Economic analysis of using valley hardwoods for fuel energy

A TVA interoffice biomass economic task force was formed to assess the economics of using this currently underutilized wood resource for fuel energy. The feasibility of seven technologies for using these Valley hardwoods for fuel energy was considered. The conversion technologies included use of wood (1) in direct combustion boilers, (2) for cogeneration, (3) to produce a solid fuel and oil by pyrolysis, (4) in gasification to produce synthetic natural gas, (5) in liquefaction to produce a crude oil, (6) to produce methanol, and (7) to produce ethanol via acid hydrolysis. Processes 1 and 2 have been commercially developed and are ready for adoption by industry. Data for estimating feasibility were obtained from information reported in the literature and TVA sources. Data were adjusted by normal escalating and scaling factors to improve comparability (e.g., scaling to 1000 dry tons per day wood use and adjusting to 1980 costs). Evaluations were based upon internal rates of return (IRR) over a 20-year project life - this method incorporates cost of production, product value, and the time value of money. The analysis includes tax considerations and projected rates of inflation. The cost to harvest, chip, and transport (less than 70-mile haul) the woodmore » plus current stumpage price is estimated to be about $30 per dry ton (equivalent) for large-scale operations.« less