Totnes Biofuel Hub & Community Transport Study A Technical & Financial Analysis Oct 2012

1. Totnes Biofuel Hub & Community Transport StudyA Technical & Financial AnalysisOct 2012 Photo: http://www.is.njit.edu/competition/2009/Cat2_2_Winner_Group142/img/photovoltaics.jpg Ref: http://www.peopleandwildlife.org.uk/newsimages/wind%20turbine.jpg

2. Contents Objectives & reasons for investigation Process Quantification Hub Requirements Options Analysis Community Transport Financial Analysis Conclusion Next Steps 3 5 6 9 10 11 15 16

3. Key Study Objective To investigate the ability to utilise locally-produced used cooking oil (UCO) to power community transport solutions through the creation of a “bio fuels hub” where The ‘hub’ is a central place where community transport vehicles are maintained and stored, biofuel is produced and the generation of electricity takes place.

4. Why investigate the opportunity for UCO? Environmental Damage: Poured down the drains it causes environmental damage Economic Cost: Water companies increase water charges to cover costs of cleaning Economic Loss: UCO collection and non-usage creates a loss in economic value from the community Fuel substitute: UCO converted to bio diesel has 90% the calorific value of normal diesel (Abuhabya, A et al, 2010) and significantly lower localised emissions

5. Why investigate the opportunity for UCO? Figure 1: Report analysis process Purpose of this process is to develop and model a financially sustainable business structure that has clear economic benefits. Quantify Available Oil Establish hub requirements Business Analysis Options Analysis

6. Step 1: UCO Quantification - Residential • Significant discrepancy in the available data • Report utilises lowest value of 6.06 litres / household, which implies 26,000 litres / year for Totnes, Bridgetown & Dartington • Requires further localised study, although EU study in progress. Potentially use Transition Streets model for study purposes • Financial model allows for more detailed figures to be utilised easily

7. Step 1: UCO Quantification - Business Figure 2: Annual UCO arisings for relevant businesses in Totnes & Dartington (from study, 2012)

8. Step 1: UCO Quantification - Business Table 1: Estimated UCO arisings from local businesses • Although many businesses have a relationship with South West Edible Oils, many said they would be happy to supply a UCO scheme for community benefit. • Issues: • Currently paid £0.16 / litre for collectible UCO • Contracts can be as long as 1 year • Legal issues need to be addressed i.e. paperwork

9. Step 2: Hub Requirements • Business and financial model developed for possible hub • Minimum medium term revenues required in excess of £40,000 per year • Given supply profile, requires a minimum sale price per litre of bio diesel of £0.94 per litre after taxes for positive net present value (NPV)

10. Step 3: Options Analysis Figure 3: Comparison of financial cash flows associated with each potential option £6.73 £0.50 £0.70 £0.49 The analysis shown assumes that the bus can hold 17 people, is 60% full on average, is travelling 130 miles per day and charges customers £0.15 per mile.

11. Step 4a: Developing the community bus model Figure 4: Community buses that could be supported by projected UCO supply Assumes new bus required for every 130 passenger miles / day available from biodiesel and cost approx. £35,000.

12. Step 4b: Sensitivity Analysis Figure 5: NPV sensitivity analysis to utilisation rate and price Key points are to the right and above the purple area for positive project NPVs.

13. Step 4c: Financial Analysis Figure 6: 100% biodiesel financial sensitivity to financing type • Requires buses to run 7 days per week with fixed utilisation rate of 60%. • How can we reduce risk of financial position?

14. Step 4d: Membership Financing Options Table 2: Sensitivity of membership cost per person per year such that annual NPV equals zero i.e. minimum charge • Big Lemon annual cost £300 per year • Yet larger student population • Key is to determine routes required by community

15. Conclusions • Supply: Analysis indicates a supply of 40,000 litres of biodiesel is achievable although residential element is big unknown. • Wholesale collection: Opportunity exists to develop local business • Biofuel hub sustainability: Production and sale as either fuel and / or for energy generation does not provide financial sustainability • Community transport: Is the only viable option yet highly sensitive to utilisation rates and prices paid as well as business cost factors • Membership Model: Could provide a valuable de-risking of community transport option yet dependent upon routes chosen

16. Proposed Next Steps • Workstreams to determine the key assumptions and development of full business plan, to include: • Supply: Research into residential potential arisings • Hub costs: development of specific cost profile of hub incl. decision on utilisation of existing assets in community e.g. Bob the Bus, biodiesel production facilities etc. • Residential collection incentives:Discussionswith SWW regarding potential incentive programme for residential UCO collection • Community Transport Requirements: research into key areas such as: • routes that community requires and demand functions i.e. passenger miles / day • passenger price sensitivity • membership potential

17. Thank You.

18. Appendix

19. Appendix 1: UCO Emissions versus diesel Figure A1:Average emission impacts of biodiesel for heavy-duty highway engines (EPA, 2002)