Solar Thermal Applications in The Delmarva Poultry Industry

Solar Thermal Applications in the Delmarva Poultry Industry
Sponsored by the: Delaware Energy Office Maryland Energy Administration Virginia Department of Mines, Mineral and Energy United States Department of Energy Prepared for: Delmarva Poultry Industry, Inc. Members of the Delaware Million Solar Roofs Coalition
Prepared by:
Mark D. Thornbloom, P.E. Kelelo Engineering 3404 Angelica Street Cocoa, FL 32926 Phone: 321-537-6808 email: Kelelo1@kelelo.com Sandra A.H. Burton, CEM Mid-Atlantic Million Solar Roofs Coordinator Enfield Enterprises, Inc. U. S. Department of Energy Mid-Atlantic Regional Office 100 Penn Square East, Suite 890 Philadelphia, PA 19107-3396 Phone: 215-656-6983 email: sandra.burton@ee.doe.gov Brian P. Gallagher Delaware Million Solar Roofs Coordinator 2100 Lee Highway, #221 Arlington, VA 22201 Phone: 703-524-1249 email: bgallagher@e3energy.com Sarah L. Buttner Research Associate Center for Energy and Environmental Policy University of Delaware Newark, DE 19716 Phone: 302-286-1118 email: ssasser@udel.edu
DATE: April 28, 2006
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TABLE OF CONTENTS Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i Section 1: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Section 2: Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Million Solar Roofs Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Delmarva Poultry Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 3: Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 4: Solar Thermal Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Collectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Low-Temperature Collectors/Swimming Pool Collectors . . . . . . . . . . . Flat-Plate Collectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Evacuated-Tube Collectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Concentrating Collectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Storage Tanks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Solar Thermal Equipment and Installer Certification . . . . . . . . . . . . . . . . . . . . Solar Hot Water Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Glycol Antifreeze Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Drainback Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Solar Cooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 5: Poultry Facilities and Solar Thermal Applications . . . . . . . . . . . . . . . . . . . Hatcheries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Growers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Feed Mills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Processing Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hot Water Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Minimum Daily Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Required Water Temperatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rendering Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 6: Economic Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Software Analysis Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assumptions and Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Location of Poultry Processing Plant . . . . . . . . . . . . . . . . . . . . . . . . . Solar Radiation and Weather Data . . . . . . . . . . . . . . . . . . . . . . . . . . . Groundwater Temperatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Daily Hot Water Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Required Water Temperature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fuel Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Solar Array Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Balance of System (BOS) Costs and Other Miscellaneous Costs . . . . Storage Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3 4 4 4 5 5 6 6 7 7 7 8 9 9 10 10 10 11 11 11 12 12 12 12 13 14 14 14 14 15 15 15
Storage Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Costs Per Unit of Energy Delivered . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Solar Fraction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Base-Case Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Poultry Process #1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Poultry Process #2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sensitivity Analyses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Collector Array Tilt and Azimuth . . . . . . . . . . . . . . . . . . . . . . . . . . . . Impact of Collector-Type on Array Size . . . . . . . . . . . . . . . . . . . . . . Cost-Effectiveness of Exceeding a Solar Fraction of 50% . . . . . . . . . Storage Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discount Rate Sensitivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sensitivity Analyses for Combinations of Incentives, Fuel Costs, & Collector Costs . . . . . . . . . . . . . . . . . . . . . Best-Case Scenario . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 7: Examples of Large Solar Thermal Systems . . . . . . . . . . . . . . . . . . . . . . . Packerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arnold Schwarzenegger Stadium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Phoenix Federal Correctional Institution . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 8: Financial Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Federal Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Modified Accelerated Cost Recovery System . . . . . . . . . . . . . . . . . . . 30% Business Solar Energy Tax Credit . . . . . . . . . . . . . . . . . . . . . . . Section 9006 of the Farm Bill Grants and Loans . . . . . . . . . . . . . . . . State Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Virginia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Renewable Energy Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16 16 16 16 16 17 18 19 19 19 20 20 20 20 26 26 26 26 27 27 27 27 28 29 30 30 31 31 31
Section 9: ESCO/Performance Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Section 10: Environmental Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Avoided Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Value of Avoided Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 11: Conclusions and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Section 12: Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Appendix A: Appendix B: Appendix C: Appendix D: Delaware Million Solar Roofs Coalition Partners Broiler Production by State, 2004 Delmarva Broiler Chicken Facilities Poultry Processing Plant Water Use Schematic
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EXECUTIVE SUMMARY
Introduction and Background In April 2002, Delaware Governor Ruth Ann Minner created the Delaware Energy Task Force with instructions to develop an energy plan to address the States long-term and short-term energy challenges. In September 2003, after more than a year and greater than 100 participants, the Delaware Energy Task Force submitted Bright Ideas for Delawares Energy Future to the Governor. Through the report, the Delaware Energy Task Force summarized and ranked recommendations from six workgroups investigating specific areas of Delawares energy usage. Recognizing that boilers and process heating consume greater than one-third of the energy used in the industrial sector in Delaware, the Diversity of Fuels Workgroup recommended that the Task Force promote the use of solar thermal for industrial applications, particularly in boiler feedwater preheating. In response to the Delaware Energy Task Forces recommendation and with funding from U.S. Department of Energys Million Solar Roofs Initiative, the Delaware Million Solar Roofs Coalition (DEMSR) initiated this study on solar thermal applications in the poultry industry in late 2004. By partnering with the Delmarva Poultry Industry, Inc., the Delaware Energy Office, the Maryland Energy Administration and the Virginia Department of Mines, Minerals, and Energy, the DEMSR investigated the feasibility and cost-effectiveness of integrating solar thermal into preheating process water in feed mills, processing plants, hatcheries, and rendering facilities. The purpose of this study is to investigate and make recommendations regarding: Technical issues related to the installation of solar thermal technologies for poultry facilities. Costs and other economic considerations of solar thermal for specific poultry facilities. Financial incentives available to the poultry industry to install solar thermal. Environmental benefits of solar thermal technologies on poultry facilities. The goals of this study are to educate the poultry industry about solar thermal, to identify potential cost-effective applications of solar thermal energy in the poultry industry, and to support the installation of solar thermal technologies on poultry facilities. Through the cooperation of energy and facility executives at Allen Family Foods, Perdue Farms, and Tyson Foods, the authors of this report (the investigators) collected detailed information on system processes and energy and water usage at poultry facilities on the Delmarva Peninsula. After evaluating potential applications of solar thermal technologies for different types of poultry facilities, the investigators determined that preheating water for poultry processing plants was likely the most cost-effective application of solar thermal in poultry facilities. While the investigators also believe that solar absorption cooling could be a cost-effective application for hatcheries, this application was not modeled and analyzed for cost-effectiveness in this report. This could be an area for further investigation.
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Economic Analyses Using RETScreen International Clean Energy Project Analysis Software, two solar thermal systems used to preheat process water in a poultry processing plant were modeled: Poultry Process #1 is the modeled optimal size for a solar thermal system likely to be installed for a typical poultry processing plant as defined by the investigators. Poultry Process #1 assumes a 200,000 gallons per day demand for hot water at 60C (140F), 136,000 gallons (515,000 liters) of storage, and 121,000 ft2 (11,200 m2) of flat plate solar collectors. This system size delivers 7020 MWh of energy annually and on annual basis provides 46% of the energy needed to heat 200,000 gallons of water a day a solar fraction of 46%. Other assumptions include total installed system costs estimated at $2,634,602 (which is likely at the low end of range of costs), a 10% federal business solar energy tax credit, and the price of fuel oil at $1.00 per gallon. This scenario yields a simple payback (SPB) of 9.7 years and a pre-tax internal rate of return (IRR) of 10.7%. Using representative threshold criteria suggested by the investigators, Poultry Process #1 is borderline costeffective and is not an attractive investment as modeled. Poultry Process #2 is a smaller solar thermal system that is sized to maximize the impact of a $250,000 incentive, available in Delaware, on the cost-effectiveness of the system. The system size is reduced to 24,672 gallons (93,386 liters) of storage and 21,905 ft2 (2,035 m2) of flat plate solar collectors a size that results in only a 10 % solar fraction and 1535 MWh of energy delivered annually and the assumed total installed system costs are $500,062 which is likely at the low end of the range of costs. A 10% federal business solar energy tax credit and the price of fuel oil at $1.00 per gallon is also assumed. Given these assumptions, this scenario yields a pre-tax internal rate of return of 23% and a simple pay back of 4.5 years. Using the same representative threshold criteria suggested above, this scenario is above defined cost-effectiveness thresholds and may be an attractive investment for many companies. The cost-effectiveness of the two base-case scenarios described above is understated if the solar system is installed before the end of 2007 because the Energy Policy Act of 2005 increased the existing 10% tax credit for solar energy installations to a 30% credit for the period of January 1, 2006 to December 31, 2007. The tax credit will revert back to 10% on January 1, 2008 unless Congress extends the 30% credit. A bipartisan bill was recently introduced in Congress to extend the tax credit to 2010. Sensitivity analyses for several factors were run on the two base-case scenarios described above to determine which combination of factors would lead to cost-effective applications of solar thermal technologies to preheat process water in poultry processing plants. Following are the three economic factors that seem to have the largest impact on cost-effectiveness: Price of Fuel Oil: The assumed fuel for the economic analyses, No. 6 fuel oil with a sulfur content greater than 1%, is an inexpensive fuel compared to other grades of petroleum. Average prices for No. 6 fuel oil went from $0.70 per gallon in 2004 to $1.00 per gallon in 2005. The assumed fuel cost of $1.00 per gallon (excluding taxes) is somewhat conservative because of the 1% escalation factor used in the analyses. Sensitivity analyses indicate that starting at about $1.30 per gallon and higher, the price of fuel oil is a primary determinant
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that makes a scenario cost-effective, using the suggested threshold criteria. Incentives: For a smaller solar thermal system, like Poultry Process #2, the incentive available in Delaware, capped at $250,000, largely determines the cost-effectiveness of a project. For larger systems, like Poultry Process #1, the Delaware incentive is less important and the 30% federal business solar energy tax credit has more of an impact on costeffectiveness. The implication of 30% tax credit is that the cost-effectiveness of a larger system will be similar whether it is located in Delaware, Maryland, or Virginia. The benefits of federal tax incentives in the analyses in this report are underestimated because the benefit of a 5-year accelerated depreciation allowed for solar energy property for a company was not calculated. Total Installed Costs: The investigators used the measure installed costs/MWh delivered in the 1st year of service to compare and contrast various installed cost scenarios and does not reflect the actual costs per unit of energy delivered over the lifetime of a solar system (which would be considerably lower). The costs/MWhyear1 figures quoted here can ONLY be compared to other scenarios within this report and are meaningless when compared to scenarios outside this report. The assumed costs for the two base-case scenarios are at the low-end of the range of total installed costs per unit of energy (MWh) delivered in the first year of service. The sensitivity analyses in this report suggest that the cost-effectiveness threshold for costs is at about $400/ MWhyear1. Generous incentives can raise the threshold to about $500/ MWhyear1.
The most cost-effective scenarios modeled in this report maximized the incentives ($250,000 grant and 30% tax credit) for Poultry Process #2. Using Poultry Process #2, a modeled BestCase scenario produced financial results that would be an attractive investment opportunity for almost any company. However, Poultry Process #2 would be a relatively small system so the resulting reduction in fuel oil use and the total impact on the companys fuel oil bill would also be very small. Assuming base-case costs and a 30% federal tax credit (and no $250,000 incentive available as is the case in Maryland and Virginia), Poultry Process #1 and Poultry Process #2 start becoming attractive investments when the price of fuel oil reaches about $1.30 per gallon. Because of economies of scale, a larger solar system like the one modeled in Poultry Process #1 would likely have lower installed costs on per energy unit delivered basis. If the financial results of installing a solar thermal system for a particular processing plant are not attractive to a company, an energy services company/performance contracting-type of arrangement may be a viable alternative to a poultry companys ownership of an installation. Recommendations While determining the cost-effectiveness of using solar thermal for a particular processing plant will depend on a customized analysis, the results of the analyses in this report indicate that solar thermal energy can be a cost-effective application for a poultry processing plant and that using solar thermal energy warrants consideration by the poultry industry on the Delmarva Peninsula. Most of the scenarios considered within this report satisfy threshold economic criteria of many companies. This type of analysis may be used by a company for a specific site to determine the
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type and size of solar thermal system that both satisfies its threshold economic criteria and makes a significant impact in its fuel oil consumption. Other factors such as energy independence, boiler replacement avoidance, and emissions reductions could be added to further improve the economic results. The investigators believe that the assumptions and analyses used in this study may also be applicable to other poultry facilities in other regions of the U.S. This report can be used by both the poultry industry and the solar thermal industry as a basis for determining if solar thermal applications are appropriate for individual poultry facilities. Interested parties can download RETScreen for free and use it to customize their analysis for company and facility-specific data.
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SECTION 1: INTRODUCTION
On April 26, 2002, Delaware Governor Ruth Ann Minner created the Delaware Energy Task Force through Executive Order No. 31. The task force was instructed to develop an energy plan that would provide the Governor with actions to address the States long-term and short-term energy challenges. After more than a year and involving more than 100 participants, the Delaware Energy Task Force submitted to the Governor, Bright Ideas for Delawares Energy Future in September 2003. The task force identified a key set of strategic options including detailed recommendations to assist the Governor in navigating through Delawares energy future. In Bright Ideas for Delawares Energy Future, the Delaware Energy Task Force summarized and ranked recommendations from six workgroups investigating specific areas of Delawares energy usage. Recognizing that boilers and process heating consumes 41% of the energy used in the industrial sector1, the Diversity of Fuels Workgroup recommended that the Task Force promote the use of solar thermal for industrial applications, particularly in boiler feed water preheating. In response to the Delaware Energy Task Forces report and with funding from U.S. Department of Energys (DOE) Million Solar Roofs Initiative (MSR), the Delaware Million Solar Roofs Coalition (DEMSR) initiated this study on solar thermal applications in the poultry industry in late 2004. In 2004, the poultry industry on the Delmarva Peninsula2 produced about 8% of all the meat-type chickens in the United States. Valued at more than $1.7 billion, broiler chickens, raised for their meat rather than eggs, are the largest segment of agriculture in Delaware, Maryland, and Virginia. By partnering with the 3400 member Delmarva Poultry Industry, Inc. (DPI), the Delaware Energy Office, the Maryland Energy Administration, and the Virginia Department of Mines, Minerals, and Energy, the DEMSR was funded to investigate the feasibility and cost-effectiveness of integrating solar thermal for the preheating of process water in feed mills, processing plants, hatcheries, and rendering facilities. The purpose of this study is to investigate and make recommendations regarding: Technical issues related to the installation of solar thermal technologies for poultry facilities. Costs and other economic considerations of solar thermal for specific poultry facilities. Financial incentives available to the poultry industry to install solar thermal. Environmental benefits of solar thermal technologies on poultry facilities. The goals of this study are to educate the poultry industry about solar thermal, to identify potential cost-effective applications of solar thermal energy in the poultry industry, and to support the installation of solar thermal technologies on poultry facilities.
Excluding the states only oil refinerys oil feedstock, see p. 35 of the Delaware Energy Task Force Report to the Governor - September 2003, http://www.delaware-energy.com/download.htm. 2 The Delmarva Peninsula consists of the parts of Delaware, Maryland, and Virginia between the Chesapeake Bay and the Atlantic Ocean.
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SECTION 2: BACKGROUND
The Million Solar Roofs Initiative Since June 1997, U.S. DOE has supported the MSR initiative to bring together state and local partners to reduce the barriers to the use of solar energy through education and community outreach. The initiatives goal is to facilitate the installation of one million solar energy systems throughout the United States. Today, MSR has nearly 100 state and local Million Solar Roofs Partnerships working together to remove barriers, provide solar energy education, and develop and strengthen local demand for solar energy. In 2002, Green Plains Energy, Inc. in cooperation with the State of Delaware Energy Office responded to the U.S. DOEs request for state and local partners and established the DEMSR. The DEMSR is a group of Delaware organizations,3 businesses and individuals working together to: Identify market barriers to the installation of solar energy systems. Eliminate market barriers to the use of solar energy through education and community outreach. Develop and strengthen local demand for solar energy products and applications. Contribute to the National Million Solar Roofs goal by installing at least 500 solar energy systems within Delaware. The Delmarva Poultry Industry In 1923, the Delmarva Peninsula saw the launch of the modern poultry industry when Cecile Steele of Ocean View, Delaware began raising flocks of broilers and selling them for consumption as young birds. Prior to Steeles involvement, most chickens were raised for egg production alone. Since then, the production of poultry has become a highly automated process. From start to finish, the poultry companies on the Delmarva Peninsula and elsewhere in the U.S., are vertically-integrated operations owning breeder flocks, hatcheries, feed mills, grow-out operations, and processing plants. Still major players in the poultry industry, Delaware, Maryland and Virginia rank in the top ten or eleven in terms of broiler production and pounds of meat-production. The rest of the top-ten poultry producing states are mostly Sunbelt states like North Carolina, Georgia, Alabama, Mississippi, Arkansas, and Texas.4 There are four poultry companies that operate on the Delmarva Peninsula: Allen Family Foods, Mountaire Farms, Perdue Farms, and Tyson Foods.
SECTION 3: METHODOLOGY
The focus of this study was to investigate cost-effective uses of solar thermal in agricultural and industrial applications. After an initial discussion with the DPI, growers poultry houses and breeder facilities were ruled out due to limited hot water needs. Hatcheries, feed mills, and poultry processing plants were identified as facilities that had more potential for solar thermal applications. Three of the four poultry companies on the Delmarva Peninsula participated in the study: Allens Family Foods, Perdue Farms, and Tyson Foods.
3 4
Members listed in Appendix A. See broiler production by state in Appendix B.
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The authors of this report (the investigators) held conference calls with poultry companies and submitted data requests on energy and water use at plants. Each company narrowed their site selection to best fit the criteria for solar thermal. Next, the investigators made on-site visits to nine facilities consisting of hatcheries, feed mills, rendering plants, and processing plants to better understand their operations. During the on-site visits, the investigators met with energy and facility managers to further discuss plant processes, collect detailed information on energy and water usage, and visually examine plant processes and identify ways to reduce the thermal loads or make them more efficient by using solar energy.
SECTION 4: SOLAR THERMAL TECHNOLOGIES

