Finally, wood chipping unit costs for existing wood chipping companies having
large wood chips production capacities are set at 4EUR per ton, while for local sawmills
those costs are calculated at 6EUR per ton. Margin and investment unit costs are for
both options calculated at 15EUR per ton.
In Mali Zvornik area wood chips price of 50-55 EUR per ton or 17-18 EUR per bulk cbm at
water content of 30%, or 71.43EUR to 78.57EUR per atro (dry) ton can be regarded as
sustainable and profitable for suppliers. For further economic calculations in this Report
average price of 15.4EUR/MWh will be used.
It is possible that due to competition of suppliers price is reduced to certain extent. Also,
in case of reduction of woody biomass prices or decrease of other inputs, price can be
reduced, but so far we cannot confirm it can be expected.
5.4. KEY CONTRACT CONDITIONS FOR WOOD CHIPS TENDERING
Contracting of woody biomass can be done annually or long term. Considering future DH
plant demand for wood chips and that long term supply contracts for woody biomass
supply are not common in Serbia and do exist only for larger quantities of wood (above
30,000 cbm) for some chipboard and wood pellet factories, we can recommend option
Revision: 0 Page 27
of annual contracting of wood chips supply to DH plant in Mali Zvornik based on a public
tender. Contract conditions for wood chips tendering should be set in order to ensure
secure supply of wood chips with required quality.
Selected wood chips suppliers need to guaranty delivery of contracted quantities of

wood chips at required quality level. Procedures for measurement and quality
determination should be a part of the contract. On the other hand buyer of wood chips
needs to guarantee takeover of contracted quantities. Contracted price should be
indicated in relation to quality of delivered wood chips yet in units practical for
measurement.
Point of delivery needs to be specified as DDP DH plant Mali Zvornik, meaning that wood
chips seller have the obligation of wood chips delivery to DH plant with all costs included
at contracted wood chips price.
Contracted quantities needs to be guaranteed, meaning that contract should be backed

by sellers provision of bank guaranty or a bill. Value of bank guaranty or a bill should be
at least 10% of contracted wood chips quantities. Failure to fulfil delivery of contracted
quantities needs to be subjected to penalties. Formula below can be suggested for
calculation of penalties for non-delivery of contracted quantities:
P = (Pfoss Pwc)x Q
P = Penalty
Pfoss = Unit price of fossil fuel counterpart
Pwc = Unit price of wood chips
Q = quantities of contracted yet undelivered wood chips.
Buyer also needs to be subjected to penalties in case of not taking over contracted
quantities. Formula below can be suggested for calculation of buyers penalties for not
taking over contracted quantities:
P = 0.5 x (Qcon-Qdel)
P=Penalty
Qcon=contracted quantities
Qdel= actually delivered quantities
Preliminary delivery schedule, based on contracted quantities, should be determined on

monthly basis and needs to be indicated in the contract. However, delivery of biomass
can be organized with sellers consent according to buyers demands on weekly or 15 day
basis. Penalties can be linked with failure to fulfil monthly supply according to the
contract. Except penalties, contract cancelation with supplier can also be included if
significantly fails to deliver contracted quantities for two months in a row.
Measurement procedures and quality control should be determined by the contract,

along with units used for wood chips measurement. We suggest utilization of bulk cbm
as a unit for wood chips measurement. Application of this unit does not require
investments on truck scales needed for weight measurement, while delivered quantities
can be determined by simple measurement of wood chips transport trailer volume.
Application of bulk cbm as a unit, needs to be followed with control of water content of
delivered wood chips. Control of water content can be efficiently organized with
Revision: 0 Page 28
application of probe based water content portable measuring devices5. Every shipment
of wood chips can be controlled by probe insertion to a wood chips bulk at every corner
of the trailer used for transport and additional 4 probes insertion to a wood chips bulk
after unloading if possible. Average of measured water content values should be
determined and used for price evaluation. Additional quality control should include
particle size control and compliance with contracted particle size according to Serbian
wood chips standards. Also, control should include inspection of wood chips properties
in terms of rot, decay or presence of matters other than wood chips. For non-
compliance with contracted quality reclamations and reduction in terms of wood chips
volumes to be paid should be applied.
Contracted price of wood chips should be indicated in RSD per bulk cbm at 30% water
content, therefore price should be linked to an average water content of every wood
chips shipment. For reduction or increase of price we suggest method presented in a
table below.
Water Energy value MWh/t Corection factor

content %
15-20 4.15 1.2
20-25 3.80 1.1
25-30 3.50 1.0
30-35 3.25 0.9
35-40 2.90 0.8
Table 15: Correction factors for wood chips prices

Correction factors should be applied on contracted price to determine actual price of
wood chips form every shipment.
As mentioned, we can recommend annual contracting of wood chips delivery, since
there is no usual practise of long term contracts for wood chips delivery in Serbia yet.
However, if long term contract is applicable this can be an adequate solution as well. In
this case price should be indicated but possibility for price escalation should be
accounted as well. Conditions for price change should be determined in the contract.
Price can be subjected to annual change or price can be change in relation of the change
of significant factors influencing the price.
In case of long term contact following formula accounting wood chips price escalation
can be applied:
PVn = PVn-1 x In
I = IS x 25 % + IC x 25 % + IT x 25 % + IB x 25 %
PVn = New price without VAT (RSD/ton)

PVn-1 = Previous price without VAT (RSD/ton)
In = index in period between previous and new price
http://www.humimeter.com/bioenergy/humimeter-bll-wood-chip-moisture-meter/
5
Revision: 0 Page 29
I = Index
IS = Index determining change of average salaries and social contributions
IC = Index of fuel prices
IT = Regional index of transportation costs
IB = Index of wood prices (linked to changes of prices according to PE Srbijaume
pricelist)
Table below presents most important conditions for wood chips tendering.
Condition Criteria Explanation

