A Financial Analysis of Using Sawmill Residues for Cogeneration in Northern Ontario
This paper investigates the financial viability of producing steam and electricity from forest biomass using a small-scale cogeneration facility (5 MW capacity) in the context of Geraldton, a small municipality in Northern Ontario. Two sources of biomass fuel were considered; sawmill residues and chipped biomass. Results of the financial analysis indicate that, for 100% capacity utilization, using sawmill residues for cogeneration would yield a net present value of over $7 million and an internal rate of return of approximately 17% On an initial investment of $6 million. In comparison, using chipped biomass would yield a net present value of about $2 million and an internal rate of return of 9% at 100% capacity utilization. Calculations based on 80% capacity utilization produced rates of returns of approximately 12% for sawmill residues and about 2% for chipped forest biomass respectively.
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