Solar thermal technologies use direct heat from the sun, concentrating it in some manner to produce heat at useful temperatures. Uses of solar thermal technologies include: Heating water for domestic hot water. Preheating boiler and process water used in commercial and industrial applications. Producing steam for electrical generators. Space heating. Heating water for absorption refrigeration/air conditioning applications. Heating water for swimming pools. The two applications of solar thermal most appropriate for use in poultry facilities preheating process and boiler water and solar absorption cooling are described in more detail below. COLLECTORS While applications of solar thermal may have different end uses, the one thing all solar thermal technologies have in common is an apparatus that will collect the suns radiant energy. Solar collectors absorb the radiant energy of the sun and change it into heat energy. To maximize energy production, collectors should face south, but southeast or southwest orientations result in only small collection efficiency reductions. For the most annual energy gain, fixed collectors are usually tilted at an angle equal to the latitude of the site.5 This angle points the collectors directly toward the sun in the spring and the fall when the sun is at its midpoint position in the sky. Energy from the low winter sun and the high summer sun is not collected as efficiently, but the average yearly collection of energy is maximized. If an end use of solar thermal is seasonal, collectors are tilted from latitude to maximize energy collection collectors should be tilted as little as 15 degrees less than latitude for energy maximization during the summer and tilted as much as 15 degrees more than latitude for energy maximization during the winter. Collectors can be mounted on building roofs or on the ground that is free from shade. The range of solar thermal collectors can be loosely grouped according to operating temperature ranges. Unglazed and glazed flat-plate collectors are generally used for low and intermediatetemperature applications. Evacuated-tube collectors and concentrating collectors are usually used for higher temperature applications.
5
Christensen, Craig B. and Greg M. Barker. Effects of Tilt and Azimuth on Annual Incident Solar Radiation for United States Locations . Proceedings of Solar Forum 2001: Solar Energy: The Power to Choose April 21-25, 2001, Washington, DC.
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Low-Temperature Collectors/Swimming Pool Collectors Low-temperature collectors, also known as unglazed flat-plate collectors, can increase water temperature to as much as 15 to 20C (27 to 36F) over the ambient air temperature. These collectors have a relatively simple design: they consist of a black plastic absorber with flow passages; have no glass cover; no insulation; and no expensive materials such as aluminum or copper. They are less efficient in collecting solar energy when outdoor temperatures are much lower than the desired temperature, but are quite efficient when outside air temperatures are close to the desired water temperature. They are also usually less expensive than other solar collectors. These features make them highly suitable for swimming pool water heating and other uses that require only a moderate increase in temperature. Heating swimming pool water with solar energy is much more cost-effective than using natural gas or electricity to heat pool water. Solar pool heating is by far the most prevalent use of solar thermal technologies in the U.S. Flat-Plate Collectors Glazed flat-plate collectors (see Figure 1) can heat water to operating temperatures of 48.8 to 60C (120 to 140F), although some highly efficient models can perform reasonably well at temperatures above 200EF. The most common use is for heating domestic hot water, but there are numerous preheat applications for industrial process heat as well as for space heating.
Figure 1
This type of collector is an insulated metal box with a glass or plastic cover and a dark-colored absorber plate. The cover may have a glazing that is transparent or translucent. The glazing allows sunlight to strike the absorber plate but reduces the amount of heat that can escape. The sides and bottom of the collector are usually insulated to minimize heat loss. The absorber plate is usually black because dark colors absorb more solar energy than light colors. Sunlight passes through the glass and strikes the absorber plate, which heats up, changing solar radiation into heat energy. The heat is transferred to the liquid water or an antifreeze solution passing through the collector. Evacuated-Tube Collectors Evacuated-tube collectors (see Figure 2) are rows of parallel, transparent glass tubes. Each evacuated and pressure proof glass tube contains an absorber covered with a selective coating. Sunlight enters the tube, strikes the absorber, and heats a liquid flowing through the absorber. A heat pipe collector incorporates a special fluid which begins to vaporize even at low
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temperatures. The steam rises in the individual heat pipes and warms up the carrier fluid in the main pipe by means of a heat exchanger. The condensed liquid then flows back into the base of the heat pipe. Because the sunlight is absorbed in a vacuum, convective heat losses are minimized or eliminated. Sunlight is also perpendicular to the glazing for most of the day due to the circular shape of the evacuated tube. This characteristic may allow the tubes to perform well in both direct and diffuse solar radiation (i.e., cloudy days).
Figure 2
The high temperatures more than 76.6C (170F) evacuated-tube collectors can achieve, combined with the fact that evacuated-tube collectors are usually more expensive than flat-plate collectors, make them more appropriate for applications such as commercial and industrial hot water heating, steam production, and solar air conditioning. Concentrating Collectors Concentrating collectors use mirrored surfaces to concentrate the sun's energy on an absorber called a receiver. Concentrating collectors can achieve higher temperatures than evacuated tube collectors. But unlike evacuated-tube collectors, they can do so only when direct sunlight is available. The mirrored surface focuses sunlight collected over a large area onto a smaller absorber area to achieve high temperatures. Some designs concentrate solar energy onto a focal point, while others concentrate the sun's rays along a thin line called the focal line. The receiver is located at the focal point or along the focal line. A heat-transfer fluid flows through the receiver and absorbs heat. Concentrators are the most practical in areas of consistently high amounts of direct solar radiation, such as the desert southwest United States. Concentrators are used mostly in utility or commercial applications because they are expensive and because the trackers (to follow the sun throughout the day and year) need frequent maintenance. STORAGE TANKS Most solar thermal applications require water tanks to store the collected thermal energy. In many residential and other small non-residential applications, specialized 80 or 120-gallon hot water tanks with built-in heat exchangers are used. For larger systems, multiple manufactured tanks can be used or tanks can be built on-site to best match the needs (e.g., insulated or uninsulated) of the particular solar thermal application.
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SOLAR THERMAL EQUIPMENT AND INSTALLER CERTIFICATION The Solar Rating and Certification Corporation (SRCC)6, established in 1980, is an independent, nonprofit organization that creates and implements solar equipment certification programs and rating standards. It is the only organization that rates and certifies solar thermal energy equipment used throughout the United States. For residential solar domestic hot water applications, the SRCC certifies entire systems; the collectors, controls, sensors, fluids, heat exchangers, pumps, plumbing, piping, and tanks have to meet or exceed minimum standards. For larger commercial and industrial applications of solar thermal, the SRCC only certifies collectors. SRCC certification of equipment is required for some state and federal incentives (see Financial Incentives below). Proper installation of solar thermal equipment is also important to ensure the systems operate at their maximum efficiency. Currently, there are few state and no national quality credentialing and certification programs for solar thermal professionals. Dealers and installers are generally trained by the manufacturer whose product they are marketing. However, the North American Board of Certified Energy Practitioners (NABCEP), a volunteer board of renewable energy stakeholder representatives, is developing a program for solar thermal installers. In 2006, NABCEP plans to launch a certification program for solar thermal installers similar to its Solar PV Installer Certification.7 SOLAR HOT WATER SYSTEMS Solar hot water heaters can be either passive or active. Passive systems have no pumps and use convection to move water or a heat-transfer fluid through the system. Since passive systems are usually not practical for larger systems, all the systems discussed below are active systems. Active systems use electric pumps to circulate a heat-transfer fluid. Active systems are more expensive than passive systems but are also more efficient. Because the pumps in active systems use electricity, they will not function in a power outage unless there is a photovoltaic circulator or back-up generator. Solar water heater systems are also characterized as open-loop (also called direct) or closed-loop (also called indirect). Open-loop systems circulate process or potable water through a collector and this water is then used directly for end-uses. These systems are most often used where freezing temperatures do not or rarely occur or where local water quality is not an issue. Since temperatures on the Delmarva Peninsula drop well below freezing numerous times each winter, open-loop systems are not appropriate for this area. Closed-loop systems pump a heat-transfer fluid through collectors. The heat-transfer fluid can be distilled water or a nontoxic glycol antifreeze solution, however, glycol antifreeze is a slightly less efficient heat-transfer fluid than water. Heat exchangers transfer the heat from the fluid to the intended end-use: water, air for space heating, or a refrigerant for solar absorption cooling. Double-walled heat exchangers prevent contamination of potable water.
6 7
SRCC website http://www.solar-rating.org/ See http://www.nabcep.org/
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Closed-loop systems are used in areas subject to sustained freezing temperatures because they allow good freeze protection mechanisms. The two freeze-protection methods most appropriate for the climate of the Delmarva Peninsula are pressurized glycol systems and drainback systems. Glycol Antifreeze Systems A nonionic water-glycol antifreeze solution circulates in a closed-loop system. Advantages of this type of system are that it offers excellent freeze protection, the sloping of collector fields is less critical, and pumps can usually be sized only for hydronic circulation, meaning smaller pumps, and less parasitic energy. Disadvantages of glycol systems include: lower heat transfer efficiency compared to drainback systems; the greater maintenance needed to monitor antifreeze quality the stagnation of some antifreeze mixtures at high temperatures and exposure to air may cause the glycol to breakdown; and the glycol may need to be changed every few years. Drainback Systems This type of system uses a nonpressurized, closed loop that circulates a heat-transfer fluid. The fluid is forced through the collectors by a pump and then is drained by gravity to the storage tank and heat exchanger. When the pumps are off, the collectors are empty, thereby providing freeze-protection. The advantages of drainback systems include: excellent freeze protection when properly installed; an inexpensive and effective heat transfer fluid (water); and water generally is not in the collectors during stagnation so it is not lost and thus does not need to be changed as often as in other systems. Disadvantages of these systems are: the solar collectors and all piping exposed to weather must be located above the drainback tank; the collector and piping must be properly sloped; the collector field must be checked periodically for settling (i.e., poor drainage); the drainback tank must be sized and insulated sufficiently; and the pumps usually must be larger than for circulating loops meaning larger parasitic losses. However, in large systems in moderately freezing climates, these issues may be easier to address than in other situations. If a system is properly designed and installed according to the design, then either a glycol or drainback design would be an effective system for the process applications and geographic locations considered in this report. SOLAR COOLING While absorption cooling does not enjoy the widespread familiarity in the U.S. that vapor compression cooling does, absorption cooling is the first and oldest form of air conditioning and refrigeration. The technology is commonly used in large industrial facilities where waste process heat is available. In recent decades, small units (10 tons and up) have become commercially available.
Figure 3: Drainback System.
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An absorption air conditioner or refrigerator does not use an electric compressor to mechanically pressurize the refrigerant. Instead, the absorption device uses a heat source, such as natural gas or a solar collector array, to evaporate the already-pressurized refrigerant from an absorbent/refrigerant mixture. This takes place in a device called the vapor generator. Although absorption coolers require electricity for pumping the refrigerant, the amount is very small compared to that consumed by a compressor in a conventional electric air conditioner or refrigerator and is within the realm of possibility for solar electric pumps. Where cooling is required, single-effect absorption chillers use solar thermal heat at approximately 87.7C to 93.3C (190 to 200F) to provide process cooling at 7.2C (45F). Waste heat at about 29.4C (85F) is either used elsewhere in the preheat process or is rejected to a cooling tower. The system provides the best cooling when it is needed most when the sun is high and hot. Solar absorption cooling is more cost-effective than using solar photovoltaics to power vapor compression systems, and it can compete with conventional cooling technologies especially when time-of-use rates and peak-demand price spikes are taken into consideration. Single-effect absorption coolers are the best match for use with flat plate solar collectors. It is also possible to produce ice with a solar powered absorption device, which can be used for cooling or refrigeration. Europe leads the world in solar cooling with over 45 solar cooling installations to date. A notable installation is the EAR Tower in Pristina, Kosovo. Installed in 2002, this system uses highly efficient flat-plate collectors to power 60 tons of LiBr-water absorption chiller capacity. The solar system meets 75% of the cooling load, 20% of the heating load, and 100% of the hot water load for the office building. In the U.S., experimental systems have been operating for over a decade at the University of Puerto Rico in Mayaguez and at Bergquam Energy Systems in Sacramento, California. In 2004, the Audubon Society commissioned a commercial system to provide 100% of the cooling needs for a nature center outside Los Angeles using evacuated-tube collectors and a 10-ton chiller. The system displaces 15 kW of peak utility demand and the center is not susceptible to blackouts. Other solar cooling systems include a solar adsorption system commissioned in Canada in 2005 and three absorption systems planned for 2006 commissioning two in Florida and one in Arizona.
SECTION 5: POULTRY FACILITIES AND SOLAR THERMAL APPLICATIONS