Fulfilment of basic Elimination criteria According to the Law on public procurement all
conditions set by companies (or their subcontractors) participating in the
Law on public public tender need to submit:
procurement6 Proof of registration
Proof of not being criminally processed or
convicted
Proof they have paid taxes
Security of supply Elimination criteria Bank guarantee or signed bill
Wood chips quality Elimination criteria or rejection criteria at biomass Quality should be indicated in concordance with Serbian
range takeover solid biofuels standard SRPS EN 15234-4:2014. Exact
particle size and water content should be declared
according to incineration technology requirement. Usual
particle size is P16 to P45, while usual water content is
M30 to M40.
Origin of wood Elimination criteria Wood chips supplier should present proof of origin of
contract for raw wood chips contract for raw woody biomass supply. In
woody biomass case of sawmills wood supply contract should be
submitted and reviewed.
Wood chips price Selection criteria Price should be indicated per cbm at 30% water content.
Lower price should have an advantage.
Payment conditions Selection criteria Payment should be indicated in number of days after
wood chips delivery.
Delivery schedule Selection criteria Preliminary delivery schedule should be indicated on
and quantities of monthly basis before contract completion. Confirmed
woody biomass delivery schedule , on 15 day or weekly basis when
delivery starts
Table 16: Key tendering conditions for wood chips supply
Procedures required by Law on public procurement in tendering process need to be

fulfilled by any public sector tender organizer. Goal of these procedures is to reduce
possibilities for corruption or other criminal actions. Fulfilment of basic conditions set by
the Law on public procurement should be an elimination criterion.
Security of supply needs to be provided and contracted quantities need to be secured

via bank guarantee or signed bill on the value of contracted quantities. This should be an
elimination criterion.
Required wood chips quality range needs to be clearly determined in the tender
process. Particle size needs to be indicated in the tender procedure. Particles larger than
required size can jam wood chips transporting system. Water content directly affects
energy content of delivered wood chips. Water content also can affect combustion
6
Law on Public Procurement. Official Gazette of the Republic of Serbia no. 124/2012 and 14/2015
Revision: 0 Page 30
process and boilers efficiency. Fulfilment of these conditions should be rejection criteria
at takeover of the biomass which can lead to contract cancelation.
In order to ensure sustainability of forest management and woody biomass supply,

proof of woody biomass origin proving that woody biomass is obtained in accordance
with forestry regulation is required. In order to prevent illegal logging for wood chips
production, contracts between forest owners or managers for raw wood or woody
biomass supply should be delivered. Proof of woody biomass origin and contract backing
up woody biomass supply for contracted quantities of wood chips needs to be an
elimination criteria.
Price of wood chips reflects on profitability of DH operations and the end consumer
price. Usual model for wood or wood chips payment in constant delivery is 15 or 20days
after delivery. Payment can also be organized in weekly or 15day lots, meaning 10-
20days after all deliveries during one week or 15day period. Payment can be either set
as condition in the tender or used as a selection criteria based on suppliers offers.
Delivery schedule directly influence investment costs of DH plant in terms of wood chips
storage. Seasonal quantities of woody biomass need to be indicated by the potential
suppliers.
Potential suppliers at a tendering process should be ranked based on wood chips price
per dry ton, with possible ranking based on payment conditions, if all other conditions
are met. Finally quantities should also be used for ranking, especially in case there are
suppliers who have competitive prices but not enough quantities to cover DH plant
demand. In that case, contracting with several most competitive suppliers can be
decided.
6. COST ESTIMATE
6.1. INVESTMENT COSTS
The table below gives an overview of the investment costs for the biomass based
heating plant with a gas fired back-up boiler. Item No. 9 describes the connection
pipeline from the new site into the city centre (old boiler house), from where the heat
will be distributed to the consumers.
Component Biomass HoB Fossil HoB

1. Fuel storage and handling, equipment and area 160.000 20.000
2. Thermal plant with boiler 260.000 160.000
3. Ash disposal facilities 90.000 0
4. Electrical equipment, electrical installation works 130.000 0
5. Interface sub-station 80.000 0
6. Cooling water facilities, if any 0 0
7. Civil works 440.000 50.000
8. Connection to electrical grid for power feed in 0 0
9. Connection to DH network 280.000 0
10. Commissioning 90.000 0
11. Contingencies (10% share of sum from 1 10) 150.000 20.000
Revision: 0 Page 31
12. Planning costs (incl. consultancy services) 220.000 0

TOTAL CAPEX 1.900.000 250.000
Table 17: Investment costs for the heating station
6.2. COMPLEMENTARY INVESTMENT COSTS
As the network is very old it is recommended to replace the entire network. The heating
mains north will be substituted by the above mentioned connecting pipeline. Therefor
these costs are not considered any more as complementary investments.
Existing network DN route length costs

Heating mains north 150 0m 0
Heating mains north 100 0m 0
Heating mains east 100 300 m 65.000
Heating mains east 80 100 m 18.000
Heating mains south 100 200 m 43.000
Heating mains south 80 150 m 26.000
Heating mains/branches west 80 150 m 26.000
Branches/connections to buildings 32 600 m 47.000
total 1.500 m 225.000
Table 18: Complementary investment costs
6.3. OPERATION AND MAINTENANCE COSTS
O&M measure Cost approach

Maintenance for generating facilities 2% of CAPEX per year
Maintenance for distribution networks 1% of CAPEX per year
Additional staff members for Biomass HoB 6 men
Mean yearly personnel costs (all-in) 6,026per men and year
Own electricity demand for Biomass HoB 7 kWh per MWh fuel input
Own electricity demand of network pumps 3 kWh per MWh heat fed into network
Costs for ash disposal 40 /ton
Table 19: Approach for operation and maintenance costs
7. PRELIMINARY FINANCIAL ANALYSES
7.1. FINANCIAL COST BENEFIT ANALYSIS
For the evaluation of investment options the technical project parameters have been
applied based on the elaborations presented in the previous, technical chapters. The
investment options analysed for Mali Zvornik include
the projection of the existing heat generation facilities
Revision: 0 Page 32
a project variant elaborating on the implementation of a biomass based HOB

including complementary investments
a new fossil fuel based HOB facility
The technical variants consider respective data on

