Nowadays the demand for alternative energy sources is growing in terms of cutting expenses and saving environment. One of the most popular type of fuel in this case is wood pellets. They are claimed to be relatively cheap and environment-friendly in comparison with oil, gas or coal. Therefore, a number of entrepreneurs starts their own pelleting business. However, most of them face the problem touching their expenses. And the main question is how much would it cost to build a wood pellet plant?

First of all, entrepreneur should calculate feedstock costs. Pellet line consists of several unit, each one of different type. The point is that every type of pelleting equipment is applied to process different raw material. What is more, different feedstock requires different processing conditions. For instance, softwood or hardwood demands different compression ratio. The higher one is require to process softwood. Thus, this condition should be taken into account in order to choose an appropriate equipment.

Another characteristic, which is important in this case, is the size of raw material. The point is that oversized material cannot be processed by pellet mill. Therefore, in case logs are too large, hammer mill should be applied to grind them. In this case, the cost of this pellet line unit is to be included into calculations.

Supposed yield of pellets should be taken into account as well. As more pellets are expected to be produced, as more expensive equipment is to be installed. What is more, the equipment, which is to produce great amount of pellets, requires a large workshop, which evidently will raise the cost of plant building.

 

Building costs depend on raw material

Beyond that, it should be taken into account whether recovered wood or virgin fibre is used in the production of pellets. The first one is cheaper: the average price for recovered wood stands at $55-65 per tonne, while the price for virgin fibre is approximately $70-80 per tonne.

In addition, the price for raw material depends on moisture content. The average figure is between 40 and 60 per cent of moisture. Thus, as higher this figure is, as more expensive the production of pellets is. The reason is that the high content of moisture raises expenses in order of drying. Moreover, recovered wood, which contents far less moisture than virgin fibre does, is significantly cheaper, as it was mentioned before.

 

Other factors included in the cost of building

In accordance with the study of Deloitte, other factors also make impact on how much it would cost to establish a wood pellet plant. First of all, the consumption of energy should be calculated. It costs, in average, $10 per tonne. The cost of repairs and lifecycle maintenance equates around $5 per tonne. Loading onto rail for bulk shipments will cost $2.5 per tonne.

 

Additional capital costs include grinding on site ($3-4 million), pellet storage and rail load facilities ($2 million). It is also important to say, that the cost of such factors as labour and basic capital cost depend on plant capacity. If it is, for instance, 150,000 tonnes annually, labour expenses will equate approximately $10 per tonne. In case capacity is 100,000 tonnes annually, basic capital cost will reach $125 per tonne.

 

It is also necessary to add the total cost of pellet plant construction depends on region. It will be higher in the European countries in comparison with the USA and Canada, as energy expenses are significantly higher here.

 

 

In summary, the cost of pellet plant construction includes a number of factors. Among them are the type of raw material (its size, moisture content and so on).It makes impact on both feedstock price and types of equipment required. Beyond that, some other factors should be taken into account, such as supposed plant capacity, basic capital cost, labour, repair and maintenance, storage and transportation.