Solar thermal technologies are the most cost-effective when: There is a consistent daily and year-round hot water demand. Hot water consumption is significant. The water temperatures required and methods used to heat water match the capabilities of solar thermal technologies. The investigators used these criteria to assess the potential application of solar thermal technologies for poultry facilities. For the purposes of this study, the answer to the age-old question what came first, the chicken or the egg? is easy. Its the egg! Because the investigators did not investigate the energy usage of breeder facilities, hatcheries are the first poultry facilities to be discussed.
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HATCHERIES After hens lay eggs at breeder facilities, the eggs are delivered to hatcheries and placed in incubators that are carefully monitored to ensure that correct temperature and humidity levels are maintained throughout the entire incubation period. The most important function of a hatchery is maintaining precise humidity levels and temperatures. After a specified number of days in an incubator, the eggs are placed in atmospherically controlled cabinets with sufficient air flow to facilitate the hatching process. After the chicks hatch, they are transported to grow-out farms. There are 13 hatcheries on the Delmarva Peninsula.8 Although hatcheries operate 24 hours a day, 7 days a week, the hatcheries may only receive new eggs several days a week. Starting in the morning on egg delivery days, the egg crates are cleaned with 60C (140F) water to remove dirt and debris. This cleaning process usually takes about 3 to 4 hours. Some hatcheries averaged about 20,000 gallons per day or less for this purpose. Using solar thermal to preheat water for hatcheries is not as optimal as for processing plants (see below). This is because the thermal load is limited, is intermittent, and would require solar storage since the load occurs in the early morning. However, in cases where a boiler may be undersized, solar thermal may be an alternative to boiler replacement or supplement. In such a case, a system with a relatively small collector field and a relatively large well-insulated storage tank might serve the purpose well. As the price of fuel oil rises and/or the cost of emissions rises, this application would become more cost-effective. A more promising use of solar thermal in hatcheries is for air conditioning. The thousands of eggs in hatcheries constantly produce heat, and for most of the year, air conditioning is needed to attain the desired air temperature. Heating is only needed during the coldest days of the year. This cooling profile is well-suited for solar absorption cooling. Solar absorption cooling could relieve the electrical load and allow the facility to opt for lessexpensive interruptible electrical supply. The solar array could also be used for space heating on the days when space heat is needed. Reject heat from the solar air conditioner would be routed into a preheat tank prior to being rejected to a cooling tower. Further, the preheat tank may be well-matched for use for the wash-down water heating load and this application could delay or avoid boiler replacement. While the investigators believe that solar absorption cooling could be a cost-effective application for hatcheries, this application was not modeled for cost-effectiveness in this study. Instead, the investigators chose to focus on processing plants because of their larger thermal loads. This could be an area for further investigation. GROWERS Most chicks that leave hatcheries on the Delmarva Peninsula are sent to contract poultry growers or farms. These growers usually provide the land, poultry house, equipment, and labor to raise chickens while a poultry company provides chickens, feed, and technical guidance as specified in a contract. There are 1,900 poultry growers and 5,100 poultry houses on the Delmarva Peninsula.
8
See Appendix C.
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Growers were not a subject of this study. For more information on possible solar applications for growers, please see The Potential for Solar Electric Applications for Delawares Poultry Farms by the Center of Energy and Environmental Policy at the University of Delaware.9 FEED MILLS Feed mills process ingredients such as grains, soybean meal, vitamins, and minerals into pellets that are formulated for the 4 or 5 different phases of a chickens growth. There are 10 feed mills on the Delmarva Peninsula.10 Feed mills usually operate 5 days a week and use about 20,000 gallons of water per day to make 162.7C (325F) steam. The steam adds moisture to the feed so that pellets can be formed. Solar thermal could be used to preheat boiler feedwater. This application would be a good candidate for evacuated tube collectors because of the higher temperatures needed. Using solar thermal to preheat boiler feedwater for feed mills is unlikely to be a cost-effective application at this time. However, as the price of fuel oil rises, the economic viability of this option will improve. Another possible application for feed mills would be to use solar thermal drying technologies to dry the feedstock prior to it entering the feed mill. Solar drying of foodstuffs and feedstock is one of the humankinds original uses for solar energy but has been neglected in modern society in favor of fossil-based drying. Advances in the technology and rising fossil fuel costs may lead to renewed interest. This application was not analyzed by the investigators as part of this study. PROCESSING PLANTS Processing plants are where chickens are killed and processed for consumption. After a bird is killed, the carcass is: Put on a conveyor. Drained of blood. Feathers, feet and head are removed. Eviscerated internal organs pulled for inspection by USDA. Chilled to 4.44C (40F), usually by immersion in a chilled water bath, to inhibit bacterial growth. Packed whole or cut into parts for distribution. Plants operate under USDA Pathogen Reduction rules and industry guidelines to improve the microbiological quality of the product. Prior to the chilled water bath, the carcasses are subject to semi-scalding water four times for defeathering, a whole bird wash, evisceration, and a final bird wash.11 There are 10 processing plants on the Delmarva Peninsula.12 Hot Water Demand Processing plants have large daily hot water demands. Heated water is used in the plants for evisceration, sanitation during processing, and the daily cleanup of the plant. The processing
9
See http://ceep.udel.edu/publications/2005_06.htm See Appendix C. 11 See Appendix D for processing plant schematic. 12 See Appendix C.
10
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plants on the Delmarva Peninsula seem to be operated in a similar manner: two processing shifts per day, Monday to Friday; a nightly cleanup shift; and a Saturday shift if product demand dictates. Plant cleanup occurs six to seven times per week. For sanitation requirements, plants have to be cleaned within a certain number of hours prior to the start of a processing shift (i.e., a plant that is idle on Sunday is required to be cleaned on Sunday night before a Monday morning shift).
Minimum Daily Usage While none of the visited plants sub-metered water usage, plant personnel estimated that the daily cleanup of the plant represented at least 50% of daily hot water consumption. Hot water consumption differed for each plant the investigators visited, but all the processing plants exceeded 200,000 gallons per day. Discussions with the poultry industry suggest that a minimum usage of 200,000 gallons of hot water per day would be typical for most processing plants in the U.S.
Figure 4: Photo courtesy of Allen Family Foods, (http://www.allenfamilyfoods.com/oper/qal.html)
Required Water Temperatures All the processing plants the investigators visited use groundwater. Groundwater temperatures on the Delmarva Peninsula usually range between 12 to 16C (54 to 62F) depending on the time of year and depth of well. Temperatures required in plants range from 51 to 54C (124 to 130F) for the semi-scalding (evisceration) process to 60C (140F) for plant cleanup. The daily hot water demands, the pattern of water consumption, and methods of heating water in processing plants are a good fit for the capabilities of solar hot water heaters. Processing plants patterns of water use moderate hot water demands during the day and heavy night usage match fairly well with solar hot water heaters production that peaks in the afternoon. The need to raise the relatively consistent temperature of groundwater about 47C (85F) allows solar thermal technologies to operate on the most efficient part of their curve for most of the time that they preheat the water. Preheating means the boilers work less and less fossil fuel is consumed. In cases where a boiler is undersized or production has increased, the solar system would be sized to make an additional boiler unnecessary. The investigators determined that preheating water for poultry processing plants was likely the most cost-effective application of solar thermal in poultry facilities. RENDERING PLANTS Rendering plants process poultry byproducts (e.g., feathers and bones) into protein, fat, or bone meal for use in pet food and other products. Basically, the rendering process is the grinding and cooking of byproducts at high temperatures to separate fats and proteins. Rendering plants use make-up water for the boilers to make steam for the cooking process. Solar thermal could be used to preheat make-up water for steam in rendering plants but this use may not be an optimal use of solar due to the small amounts of water used, variable loads, high temperatures, and existing opportunities for other heat recovery schemes.
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SECTION 6: ECONOMIC ANALYSIS