Production of heat
Fuel consumption
Heat consumption, tariffs and revenues
Operating costs considering fuel input, materials and staff
For the determination of cash flows for the project evaluation of a specific technical
investment variant only incremental costs are applicable. In the following table the total
energy cost are presented to show relevant changes in this key cost factor.
With regard to energy cost, the prices of fossil fuels are estimated to follow a gradual
recovery from recent sharp declines as shown for regional data in the graph below.
Figure 19: Fossil fuel price developments
Current international market analysis projects a growth pattern bringing oil prices to the
longer term trend over the medium term7. These projections have been adopted for an
escalation scenario of fossil fuel prices in real terms as shown in the table below.
2015e 2016e 2017e 2018e 2019e

GAS 100% 88% 105% 118% 119%
Table 20: Projection of operations and Net Cash Flows (NCF) Variant HOB
From 2019 an average growth of 1% has been assumed.
7
HSBC Global Research, Bloomberg, HSBC assumptions, Crude oil market insightsSeptember15, p. 4
Revision: 0 Page 33
The energy costs following from the implementation of the project are subsequently
balanced with the time series of energy costs determined for the case of the toplana
without the project (section 7.5). Other cost items including materials, staff and
administrative items are only given on an incremental basis.
Revision: 0 Page 34
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
T otal heat supplied MWh 3,293 3,293 3,416 4,216 4,174 4,133 4,091 4,050 4,010 3,970 3,930 3,891 3,852 3,813 3,775 3,737 3,700
to private households MWh 2,047 2,047 2,183 2,761 2,733 2,706 2,679 2,652 2,625 2,599 2,573 2,547 2,522 2,497 2,472 2,447 2,423
to commercial customers & public MWh 1,246 1,246 1,233 1,456 1,441 1,427 1,412 1,398 1,384 1,371 1,357 1,343 1,330 1,317 1,303 1,290 1,277
Household T ariff EUR/m pm 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14 0.14
EUR/MWh 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50
T ariffs - Commercial, Public EUR/m pm 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21 0.21
EUR/MWh 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75 75
Revenues
Private households 1,000 EUR 135 135 144 175 174 173 171 170 169 167 166 165 163 162 161 160 158
Commercial customers & public users 1,000 EUR 108 108 107 124 138 122 121 120 119 118 117 116 115 114 113 112 111
T OT AL REVENUES 1,000 EUR 243 243 251 299 312 294 292 290 287 285 283 280 278 276 274 271 269
Incremental revenues 1,000 EUR - - - 7 21 6 5 5 4 4 4 3 3 2 2 1 1
OPERATING COSTS
Energy total
Natural gas EUR/MWh 45 40 47 53 53 54 55 55 56 56 57 57 58 58 59 60 60
1,000 EUR 189 166 206 44 43 43 42 42 42 41 41 42 42 42 41 41 41
Biomass EUR/MWh 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15 15
1,000 EUR - - - 69 69 68 68 68 67 67 67 66 66 65 65 65 64
Electric energy Share 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
MWh - - - 27 27 26 26 26 26 26 26 25 25 25 25 25 25
EUR/kWh 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.07
T otal electric energy costs 1,000 EUR - - - 2 2 2 2 2 2 2 2 2 2 2 2 2 2
T otal energy 1,000 EUR - - - 115 114 113 112 112 111 110 109 110 109 109 108 107 107
Materials & Services incremental
Maintenance 1,000 EUR - - - 23 23 23 23 23 23 23 23 23 23 23 23 23 23
Consumables (chemicals, lubricants, etc.) 1,000 EUR - - - 1 1 1 1 1 1 1 1 1 1 1 1 1 1
1,000 EUR - - - 1 1 1 1 1 1 1 1 1 1 1 1 1 1
T otal Supply materials 1,000 EUR - - - 25 25 25 25 25 25 25 25 25 25 25 25 25 25
Personnel incremental
Skilled staff Number - - - 6 6 6 6 6 6 6 6 6 6 6 6 6 6
Avg. Monthly salary EUR 502 502 502 502 502 502 502 502 502 502 502 502 502 502 502 502 502
T otal cost of personnel 1,000 EUR - - - 36 36 36 36 36 36 36 36 36 36 36 36 36 36
Administrative costs incremental 1,000 EUR - - - 11 11 11 11 11 11 11 11 11 11 11 11 11 11
T OT AL OPERAT ING COST S - - - 187 186 185 185 184 183 182 182 182 181 181 180 180 179
Incremental to Existing
Incremental Cost of sales - - - -85 -86 -88 -89 -91 -92 -93 -95 -95 -97 -98 -100 -101 -102
Incremental SG&A - - - 11 11 11 11 11 11 11 11 11 11 11 11 11 11
T otal incremental to Existing - - - -74 -76 -77 -78 -80 -81 -83 -84 -84 -86 -87 -89 -90 -92
Net Cash Flows 1,000 EUR - -113 -2,048 -134 97 83 84 85 86 87 88 88 89 90 91 92 556
Table 21: Projection of operations and Net Cash Flows (NCF) Variant HOB
Revision: 0 Page 35
7.2. ECONOMIC COST BENEFIT ANALYSIS
7.2.1. Economic performance
All technical variants have also been subjected to economic analysis considering benefits
from
import substitution of fossil fuels valued at the cost of biomass
avoided emissions.
Data related to emissions vis--vis the projection of existing facilities

