Villages and communities today support the idea of local energy supply and join the energy transition in their countries. In Germany, for instance, the energy transition comprises organizational innovations for providing sustainable energy to small communities, referred to as “bioenergy villages” [1]. A bioenergy village can be defined as a village, municipality, settlement or community, which produces and uses most of its energy from local bioenergy and other renewable energy sources [2]. Bioenergy, particularly biomass, could be given a role as one of the most important renewable energy sources for the future low carbon economy, whose increased domestic consumption, compliant to certain sustainability criteria, also positively contributes to the energy security. The biomass availability is highly correlated to the location and ecosystem [3]. Underutilised biomass shall be targeted [4] and long-term scenarios contextualized [5]. The utilization of biomass residues as a feedstock for renewable heating systems is increasing [6], [7]. Biomass residues from forests have great potential for energy use [8], [9] and are considered economically viable, e.g. in South-eastern European countries [10]. Harvesting the forest residues is in favour of forest management with an obligation to dispose them and leave a minimum biological amount for the ecosystem, but more importantly, to protect the forests from fires. Kasurinen et al.[11] highlights the complementarity of the ecosystem and the bioenergy businesses, meaning that the ecosystem is provided with services by the bioenergy businesses, while through the ecosystem, bioenergy businesses fulfil the heating as a basic human need. Heating with different biomass fuels, e.g. forest residues and wood-pellets in multi-fuel boilers [12], shall be fostered when planning the heating systems. The variety of biomass based technologies conduces to the actualization of sustainable development at the local level, and simultaneously, gives local communities the power to submit valuable contributions towards the global Paris agreement [13].

Bioenergy is even recognised as a socio-technical system, thus promoting social resources, leadership and collective action, transparency, social activities, and consistent networking [14]. A study on public acceptance of biomass, shows the positive feedback from population and key actors on its exploitation [15]. On the downside, Vad Mathiesen et al. [16] upholds the limitation of biomass dependence, due to rising challenges in renewable energy systems. However, as the fossil fuelled systems are still predominantly employed, creative approaches like the bioenergy village approach, would motivate the citizens to act and switch to renewables. The civic engagement transforms the energy systems through community-led innovations [17] or citizen-driven renewable energy cooperatives [18], and is able to largely reshape the local energy sector. A strong emphasis is placed on the social aspects and combining assessments and analyses with activities needed in the process of becoming a bioenergy village, such as workshops, meetings and study tours to best-practice examples [19]. Interviews and questionnaires can significantly help in the implementation of bioenergy villages and pinpoint the success factors [20], [21]. They can further indicate criteria decisive for households when selecting a heating system, such as easiness, comfort and affordability, and environmental awareness. On the supply side, through workshops and questionnaires, Kasurinen et al.[11] examined bioenergy operators’ level of maturity of responsibility for sustainability, justifying the biomass production only if addresses urgent environmental and human challenges, both globally and locally. The means of bringing a low carbon energy supply for small communities into practice have their pros, and an expansion of biomass utilization for heat and power production is still recommended, due to a cost-efficient decarbonisation [22].

Bioenergy villages involve small and medium scale individual and District Heating (DH) systems. DH systems with their great potential as highly efficient and economically viable ways of heat production have the possibility to penetrate larger amount of renewable energy in the existing energy systems. They contribute to developing the future sustainable energy systems or smart energy systems [23]. Comparison of modern heating systems and solutions against conventional ones is a major point of interest for customers as well as researchers [24], [25]. For that reason, benefits of biomass versus fossil fuel based DH system in a small community are investigated in this work as part of a H2020 project called BioVill (Bioenergy Villages ‒ Increasing the Market Uptake of Sustainable Bioenergy), on a case of a small and densely populated settlement, in the Macedonian municipality of Kichevo, for which a bioenergy village concept was developed. The concept contains a small DH system and network, fuelled by local forest residues. A bioenergy village approach has not been applied under Macedonian conditions yet, although biomass seems to take up a serious role in Greenhouse Gases (GHG) emission reduction in the country [26]. The approach is at a nascent stage of implementation in other South-Eastern European countries as well, so the main goal is to scrutinize the feasibility and determine all the associated perks as well as to bring new knowledge to these countries.