The financial impacts of solar thermal installations on poultry facilities will be the primary factor on which poultry companies decide whether to install a solar system. A goal of this study is to provide the poultry industry with a realistic assessment of the economics of using a solar thermal system at a poultry facility. This economic analysis focuses on using solar thermal to preheat water for poultry processing plants because this application of solar thermal was identified by the investigators as the most promising for the Delmarva poultry industry. The following analysis is based on: data from three of the four poultry companies on the Delmarva Peninsula; on-site visits to poultry processing plants; databases in a software analysis tool; cost estimates from solar contractors; and the investigators solar industry experience. SOFTWARE ANALYSIS TOOLS The investigators considered using three widely-used software analysis tools to estimate loads, system sizing, costs, and provide an economic analysis for solar thermal technologies TRNSYS, F-Chart, and RETScreen. F-Chart may not be appropriate for this analysis because it is designed for residential systems.13 TRNSYS is a very robust software tool but its economic analysis is limited and it requires fairly extensive engineering knowledge to operate the software.14 RETScreen is used because it provides a broad technical and economic analysis that can be applied to non-residential systems for pre-feasibility applications. Although it allows the user to control a large number of parameters, it also has suggested default values for many of those parameters and usually provides a wide range of default values with some justification for the ranges suggested. Like most software analysis tools, its user-friendliness may result in a precisely inaccurate result, i.e., an inexperienced user may pick a value for a parameter that leads to a result that is precisely wrong. However, if the user has some experience with the industry under consideration and with solar energy, RETScreen can be used with great effect. The RETScreen International Clean Energy Project Analysis Software is a free software tool developed with the contribution of numerous experts from government, industry, and academia. The software can be used worldwide to evaluate the energy production, life-cycle costs, and greenhouse gas emission reductions for various types of energy efficient and renewable energy technologies. The software also includes product, cost, and weather databases.15 ASSUMPTIONS AND INPUTS A RETScreen user can use the product, cost, and weather databases included in the software or manually adjust these databases. Below is a discussion of the inputs into the analysis and where alternatives to RETScreens assumptions were used. Location of Poultry Processing Plant The assumed location of the processing plant is Georgetown, Delaware, the centrally located seat of Sussex County. Four of the ten processing plants on the Delmarva Peninsula are located in
See http://sel.me.wisc.edu/fchart/new_fchart.html See http://sel.me.wisc.edu/trnsys/default.htm 15 More information on RETScreen can be found at http://www.retscreen.net/
14 13
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Sussex County, with another one just over the county line in Milford, Delaware. Two plants in Maryland are located in Caroline and Talbot counties which are adjacent (i.e., in terms of latitude) to Sussex County. Solar Radiation and Weather Data To paraphrase a political clich, all weather is local. The amount of solar energy received by the earth at a particular location is highly variable both in time and space (from location to location) due to localized conditions such as cloud cover and pollution. The data available to precisely determine solar radiation at a particular location is limited. For example, whereas the National Renewable Energy Laboratorys (NREL) National Solar Radiation Data Base is a 30-year record of the radiation received at 239 locations across the U.S., none of the 239 locations are on the Delmarva Peninsula. Therefore, the estimates of the amount solar radiation for this analysis may not exactly match actual results. For this analysis, the data from Wilmington, Delaware (latitude of 39 44) is used because it is the closest location to Georgetown with NREL data. To give some perspective on Georgetowns location (38 40), it is about 70 miles south of Wilmington. Salisbury, Maryland (38 21), a location of another processing plant, is about 95 miles south of Wilmington. A plant located in the Virginia portion of the Delmarva Peninsula at Temperanceville (37 53) is about 130 miles south of Wilmington. Another plant is located in Accomac, Virginia which is about 15 miles south of Temperanceville. These sites are all very close to the same latitude and should receive about the same amount of solar energy. However, as shown in a sensitivity analysis below, Washington, DC, which is south of Wilmington, receives nine percent less solar radiation on an annual basis than Wilmington probably due to cloud cover variations. The investigators believe that use of the data for Wilmington, from the weather station designated WBAN#13781, is an appropriate proxy for the Delmarva Peninsula that may yield slightly conservative results for the amount of solar radiation used in the cost-effectiveness analyses. The appropriateness of the RETScreen radiation data, derived from a 10-year satellite record, was validated by comparing the RETScreen data against NRELs data. As seen in Table 1, RETScreen radiation data matches very closely to NRELs WBAN#13781 for zero and for latitude tilt. RETScreen slightly under predicts WBAN data for latitude tilt, which allows for a conservative radiation estimate. Table 1: Comparison of Solar Radiation [kWh/m2/day], RETScreen to NREL
RETScreen at 0 tilt January 2.03 February 2.86 March 3.90 April 4.91 May 5.65 June 6.24 July 6.08 August 5.45 September 4.39 October 3.29 November 2.18 Decem ber 1.75 W BAN#13781 at 0 tilt 2.0 2.9 3.9 4.9 5.6 6.2 6.1 5.4 4.4 3.3 2.2 1.7 RETScreen at latitude tilt 3.47 4.15 4.65 4.96 5.10 5.35 5.33 5.25 4.91 4.44 3.53 3.08 W BAN#13781 at latitude tilt 3.4 4.2 4.8 5.2 5.4 5.6 5.6 5.5 5.1 4.5 3.5 3
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Weather data in RETScreen was checked against published NREL weather data for the same location. RETScreen average monthly temperatures for Wilmington match to within 0.2C of WBAN#13781 from NREL. WBAN#13781 shows a daily minimum/maximum range for each month of about 9 to 11C, fairly evenly spaced around the daily average. Groundwater Temperatures The Delmarva Peninsula is a flat coastal plain with deep layers of sediment. Groundwater is the source for all potable water uses on the Delmarva Peninsula. Compared to surface water, groundwater temperature tends to be much less variable on an annual basis, especially in deeper aquifers. One processing plant the investigators visited is connected to a municipal water utility and the remainder have private wells. RETScreens temperature range of 7.7 to 16.6C (46 to 62F) for groundwater in Delaware is the temperature range used in this analysis. Based on measured temperature data for a shallow well on the northern part of the Delmarva Peninsula, this range seemed to be a reasonable groundwater temperature profile for Delaware. Daily Hot Water Demand As discussed in Section 5 above, the minimum daily hot water demand for a poultry processing plant is assumed to be at least 200,000 gallons per day (gpd). This daily usage is also assumed to occur 365 days a year.16 Required Water Temperature As discussed in Section 5, the uses of hot water in processing plants require water to be heated to temperatures between 51 to 60C (124 to 140F). The cleanup process is the largest portion of the daily hot water demand and requires the highest temperature 140 F. Therefore, it is assumed that 200,000 gpd of groundwater, at temperatures of 7.7 to 16.6C (46 to 62F), is required to be heated to 60C (140 F). Fuel Costs No. 6 fuel oil is the fuel of choice for poultry processing plants on the Delmarva Peninsula for use in boilers to heat water. No. 6 fuel oil, also known as Bunker C or residual oil, is a very thick almost tar-like oil. The sulfur content of No. 6 fuel oil, which may impact the price of the oil, can range from 0.5% to 2.0%. No. 6 fuel oil with a 2% sulfur content appears to be the most widely used grade by the Delmarva poultry industry and some No. 6 fuel oil with 1% or even 0.5% sulfur content may be used to meet emissions quotas. Some plants use more expensive No. 4 fuel oil and some facilities may also use natural gas or propane on occasion. For the cost-effective analysis, No. 6 fuel oil is the fuel assumed to be used in processing plants. According to the U.S. DOEs Energy Information Agency, the average price (excluding taxes) to end-users for No. 6 fuel oil for 2004 was $0.692 per gallon and for 2005 was $0.981 per gallon.17
16
Actual days with assumed load will be slightly less because individual plants Saturday schedule vary and holiday closings. 17 Based on the Energy Information Agencys data for residual oil with sulfur content greater than 1%: http://www.eia.doe.gov/emeu/mer/pdf/pages/sec9_7.pdf
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Since August 2005, the average price (excluding taxes) of No. 6 fuel oil has been above $1.00 per gallon. Reflecting these recent trends, the assumed cost of No. 6 fuel oil is $1.00 per gallon (excluding taxes) with an annual escalation rate of 1%. Solar Array Costs RETScreen suggests the Heliodyne Gobi 410 as a default collector, allowing the programmer to access a representative flat-plate collector performance curve and size. The choice of collector can be easily adjusted by selecting from a menu of other manufacturers and collectors. Note that the choice of the Gobi 410 is for access to an actual collector efficiency curve for representative energy performance analysis only; collector cost data discussed below is based on industry averages and does not necessarily represent cost data for the Gobi 410. Solar collectors are the majority of the costs of a solar thermal system. The cost of the array of flat-plate collectors is usually represented in $/m2 or $/ft2. While RETScreen lists costs of $180 to $310/m2 for flat-plate collectors, the investigators believe that the costs could be as low as $130/m2 based on industry data from recent years and based on the expected economies of scale for the relatively large systems modeled in this study. To evaluate recent cost trends for solar thermal installations, the investigators contacted several solar thermal contractors for cost estimates for the two solar systems modeled below. The estimates received were higher in cost than $130/m2. These higher estimates maybe the result of solar contractors that lack experience in large-scale installations and a tendency by solar thermal contractors to overestimate costs for pre-feasibility estimates. The higher estimates may also simply reflect increases in materials and costs industry-wide. Nevertheless, the evaluation of recent cost trends indicates that $130/m2 appears to be the low-end of the price range for solar collectors. Balance of System (BOS) Costs and Other Miscellaneous Costs In small systems such as residential and small commercial, collectors are typically mounted on a roof. Sometimes the collectors double as an awning or window shade, or as a shading device in a parking lot. There can be energy-efficiency and even aesthetic benefits to these mountings that are difficult to measure in an economic analysis. However, for purposes of the analysis described in this report, the investigators believe that a ground-mounted solar system (e.g., in a field) is likely to be more cost-effective than a system installed on a plants roof or as a shading device in a parking lot due to the fact that less hardware is required. Using guidance from RETScreen, materials are assumed to cost $40/m2 and ground-mount installation (no cranes) and pipe installation are assumed to cost $20/m2. However, BOS costs may vary widely depending on the type of collector installed. RETScreen suggestions for contingencies, feasibility studies, development, engineering, and training are used in the analysis. Storage Size Storage size can be varied significantly depending on how the system is designed. RETScreens suggested ratio of 45.9 liters/m2 (which is about 1 gallon per square foot) is used for the analysis. It may be more cost effective in an actual installation to size the storage to meet a certain minimum load or to cover planned outage time for routine maintenance of a plants boilers.
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Storage Cost Using the RETScreen data, un-pressurized concrete underground tanks are assumed to cost $0.28/L and un-pressurized polyethylene (PE) tanks are assumed to cost $0.18/L. Insulated underground un-pressurized concrete tanks are assumed to cost $0.28/L to $0.45/L. RETScreen costs seem to be a bit high a sampling of PE tank product literature found $0.15/L ($0.13/L for 12 or more) for 10,550 gal/40kL PE tanks with maximum temperatures of 60C (140F). However, the investigators are using RETScreen suggestions to be conservative. Costs Per Unit of Energy Delivered While the costs of the various components of a solar thermal system will have a significant impact on the total installed costs, it is the cost per unit of energy delivered that ultimately drives the cost-effectiveness of a solar system. For the analyses in this report, MWh is the unit of energy reported. Other units of energy, such as BTUs, can be used and reported by RETScreen. Financial Indicators RETScreen calculates several financial indicators for each scenario modeled and the following are the indicators that are presented in this report: Pre-Tax Internal Rate of Return (IRR) or Return on Investment (ROI) represents the true interest yield provided by project equity over its life before income tax. The investigators assumed 15% to be a threshold projects with an IRR below this amount are not considered to be an attractive investment. Individual companies may have a higher IRR threshold. Simple Payback (SPB) represents the length of time that it takes an investment to recoup its own initial costs. The investigators assumed that a SPB above 8 years would not be likely to be an attractive investment for most companies and a SPB below 5 years would be an attractive investment for most companies. Net Present Value (NPV) is the value of all future cash flows, discounted at the discount rate, in todays currency. The NPV is shown in this report because assumptions such as the discount rate, energy cost escalation rate, and inflation rate impact the NPV but not necessarily the IRR or SPB. Benefit-Cost (B-C) Ratio is the basic measure of cost-effectiveness a B-C ratio above 1.0 is profitable over the life of a project and below 1.0 is not profitable. The investigators assumed that IRR and SPB are the primary screens used to evaluate projects by companies. RETScreen calculates several more financial indicators that are not presented in this report but may be of value to a RETScreen user such as year-to-positive cash flow. Solar Fraction The solar fraction (SF) is the percentage of the energy load that is provided by sunlight. For example, in Poultry Process #1 below, a 46% SF could be visualized in simplified terms as the 200,000 gpd of 60F groundwater that flows thru the solar system and is heated up by an average of 36.8F. A fossil fuel boiler then heats this 96.8F water to the required water temperature of 140F and provides 54% of energy needed on annual basis to the heat the water. BASE-CASE SCENARIOS Two solar thermal systems used to preheat process water for a poultry processing plant are modeled below. Poultry Process #1 optimizes the size of a solar thermal system to be installed for a poultry processing plant with a minimum daily hot water (60C/140F) demand of 200,000
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gallons. Poultry Process #2 adjusts the size of the solar system to maximize the incentive available in Delaware. For comparison purposes, these two base-case scenarios could also be characterized as a large system (Poultry Process #1) and a small system (Poultry Process #2). Poultry Process #1 This analysis was run assuming a demand of 200,000 gpd of hot water at 60C (140F). Usually, about a 50% SF ensures that the collectors are never underutilized, even during the summer months. RETScreen considers this when recommending a system size in this case it recommended a SF of 46%. Table 2: System Sizing for Poultry Process #1
Solar Fraction Collector Type & Number Array Size Annual Solar Energy Delivered Storage Size 46% 3000 4'x10' flat plate collectors 11,220 m 2 (120,771 ft2 ) 7,020.41 MW h 514,998 liters (135,883 gallons)
The collector array for this system would cover about 2.77 acres of collector field. An appropriate-sized parking lot or field (or combination thereof) adjacent to a processing plant will be necessary to accommodate this large system. For storage size, RETScreen assumed 26 tanks with capacities of 20,000 liters (5,283 gallons) would be needed 6 concrete underground tanks and 20 PE tanks. The type of tank specified can vary widely. If multiple unpressurized tanks are specified, it is assumed that they would be the same or a lower cost than the 26 tanks. Table 3: Costs for Poultry Process #1
Solar Collector Costs Other Array Costs BOS Costs Other Costs Total Installed System Costs $ 1,458,600 $ $ $ 214,867 675,666 285,469
$ 2,634,602
As discussed above, the costs modeled for Poultry Process #1 are likely at the low-end of the range of costs per energy unit (MWh) delivered. A summary of the financial indicators calculated for Poultry Process #1 are shown in Table 4. This cost-effectiveness analysis was run using the assumptions noted above, RETScreens default values for other parameters, and a 10% federal tax credit. As discussed below in the Financial Incentives section, a 10% tax credit, worth $263,460 for this scenario, is the minimum incentive available in all three states on the Delmarva Peninsula. Table 4: Financial Summary for Poultry Process #1
IRR/ROI SPB NPV B-C Ratio 10.3% 9.7 years $58,152 1.02
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These financial results for Poultry Process #1 are unlikely to convince a poultry company to install a solar system due to the $2 million price tag and financial results that are below threshold levels assumed by the investigators. Fuel costs higher than $1.00 per gallon would make this solar system more cost-effective. Incentives beyond the 10% federal tax credit, could also make this solar system a more attractive investment for a poultry company. Poultry Process #2 The Green Energy Program, available to customers in Delmarva Powers service territory in Delaware, provides grants up to 50% of the installed costs of solar thermal systems. The grants are capped at $250,000 per facility which means that the project costs over $500,000 are not eligible for a grant. So, in order to maximize the impact of the available grant on system costeffectiveness, a project should be sized so that the total installed costs are as close to $500,000 as possible. The system sizing for Poultry Process #2 was adjusted to maximize the grant. Table 5: System Sizing for Poultry Process #2
Solar Fraction Collector Type & Number Array Size Annual Solar Energy Delivered Storage Size 10% 544 4'x10' flat plate collectors 2,035 m 2 (21,905 ft2 ) 1,535.25 MW h 93,386 liters (24,672 gallons)
Table 6: Costs for Poultry Process #2