(including measures under implementation) have been elaborated in the
technical sections of this report.
Costs of CO2 are determined in line with the IPCC approach, which calculates
the 'social cost of carbon' in terms of future damages. The cost of future
emissions is dependent on the inherent uncertainty in projected volumes of
emissions and therefore how much global warming will occur. Discount rates
and non-monetary values also have to be accounted for. The mean estimate
from the literature in 2005 was USD 43 +/-USD 86/ton. For the economic
calculation, a value of 45 EUR/t has been applied1.
The format of economic evaluations carried out for all technical variants and degrees of
plant availability is presented in Table 22.
7.2.2. Levelized Unit Costs LUC
In order to compare the project on the basis of investment and operating costs only, the
LUC for heat production have also been determined.
Operational costs of consist of the operating costs of the baseline, i.e. without project
measures analysed in this report, and the incremental operating costs.
The attribution of annual totals of cost to the respective annual heat outputs have been
discounted at 2.5% corresponding to the estimated, weighted average cost of capital.
Table 23 presents the format used for these analyses.
1
IPCC, Summary or Policymakers, Contribution of Working Group II to the Fourth Assessment Report of the
Intergovernmental Panel on Climate change, 2007
Revision: 0 Page 36
1,000 EUR
Item 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Cash flows - -113 -2,048 -134 97 83 84 85 86 87 88 88 89 90 91 92 556
External Costs and Benefits
Correction of biomass cost - 1,000 EUR - - - 69 69 68 68 68 67 67 67 66 66 65 65 65 64
CO2 emissions saved
Emissions avoided - t - - - 850 846 841 837 833 828 824 820 810 806 802 798 794 790
Cost of CO2 emissions - EUR/t - - 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0 45.0
Benefits from avoided emissions - 1,000 EUR - - - 38 38 38 38 37 37 37 37 36 36 36 36 36 36
Incremental Cash Flows incl. External Benefits - in 1,000 EUR - -113 -2,048 -27 203 189 189 190 190 191 191 190 190 191 191 192 656
Table 22: Economic Evaluation Format Variant HOB
1,000 EUR
in 1,000 EUR 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Total cost
Investment - 113 2,048 215 - - - - - - - - - - - - -
Revenues of combination output - -7 -21 -6 -5 -5 -4 -4 -4 -3 -3 -2 -2 -1 -1
Operations 251 228 268 249 248 247 247 246 245 244 244 244 243 243 242 242 241
Table 23: Levelized Unit Cost Format Variant HOB
Revision: 0 Page 37
Results from all analyses including

Profitability of investment expressed in
- the Financial IRR
- the Net Present Value
Overall cost expressed in the long term LUC (15 years)
National economic effect expressed in the Economic Rate of Return (EIRR)
carried out for the project are presented in the following table.
For a base case all analyses have been carried out in real terms.
LUC NPV
IRR EIRR
RSD/KWh in Mio. EUR
Existing 9.45
HOB -3.4% 11.28 -1.1 3.5%
new fossil -15.8% 7.77 -0.6 -15.2%
Table 24: Summary of results
7.3. SENSITIVITY ANALYSIS
The project has been tested for modifications in key assumptions so as to examine on
changes of results. The financial IRR is considered a central indicator of project benefits.
It is consequently used to evaluate the sensitivity of project profitability by alternating
possible positive and negative changes to assumptions.
Changes in real terms percentage additions costs and prices
Investment costs - Percentages added to investment cost budget
Incremental operating costs - Percentages added to all non-energy
operating costs
Initial price of biomass (wood)
Initial level of prices of fossil fuels
Plant availability
Results of the sensitivity analyses are shown in the subsequent graph.