Techno-economic [8], social [23] and environmental assessments [9], [25], [27], are fundamental for such bioenergy concepts and shed light on the viability for their realization. In order to succeed, the concepts shall primarily be economically feasible and affordable to the consumers [23]. Moreover, they shall address sustainability, increase the renewable energy share, mitigate the GHG emission, particularly CO₂ emission [7], generate cost savings and additional revenues, and create new jobs and value chains.

Campaigns, subsidies, policy measures and implementation strategies are suggested for replacement of fossil fuels with local biomass sources in DH systems [28]. An adequate implementation strategy is also developed in this work, taking into consideration the current local and national frameworks, similarly as in Kainiemi et al. [21]. Indeed, governance and regulatory frameworks strongly impact the transition towards sustainable energy systems [29]. In addition, economic and environmental uncertainties could lower the public acceptance of bioenergy applications [21] and hamper the overall process of becoming a bioenergy village. Bioenergy villages can often face these regulatory and economic changes and challenges, which shall be used to balance the interests of actors and promote close cooperation and coordination within the community [1]. Bottom-up civil society activities and the trust of local politicians in community-led projects are crucial, alongside the existence of funding opportunities [29].

Finally, this work aims to integrate the assessment and the strategy into one bioenergy concept, which is not often seen in works dedicated to bioenergy villages and small biomass based heating systems.

In order to calculate the heat demand of buildings connected to a DH system, a heat demand survey that includes energy audit was carried out. The outcomes were used to conduct a techno-economic (pre-feasibility) assessment of the economic and technical viability of setting up a small DH network, while considering the actual costs and saving potentials. This techno-economic assessment is executed on the base of a tool named “B4B BioHeat Profitability Assessment Tool” [30], an Excel based tool developed by the Austrian Energy Agency for the H2020 project Bioenergy4Business (B4B). The tool incorporates a discounted cash-flow analysis founded upon the Association of German Engineers Guideline 2067 (VDI Guideline 2067). It can be used for comparison of the economic efficiency (pre-feasibility level) of small/medium scale, solid biomass and fossil fuel fired (district and in-house) heat-only plants. Furthermore, the calculator contains country-specific reference values for investment (of various plant components) and for outgoing and incoming payments of twelve European countries (price base 2015). Scopes of this tool are biomass heating plants with and without DH networks, in a capacity range from 0.1 to 20 MW. In this work, the tool is used to compare a fossil fuelled DH reference system as a reference scenario with biomass fuelled DH system as a proposed scenario for implementation.

Additionally, as an input needed for the B4B BioHeat Profitability Assessment Tool, the biomass fuel costs of the system are calculated by means of available biomass fuel price lists and the B4B Wood Fuel Parameter Calculator [31], developed by the Austrian Energy Agency. The calculator is based on the Austrian standards ÖNORM M 7132, 7133, and 7135 and ÖNORM B 3012, and on generally acknowledged empirical values. For this work, a mixture with equal contents of European beech and Turkey oak is used. Also, the fuel oil costs, as outgoing payments, are calculated based on average values for the twelve European countries incorporated in the B4B BioHeat Profitability Assessment Tool (price base 2015).

As for the social and environmental assessment, the jobs potentially created are predicated on working hours per terajoule (TJ) primary energy input of biomass fuel transported and converted in a heating plant, empirically surveyed [32]. The job creation potential is presented in full-time job equivalents on basis of 1,720 working hours per year. The potential of the bioenergy concept to avoid carbon dioxide (CO₂) emission is calculated on basis of a fossil fuelled reference system. The difference between GHG emission of the bioenergy system and the reference system is estimated in CO₂ equivalents (CO_2eq) and represent the GHG emission savings, if implement a biomass based heating system instead of a fossil fuel based heating system. For that purpose, the European reference Life Cycle Assessment (LCA) emission factors (3.6 t CO_2eq/TJ for sustainable wood, 84.7 t CO_2eq/TJ for fuel oil) [33] are embedded in the B4B BioHeat Profitability Assessment Tool, referring to the overall cycle of the energy carrier, which covers not only the GHG emission due to fuel combustion but also emission of the entire energy supply chain – exploitation, transport, processing.