Solar Collector Costs BOS Costs Other Costs Total Installed System Costs $ 308,902 $ 124,740 $ 66,420 $ 500,062
The smaller collector array of Poultry Process #2 results in less energy delivered only 1,535 MWh annually compared to the 7,020 MWh in Poultry Process #1. As modeled, Poultry Process #2 delivers about 15% less energy than Poultry Process #1 for each dollar spent reflecting a slight benefit for the economies of scale for a larger system like Poultry Process 1. The results for the financial analysis on Poultry Process #2, calculated with a $250,000 grant and 10% federal tax credit (total incentives of $275,006), is shown in Table 7. Table 7: Financial Summary for Poultry Process #2
As modeled, Poultry Process #2 would likely be an attractive investment to some companies. In addition, for companies that are unfamiliar with solar thermal technologies, a smaller project like Poultry Project #2 could be more attractive investment until they become more comfortable with
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solar thermal technologies. Because solar thermal installations are usually expandable, a company could choose to make a smaller initial investment in a system such as Poultry Project #2 and then expand the system later. However, financial incentives may not be available for the expansion phases of a project and the total costs for a multi-phase project would likely be higher than for single, one-time installation. SENSITIVITY ANALYSES A number of sensitivity analyses were performed to determine how different factors impact the cost-effectiveness of Poultry Process #1 and Poultry Process #2. For reference, Tables 8 and 9 have the constant parameters, unless otherwise noted, used in the analyses described below. Table 8: Constant Parameters, Unless Otherwise Noted, for Poultry Process #1
Cost of No. 6 fuel oil Debt ratio Retail price of electricity Energy cost escalation rate Inflation Discount rate Project life Collector area Storage capacity $1.00 0% $0.10/kW h 1.0% 2.0% 10.0% 25 years 11,220 m 2 514,998 liters Annual electricity consumed Specific yield System efficiency Solar fraction Annual Renewable heat delivered Initial costs Incentives/grants Annual costs/debt Annual savings 67.25 MW h 626 kW h/m 2 38% 46% 7,020.41 MW h $2,634,602 $0 $7,825 $253,532
Table 9: Constant Parameters, Unless Otherwise Noted, for Poultry Process #2