Revision: 0 Page 38
0%
-1%
-2%
-3%
-4%
-5%
-6%
-6% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 5% 6%
Level investment cost Level of incremental operating costs
Level of fossil fuels prices Biomass price level
Plant availability
Figure 20: Sensitivity of IRR on changes in key parameters
The sensitivity analysis clearly demonstrates the critical impact of assumptions on prices
of fossil fuels on the project profitability.
For negotiable parameters of investment and the biomass purchase price, results for
individual values are presented.
Basecase Variations
Investment - mn. EUR 2.4 2.6 3.1 4.1
Variation 0% 10% 20% 30%
FIRR -3.4% -4.4% -5.2% -5.9%
Biomass price - in EUR 15.4 13.9 15.2 18.3
Variation 0% -10% 10% 20%
FIRR -3.4% -2.8% -4.2% -4.9%
Table 25: Sensitivities on individual values of parameters
7.4. TARIFF STRUCTURE
The Toplana presently applies a dual tariffing system charging a fixed price per square
meter as well as a variable rate per kWh.
T ariff 2015 T ariff 2015

RSD/m RSD/KWh
Private Households 16.75 6.04

Commercial customers 25.12 9.07
Public institutions 25.12 9.07
Table 26: Tariff rates
Revision: 0 Page 39
Rates shown are applicable since 1st January 2015.
The Serbian Law on Efficient Use of Energy requires consumption based billing from
2015 onwards. However, its implementation is lagging due to lack of required
infrastructure. Hence it will not be applied to the heating season 2015/16. Also, it is
unlikely that full implementation can be expected for the next heating season.
In the framework of this assessment, a tariff consisting of two parts (a 35% fixed portion
based on heated are and a 65% variable portion based on measured heat consumption)
was assumed from 2017. The split is calculated based on the projected 2016 total
revenue per customer category.
The area based fixed portion would consequently change 24.36 RSD/m, the
consumption based variable portion would amount to 5,170 RSD/MWh for private
consumers. For institutional customers it is calculated as 64.35 RSD/m and 6,829
RSD/MWh.
7.5. DHCS CURRENT FINANCIAL SITUATION AND DEBT CAPACITY
Based on the information received from the Toplana, past financial data and
development plans have been reviewed. The following tables present standardized
formats of both the profit and loss statements and the balance sheets for the past three
years. They include all business handled by the utility in charge of heat supply.
1,000 EUR
Item 2012 2013 2014
Sales 304.4 327.9 253.8
Cost of Sales -294.4 -314.9 -250.3
Gross Margin 10.0 13.0 3.6
Depreciation Depreciation on Fixed Assets -0.8 -0.7 -0.7
Depreciation on Intangible Assets
Sales, General & Administration Overheads, other & non-op -15.4 -14.2 -9.6
Net Operating Profit (NOP) -6.2 -2.0 -6.7
Interest Expense (incl. Bank fees) -4.5 -4.4 -2.4
Interest Income 8.8 9.3 11.8
Other Financial Income (incl. Subsidies) 2.6 0.1 0.0
Profit after Financial Items 0.7 2.9 2.7
Exceptional Expense 0.0 0.0 0.0
Profit before Tax 0.7 2.9 2.7
T ax liabilities 0.0 0.0 0.0
T ax receivables 0.0 0.4 0.1
Taxable Profit 0.7 3.4 2.9
Corporate T ax -0.1 -0.8 -0.3
Net Profit after Tax (NPAT) 0.6 2.5 2.6
Table 27: Profit and loss statements
Revision: 0 Page 40
1,000 EUR
Item 2012 2013 2014
Cash and Deposits 13 4 63
T rade Receivables (Debtors) 432 396 422
Inventory 22 27 40
Other Current Assets 10 20 22
Current Assets 478 447 546
T angible assets 676 1,429 1,419
Buildings
T echnical installations and machinery 676 1,429 1,419
Incorporated fixed assets and reinvestments (corrective) 0 0 0
Capital expenditures 17 16 15
Depreciation
Net Property, Plant and Equipment 693 1,446 1,435
Other Investments 0 0 0
Intangibles/Goodwill 69 0 0
Non Current and Fixed Assets 762 1,446 1,435
Total Assets 1,240 1,893 1,981
Item 2009 2010 2011
Short T erm Bank Loans 21 0 1

