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Profitability Calculations

Almost without exception, people who have switched to biofuels have saved considerable sums of cash. The bigger the consumption, the bigger the savings.

Example 1

Detached house – from oil to pellet

The house consumes 3 000 litres of fuel oil, which is in kilowatts approximately 30 000 kWh in a year.

  • Fuel oil price is 1,15 cents/litre 
  • Pellet price is 230 euros/tonne

The fuel oil costs in the house are 3 450 euros a year. To replace this amount of oil with pellet requires 6 300 kilos of pellet which costs 1 450 euros. The amount saved money in a year is 2 000 euros.

If the boiler room renewing and new equipment cost 5 000 euros, the new system would pay for itself in two and a half years.

It is also noteworthy that pellet price is and is likely to be in the future as well more stable than oil price. The more energy is used, the bigger are the savings.

Example 2

Farm – from oil to wood chips

The farm consumes 10 000 litres of fuel oil in a year, which is in kilowatts approximately 100 000 kWh.

  • Fuel oil price is 1,15 cents/litre
  • Wood chip price is approx. 20 €/m³

The fuel oil costs in the farm are 11 500 euros. To replace this amount of oil with wood chips requires 125 m³ of wood chips.

If the wood chips are bought and a decent price is paid of them, the costs are 2 500 euros. Thus the wood chip price would be 0,025€/kWh. The amount of money saved would be 9 000 euros.

If a new heating plant (50 kWh) was built, and the estimated price was 35 000 euros (VAT 0%), the payback period would be less than four years.   

If you own forest and can prepare chips of your own trunks, the payback period is naturally considerably shorter, because the fuel price is lower. It is good to take notice on the wood chip market price stability and the degree of self-sufficiency when doing profitability calculations. With fuel oil, the price changes can be very swift and radical.

The calculations are suggestive and are subject to change according to energy prices. Usually the general price change development favours biofuel users.  

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Power & Energy Africa 2015 in Dar-es-Salaam, Tanzania.RENEXPO® BiHtcbiomass2015: Technology for the Bioeconomy