The major findings of the techno-economic, social and environmental assessment were used to outline an implementation strategy through establishing a bioenergy working group and organising bioenergy working group meetings. Aspects considered in the implementation strategy are: development of an individual business model, definition of a biomass and heat supply chain, duration of contracts and contractual agreements, investigation of financing opportunities, improvement of regulatory and policy framework, and realization of communication and dissemination activities.

Kichevo is located in the western part of the Republic of Macedonia, in a valley in the southeastern slopes of Bistra Mountain, with a total area of 814.3 km². Main challenges in Kichevo are the relatively high energy consumption, outdated energy infrastructure and high environmental pollution, along with the economic stagnation in the last decades. Common heating sources utilized in the residential sector in Kichevo are often untenable firewood and electricity deriving mainly from coal, whilst in the public and commercial sector (e.g. schools and kindergartens) fuel oil is used as well. In the public buildings, the municipality is dealing with inadequate indoor conditions due to old and inefficient heating systems that have incited protests of citizens and closure of schools in previous years. On the supply side, the coal based thermoelectric power plant Oslomej in Kichevo faces economic challenges due to shortage of fuel and high cost of energy production. Traditional industries like heavy industry have become mostly uneconomical and the main factories have been phased out. As a consequence, the majority of citizens now works in the public administration, small and medium-sized enterprises or abroad. Starting from such framework conditions, an urgent need to increase the utilization of local sources is evident, so as to overcome environmental, economic and social problems as well as to create jobs and to support the local economic growth. The first step for setting-up a bioenergy village in Kichevo is transforming the energy system in a densely populated settlement with a high heat demand called “Lozhionica”, comprising an area of around 0.5 km², thus affecting around 3,000 students and residents [34].

Techno-economic assessment

DH system.

The DH system foresees woodchips from forest residues as biomass resources, and woodchip boilers and a heating network as technologies. It is planned to be realized in the following three phases:

• Phase 1: Implementing a DH system for 4 public buildings (3 schools and 1 kindergarten);

• Phase 2: Enlarging the system by connecting 7 old residential buildings (240 households);

• Phase 3: Connecting additional 2 new residential buildings (40 households).

Results from the conducted heat demand survey depict an annual space heat demand of 1,089 MWh for Phase 1. After finalisation of Phase 1, possibilities for extending the bioenergy village concept with Phase 2 and Phase 3, with annual space heat demand of 7,213 MWh and 540 MWh, respectively, are inspected. The total assumed annual space heat demand of all three phases sums up to 8,842 MWh (Table 1).

Table 1.

Calculated heat load and heat demand of three-phase project

Phase	Space heat load [kW]	Annual space heat demand [MWh]
1	830	1,089
2	4,285	7,213
3	321	540
Total	5,436	8,842

In accordance with the B4B BioHeat Profitability Assessment Tool, a total nominal biomass boiler capacity of 5 MW (1 MW for Phase 1) and a fuel oil boiler as backup and peak load boiler with nominal capacity of 3 MW are suggested. With regard to the fossil fuelled reference system, a total installed nominal heat capacity of 10 MW is proposed. The trench length of the heating grid is assumed with 1,220 m in both cases. This results in a relatively good heat load-length ratio [34].

Moreover, the average annual full-load operating hours of installed biomass boilers are taken to be 1,886 hours. During annual biomass DH plant operation, 8,842 MWh will be delivered to the end consumers. The total heat produced by the plant and injected to the DH network is 9,824 MWh, for which an amount of 11,363 MWh biomass fuel equivalent is needed (net calorific value). This equals an annual quantity of 10,230 m³ of loose (4,165 t – fresh, 2,500 t ‒ absolute dry) woodchips. Seen from the perspective of available biomass feedstock, the feasibility of the three-phase project is secured. Indeed, the annual harvest of wood in Kichevo’s is around 40,000 m³, whereof 35,000 m³ for energetic use (firewood) and 5,000 m³ for material use (industrial wood), and additional 2,000-5,000 m³ (depending on the seasonal conditions) are forest residues, which, converted into woodchips (around 10,000 m³), are sufficient for the fuel demand of the three-phase project [35].