T rade Creditors (Payables) 103 113 149
Other Creditors 598 1,251 668
Other Current Liabilities 16 19 23
Current Liabilities 738 1,384 841
Long T erm Bank Loans 0 0 0
Long Term Liabilities - - -
T ax/Deferred T axation 0 0 0
Long Term Liabilities and Provisions - - -
Ordinary Shares (Common Stock) 494 491 475
Profit and Loss Reserve (Retained Earnings) 7 18 666
Shareholders' Funds 502 509 1,140
Total Liabilities and Equity 1,240 1,893 1,981
Table 28: Balance Sheets
7.5.1. Projection of financial statements
For the projection of the financial development of the Toplana the present situation has
been considered as well as the technical changes currently planned. Projected revenues
are based on the demand trends and envisaged system developments described in the
chapter on the heat market.
An average of the level of subsidies at 0.3% found in the past three years has been
applied for future contributions. No specific information on regulations and basis of
subsidies was received.
Revision: 0 Page 41
Despite the improvements in operational parameters, short term debt would further
accumulate to unacceptable levels. Under the given assumptions losses would further
accumulate. The financing of these shortcomings was assumed to be covered by short
term debt.
Revision: 0 Page 42
1,000 EUR
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Sales 245 245 253 290 288 286 285 283 281 280 278 276 274 273 271 270 268
Cost of Goods Sold -241 -219 -258 -314 -314 -315 -316 -316 -317 -318 -319 -319 -320 -321 -322 -323 -323
Gross Margin 4 27 -5 -24 -26 -29 -31 -33 -36 -38 -41 -43 -46 -48 -51 -53 -56
Depreciation on Fixed Assets -1 -1 -12 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16 -16
Sales, General &Administration Overheads -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9 -9
Net Operating Profit (NOP) -6 16 -26 -49 -51 -53 -56 -58 -61 -63 -66 -68 -70 -73 -75 -78 -80
Interest Expense (incl. Bank fees) -0 - -2 -14 -13 -16 -20 -24 -29 -34 -39 -45 -51 -58 -66 -74 -83
Interest Income 1 3 - - - - - - - - - - - - - - -
Other Financial Income (incl. Subsidies) 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
Profit after Financial Items -4 20 -28 -62 -63 -69 -75 -81 -88 -96 -103 -112 -121 -130 -140 -151 -162
Taxable Profit -4 20 -28 -62 -63 -69 -75 -81 -88 -96 -103 -112 -121 -130 -140 -151 -162
Corporate taxes - -3 - - - - - - - - - - - - - - -
Net Profit after Tax (NPAT) -4 17 -28 -62 -63 -69 -75 -81 -88 -96 -103 -112 -121 -130 -140 -151 -162
Table 29: Projected Profit and Loss Statements WITHOUT project scenario
Revision: 0 Page 43
1,000 EUR
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Cash and Deposits 130 - - - - - - - - - - - - - - - -
Trade Receivables (Debtors) 341 341 352 403 401 398 396 394 391 389 386 384 382 379 377 375 373
Inventory 32 32 33 38 38 37 37 37 37 37 36 36 36 36 35 35 35
Other Current Assets 18 18 18 21 21 20 20 20 20 20 20 20 20 19 19 19 19
Current Assets 521 391 403 462 459 456 454 451 448 445 443 440 437 435 432 429 427
Technical installations and machinery 1,387 1,568 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750 1,750
Depreciation 1 2 14 29 45 61 76 92 107 123 138 154 169 185 200 216 232
Net Property, Plant and Equipment 1,386 1,566 1,736 1,721 1,705 1,689 1,674 1,658 1,643 1,627 1,612 1,596 1,581 1,565 1,550 1,534 1,518
Other Investments - - - - - - - - - - - - - - - - -
Intangibles/Goodwill - - - - - - - - - - - - - - - - -
Non Current and Fixed Assets 1,386 1,566 1,736 1,721 1,705 1,689 1,674 1,658 1,643 1,627 1,612 1,596 1,581 1,565 1,550 1,534 1,518
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Assets 1,906 1,957 2,139 2,183 2,164 2,146 2,127 2,109 2,091 2,073 2,054 2,036 2,018 2,000 1,982 1,963 1,945
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Short Term Bank Loans - 34 218 202 252 309 371 440 515 598 689 788 896 1,014 1,141 1,280 1,429
Trade Creditors (Payables) 144 144 148 170 169 168 167 166 165 164 163 162 161 160 159 158 157
Other Creditors 643 643 663 760 755 750 746 741 736 732 727 723 719 714 710 706 702
Other Current Liabilities 22 22 23 26 26 26 26 26 25 25 25 25 25 25 25 24 24
Current Liabilities 808 842 1,052 1,157 1,202 1,252 1,309 1,372 1,442 1,519 1,604 1,698 1,801 1,913 2,035 2,168 2,312
Long Term Bank Loans - - - - - - - - - - - - - - - - -
Long Term Liabilities - - - - - - - - - - - - - - - - -
Tax/Deferred Taxation - - - - - - - - - - - - - - - - -
Long Term Liabilities and Provisions - - - - - - - - - - - - - - - - -
Ordinary Shares (Common Stock) 459 459 459 459 459 459 459 459 459 459 459 459 459 459 459 459 459
Profit and Loss Reserve (Retained Earnings) 639 656 629 567 504 435 360 278 190 95 -9 -121 -241 -372 -512 -663 -825
Shareholders' Funds 1,098 1,115 1,087 1,026 962 894 819 737 649 553 450 338 217 87 -53 -204 -367
Total Liabilities and Equity 1,906 1,957 2,139 2,183 2,164 2,146 2,127 2,109 2,091 2,073 2,054 2,036 2,018 2,000 1,982 1,963 1,945
Table 30: Projected Balance Sheets WITHOUT project scenario
Revision: 0 Page 44
1,000 EUR
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Free Cash Flow
Depreciation / Amortisation / Non-cash Items 1 1 12 16 16 16 16 16 16 16 16 16 16 16 16 16 16
EBITDA -5 17 -14 -33 -35 -38 -40 -43 -45 -48 -50 -52 -55 -57 -60 -62 -65
Changes in Net Working Assets 73 - 13 63 -3 -3 -3 -3 -3 -3 -3 -3 -3 -3 -3 -3 -3
Net Operating Cash Flow (NOCF) 67 17 -1 30 -38 -41 -43 -46 -48 -50 -53 -55 -58 -60 -63 -65 -67
Expenditure on Property, Plant and Equipment -0 -182 -182 -0 0 0 -0 0 0 -0 0 -0 0 0 -0 0 0
Net Cash Outflow for Taxation - -3 - - - - - - - - - - - - - - -
Operating Free Cashflow 67 -167 -183 30 -38 -41 -43 -46 -48 -50 -53 -55 -58 -60 -63 -65 -67
Subsidies, Residual Value 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 -366
Free Cash Flow 68 -166 -182 31 -38 -40 -42 -45 -47 -50 -52 -54 -57 -59 -62 -64 -433
Table 31: Projected Free Cash Flows WITHOUT project scenario
Residual Value represents the final value of the entity including valuation of fixed assets and working capital.
Revision: 0 Page 45
7.5.2. Evaluation of debt capacity
Free Cash flows as shown in above table are weighed at an assumed DSCR requirement
of 1.2 resulting in a present value debt capacity for the existing toplana of -0.90 Mio.
EUR. Projected cash flows based on the given assumptions would result in a negative
debt capacity.
No debt to the Republican Directorate for Commodity Reserves was indicated.
7.5.3. Projection of implementation of the HOB project in the Toplana
For a forecast of the development of toplana given the implementation of the project,
assumptions have been entered into the projections of financial statements of the
company.
Specifically the following parameters have been considered:

