A Financial Analysis of Using Sawmill Residues for Cogeneration in Northern Ontario

Naomi Beke, Glenn Fox, Dan McKenney

Abstract


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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DOI: http://dx.doi.org/10.15173/esr.v8i1.381