Impact of Alternative Raw Materials on the Profitability of a Large-Scale Bio-Coal Pellet Plant in Finland

Abstract

The aim of this paper was to compare the annual economic impact of a large-scale bio-coal pellet plant by raw material specifically for the Finnish Lakeland region. In this study, the total production volume of the theoretical plant was 200,000 tons per year and the raw wood materials used were birch pulpwood, spruce pulpwood, pine pulpwood, and energy wood. These wood materials were young delimbed wood from early thinnings. The main goal of the paper was to illustrate that the energy content differences of raw wood materials affect the economic profitability of a bio-coal pellet plant at regional level. In this case, wood type also has a regional economic impact, which the pellet plant can influence through its raw wood material choices. The raw material comparison was based on measured data and not computational or literary data alone. The study found that lower solid wood energy densities caused higher relative costs for the total supply chain. A parallel phenomenon occurred with the required gross margin of the pellets, where lower energy content caused higher required gross margin for pellet sales. The gross margin was also sensitivity analyzed at different discount rates from 5% to 20%. At each required discount rate, the highest annual economic impact on the region was found for birch pellets, with values of 36.95 - 42.66 million � Spruce pellets had the smallest annual economic impact, although it had the highest final pellet price in the same cases. The different economic effects were caused by the energy volumes sold.