Small-Scale Biofuel Production: Assessment of Efficiency

Abstract

Currently, the energy industry is tending toward a global expansion of the use of renewable energy sources, thereby contributing to economic development. In the Russian Federation, such transformation is particularly important in terms of enhancing the involvement of excessive wood waste in production. In this regard, processing wood waste into pellets has proven to be highly beneficial. Apart from increasing the efficiency of the harvested wood and reducing the fire hazard in waste storages, it also positively influences the structure of energy balance in specific regions, creating an impetus for the development of small businesses in the country. This paper aims to assess the economic effects of biofuel production together with the efficiency of processing wood waste into pellets as a factor in the development of small business in the Russian Federation. Net present value (NPV) is used as the main analytical tool to assess economic efficiency. A general scientific analysis of the open data is also applied, including analytical reviews of the Russian ministries and international organizations. As a result, the paper estimates the prospects of using wood biomass in the energy industry, provides options for establishing capacities of microenterprises engaged in pellet production, and considers the expected economic effect for various levels of capacity utilization. The scientific novelty of this paper is centered on the design of a biofuel production scheme from wood waste (wood pellets) for a small-business enterprise with minimum labor and production costs. The paper is highly practice oriented, as it substantiates the economic efficiency of pellet production by small businesses in the Russian Federation in accordance with current legislation and state subsidies. Overall, this paper provides enough evidence to seriously consider the prospects of wood pellet production in order to expand the share of renewable sources in the energy balance of the country.