Investment analysis of wood-fueled combined heat and power entrepreneurship in rural Finland

Combined heat and power (CHP) generation is potentially an attractive entrepreneurship lane in rural Finland. The country’s climate, infrastructure and political commitments are making such businesses more favorable. The latest technological advances in cogeneration further facilitate the use of discussed energy technologies. The present study examines the net present values (NPVs) and internal rates of return (IRRs) of investments in various energy generation technologies with entrepreneurial prospects (sales of heat and electricity). CHP, wood boiler, oil boiler and ground source heat pump (GSHP) systems were studied at two production scales (detached rural house and farm). For wood-fueled energy systems own forest fuel availability was considered. Renewable energy subsidies were applied for eligible technologies. The study found that with current technologies and renewable energy subsidies, the heat and power production mix can be more favorable than heat alone at comparable scales. Own wood fuel resources made investments in energy generation more viable. The profit margins, however, remain very tight and CHP entrepreneurship is still likely to be undertaken by enthusiasts. Operation and maintenance costs were identified as some of the most significant hindrances for adoption of wood-fueled CHPs. For other energy alternatives, price of fuel almost solely determined the value of investments. The study also discusses a host of climate and energy production issues pertaining to CHP technologies