ClearPower Interview

Recently I travelled to Blessington in Co. Wicklow where I interviewed Simon Dick, of Clearpower Limited, a leading Irish company involved in wood energy and organic waste management. Clearpower delivers and operates turnkey energy supply solutions for customers in many parts of Ireland. The company, which will have a turnover of between 5 and 6 million Euro this year, is likely to become very important to growers as an outlet for pulpwood and other low value forest products.

First I asked Simon to explain to readers a little about the three divisions of Clearpower.
"The first division of the business is Energy Services where we are designing, installing and operating large scale commercial heating systems running on wood chip or wood pellets.  We are starting to look at power as well but effectively at the moment we are about heat.  We engage with clients who want to go green and save costs on their hot water bills. We have our own in house team delivering an end to end turnkey service, with highly trained technical design engineers at the front end backed up by project managers, fitters and support engineers at the operational end. We have over 16,000 kilowatts installed now across the country and we're installing at about 1,500 kilowatts a month.
"The second division of the business follows up from those installations and that's Fuel Supply. The fuel supplied is mainly wood chip. We're producing and delivering wood chip to our boilers and we can also supply wood pellets where required.  Some of the boilers are on chip and some are on pellets. It is situation dependent due to the bulk of the fuel, the location and the size of the installation.  We have 4 depots, shortly a fifth, strategically located around the country. Chip is being sold locally because it is a very bulky product: 220 kilos per cubic metre when it's dried down to about 25%. A big curtain sided truck might only transport about 18 to 22 tons.  We normally deliver in 50 cubic metres tractor trailers behind a JCB fastrack and we get about 8 to 10 tons in a load.  It's a very bulky product, heavy on haulage, so we keep it as local as possible and hence a number of depots strategically located around the country. "
The third division of the business is a Waste Management division where we recycle organic wastes as a fertilizer for industrial crops such as willow and other fuel crops. Willow and other industrial crops need fertilizers and water to grow effectively, and have a high appetite for sludges and slurries. We can take the recycling of those products out of the food chain in terms of normal food land and recycle it to produce increased yields of wood chip and other fuels. We're effectively re-using a problem as a useful fertilizer.

Source for the raw wood material for fuel production
"We buy pulp, thinnings and low grade timber from forest owners, and we also take in dedicated energy crops from people growing these crops.  Raw material is stacked and air dried for a period of time to allow the moisture drop down before chipping/processing. Our depots are effectively big agricultural sheds with a weigh bridge and usually drying facilities that can be used to further dry down the chip if required.  We have large chipping machines to produce a standard fuel wood chip, chipping it directly into sheds.
Most raw material is purchased from the private sector currently, as the Coillte material is often tied up for the boardmill supply. Sourcing material involves constant communication with our growing network of planters, growers, harvesters, contractors, sawmills, etc, and understanding what material is potentially coming up in specific areas.  We're starting to bid at the Coillte auctions, but it's not straightforward as most of the bids are going in for full stands of sawlog timber.  It's very rare that you would get a bit of pulp or a bit of windblow or something like that in the auction process.  We're buying mostly from the contractors, the contract thinners, the contract harvesters, who know we are a market for the pulp. We have made our presence known as much as possible. We will buy pulp and we are looking for it.  Ava O' Brien is our head of the fuels division and she coordinates activities across the different depots. Those looking to sell pulp, especially in the areas close to our depots should contact Ava O’Brien.  Our main depots locations are Clonroche in Wexford, Naas in Kildare, Aughrim in Galway and Strokestown in Roscommon.

We are tracking how much raw material is coming through from different sources and areas of the country. Obviously, forestry has the potential to be a big source. Questions remain as to how expensive it is going to be to access and extract: how do we enter into deals with private growers where we can guarantee to purchase the thinnings over a period of time, and how can we devise a suitable and stable pricing system.  That's what we are seeking to do now. We are looking to find ways to talk to growers, particularly those who own or manage the 300,000 hectares of private growth that is coming through about now, to see if we can work out the most efficient way of accessing that resource in the Ireland context. We want to enter into dialogue with co-operatives of growers and contractor networks, to access the low grade timber that people do not really want and also to understand where in the country it is."