Investment cost estimates and scheduling
Energy cost changes considering avoided cost for heat production and
Incremental operating cost items pertaining specifically to the operation of
the project regarding
- Consumables
- Ash disposal
- Staff cost
- Administrative cost (eg insurance of new equipment)
The following tables present the effect of the project in the projected financial
statements of the company.
Projected revenues are based on the demand trends and envisaged system
developments described in the chapter on the heat market. Demand projections include
both increasing consumptions reflecting the 24 hour heating from 2018.
Revision: 0 Page 46
in 1,000 EUR
Item 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Sales 245 245 253 297 309 292 290 288 286 284 281 279 277 275 273 271 269
Cost of Services -241 -219 -258 -229 -228 -227 -227 -226 -225 -224 -224 -224 -223 -223 -222 -222 -221
Gross Margin 4 27 -5 68 81 65 63 62 61 59 58 55 54 52 51 49 48
Depreciation Depreciation on Fixed Assets -1 -1 -66 -134 -140 -140 -140 -140 -140 -102 -88 -88 -88 -88 -88 -88 -88
Sales, General &Administration Overheads -9 -9 -9 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20 -20
Interest Expense (incl. Bank fees) -0 -11 -26 -51 -53 -53 -51 -49 -59 -69 -79 -91 -103 -117 -131 -146 -165
Interest Income 0 2 2 2 4 4 3 0 0 0 0 0 0 0 0 0 0
Other Financial Income (incl. Subsidies) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Profit after Financial Items -6 8 -104 -135 -129 -145 -144 -148 -159 -131 -130 -144 -157 -172 -188 -205 -225
Corporate taxes - -1 - - - - - - - - - - - - - - -
Net Profit after Tax (NPAT) -6 7 -104 -135 -129 -145 -144 -148 -159 -131 -130 -144 -157 -172 -188 -205 -225
Table 32: Projected Profit and Loss Statement Toplana WITH the project
Revision: 0 Page 47
in 1,000 EUR
Item 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Cash in Deposits 103 113 85 159 192 159 0 0 0 0 0 0 0 0 0 0 0
Cash in hand 25 23 27 25 25 25 25 24 24 24 24 24 24 24 24 24 24
Trade Receivables (Debtors) 341 341 352 413 430 407 403 400 397 394 391 388 386 383 380 377 374
Inventory 32 32 33 39 40 38 38 38 37 37 37 37 36 36 36 35 35
Other Current Assets 18 18 18 21 22 21 21 21 20 20 20 20 20 20 19 19 19
Current Assets 518 526 515 657 710 649 487 483 479 476 473 469 466 462 459 456 453
Lands and buildings 0 0 540 600 600 600 600 600 600 600 600 600 600 600 600 600 600
Technical installations and machinery 1,387 1,499 3,007 3,162 3,162 3,162 3,162 3,162 3,162 3,162 3,162 3,162 3,162 3,162 3,162 3,162 3,162
Depreciation 1 2 68 202 343 483 624 764 905 1,006 1,094 1,182 1,270 1,358 1,446 1,533 1,621
Net Property, Plant and Equipment 1,386 1,497 3,478 3,560 3,419 3,279 3,138 2,998 2,857 2,756 2,668 2,580 2,492 2,404 2,316 2,229 2,141
Other Investments 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Intangibles/Goodwill 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Non Current and Fixed Assets 1,386 1,497 3,478 3,560 3,419 3,279 3,138 2,998 2,857 2,756 2,668 2,580 2,492 2,404 2,316 2,229 2,141
Total Assets 1,904 2,024 3,993 4,217 4,129 3,928 3,625 3,481 3,337 3,232 3,140 3,049 2,958 2,867 2,776 2,684 2,593
Item 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Short Term Bank Loans 0 0 0 0 0 0 62 287 523 770 1,029 1,302 1,589 1,890 2,207 2,541 2,682
Trade Creditors (Payables) 144 144 148 174 181 171 170 169 167 166 165 163 162 161 160 159 157
Other Creditors 643 643 663 777 810 765 760 754 748 742 737 731 726 720 715 710 704
Current Liabilities 808 808 834 978 1,019 963 1,018 1,236 1,464 1,704 1,956 2,222 2,502 2,797 3,107 3,434 3,568
Long Term Bank Loans 0 101 1,944 2,138 2,138 2,138 1,924 1,710 1,496 1,283 1,069 855 641 428 214 0 0
Long Term Liabilities - 101 1,944 2,138 2,138 2,138 1,924 1,710 1,496 1,283 1,069 855 641 428 214 0 -
Tax/Deferred Taxation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Long Term Liabilities and Provisions - 101 1,944 2,138 2,138 2,138 1,924 1,710 1,496 1,283 1,069 855 641 428 214 0 -
Ordinary Shares (Common Stock) 459 470 675 696 696 696 696 696 696 696 696 696 696 696 696 696 696
Profit and Loss Reserve (Retained Earnings) 637 644 540 405 276 131 -13 -161 -319 -451 -580 -724 -881 -1,054 -1,241 -1,446 -1,671
Shareholders' Funds 1,096 1,114 1,215 1,101 972 827 683 535 377 245 116 -28 -185 -357 -545 -750 -975
Total Liabilities and Equity 1,904 2,024 3,993 4,217 4,129 3,928 3,625 3,481 3,337 3,232 3,140 3,049 2,958 2,867 2,776 2,684 2,593
Table 33: Projected Balance Sheet Toplana WITH the project
Revision: 0 Page 48
7.6. MUNICIPALITIES FINANCIAL SITUATION AND DEBT CAPACITY
In order to provide some information on the debt position of the municipality, being the
owner of the utility, data for the calculation of relevant indicators has been investigated.
Legal debt limits stipulate for Local Self-Governing Units (LSU) a 50% (of total current
revenues of the previous year) ceiling on long term debt and a 15% maximum for annual
debt service.
In the case of Mali Zvornic information was received, that presently no debt is held by
the municipality. Based on the 2014 annual revenues, the calculation results in an
undrawn potential debt of 2.85 Mio. EUR.
8. INSTITUTIONAL ANALYSES
8.1. INTERNAL ORGANISATION OF THE TOPLANAS
The public utility company for the water supply,collection of municipal waste and
production and distribution of thermal energy JKP DRINA M.Zvornik was founded in
1970. The company is 100% in municipal property.
The company employs 69 workers who were assigned to the five organizational units
such as:
Legal affairs,
Economic, commercial affairs
Water supply and waste collection.
Production and distribution of thermal energy
Maintenance of greenery
Revision: 0 Page 49
Figure 21: Organizational chart
8.2. STAFF CAPABILITIES AND INSTITUTIONAL TECHNICAL CAPACITY
The manager of production and maintenance is highly qualified and experienced. The
Toplana is capable to manage the realization of such a project with the assistance of a
consulting engineer. The Toplana has strong support from the local government for this
project.
8.3. FUTURE TRAINING AND RECRUITMENT POLICY
Purchase of biomass
Biomass logistic on site
Boiler plant operation
Heat sales
Qualified boiler operator
Operation of wheel loaders
The existing staff is able to operate a biomass HoB after the above mentioned trainings.
The plant itself will need following staff members:
4 Plant operators
4 Machine fitters
Revision: 0 Page 50
1 Electricians
1 Energy purchaser (biomass)
1 Chemist
1 Control engineer
The recruitment policy will have to consider these jobs if the existing staff will not be
available for the additional tasks.
Vienna, 21.10.2015
iC - ECKERT Felix
Revision: 0 Page 51
Annex 1:
Basic characteristics - Baseline