The annual energy use efficiency of the whole DH plant projected to be situated in one of the schools’ backyards is 74.6%. The plant is planned to have enough space to accommodate the boilers for Phase 2 and 3. Also, the network should be ready to provide access to the buildings from Phase 2. Both interventions in the DH plant and network will slightly boost the initial investment, but will drastically decrease the future costs for expansion of the system towards the residential buildings. Further, this will increase the flexibility of the operator who can offer a more competitive price for heating, notably after the complete liberalization of the electricity market towards the residential sector in Macedonia, when the prices for electricity are predicted to rise and affordable alternatives will be sought by the households.

Economics.

Investment, cost, and price data used for the design of the biomass DH system are based on Macedonian conditions, having in mind experts’ opinion and the suggested values of the B4B BioHeat Profitability Assessment Tool. The total initial investment for Phase 1 of the biomass DH system, as the most achievable option at the moment in Kichevo, is around 688 kEUR, which is about 56% higher than the fossil fuelled reference system, requiring a total initial investment of 442 kEUR (Table 2).

Table 2.

Estimated investment costs for Phase 1 of Kichevo’s concept

Item	Amount [EUR]
	Biomass DH system	Fossil fuelled DH system
Boiler	277,000	166,000
Construction (boiler house, fuel storage, electric, hydraulic installations)	120,000	72,000
Heating grid investment	191,000	191,000
Project documentation (3% of the total investment in equipment and works)	20,000	13,000
Other initial investment (mobile wood chipper and truck)	80,000	-
Total	688,000	442,000

The profitability assessment is calculated for a service life of 25 years, since this period is sufficient to show whether the project is able to finance re-investments by itself. The calculations consider re-investments of plant components according to their technical service life, i.e. the replacement of the boilers and the related electric and hydraulic installations. In year 20 of operation, the re-investment is assumed to be 397 kEUR for the biomass DH system and 190 kEUR for the fossil fuelled reference system. Both, the normally higher up-front investment and re-investment of biomass DH systems are offset by the lower outgoing fuel or lower outgoing total payments. As illustrated in Figure 1, the total annual outgoing payments (operating and capital expenditures) are lower for the biomass DH system compared to the fossil fuelled reference system, i.e. 40.2% or 289 kEUR in year 4 of system operation.

Moreover, financing of both systems is based on 30% equity from own funds and 70% from a credit line. No investment subsidies are foreseen in the analysis. In 2019 (year of the initial investment), the biomass fuel costs are assumed with 17.5 EUR/MWh [36], [31], and the fuel oil costs are set at an average price of 50.1 EUR/MWh, as suggested in [30]. The biomass DH system would have heat generation costs of 44.9 EUR/MWh in 2020 (first year of operation), whereas the fossil fuelled reference system’s heat generation costs would be 75.2 EUR/MWh, which makes the latter less attractive for the community.

With an assumed DH price of 46.5 EUR/MWh for both systems, which is comparable to the current energy prices in the country, and an annual growth of 2% over the calculated service life, the fossil fuelled reference system does not pay off (amortize) at all. As displayed in Figure 2, the planned biomass DH system amortizes (dynamically) within 4.5 years, leading to the conclusion that the biomass DH system is much more beneficial to the DH consumers, compared to the fossil fuelled reference system. Key indicators for the profitability of the biomass DH system are furthermore the Net Present Value (NPV) and the Internal Rate of Return (IRR). The NPV for the calculated lifetime of 25 years has a positive value of about 250 kEUR for the biomass DH system unlike the fossil fuelled reference system with a negative NPV (visualisation of the dynamic payback time is given in Figure 2). As for the IRR, the calculated value for the biomass DH system is 7.1%, which is more than twice as high as the present loan interest rate of 3% [34].