Cost of No. 6 fuel oil Debt ratio Retail price of electricity Energy cost escalation rate Inflation Discount rate Project life Collector area Storage capacity $1.00 0% $0.10/kW h 1.0% 2.0% 10.0% 25 years 2,034.6 m 2 93,386 liters Annual electricity consumed Specific yield System efficiency Solar fraction Annual Renewable heat delivered Initial costs Incentives/grants Annual costs/debt Annual savings 14.70 MW h 755 kW h/m 2 46% 10% 1,535.25 MW h $500,062 $250,000 $5,870 $55,443
Collector Array Tilt and Azimuth The tilt of solar collectors can be varied from the latitude (39:30) down to 20 and up to 40 before losing just over 3% (0.02MWh/m2/yr) of solar radiation in the plane of the collectors. In addition, the azimuth can be varied +/-15 before losing about 1.6% (0.01MWh/m2/yr) of solar radiation. These relatively small losses in power allow some flexibility in siting the array. Impact of Collector-Type on Array Size To determine if the use of different types of collectors would change the size of the solar array in Poultry Process #1, three other collectors in addition to the Heliodyne Gobi 410 were modeled with RETScreen. Table 10: Impact of Collector-Type on Array Size for Poultry Process #1
Type of Collector Heliodyne Gobi 410s SCP Typ A Swiss Solar Tech Multisol M240 Therm om ax Solam ax AST50 # of Collectors 3,000 1,280 5,400 2,096 Array Size 11,220 m 2 13,696 m 2 10,800 m 2 14,944 m 2
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As shown in Table 10, array sizes do vary depending on the type of collector used. However, the differences in array sizes are not significant enough to have a real impact on the area needed for an installation. Cost-Effectiveness of Exceeding a Solar Fraction of 50% Doubling the size of the collector array of Poultry Process #1 to 6,000 collectors and doubling the storage size to 1,030,000 liters does not improve the cost-effectiveness of the system. This system size has a 72% SF and delivers 11,082 MWh of solar energy but the SPB is 2 years longer than in the base case of Poultry Process #1. This unattractive result is because on some days the energy delivered by collector array would now exceed the assumed daily load (200,000 gallons per day) and the array would be underutilized. Storage Size Poultry Process #1 assumes 45.9 liters of storage is needed for each m2 of collector (about 1 gallon per square foot). This storage size results in the system delivering 7,020.41 MWh/yr of solar energy. If a higher storage size is used, for example 757,000 liters (200,000 gallons) or 67.48 L/m2, the system delivers 7,255.33 MWh or a 47% SF. Thus increasing storage by as much as 50% only increases the solar fraction by a percentage point. Depending on the cost of storage, this would probably not result in improved economics. However, if there is ever any downtime when the plant is offline for holiday or maintenance, then increased storage makes more economic sense. This is because the solar array would be able to continue to collect and store heat even when the process plant is down. Most designers of solar thermal systems will consider this and specify one or two days of storage. The optimum storage size will depend on site-specific data such as anticipated sequential days of downtime and installed cost of storage. Discount Rate Sensitivity To demonstrate the impact of the assumed discount rate on cost-effectiveness, sensitivity analyses using different discount rates for Poultry Process #2 are shown in Table 11. Table 11: Discount Rate Sensitivity for Poultry Process #2
Discount rate Pre-tax IRR/ROI SPB NPV (B-C) Ratio 6.0% 20.7% 5.0 years $443,971 1.89 8.0% 20.7% 5.0 years $325,104 1.65 10.0% 20.7% 5.0 years $235,651 1.47 12.0% 20.7% 5.0 years $167,032 1.33 14.0% 20.7% 5.0 years $113,430 1.23
The results in Table 11 indicate that the discount rate impacts NPV and the B-C Ratio, but it does not impact the IRR and SPB. If the NPV is an important financial factor for an individual company, then using the appropriate discount rate in a customized analysis for that company will be necessary. Sensitivity Analyses for Combinations of Incentives, Fuel Costs, and System Costs Effective January 1, 2006 until December 31, 2007, the federal business solar energy tax credit increases from 10% to 30% of total installed costs. Because the tax credit rate returns to 10% in 2008, the analyses below are run with both a 10% and 30% tax credit and the tax credit is
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calculated on the costs remaining after Delawares Green Energy Program grant has been subtracted from the total installed costs (for more detail on the tax credit and the Green Energy Program, see Section 8: Financial Incentives). As discussed above, the assumed cost of No. 6 fuel oil for base-case scenarios is $1.00/gallon (excluding taxes) with an annual escalation rate of 1%. Recent trends in oil prices suggest that the prices will not return to pre-2005 levels for the foreseeable future. Therefore, the sensitivity analyses on No. 6 fuel oil price are skewed toward higher prices. The results of the analyses on fuel price are shown in Table 12 and Table 13. Table 12: Sensitivity Analyses for No. 6 Fuel Oil Price & Incentives for Poultry Process #1
10% Federal Tax Credit ($263,460) No. 6 Fuel Oil Price Pre-Tax IRR/ROI SPB NPV B-C Ratio $0.90/gal 9.0% 10.8 years $(192,691) 0.93 $1.00/gal 10.3% 9.7 years $58,152 1.02 $1.10/gal 11.6% 8.7 years $308,995 1.12 $1.20/gal 12.8% 8.0 years $559,837 1.21 $1.30/gal 14.0% 7.4 years $810,680 1.31 $1.40/gal 15.2% 6.8 years $1,061,523 1.40
$250,000 Green Energy Program Grant and 10% Federal Tax Credit ($488,460) No. 6 Fuel Oil Price Pre-Tax IRR/ROI SPB NPV B-C Ratio $0.90/gal 10.2% 9.7 years $32,309 1.01 $1.00/gal 11.6% 8.7 years $283,152 1.11 $1.10/gal 13% 7.9 years $533,995 1.20 $1.20/gal 14.3% 7.2 years $784,837 1.30 $1.30/gal 15.6% 6.7 years $1,035,680 1.39 $1.40/gal 16.9% 6.2 years $1,286,523 1.49
30% Federal Tax Credit ($790,381) No. 6 Fuel Oil Price Pre-Tax IRR/ROI SPB NPV B-C Ratio $0.90/gal 12.2% 8.4 years $334,230 1.13 $1.00/gal 13.8% 7.5 years $585,073 1.22 $1.10/gal 15.3% 6.8 years $835,916 1.32 $1.20/gal 16.8% 6.2 years $1,086,758 1.41 $1.30/gal 18.3% 5.7 years $1,337,601 1.51 $1.40/gal 19.7% 5.3 years $1,588, 444 1.60
$250,000 Green Energy Program Grant and 30% Federal Tax Credit ($965,381) No. 6 Fuel Oil Price Pre-Tax IRR/ROI SPB NPV B-C Ratio $0.90/gal 13.6% 7.6 years $509,230 1.19 $1.00/gal 15.3% 6.8 years $760,073 1.29 $1.10/gal 17.0% 6.2 years $1,010,916 1.38 $1.20/gal 18.6% 5.6 years $1,261,758 1.48 $1.30/gal 20.2% 5.2 years $1,512,601 1.57 $1.40/gal 21.8% 4.8 years $1,763,444 1.67
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The results in Table 12 suggest the cost-effectiveness threshold for larger projects, like Poultry Process #1, appears to be a combination of a 30% tax credit and No. 6 fuel oil prices in the $1.10 to $1.30 per gallon range and above. In addition, because Green Energy Program grants are capped at $250,000 and a 30% tax credit is worth considerably more than that amount on large projects, the cost-effectiveness of larger projects will be similar in all three states on the Delmarva Peninsula with or without a Green Energy Program grant. Table 13: Sensitivity Analyses for No. 6 Fuel Oil Price & Incentives for Poultry Process #2
10% Federal Tax Credit ($50,006) No. 6 Fuel Oil Price Pre-Tax IRR/ROI SPB NPV B-C Ratio $0.90/gal 9.5% 10.2 years $(127,552) 0.74 $1.00/gal 11.0% 9.1 years $(86,564) 0.83 $1.10/gal 12.4% 8.2 years $(45,577) 0.91 $1.20/gal 13.8% 7.4 years $(4,589) 0.99 $1.30/gal 15.2% 6.8 years $36,399 1.07 $1.40/gal 16.6% 6.3 years $77,386 1.15
$250,000 Green Energy Program Grant and 10% Federal Tax Credit ($275,006) No. 6 Fuel Oil Price Pre-Tax IRR/ROI SPB NPV B-C Ratio $0.90/gal 20.4% 5.1 years $97,448 1.19 $1.00/gal 23.0% 4.5 years $138,436 1.28 $1.10/gal 25.5% 4.1 years $179,423 1.36 $1.20/gal 28.0% 3.7 years $220,411 1.44 $1.30/gal 30.6% 3.4 years $261,399 1.52 $1.40/gal 33.1% 3.1 years $302,386 1.60
30% Federal Tax Credit ($150,019) No. 6 Fuel Oil Price Pre-Tax IRR/ROI SPB NPV B-C Ratio $0.90/gal 12.8% 8.0 years $(27,539) 0.94 $1.00/gal 14.6% 7.1 years $13,449 1.03 $1.10/gal 16.3% 6.4 years $54,436 1.11 $1.20/gal 18.1% 5.8 years $95,424 1.19 $1.30/gal 19.7% 5.3 years $136,412 1.27 $1.40/gal 21.4% 4.9 years $177,399 1.35
$250,000 Green Energy Program Grant and 30% Federal Tax Credit ($325,019) No. 6 Fuel Oil Price Pre-Tax IRR/ROI SPB NPV B-C Ratio $0.90/gal 26.2% 4.0 years $147,461 1.29 $1.00/gal 29.4% 3.5 years $188,449 1.38 $1.10/gal 32.6% 3.2 years $229,436 1.46 $1.20/gal 35.9% 2.9 years $270,424 1.54 $1.30/gal 39.1% 2.6 years $311,412 1.62 $1.40/gal 42.3% 2.4 years $352,399 1.70
The most attractive financial results in Table 13 are the scenarios run with the $250,000 Green Energy Program grants which show very favorable results even with low fuel oil prices as well
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as for higher fuel oil prices when the federal tax credit is 10%. However, similar to the results in Table 12, the cost-effectiveness threshold for Poultry Process #2 in Table 13 appears to be a combination of a 30% tax credit and No. 6 fuel oil prices in the $1.10 to $1.30 per gallon range (with no Green Energy Program grants). As discussed above, the assumed costs per unit of energy (MWh) delivered in the base-case scenarios are likely to be at the low end of the range of probable costs. To determine how the installed costs per unit of energy (MWh) delivered in the first year of service would impact the cost-effectiveness of Poultry Process #1, a range of costs (assumed to produce the same amount of energy annually 7020 MWh) and selected incentives are analyzed in Tables 14 and 15. The investigators used the measure installed costs/MWh delivered in the 1st year of service to compare and contrast various installed cost scenarios and does not reflect the actual costs per unit of energy delivered over the lifetime of a solar system (which would be considerably lower). The costs/MWhyear1 figures quoted here can ONLY be compared to other scenarios within this report and are meaningless when compared to scenarios outside this report. The assumed costs for the two base-case scenarios are at the low-end of the range of total installed costs per unit of energy (MWh) delivered in the first year of service. Table 14: Sensitivity Analyses for Total Installed Costs & Incentives for Poultry Process #1 (Assumptions include $1.00 per gallon No. 6 fuel oil and 7020 MWh delivered annually)
30% Federal Tax Credit Total Installed Costs Costs/MWh year1 Delivered Incentives/Grants Pre-Tax IRR/ROI SPB NPV B-C Ratio $2,634,602 $375.30 $790,381 13.8% 7.5 years $585,073 1.22 $3,251,702 $463.21 $975,510 10.8% 9.3 years $153,102 1.05 $3,992,222 $568.69 $1,197,666 8.3% 11.4 years $(365,262) 0.91 $4,732,742 $674.18 $1,419,822 6.5% 13.5 years $(883,626) 0.81 $5,473,262 $779.67 $1,641,978 5.0% 15.6 years $(1,401,990) 0.74
$250,000 Green Energy Program Grant and 30% Federal Tax Credit Total Installed Costs Costs/MWh year1 Delivered Incentives/Grants Pre-Tax IRR/ROI SPB NPV B-C Ratio $2,634,602 $375.30 $965,381 15.3% 6.8 years $760,073 1.29 $3,251,702 $463.21 $1,150,414 11.9% 8.6 years $328,006 1.10 $3,992,222 $568.69 $1,372,666 9.1% 10.7 years $(190,262) 0.95 $4,732,742 $674.18 1,669,822 7.3% 12.5 years $(633,626) 0.87 $5,473,262 $779.67 $1,891,978 5.7% 14.6 years $(1,151,990) 0.79
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Table 15: Sensitivity Analyses for Total Installed Costs & Incentives for Poultry Process #1 (Assumptions include $1.30 per gallon No. 6 fuel oil and 7020 MWh delivered annually)
30% Federal Tax Credit Total Installed Costs Costs/MWh year1 Delivered Incentives/Grants Pre-Tax IRR/ROI SPB NPV B-C Ratio $2,634,602 $375.30 $790,381 18.3% 5.7 years $1,337,601 1.51 $3,251,702 $463.21 $975,510 14.7% 7.1 years $905,630 1.28 $3,992,222 $568.69 $1,197,666 11.7% 8.7 years $387,266 1.10 $4,732,742 $674.18 $1,419,822 9.5% 10.3 years $(131,098) 0.97 $5,473,262 $779.67 $1,641,978 7.8% 11.9 years $(649,462) 0.88
$250,000 Green Energy Program Grant and 30% Federal Tax Credit Total Installed Costs Costs/MWh year1 Delivered Incentives/Grants Pre-Tax IRR/ROI SPB NPV B-C Ratio $2,634,602 $375.30 $965,381 20.5% 5.2 years $1,512,601 1.57 $3,251,702 $463.21 $1,150,414 16.0% 6.5 years $1,080,534 1.33 $3,992,222 $568.69 $1,372,666 12.6% 8.1 years $562,226 1.14 $4,732,742 $674.18 1,669,822 10.5% 9.5 years $118,902 1.03 $5,473,262 $779.67 $1,891,978 8.6% 11.1 years $(399,462) 0.93
In Tables 16 and 17, the annual amount of energy delivered annually was adjusted downwards from the base-case scenario while the total installed costs remained approximately $500,000. When the combination of a $250,000 Green Energy Program grant and 30% tax credit is analyzed in Tables 16 and 17, the results show the best-case scenarios when the costs per MWh delivered are higher than the base-case scenario. Table 16: Sensitivity Analyses for Total Installed Costs & Incentives for Poultry Process #2 (Assumptions include $1.00 per gallon No. 6 fuel oil)
30% Federal Tax Credit ($150,019) Total Installed Costs
Annual Energy Delivered (MW h)
$500,062 1535.25 $325.72 14.6% 7.1 years $13,449 1.03
$500,160 1245.91 $401.44 11.2% 8.9 years $(617,848) 0.88
$500,244 1016.07 $492.33 8.3% 11.2 years $(121,668) 0.76
$499,612 856.55 $583.28 6.2% 13.6 years $(162,495) 0.67
$499,564 740.95 $674.21 4.5% 16.1 years $(192,491) 0.61
Costs/MWh year1 Delivered Pre-Tax IRR/ROI SPB NPV B-C Ratio
Solar Thermal Applications in the Delmarva Poultry Industry $250,000 Green Energy Program Grant and 30% Federal Tax Credit ($325,019) Total Installed Costs
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$500,062 1535.25 $325.72 29.4% 3.5 years $188,449 1.38
$500,160 1245.91 $401.44 23.4% 4.4 years $113,152 1.23
$500,244 1016.07 $492.33 18.5% 5.6 years $53,332 1.11
$499,612 856.55 $583.28 15.1% 6.8 years $12,505 1.03
$499,564 740.95 $674.21 12.4% 8.1 years $(17,491) 0.96
Table 17: Sensitivity Analyses for Total Installed Costs & Incentives for Poultry Process #2 (Assumptions include $1.30 per gallon No. 6 fuel oil)
30% Federal Tax Credit ($150,019) Total Installed Costs
$500,062 1535.25 $325.72 19.7% 5.3 years $136,412 1.27
$500,160 1245.91 $401.44 15.6% 6.6 years $37,941 1.08
$500,244 1016.07 $492.33 12.2% 8.3 years $(40,287) 0.92
$499,612 856.55 $583.28 9.7% 10.0 years $(93,892) 0.81
$499,564 740.95 $674.21 7.8% 11.8 years $(133,145) 0.73
$250,000 Green Energy Program Grant and 30% Federal Tax Credit ($325,019) Total Installed Costs
$500,062 1535.25 $325.72 39.1% 2.6 years $311,412 1.62
$500,160 1245.91 $401.44 31.3% 3.3 years $212,941 1.43
$500,244 1016.07 $492.33 25.1% 4.1 years $134,713 1.27
$499,612 856.55 $583.28 20.8% 5.0 years $81,108 1.16
$499,564 740.95 $674.21 17.6% 5.9 years $41,855 1.08
The results in Tables 16 and 17 suggest the cost-effectiveness threshold for costs is at about $400/MWhyear1. The exception for this when the assumptions for Poultry Project #2 include a $250,000 grant, a 30% tax credit, and $1.30 per gallon fuel oil these assumptions allow the project to be an attractive investment over a wider range of costs per MWh delivered.
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Best-Case Scenario The investigators believe that the following adjustments to the assumptions in Poultry Process #2 represents a possible best-case scenario: Fuel oil at $1.30/gallon the average price of No. 6 fuel oil with less than 1% sulfur content (base-case scenario is greater than 1%) since the summer of 2005, according to the EIA.18 Costs/MWhyear1 delivered at $325.72, bearing in mind that this cost may not be attainable or is certainly at the lower end of the present-day solar thermal market. 30% federal business solar energy tax credit (base-case scenario is a 10% credit). Given these assumptions, the financial results are: Table 18: Best-Case Scenario
The SPB of 2.6 years and the IRR of almost 40% makes the Best-Case Scenario a very attractive investment for most companies.
SECTION 7: EXAMPLES OF LARGE SOLAR THERMAL SYSTEMS

Most of the solar thermal installations in the U.S. are residential solar hot water systems. The size of the systems described in Poultry Process #1 would be about 250 times larger as the average residential installation. Following are some examples of other large installations. PACKERLAND Figure 5: Packerland System Using flat-plate technologies to preheat water is probably the most cost-effective application of solar thermal in the poultry processing industry. Perhaps the most successful and most famous application of this technology in the U.S. is the system installed in 1983 for Packerland Packing Company in Green Bay, Wisconsin. Noted in the Guinness Book of Records as the largest thermal solar energy plant in the world, it preheated water for the meat packing plant using 168,000 ft2 of solar panels (covering about 10 acres) and 330,000 gallons of water storage, supplying up to 450,000 gallons of process water each day, heating it an average of 22.2EC (40EF). The system was competitive with gas-heated water at the time and operated cost-effectively for close to a decade into the mid-1990s when the company that owned the system decided to get out of the solar industry and removed the installation. The system averaged 797 BTUs/ft2 of collector for 9 years. ARNOLD SCHWARZENEGGER STADIUM In the last decade, there have been close to one hundred large solar thermal space and hot water systems installed in Europe. In 2004, over 17 million ft2 of collector was installed in Europe, up 12% from 2003. Since 2002, the solar thermal system on the Arnold Schwarzenegger Stadium
18
http://www.eia.doe.gov/emeu/mer/pdf/pages/sec9_7.pdf
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in Graz, Austria has been providing heat and hot water to the stadium and 600 nearby homes. Hydronic heating of the stadium grass also allows the stadium to be used even during winter. The installation of 1,407 m2 (15,500 ft2) of solar collectors produces the equivalent of 665 MWh annually.
Figure 6: Arnold Schwarzenegger Stadium
PHOENIX FEDERAL CORRECTIONAL INSTITUTION In 1998, a solar system of 17,040 ft2 of parabolic trough concentrating collectors and a 23,000 gallon storage tank was installed at the Phoenix Federal Correctional Institution. This Figure 7: Phoenix Federal Correction Institution system produces up to 50,000 gallons of hot water daily and provides 70% of the facilitys annual hot water needs. Boiler maintenance and hot water service call costs for the facility have also been reduced. The Federal Bureau of Prisons did not incur the up-front cost of this system because it was financed through an Energy Savings Performance Contract (ESPC) (similar to the energy service companies/ performance contracting concept discussed below). The ESPC payments are 10% less than the energy savings so that the prison saves an average of $6,700 per year, providing an immediate payback.
SECTION 8: FINANCIAL INCENTIVES