Mali Zvornik
Network:
General city data

Number of citizens in the city (not the whole municipality) -- 4.300
Number of households in the city (not the whole municipality) -- 1.433
Number of separate networks -- 1
Generating facilities:
Number of operational boilers -- 3
Total installed capacity of the heating plant MWt 6,6
max. operating capacity of the heating plant MWt 5,3
Boiler No. 1
Year of commissioning -- 1980
Boiler manufacturer -- Toplota
Zagreb
Boiler's efficiency % 92%
Nominal thermal capacity MWt 2,4
Fuel consumption by types of fuel:
Coal t/yr
Mazut t/yr
NG 1000 m/yr 146
Pellets t/yr
Boiler No. 2
Boiler manufacturer -- Toplota
Zagreb
Coal t/yr
Mazut t/yr
NG 1000 m/yr 146
Pellets t/yr
Boiler No. 3
Revision: 0 Page 52
Boiler manufacturer -- EMO Celje

Coal t/yr
Mazut t/yr
NG 1000 m/yr 146
Pellets t/yr
Boiler No. 4
Year of commissioning --
Boiler manufacturer --
Boiler's efficiency %
Nominal thermal capacity MWt
Coal t/yr
Mazut t/yr
NG 1000 m/yr
Pellets t/yr
District heating network data:

Average length of heating season days 178
Shut off during the night? yes/no yes
Yearly operating hours of the network (considering shut off hr 2.850
during the night)
Summer operation da/ne no
Yearly heat production (= heat fed into the DH network) MWh 3.900
Yearly heat consumption of end users (= sold heat) MWh 3.290
Yearly network heat losses MWh 610
percentage of heat demand controlled individual substations % 0%
% 0%
percentage of individual substations reconstructed in last 5 years
measured consumption with heat meters % 100%
Total connected capacity MW 5,3

Total route length of distribution network m 2.000
Number of residential dwellings connected to DH- system -- 396
Number of residential buildings connected to DH- system 31
Number of sub-stations for residential buildings -- 31
Total heated area of residential buildings connected to the DH- m 19.498
system
Revision: 0 Page 53
Number of commercial units connected to DH- system -- 3

Number of sub-stations for commercial units -- 0
Total heated area of commercial clients m 1.700
Number of public buildings connected to DH- system -- 13
Number of sub-stations for public buildings -- 9
Total heated area of public consumers m 10.163
New clients (area) connected to the DH- system m
Lost clients (area) disconnected from the DH- system m 192
Fuels:
Coal:
Price delivered to site /ton
LHV kJ/kg
Mazut:
LHV kJ/kg
Natural gas:
Price /1000m 435
LHV kJ/m 34.500
Pellets
LHV kJ/kg
Preliminary results and key figures

Percentage of households connected to the DH- system % 28%
Annual heat consumed per m kWh/m 124
Energy density of network MWh/m 1,6
capacity density of network kW/m 2,7
water exchange rate of the network 1/yr 80
Average heat losses in distribution network % 19%
District heating system's total efficiency % 75%
Specific district heating network losses W/m 70
Age of the network years 35
Toplana's company data: Total utility

Number of staff pers. 11
Total annual revenues 1,000 254
Total production cost 1,000 261
of it fuel cost 1,000 189
Financial result before taxes 1,000 3
Total value of assets (book value) 1,000 1.981
Equity capital 1,000 1.140
Long term debt 1,000 0
Revision: 0 Page 54
Accounts payable 1,000 149

Accounts receivable 1,000 422
Tariff system (mean values)

Private households /kWh 0,066
Commercial customers & public users /kWh 0,087
Municipality financial data

Total annual revenues 1,000 5.704
Total annual costs 1,000 3.858
Long term debt total all lenders 1,000 0
Revision: 0 Page 55

Report Mali Zvornik

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Report Mali Zvornik

Transféré par

Droits d'auteur :

Formats disponibles

Report

Pre-Feasibility Studies on 4 Biomass plants for

Ministry of Mining and Energy

Sub-report: Mali Zvornik

This report is an amendment to the previous studies prepared in

iC consulenten Ziviltechniker GesmbH

M:\52_CES\15187_KfW_Srb_4_DHC_HoB\5_Arbeit\Reports\151021_Report Mali Zvornik.docx

DOCUMENT CONTROL SHEET

PROJECT NUMBER: 52x15187 - Reference Number: 312-01-00603/2012-10

PREPARED BY: iC consulenten Ziviltechniker GesmbH

PREPARED FOR: Ministry of Mining and Energy

PREPARED FOR: KfW Entwicklungsbank

EDITOR: iC - ECKERT Felix, B. Brndle, M. Watzal, V. Milijic, P. Vasilijevic

Date Revision No. Editor Checked by Approved by Signature

21.10.2015 Rev. 0 B.Brndle et al. Eckert Helbl

1. Executive Summary .......................................................................................................... 1

6.3. Operation and maintenance costs ........................................................................................... 32

Annex 1 Basic Characteristic table

Table 1: Technical and economical key figures ....................................................................................... 2

Revision: 0 Page III

BOT Build-Operate-Transfer scheme

1.1. DATA COLLECTION

Monthly fuel consumption

100% natural gas as fuel

1.2. THE PROJECT

The biomass HoB heating station is characterized by:

Wood chips as main fuel to substitute natural gas

Key figure Value

Complementary Investment Costs (in Mio. EUR) 0,23

e) the improvement of air quality

Data collection was characterized by sending questionnaires to the DHC to collect

3. HEAT MARKET ANALYSES

3.1. TOPLANAS PRODUCTION STATISTICS

3.2. URBAN DEVELOPMENT

3.3. CURRENT TOTAL HEAT LOAD

Figure 2: Connected square meters of the last 3 years

3.4. CURRENT ANNUAL LOAD DURATION CURVE

Figure 3: Current load duration curve

3.5. THE FORECASTS ON THE HEAT LOAD AND LOAD DURATION

Figure 4: Future load duration curve of the first year

3.6. POTENTIAL FUTURE HEAT DEMAND

All buildings in Mali Zvornik are characterized by:

connecting of approx. 20 family houses

Figure 6: Forecast on the networks heat demand

4. TECHNICAL DESIGN CONCEPTS

4.1. CURRENT SITUATION

4.1.1. Heat generation

Boiler Fuel Commissioning Installed capacity

Figure 7: Forecast on fuel demand for the no project case

4.1.2. District heating network

Network characteristic Figure Comments

Figure 8: Network plan

4.1.3. Individual Sub-stations

4.2. DISCUSSION OF DIFFERENT CONCEPTS

Until summer 2017:

Until summer 2018:

Installation of the biomass heating station as described in the chapters below.

4.3. PREFERED DESIGN CONCEPT

4.3.1. Description of preferred HoB concept

Type of boiler Fuel nom. capacity

The design of the biomass boiler is based on following preconditions:

Minimum continuous load 25%

Nominal thermal capacity 1,80 MW