Pellets
We trade pellets locally and import pellets, and we are looking at ways at which we can increase trading volume as the market builds.  We are seeking ways to serve an expanding market of people who are running on pellets, which are most often those with smaller boilers.

Installations
According to SEI, we are the largest commercial scale installation company in Ireland.  We had a number of big contract wins recently: we put 2.5 megawatts of wood boiler plant into McNamara’s Elm Park Development in Blackrock in Dublin, running a district heating scheme serving hundreds of apartments and over 10,000 sq. metres of office space. That will use approx. 2,000 plus tons of pellets in the year.  The reason it's pellets rather than chip is it's down in a basement in south county Dublin where car parks are 70 to 80 grand each, so they don't want to use up that very valuable space.  We also recently commissioined a 400 kilowatt boiler for St. Columba's Hospital for the HSE in Thomastown. That's running on an operating / maintain basis as well and we have won the project to supply, operate and maintain a 1 megawatt wood boiler in UCD to feed in to the district heating network system there. These are under ESCo arrangements, where we supply the plant and fuel, operate the system and sell energy by the kilwat hour over a heat meter. This takes all the hassle away for the user and is growing in popularity. We have about 36 or 37 other commercial installations around the country particularly hotels, leisure centres, the big early adopters because of the savings that can be achieved.

Generally our customers are looking for a package, they don't want a situation where contractor A blames contractor B because the new heating system isn't running.  We are offering a turnkey solution which will cut your heating bill and let you go green, with the comfort of knowing you'll have a secure fuel supply and strong backup service form a trusted partner if anything goes wrong.  That's an overall package that people buy into rather than just buying the fuel from one person and the boiler from another."

Maintenance
"The maintenance requirement is not significantly more than an oil or gas boiler.  There's usually quarterly checks: the cleaning depends on the quality of the fuel. You must have good quality fuel going in and maintain its consistency as much as possible

Wood Fuel Advantages
"There are five reasons why people convert to wood energy.
One is increasing costs of fossil fuels. Wood chip and wood pellets can be delivered at about half the price of oil or LPG and a little bit less than the price of natural gas.  The cost of the boiler and equipment is significantly more, it's about two or three times the amount of an equivalent oil or gas system, but if you have a high steady heat use you'll pay that back very quickly.  We're seeing paybacks on the capital investment in as little as 2 years.
"The second thing is there are government grants of 30% to help with the capital cost of installing one of these.  That brings the price back down.  
"Thirdly there is security of supply concerns. As a country we import 90% of our fuel.  When people talk about energy, including renewable energy, they think about electricity, but in actual fact if you look at our total energy mix, over a third is for heating and over a third is for transport fuel and then there is about 27% which is electricity.  So most of our energy use in this country is for fuels for transport and for heating and we import over 90% of that.  It's a crazy situation in terms of security of supply and we are at the back end of a long pipe stretching across Europe.  IBEC just came out last December and realised the security of supply is a significant issue and if we can grow some of our own indiginous fuels and get secure supplies out of that, we will become a more attractive place to have stable businesses.
"The fourth reason is carbon emissions and wood is carbon neutral, so we can reduce our carbon emissions by swapping over or we are going to get hit with huge fines under the Kyoto protocol.
"And the last reason probably for swapping onto this is that the kit has got fully automated.  The Austrians, the Scandinavians, the Germans  -  they have been innovating in this field for the last decade or 15 years. The days of shovelling loads of solid fuel into the front of a big roaring furnace, with dust everywhere, and not very controllable, are long gone. Earlier boilers would require a day and a half to heat and a day and a half to cool down again!  Modern boilers are fully automated. When you walk into a boiler room with a wood boiler alongside maybe some oil boilers in a commercial situation, you wouldn't even notice."

 Chippers and Funding
"We actually had our chippers in place before the grants came out.  We took the plunge and bought our own chippers, but I think the grants will make a difference.  There's not a significant amount of chippers coming through to date.  To keep a machine busy you want to have a lot of volume moving through it and we want to encourage some of the large agri contractors and forestry contractors to see this as a business opportunity. We will contract out some of our operations if the price per ton of chipping can be brought to a realistic, competitive level, exactly like a farming situation."

