Financial Analysis of the Cultivation of Short Rotation Woody Crops for Bioenergy in Belgium: Barriers and Opportunities

Abstract

This paper analyses the financial performance of a poplar short rotation woody crop (SRWC) plantation in Belgium, from a farmer’s and an investor’s viewpoint, based on simulations from the newly developed model POPFINUA. The establishment, production and harvest costs were investigated to calculate the net present value (NPV) and the equivalent annual value (EAV) of the SRWC cultivation when the biomass chips were sold at a price of 40 € Mg−1 with a moisture content (m.c.) of 50 %. The calculated NPVs were 229 and −485 € ha−1, and the EAVs equalled 16.3 and −34.6 € ha−1 year−1 for the farmer’s and investor’s scenario, respectively. The break-even price at which the produced biomass could be sold at the farm gate excluding transport, handling, storage and profit margins of the involved companies was calculated using the levellised costs (LC) method and equalled 78.4 and 83.5 € oven-dried ton (odt)−1 for the farmer’s and investor’s viewpoint, respectively. Three harvesting strategies, applied on a SRWC plantation of 18.1 ha in Flanders (Belgium), were studied and compared. It became clear that preference should be given to more economic, small-scale harvesters instead of large-scale self-propelled harvesters, given the relatively limited surface available for SRWCs in Belgium. Furthermore, the inclusion of transportation over a distance of 50 km by truck increased the LC by 15.1 € odt−1. Moreover, subsidies such as establishment grants and/or yearly incentives proved indispensable to make this long-term investment profitable. This is particularly true for the scenario where an investor decides to cultivate SRWCs for energy purposes.