Sealaska Plaza Wood Pellet Boiler Benefit-Cost and Sensitivity Analysis

Abstract

Executives at Sealaska Corporation's headquarters, Sealaska Plaza, in Juneau decided to replace existing oil fired boilers with a wood pellet boiler for heating as a part of the Corporation's green initiative.1 By introducing green energy, the Corporation hopes to reduce its carbon footprint, encourage other business entities in Southeast Alaska to use green energy, help to establish a local wood pellet industry in Southeast Alaska, increase local employment, and reduce the impacts of oil price volatility. Currently there is no wood pellet industry in southeast Alaska and Sealaska Corporation is assuming the leading role to develop the demand for wood pellets by promoting this renewable technology and using the Corporation's building as a demonstration location. The wood pellet boiler that the Sealaska Plaza building is using to heat the building is a Viessmann PYROT boiler that is powered by KÖB biomass technology. The publicly visible silo in front of the Corporation’s headquarters in downtown Juneau is an indication that this is a signature project to increase the public awareness about biomass technology. This paper provides a technical summary of benefit-cost ratios and sensitivity analyses of the biomass project given different fuel price projections and estimates of the social costs of carbon. The costs driving the benefit-cost ratios of this 20-year project are calculated by using the data provided by the Sealaska Corporation. In order to conduct these analyses, some economic assumptions were made and are presented below.