Background
"My own background is in natural sciences before getting involved in business and then joined a consultancy management firm based in London.  In 1997 I returned home and set up Mapflow, a software business based in Dublin. In 2000 I saw opportunities in the sustainable energy space and Ireland was just playing catch-up with some of the other countries in Europe.  The wind farm entrepreneurs were out of blocks at that stage and there seemed to be an opportunity in biomass and we had a lot of resource coming through with all the afforestation activity of the previous 40 years.  At that stage Coillte was predicting a significant over-supply of resource in Ireland. There was a combination of oil going up, significant over-supply of raw material in Ireland, CO2 issues and the combustion equipment becoming highly efficient and fully automated.  We decided to get stuck into it.  I launched the business in 2002 and John Heffernan and I now jointly own and manage Clearpower.

Employment & Board
We are growing well, and there are now 15 of us in the business, with a strong network of contract partners and suppliers. Our Chairman is Lar Bradshaw, who is also Chairman of the Dublin Docks Development Authority and sits on the board of Anglo Irish Bank. Also on our board is James Osborne, who was managing partner of Goodbody's solicitors in Dublin and is on the Board of Ryanair, plus a number of other large companies. Robert Wilson Wright who owns and manages a lot of forestry is our third non-executive Director. We have a great team on board who see the growth potential, and we intend to be the leaders in this space in Ireland.  
The Government see a great opportunity here for Ireland to achieve about 10% of our heating from wood.  If we can do that, it will create a fuel market of potentially about 300 million a year, so it's that type of scale of a market that's open here to the timber industry in Ireland if we can just access it and work out the supply chains.  To put that in perspective that's bigger than the current peat market in terms of scale of the opportunity."

Sustainable Energy Ireland
"Sustainable Energy Ireland are a great asset to the business. I think SEI are doing a great job in a difficult situation.  It's a complex combination of players and individuals. Getting the Re-Heat programme and the Greener Homes Scheme off the ground has really helped kick start this industry and it also shows that there is confidence from the Government that this is an industry sector that they are prepared to back. So people are prepared to take the plunge on the decision.  I found SEI supportive. Obviously, there is going to be issues in certain areas, but I think generally the impact of SEI has been significant over the last number of years."

Residues
"I know COFORD have done some good work here, but I’d like to see more discussion and trials on how we can access the harvest residues, the lop and top, the brash and the branches, particularly in the drier areas where it may not be needed to help the harvesting machinery travel.  There is a lot of material here that is collected in most other countries.

Electricity & Wood Fuel
"I'm concerned that under pressure to reduce CO2 emissions, the Government may make a knee jerk reaction to co-fire up to 25% wood with the peat in the three main peat power stations and give some extra coupon to the power stations that allows them to buy wood at an inflated price.  If that happened suddenly, given the fragile nature of the supply market, it could have a very poor effect on the embryonic wood heating sector. Instead of encouraging a sustainable sector, it might jeapordise growth because the available material will be consumed by the power stations - based, effectively, on a government grant.       
"This is a sustainable industry that does not actually need the props from the State once it gets set up.  If suddenly the pulp prices went over €50 per ton because the power stations could afford to pay that, we could be in a dangerous situation. Producing electricity at less than 30% conversion efficiency is not the best use of our limited national resource, but using it to produce heat at 90% conversion efficiency makes a lot of sense. We only have a limited amount of biomass resource in Ireland as wood fuel, so let's use it in the place where it has the most impact. That is what they have decided to do in Austria because that is the most efficient way to use the wood. The Austrians are now trying to channel a greater share of wood heating using their own indigenous resource, with natural gas as the most efficient electricity production.

• For more information about Clearpower contact Ava O'Brien on 086 0437015 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it This email address is being protected from spam bots, you need Javascript enabled to view it
• Irish Timber & Forestry would like to thank Simon for taking time out from his very busy schedule during late October to participate in this interview.