D R A F T

What has been proposed in Manistique?

The District Heating system and energy conservation enhancements are expected to save at least $25 million over the life of the system. This is low, and quite conservative, estimate. Capital expenditures will amount to about $9 million.  Construction, operating, and debt payment costs would be paid through energy savings (roughly half the projected savings), at no additional cost to stakeholders (with some possible caveats). A cental wood chip fed central power plant would be located in the approximate vicinity of the Hiawatha Behavioral Health Center and current hospital. A network of specialized underground piping would be laid to connect the member buildings. These would be water pipes, not high pressure steam pipes. Water would circulate through the piping network and heat transfered to each member building. Network water would not mix with water sytems of member buildings. The network would run under sidewalks, not under streets. The boilers would require 3-5 semi loads of chips per week. At peak heating times (-20 degrees Fahrenheit), the boilers would require 1-2 semi loads per day. The power plant and piping network will be desitned for a 50 year life, with regular maintenance and part replacement. In the initial feasibility studies and energy audits, 11 entities were considered that include about 12-15 buildings. Discussions have been ongoing for about the last two years. As of January 2012, most of the pieces to the puzzle have been assembled, including a reasonable financing route. Johnson Controls has prepared an energy audit, at their expense, and proposed a project management option that substantially reduces the risk to stakeholders.

Background

The “District Heating” concept is shared heating from a central boiler.  Heat is distributed to member buildings through a hot water piping system.  Smaller projects, such as that proposed in the City of Manistique, generate heat only.  Larger projects often have the option of generating electricity as well.  A heat and electricity production system is often called a “Combined Heat and Power” operation. 

District Heating/Energy is a common infrastructure throughout many northern European countries, New England States, and is emerging throughout the Lake States region.  The Manistique project differs somewhat from other Upper Peninsula systems in that multiple buildings are involved and the controlling entity would be a 501(c)12 cooperative.  The cooperative expects to file initial legal papers in March, 2012.

The Manistique project plans to use wood chips to fuel a pair of geographically central boilers.  A wood storage building and handling area is required.  The emplaced piping network will connect 12-15 buildings of various sizes.  The District Heating systems will be largely automated.  The competing heating fuel is natural gas, which has recently dropped substantially in price.  Approximately 3900 tons of chips will be used per year, which translates to about 1-2 truckloads per day during peak heating times (boilers running at 80%). 

Stakeholders

The Manistique District Heating Cooperative consists of members who share in the district heating system.  At this time, the cooperative has not yet legally formed.  There are 11 potential cooperative members, mostly public entities.  Others could be added. 

History

The concept of District Energy in Manistique began in 2009 through the efforts of the BURN-UP program (Biomass Utilization and Restoration Network for the Upper Peninsula of Michigan).  Dave Andersen, retired Schoolcraft County MSU Extension Director, was the catalyst that brought potential stakeholders to the table.  Partnering with the USDA Wood Education and Resource Center, a pre-feasibility was completed in November 2009.  Following that, a full feasibility study was done by Integrated Designs, Inc., an architectural and engineering consulting company in Marquette, dated May 2011.  This study was paid for by a grant from the State of Michigan Department of Labor, Energy, and Economic Growth (DELEG).  Johnson Controls was invited to perform an audit that would include energy improvements beyond strictly district heating.  That audit was completed in November 2011 at the expense of Johnson Controls. 

Tom Kalchik, of the Michigan State University Product Center lent assistance with the development of the cooperative.  Attorney Mike McIntyre drafted the Articles of Incorporation, Cooperative Bylaws, and membership agreement. 

Dave Andersen retired at the end of October 2011 and passed some of the organizational responsibilities to Bill Cook, MSU Extension Forester/Biologist.  Dave maintains an active interest in the project but cannot administer project details from his retirement home in Florida. 

By January 2012, the proposal was ready to seek funding. 

Projected Financial Picture

The top of the green stack is the projected cost of natural gas.  The green margin is money that the stakeholders are currently going to spend, that is not spent using this district energy system.  Those funds can be re-directed towards other priorities.  The operating & maintenance costs are shown in the red stack.  The brown stack is the debt service. 

These numbers are based on a late 2011 energy audit prepared by Johnson Controls.  The pattern will adjust as stakeholders opt “in” and “out” of the proposal and when plans are finalized.  Risk to stakeholders is nearly eliminated by guarantees from Johnson Controls.  Should the costs be greater than projected, or savings less than expected, then Johnson Controls will pick-up the difference. 

Funding Status

Various grant and loan programs are currently being explored, from both the State and Federal Government.  The USDA Rural Development office has a program that may be able to provide a direct loan.   Application to that program is underway.  The money is available for this fiscal year and needs to be obligated by September. 

Letters of inquiry and solicitation of assistance have been mailed to State Senator Tom Casperson and State Representative Steve Lindberg.  Contacts have also been made with U.S. Senator Levin’s office, Elizabeth Reed. 

Current Documentation [add any of these as PDFs?]

Pre-feasibility Study.  Manistique Biomass  District Energy System Potential.  2009.  USDA Forest Service Wood Education and Resource Center.  4 pages.  Contact:  Lew McCreery.

Feasibility Study.  Central Biomass Heating Plant Feasibility Analysis, Schoolcraft  County, City of Manistique.  2011.  Integrated Design, Inc.  Marquette, Michigan.  50 pages.   Contact:  Steve Boettcher. 

Preliminary Energy Audit.  Manistique Area District Energy Plant.  2011.  Johnson Controls.  64 pages.  Contact:  Ron Stimac.

Draft Articles of Incorporation.  2011.  MSU Product Center.  4 pages.  Contact:  Michael McIntyre, PLC. 

Draft Bylaws Manistique Heating District Cooperative.  2011.  MSU Product Center.  18 pages.  Contact:  Mike McIntyre. 

Membership Application and Agreement.  2011.  MSU Product Center.  4 pages.  Contact:  Mike McIntyre. 

TRAILER- This website was created by Bill Cook to help explain the proposed district heating system within the City of Manistique, Michigan, and to address questions about the proposal. Bill Cook can be contacted at cookwi@msu.edu or 906-786-1575.

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