The commercial sector is a diverse group consisting of public services such as schools, public pools and hospitals and buildings such as offices and accommodation as well as manufacturing and cold storage. The commercial sector dominates New Zealand’s economy, contributing 62% to the national GDP in 2011. However, the commercial sector only requires 9% of total energy consumption. 

The main fuel types used across the commercial sector in Southland is a mixture of diesel, electricity, LPG and coal. Space heating and hot water is the main use of this fuel using low temperature hot water (less than 90°C) boilers. The main objective of Wood Energy South is to convert some of these commercial users to woodchip. 

The business case for converting commercial users to woodchip should not be considered on the fuel price alone especially for coal. In the case of a straight comparison against diesel, LPG or electricity prices then woodchip is very competitive. There are numerous examples of commercial operations that have converted to woodchip which includes rest-homes, hospitals, pool facilities and university buildings. In all these cases, the common factor is a year round consistent requirement of energy for heating which usually results in very favourable returns on investment.

Coal on the other hand is a very different scenario and the business case for converting commercial users with coal heat plant to woodchip needs to be considered over the life time of the asset (25+ years) taking into account all aspects related to the plant such as staffing requirements, maintenance and clean air regulations. Other benefits beyond financial may also take precedence in the commercial sector. An example of this was the installation of a woodchip boiler at Mt Difficulty winery in Bannockburn, Central Otago. It would have been much cheaper for Mt Difficulty to install a LPG boiler but drivers relating to sustainability and marketing outweighed the financial benefits.

Modern woodchip boilers are very efficient too, compared to coal boilers, and are capable of producing the same amount of energy using less fuel. A coal boiler operating at 60% efficiency will use 50% more fuel than a modern wood boiler to produce the same heat output.

Reference: Ministry Economic Development Changes in Energy Use