The poultry industry may be able to take advantage of the following financial incentives to install solar thermal technologies. FEDERAL INCENTIVES Modified Accelerated Cost Recovery System A company installing solar property is eligible for the Modified Accelerated Cost Recovery System (MACRS). MACRS allows a solar energy property to be depreciated over five years instead of the normal 20-year depreciation. A 5-year depreciation schedule reduces a solar system's life cycle cost by approximately 12.5% compared to a 20-year depreciation schedule.19 For more information, see IRS Publication 946 and IRS Form 4562. The benefit of MACRS was not calculated for the cost-effectiveness analyses discussed in this report. Furthermore, state and federal taxes were not calculated for the cost-effectiveness analyses in this report, with the exception of the federal business solar energy tax credit, because
Assuming a federal tax bracket of 34% and a discount rate of 10%, the life cycle value of the depreciation allowance of a $20,000 solar system would be $5,250 rather than $3,000, saving the owner $2,250 in taxes. see http://www.wisconsun.org/fund/fund_pv5.shtml
19
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of the complexity of calculating multiple-jurisdictional tax rates. In addition, as discussed below, whether an incentive is considered taxable or nontaxable will impact the basis for MACRS and the business solar energy tax credit. The investigators suggest that companies that are considering installing solar thermal technologies use RETScreen to customize their analysis including the impact of state and federal taxes. 30% Business Solar Energy Tax Credit The Energy Policy Act of 200520 increased the existing 10% tax credit for installation of solar hot water and solar process heat energy property to a 30% credit for the period of January 1, 2006 to December 31, 2007. The credit is claimed on Internal Revenue Service (IRS) form 3468. The tax credit will revert back to 10% on January 1, 2008 unless Congress extends the 30% credit.21 22 The IRS has not issued revised regulations for this provision of the Act and it is uncertain if the IRS will issue regulations for the new solar tax credits. The current regulations for the 10% tax credit23 (IRS regulation 26 CFR 1.48-9) will be useful as a guide until the IRS issues revised regulations. The following, largely based on current regulations, should provide some guidance on the eligibility and application of the business solar energy tax credit: To qualify for the credit, the property must be energy property as defined by the Internal Revenue Code and Regulations. A company has to have a tax liability in order to use the credit the business solar tax credits in combination with other business credits cannot reduce a taxpayer's tax liability in a given year below the alternative minimum tax (AMT) floor. In most cases, the IRS will allow spreading the credit over a 2-year period if the total credit cannot be taken in one year because of the AMT. Solar energy property must be depreciable property and constructed and used by (or on behalf of) the taxpayer. The solar energy property must have a useful life of at least three years. Solar energy property used to generate steam is not eligible. Pipes and ducts that are used exclusively to carry energy from the solar system are included in solar property. If the pipes and ducts are used to carry energy both from solar and other sources, the portion of the cost attributable to the solar use may still be included as energy property as long as the solar component is at least 75% of the total energy input. The information provided here within is not tax advice companies considering installing solar equipment should contact a tax professional to determine eligibility for a tax credit. The basis for the federal business solar energy tax credit is the total eligible costs less any nontaxable incentives and/or subsidized financing used. However, the current regulations provide no direct guidance on whether state incentives like Delawares are considered taxable
20
See http://thomas.loc.gov/cgi-bin/query/z?c109:h6: Shortly before the publication of this report, a bipartisan bill (S. 2041) was introduced in the U.S. Senate to extend the 30% federal tax credit to 2010. 22 For updates on the federal business solar energy tax credit, see the Solar Energy Industry Association website http://www.seia.org 23 IRS regulation 26CFR1.48-9, see http://frwebgate2.access.gpo.gov/cgibin/waisgate.cgi?WAISdocID=766855281583+3+0+0&WAISaction=retrieve
21
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income. A recent analysis of the federal business solar tax credits by the Lawrence Berkeley National Laboratory suggests that incentives like the Delawares Green Energy Program grants would be considered taxable income for a business.24 If the grants available in Delaware are considered to be taxable income, then a grant recipient can claim the federal tax credit and MACRS on the full cost or basis of the system. However, if the grants are not considered to be taxable income, then the grant recipient must reduce, by the amount of the grant, the basis to which the tax credit and MACRS apply. Most businesses should derive greater federal tax benefits from a Green Energy Program grant if the grant is considered taxable income. However, the analyses in this report were calculated assuming the Green Energy Programs grants are non-taxable because of the uncertainty regarding the taxable status of the grants. In the analyses for Poultry Process #2, for example, the amount eligible for the tax credit is $250,062 (total cost of $500,062 minus Green Energy Program grant of $250,000). So for this example, a company could take a credit of $75,019 off of their taxes. Section 9006 of the Farm Bill Grants and Loans Section 9006 of the Farm Security and Rural Investment Act of 2002, known as the Farm Bill, provides grants of up to 25% of the cost of qualifying renewable energy systems up to a maximum of $500,000. The grants are awarded competitively based on a point system. Solar thermal projects for poultry hatcheries could qualify for grant or loan. To be eligible for a grant, an applicant or entity must be either an agricultural producer or a rural small business. While none of the poultry companies on the Delmarva Peninsula would qualify for the grants as a rural small business, the hatcheries could qualify as an agricultural producer. The rules for Section 9006 define an agricultural producer as an: Individual or entity directly engaged in the production of agricultural products, including crops (including farming); livestock (including ranching); forestry products; hydroponics; nursery stock; or aquaculture, whereby 50 percent or greater of their gross income is derived from the operations (7 CFR Part 4280.103). Whether a poultry company would qualify as agricultural producers would depend on its degree of separateness from others parts of their business. According to a representative of the USDA Rural Development Delaware Maryland Office, some relevant criteria would include whether they have separate financial statements and a separate roster of employees. Other eligibility criteria include that the applicant must be the owner of the renewable energy system. This provision seems to rule out the possibility of a grant for an ESCO-type arrangement a third party owning, installing and operating a solar thermal system. The applicant must also have demonstrated financial need, which is defined as the: Demonstration by an applicant that the applicant is unable to finance the project from its own and commercially available resources without grant assistance, or
24
Exploring the Economic Value of EPAct 2005s PV Tax Credits, Lawrence Berkeley National Laboratory, Mark Bolinger and Ryan Wiser, see http://eetd.lbl.gov/ea/emp/cases/LBNL_59928.pdf
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that the project proposed by the applicant cannot achieve the income and cashflows to sustain it financially over the long term without grant assistance (7 CFR Part 4280.103). The latter half of this definition could apply to a situation where the payback period of a solar system did not meet a companys financial needs. Section 9006 of the Farm Bill also provides for guaranteed loans. The loan amount cannot exceed 50% of the eligible project costs. The interest rates and terms of a loan are negotiated between the lender and the applicant (7 CFR Part 4280.121-126). The deadlines for the next round of grant or loan applications is May 12, 2006. The level of funding for the program on an annual basis is uncertain because of variations in Congressional appropriations. Contact the local USDA State Rural Development Offices25 for more information on eligibility and funding availability. STATE INCENTIVES Below are the summaries of the incentives available for solar thermal energy in Delaware, Maryland, and Virginia. For updates on state and federal incentives, see the Database of State Incentives for Renewable Energy (DSIRE) at http://www.dsireusa.org. DSIRE is a comprehensive source of information on state, local, utility, and selected federal incentives that promote renewable energy. DSIRE also includes state and federal incentives for energy efficiency. Delaware Delaware provides grants for renewable energy through the Green Energy Fund which is administered by the Delaware Energy Office and comprised of three programs: the Green Energy Program, Technology Demonstration Program, and Research and Development Program. The Green Energy and the Technology Demonstration Programs are the most appropriate for the type of solar thermal projects discussed in this study. Green Energy Program This program provides grants for up to 50% of the cost of installing solar thermal systems and other renewable energy technologies. For non-residential customers, there is a grant limit of $250,000 per facility. Non-residential solar thermal systems must utilize collectors certified to meet the Solar Rating and Certification Corporation's (SRCC) OG-100, Operating Guidelines for Certifying Solar Collectors. Applicants must provide information to the Delaware Energy Office including a detailed system design and predicted performance calculation verified by a Professional Engineer. Installation must be done by a Participating Contractor and have a fiveyear warranty. For more on the Green Energy Program, see http://www.delawareenergy.com/green-energy-program.htm. Currently, only electric customers of Delmarva Power (formerly Conectiv Power Delivery) are eligible to participate in this program. The customers of the Delaware Electric Cooperative (DEC) and the nine municipal electric companies in Delaware may become eligible in for the
25
See http://www.rurdev.usda.gov/rbs/farmbill/index.html
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Green Energy Program in 2006. The Renewable Portfolio Standards (RPS) Act, enacted in July 2005, requires DEC and the nine municipal electric companies in Delaware to obtain a certain percentage of their electricity from renewable resources. Instead of meeting a RPS, DEC and the municipal electric companies have an option of participating in the Green Energy Program or setting up a similar renewable energy grant program of their own. Their decisions are expected by the summer of 2006. Technology Demonstration Program This Program provides grants to projects that demonstrate the market potential for renewable technologies and accelerate the commercialization of these technologies in Delaware (Green Energy Fund Regulations). Grants can fund up to 25% of the installed cost of a project with a limit of $200,000 a project. Applications are accepted on a biannual basis. A company receiving a Technology Demonstration Program grant would have to include a public education component such as allowing public tours of the installed renewable energy technology. Since this program has no restrictions on customer eligibility like the Green Energy Program does, it would be most appropriate for solar thermal projects not located in Delmarva Powers territory. Maryland Title 9 of Marylands property tax code allows counties to provide a credit against the corporate property tax for buildings equipped with a solar energy. Counties determine the amount of the credit, define the eligible technologies, and determine the length of the credit, up to a maximum of three years. Currently, no counties on the Delmarva Peninsula provide a tax credit. Title 8 of Marylands property tax code allows for a statewide special assessment provision for solar heating and cooling systems. Under this provision, such systems are to be assessed at not more than the value of a conventional system for property tax purposes if no conventional system exists in the building. If a solar energy heating and cooling system is installed in addition to a conventional system in a building, the combined system may be assessed at not more than the value of the conventional system essentially a full exemption for the solar energy equipment. Virginia Similar to Maryland, Virginia allows any county, city or town to exempt or partially exempt solar energy equipment from property taxes. However, the two counties that make up Virginias portion of the Delmarva Peninsula, Accomack and Northampton, dont currently allow this exemption. RENEWABLE ENERGY CERTIFICATES Markets for renewable energy certificates (RECs) are a growing opportunity that owners of solar thermal projects may be able to benefit from. Attributes of renewable energy, such as no emissions of pollutants, may have a value that is separate from the value of the energy itself. This value, a REC (sometimes called a green tag), can be traded or sold.
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In general, the market for RECs can be divided into two market segments. In one segment, private companies and institutions (e.g., universities and governments) buy RECs to support renewable energy because of a commitment to renewable energy and/or to project a public image of concern for the environment. The RECs are often bought to offset a certain percentage of an entitys energy use, usually electricity. There are several companies that buy and sell these types of RECs including Sterling Planet and Mainstay Energy. The following, from Mainstays website, is an example of how a customer projected a environmental-friendly image by buying voluntary RECs: Running Fossil Free! The Lakeshore Marathon 2005 is Certified 100% Fossil Free! Experiencing Chicago's beautiful lakeshore on May 30th, 2005 will be even better, since the whole event is being powered by clean, renewable energy. Organizer Mark Cihlar knows that the participants and fans of the Lakeshore Marathon are concerned about health and sustainability, and he wanted his organization to make a difference. The voluntary REC market segment offers the best opportunity for sales of RECs derived from a solar thermal installation on a poultry facility. The other market segment for RECs is driven by states with renewable portfolio standards (RPS) laws requirements for electricity suppliers to purchase a percentage of their power from renewable resources. State RPS laws and regulations require that a portion of the electricity sold by utilities be generated using renewable resources or that the utilities purchase RECs to offset a portion of electricity generated using nonrenewable resources. Solar thermal installations for poultry processing plants on the Delmarva Peninsula would not be eligible for this REC market segment because the projects would not directly offset electricity. Owners of renewable generation have sold RECs for $0.001/kWh to $0.50/kWh.26 While the market for non-electricity based RECs is under-developed, it may be possible for a solar thermal project for a poultry facility to realize some benefit from RECs. If RECs could be sold for solar poultry applications, Poultry Project #1, for example, could yield $7,000 to $21,000 per year in RECs based on REC payments equivalent to $0.001/kWh to $0.003/kWh.
SECTION 9: ESCO/PERFORMANCE CONTRACTING

