Procurement Models

There are three main procurement options for purchasing a biomass system:

• Design and Build
• Design, build and operate
• Heat Supply

Design and Build

In the UK the market has evolved so that biomass installers are those that retain most of the design competences to draw all these components together via a mix of sub-contractors and in house expertise. That is a good thing and allows a single entity to take responsibility for the design and installation of the project. In general these should be clearly placed with the biomass installation company under a ‘design and build’ contract based upon a clear written performance specification.

Biomass installers will usually have commercial agreements with continental European boiler manufacturers and have agreements to import, install and maintain their boiler equipment. The UK has not developed an extensive range of indigenous boiler manufacturers and it is unlikely that situation will change in the foreseeable future. So it should be recognized that the first part of a UK based biomass installer task is to select and import biomass boilers to the correct specifications for their customers. Sometimes a simple boiler is needed, other times a  ‘Rolls Royce’ is needed. Only those with the suitable commercial relationships and appropriate technical experience can determine this and that is most commonly the boiler installation company.

Performance specifications may determine general requirements and restrictions about the design, location and operation of a project, but leave the detailed design choices to the installation companies.

Design, Build and Operate

This model is as above but includes ongoing operating costs. Adding an operate element to the design and build contract is often a good idea for the following reason. More expensive installations tend to have lower operating costs per kW, often require less fuel per kWh of heat produced, and usually have more efficient systems for fuel reception, handling and storage. For example delivery turnaround time for the same volume of fuel can be as low as 10 minutes and as high as over an hour, which over a 20 year operational life with weekly/fortnightly deliveries can build in major additional operating costs.

Therefore the whole-life cost of a biomass investment is directly affected by the cost, design and quality of the installation. Put simply, cheaper, less well specified schemes are likely to cost more to operate, and as a consequence deliver lower carbon savings and financial benefits to their owners.

Under design and build there is an incentive for the biomass supplier to offer a low cost solution in order to win the tender. Clearly that is often not the desirable outcome and may reduce the overall benefits of the installation. This means end users should consider the ‘design and build’ cost alongside the ‘operate’ cost.  The most effective way of doing that is to obtain ‘design, build and operate’ offers under a single procurement process. This has the benefit of placing all the technical risks with a single biomass installer.

Heat Supply Contracts

Standard ‘operate’ (often called heat supply contracts) contracts are not widely available; and professional advice should be sought in developing these.