Figure 1.

Development of outgoing payments for biomass DH system (up) and fossil fuelled reference system (down)

Figure 2.

Development of NPV for biomass DH system (up) and fossil fuelled reference system (down)

The development of a bioenergy village is a lasting planning process and varies from region to region or even village to village. The complementarity of national and local political support, the funding opportunities, the decisions of mayors to be guarantors for credits, participation of authorities in new local decision-making procedures that reallocate the power to the local community, are necessary preconditions for the creation of the bioenergy village [29].

Through the bioenergy village case study in this work, a biomass DH system has shown to be a feasible option for heating the public buildings from Phase 1 of the planned three-phase project in Kichevo with a number of determined additional benefits. Phase 1 of the project is a stepping-stone towards realization of the complete three-phase project. It includes the connection of 4 public buildings to a DH system with a thermal capacity of 1 MW and a network length of about 1,220 m. The investment needed is about 700,000 EUR and the main investor and operator would be the municipality. Also, the municipality should take the responsibility for the management of the system, by using the experience of workers dealing with heating issues. In the future, the municipality can form a public enterprise that will take over the management of the system and intend to expand the network, not just on the selected site, but also on the entire territory of the municipality. The latter should come as a result of the successful realization of the planned project phases [35].

Inclusion of the residential buildings from Phase 2 and Phase 3 is desirable, albeit highly dependent on the DH price. To substantiate a hopefully attractive DH price in such concepts, an investor has to be identified, communication with potential consumers has to be intensified, an in-depth heat demand survey has to be conducted and, finally, an optimized technical planning and reliable cost surveys have to be performed. As soon as the actual heat demand and the cost figures are settled, the heat generation costs and the heat sales price applicable to DH consumers can be defined. This is when DH consumers can take a decision on a long-term connection. As it can be the case, that fewer consumers connect than expected, Phase 2 and 3 of the project can fail even at the advanced status. Basically, key success factors for the biomass DH system are a large proportion of energy sold and an effective biomass supply chain management.

Despite biomass, further work on this concept could possibly introduce another renewable energy technology into the DH system, e.g. combination with solar thermal collectors on the high school rooftop, as done with prosumers in [40], a process also known as hybridisation of a DH system. Also, Kichevo’s concept itself can be replicated with a variety of bioenergy and other renewable energy sources, thus contributing to sustainable development pathways of other communities in the country. Within the BioVill project, the concept has been transferred to three follower communities ‒ Kriva Palanka, Chashka and Delchevo. The relevant stakeholders from these communities have already started to develop similar project concepts utilizing as a fuel the biomass residues from greenhouse farming (Chashka) and from wood processing industry (Kriva Palanka). In general, Macedonia has a significant potential for utilization of agricultural residues for energy production, although, numerous projects/studies have not been implemented from various reasons yet, and residues stay untapped in rice fields and vineyards.

To sum up, raising awareness on renewable energy sources and energy efficiency and tackling social barriers like lack of knowledge, are essential for the success of bioenergy concepts. Core part in these concepts is also formulating an adequate implementation strategy where the local citizens, stakeholders, and policy and decision makers are the key drivers on the way to using local resources, impeding money outflow and contributing to sustainable development of local communities. Creation of jobs and business opportunities are important challenges as well. In combination with a strong public participation, bioenergy concepts are suitable to improve the social and environmental conditions and induce economic growth in small communities.

The authors would like to thank the BioVill project partners, and particularly the colleagues from the Austrian Energy Agency (AEA) for their support in elaborating the results for Kichevo’s bioenergy village concept. The authors would like to thank the European Commission and the Innovation and Networks Executive Agency (INEA) for the support of the BioVill project. BioVill has received funding from the European Union`s Horizon 2020 Research and Innovation Programme under Grant Agreement No 691661. The project duration is from March 2016 to February 2019.

Disclaimer: The sole responsibility for the content of this paper lies with the authors. It does not necessarily reflect the opinion of the European Union. Neither the INEA nor the European Commission are responsible for any use that may be made of the information contained therein.