There are several companies that sell and install solar thermal energy under arrangements similar to the business model of energy service companies (ESCO) or performance contracting. In general, this type of arrangement transfers most risks from the customer to the solar company. These companies will finance, install, own, operate, and maintain a solar thermal system on a customers facility. The customer agrees to pay a fixed rate for the energy the solar system produces for a contracted period, usually 7 to 20 years. The fixed rate is usually at or below the current energy rate that the customer pays. Energy sales contracts often will guarantee a certain percentage cost savings compared to the current price of the displaced fuel. Some will guarantee a certain minimum annual energy delivery. Most will have a take-or-pay clause requiring a certain minimum purchase by the facility. Further, most will retain rights to any emissions credits or tax credits, and/or require the facility to pay for certain agreed-upon non-recoverable
Utilizing Renewable Energy Credits to Help Finance Solar PV Projects , Kevin Christy, 3 Phases Energy Services, at Solar Power 2005, October 7, 2005, Washington, DC.
26
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costs such as concrete slabs or unique and specialty interface equipment that cannot be used elsewhere. An ESCO-type of arrangement can have several benefits for customers: The customer has no capital costs. This can overcome a big hurdle for capital constrained customers. It acts as a hedge against future energy price increases and diversifies a facilitys energy mix. It provides energy planning stability since the fixed rate is guaranteed for a number of years. It demonstrates the customers environmental commitment with little or no additional costs. The arrangements also tend to be more attractive the longer the SPB is for the customer. While relatively carefree ESCO-type arrangements are the right choice for some customers, for others, owning a solar thermal system may be a more appropriate option. The biggest benefit of owning a solar thermal system is that after a solar thermal system is paid off, under the SPB concept, the solar energy is essentially free except for some routine maintenance. For this reason, ownership of installations with SPBs less than 5 to 7 years tends to make more economic sense than entering into an ESCO-type arrangement.
SECTION 10: ENVIRONMENTAL IMPACTS

According to the National Chicken Council, the poultry industry take[s] seriously their responsibility to be good stewards of the land, air, and water.27 Poultry companies on the Delmarva Peninsula including Allen Family Foods, Perdue Farms, and Tyson Foods have made public commitments to environmental stewardship and sustainability.28 By using solar energy to preheat process water, the poultry industry could have a significant and positive impact on the environment by displacing the use of thousands of gallons of fossil fuels every year. A solar energy system creates no pollution and serves as a daily, visible reminder of a companys environmental commitment. Avoided Emissions Using solar thermal energy avoids the emissions from the fossil fuel that would otherwise be combusted to heat process water. The assumed fuel for the cost-effectiveness analyses in this study is No. 6 fuel oil with 2% sulfur content. A variety of pollutants are generated when No. 6 fuel oil is combusted in an industrial boiler including: organic compounds, particulate matter, oxides of nitrogen (NOx), sulfur oxides (SOx), and greenhouse gases (GHG) including carbon dioxide and methane. Following are estimates29 of selected emissions and fuel use avoided by the solar energy systems modeled in Poultry Process #1 and Poultry Process #2:
27
http://www.nationalchickencouncil.com/aboutIndustry/detail.cfm?id=13 http://www.tysonfoodsinc.com/PressRoom/docs/SR2005.pdf, http://www.perdue.com/corporate/whoweare.asp?lvl1=2&lvl2=2#environment, http://www.allenfamilyfoods.com/oper/enviro.html 29 NOx and SOx emissions for No. 6 oil, 2% sulfur, calculated from emission factors found in http://www.epa.gov/ttn/chief/ap42/ch01/final/c01s03.pdf. GHG calculated by RETScreen.
28
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Table 19: Estimated Avoided Fuel Use and Emissions

Poultry Process #1 gallons of No. 6 fuel oil/year lbs/year of SOx lbs/year of NOx tons of GHG/year tons of GHG over 25 years 164,870 52,428 11,211 3,003 75,075 Poultry Process #2 36,054 11,465 2,452 656 16,417
Actual emissions offset would vary on individual boiler operational characteristics. Use of different grades of fuel oil with different nitrogen and sulfur contents would also change the estimated avoided NOx and SOx emissions. Value of Avoided Emissions The avoidance of emissions associated with combustion of no. 6 fuel oil likely provides some economic value for a poultry company. Installation of a solar energy system could allow a plant the flexibility to expand to meet stricter emission requirements under a state operating permit. Avoided emissions could also be valuable if a company participates in any mandatory or voluntary pollutant cap and trade program. Calculation of the benefit from avoided emissions is beyond the scope of this report and would depend on plant specific regulatory and operating conditions. Avoidance of emissions also provides a public relations value for a company, especially companies that make a commitment to environmental improvement. For example, in recent years, the poultry industry on the Delmarva Peninsula has come under increasing pressure to limit the nutrients (i.e., nitrogen and phosphorous) reaching local water bodies from poultry manure runoff and other poultry-related activities. According to the U.S. Environmental Protection Agency, 21% of the nitrogen deposition to the Chesapeake Bay is from NOx air emissions.30 A company could claim that it is preventing up to 11,000 lbs of nitrogen from entering local water bodies by using a solar energy system similar to the one modeled in Poultry Process #1.
30
http://www.epa.gov/owow/oceans/airdep/air3.html
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SECTION 11: CONCLUSIONS AND RECOMMENDATIONS

While the investigators believe that solar absorption cooling could be a cost-effective application for hatcheries, this application was not modeled for cost-effectiveness in this study. Instead, the investigators chose to focus on processing plants because of their larger thermal loads. Hatcheries could be an area for further investigation. Sensitivity analyses for several cost factors were run on two modeled base-case scenarios to determine which combination of factors would lead to cost-effective applications of solar thermal technologies to preheat process water in poultry processing plants. Following are the three economic factors that seem to have the largest impact on cost-effectiveness: Price of Fuel Oil: The assumed fuel for the economic analyses, No. 6 fuel oil with a sulfur content greater than 1%, is an inexpensive fuel compared to other grades of petroleum. Average prices for No. 6 fuel oil went from $0.70 per gallon in 2004 to $1.00 per gallon in 2005. The assumed fuel cost of $1.00 per gallon (excluding taxes) is somewhat conservative because of the 1% escalation factor used in the analyses. Sensitivity analyses indicate that starting at about $1.30 per gallon and higher, the price of fuel oil is a primary determinant that makes a scenario cost-effective, using the suggested threshold criteria. Incentives: For a smaller solar thermal system, like Poultry Process #2, the incentive available in Delaware, capped at $250,000, largely determines the cost-effectiveness of a project. For larger systems, like Poultry Process #1, the Delaware incentive is less important and the 30% federal business solar energy tax credit has more of an impact on costeffectiveness. The implication of 30% tax credit is that the cost-effectiveness of a larger system will be similar whether it is located in Delaware, Maryland, or Virginia. The benefits of federal tax incentives in the analyses in this report are underestimated because the benefit of a 5-year accelerated depreciation allowed for solar energy property for a company was not calculated. Total Installed Costs: The investigators used the measure installed costs/MWh delivered in the 1st year of service to compare and contrast various installed cost scenarios and does not reflect the actual costs per unit of energy delivered over the lifetime of a solar system (which would be considerably lower). The costs/MWhyear1 figures quoted here can ONLY be compared to other scenarios within this report and are meaningless when compared to scenarios outside this report. The assumed costs for the two base-case scenarios are at the low-end of the range of total installed costs per unit of energy (MWh) delivered in the first year of service. The sensitivity analyses in this report suggest that the cost-effectiveness threshold for costs is at about $400/ MWhyear1. Generous incentives can raise the threshold to about $500/ MWhyear1.
The most cost-effective scenarios modeled in this report maximized the incentives ($250,000 grant and 30% tax credit) for Poultry Process #2. Using Poultry Process #2, a modeled BestCase scenario produced financial results that would be an attractive investment opportunity for almost any company. However, Poultry Process #2 would be a relatively small system so the resulting reduction in fuel oil use and the total impact on the companys fuel oil bill would also be very small.
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Assuming base-case costs and a 30% federal tax credit (and no $250,000 incentive available as is the case in Maryland and Virginia), Poultry Process #1 and Poultry Process #2 start becoming attractive investments when the price of fuel oil reaches about $1.30 per gallon. Because of economies of scale, a larger solar system like the one modeled in Poultry Process #1 would likely have lower installed costs on per energy unit delivered basis. If the financial results of installing a solar thermal system for a particular processing plant are not attractive to a company, an energy services company/performance contracting-type of arrangement may be a viable alternative to a poultry companys ownership of an installation. While determining the cost-effectiveness of using solar thermal for a particular processing plant will depend on a customized analysis, the results of the analyses in this report indicate that solar thermal energy can be a cost-effective application for a poultry processing plant and that using solar thermal energy warrants consideration by the poultry industry on the Delmarva Peninsula. Most of the scenarios considered within this report satisfy threshold economic criteria of many companies. This type of analysis may be used by a company for a specific site to determine the type and size of solar thermal system that both satisfies its threshold economic criteria and makes a significant impact in its fuel oil consumption. Other factors such as energy independence, boiler replacement avoidance, and emissions reductions could be added to further improve the economic results. The investigators believe that the assumptions and analyses used in this study may also be applicable to other poultry facilities in other regions of the U.S. This report can be used by both the poultry industry and the solar thermal industry as a basis for determining if solar thermal applications are appropriate for individual poultry facilities. Interested parties can download RETScreen for free and use it to customize their analysis for company and facility-specific data.
SECTION 12: ACKNOWLEDGMENTS

The authors wish to thank: Charlie Smisson, Delaware Energy Office; Tim LaRonde, Maryland Energy Administration; Ken Jurman, Virginia Department of Mines, Minerals and Energy; Bill Satterfield, Delmarva Poultry Industry, Inc.; Joe Koch and Tom Dickinson, Perdue Farms; Larry Enders, Allen Family Foods; and Dr. Bill Ricken, Tyson Foods. This document was prepared by Brian Gallagher under subcontract with the State of Delaware Department of Natural Resources, Delaware Energy Office with funding provided by the U.S. Department of Energy to the State of Delaware under contract number DE-FG4304R340658 with additional financial support from the Maryland Energy Administration and the Virginia Department of Mines, Minerals and Energy. The views and opinions expressed in this report are those of the authors and do not necessarily reflect those of the U.S. Department of Energy, the State of Delaware, the State of Maryland, or the Commonwealth of Virginia.
APPENDIX A DELAWARE MILLION SOLAR ROOFS COALITION PARTNERS
Advanced Building and Solar AJL Resources, Inc. Alternity Power Analytical Applications of Bear, DE Applied Energy Group CMI Electric Delmarva Poultry Industry, Inc. Delmarva Power E3Energy Services, L.L.C. Energy Alternatives Energy Services Group GE Energy Green Plains Energy Home Builders Association of Delaware McConnell Development State of Delaware The Commonwealth Group University of Delaware, Center for Energy and Environmental Policy Wanex Electrical Services
APPENDIX B BROILER PRODUCTION BY STATE, 2004 Number Produced 1,052,000,000 1,241,500,000 240,700,000 78,500,000 1,298,900,000 290,800,000 284,600,000 46,300,000 827,800,000 4,300,000 2,600,000 720,200,000 41,600,000 243,800,000 133,500,000 204,500,000 195,900,000 620,700,000 263,000,000 86,400,000 33,800,000 829,250,000 8,740,650,000
State AL AR DE FL GA KY MD MN MS NE NY NC OH OK PA SC TN TX VA WV WI Other States Total
Source: USDA, see http://usda.mannlib.cornell.edu/reports/nassr/poultry/pbh-bbp/
APPENDIX C DELMARVA BROILER CHICKEN FACILITIES Company

Allen Family Foods
Type of Facility
Hatchery Hatchery Hatchery Feed Mill Processing Plant Processing Plant Processing Plant Hatchery Hatchery Feed Mill Feed Mill Feed Mill Processing Plant Processing Plant Hatchery Hatchery Hatchery Hatchery (2) Hatchery Hatchery Feed Feed Feed Feed Feed Mill Mill Mill Mill Mill
Location
Dagsboro, Delaware Seaford, Delaware Hurlock, Maryland Delmar, Delaware Harbeson, Delaware Cordova, Maryland Hurlock, Maryland Princess Anne, Maryland Millsboro, Delaware Frankford, Delaware Millsboro, Delaware Westover, Maryland Selbyville, Delaware Millsboro, Delaware Bishopville, Maryland Hurlock, Maryland Princess Anne, Maryland Salisbury, Maryland (2) Showell, Maryland Westover, Maryland Bridgeville, Delaware Berlin, Maryland Bishopville, Maryland Hurlock, Maryland Salisbury, Maryland Georgetown, Delaware Milford, Delaware Salisbury, Maryland Accomac, Virginia Temperanceville, Virginia Snow Hill, Maryland Temperanceville, Virginia
Allen Family Foods Allen Family Foods
Mountaire Farms
Mountaire Farms
Mountaire Farms
Perdue Farms
Perdue Farms
Perdue Farms
Processing Plant Processing Plant Processing Plant Processing Plant Hatchery Feed Mill Processing Plant
Tyson Foods Tyson Foods Tyson Foods
Source: Delmarva Poultry Industry, Inc., 16686 County Seat Highway, Georgetown, DE 19947-4881, dpi@dpichicken.com, (302) 856-9037
APPENDIX D POULTRY PROCESSING PLANT WATER USE SCHEMATIC
Source: U.S. Poultry & Egg Association, see http://www.poultryegg.org/Environment/docs/PFD.PDF

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