Techno-economic modeling of biomass pellet routes: Feasibility in Italy

Wood and agricultural biomass pellets boost the potential as bio-fuels toward power production in tertiary and residential sectors. The production of pellets, however, is a multi-stage process where the supply-processing phases and the overall energy input strongly depend on the characteristics of the input biomass. In this paper, we describe the key features of the market for pellets in Italy, including national production and consumption data, production costs and prices, the available energy conversion systems, and the current regulatory issues. Moreover, we outline the main technical, economic, and end-user barriers that should be addressed in order to foster the growth of Italian pellet production. Additionally, we propose a methodology to evaluate the profitability of the pellet production chain, by assessing the investment and operation costs as a function of the quality of the raw biomass. The approach is applied to a real case study of a small firm producing wooden frames along with dry wood chips as the main by-product, which can be utilized subsequently for pellet production. Moreover, in order to optimize the size of the pellet production plant, further biomass was purchased from the market, including wood pruning and agricultural residues, wood chips from forestry, and uncontaminated residues of wood processing firms. A sensitivity analysis of the main technical and economic parameters (including the cost and quality of raw material, pellet market value, investment and operational costs, and plant lifetime) indicated that the biomass market price considerably affects the profitability of pellet production plants, particularly where the biomass has a high moisture content. Therefore, a 20% increase in the price of biomass with a high moisture content leads to a 60% fall in profitability index, turning it into negative one. This is due in particular to the costs of pre-treatment and drying of biomass, as well as to the lower energy content of wet biomass. As a result, the use of forestry residues with high moisture and high ash content, high costs of collection/transport, and high costs of pre-treatment and drying is not financially competitive