Feasibility Analysis of Wood Pellets Production and Utilization in China as a Substitute for Coal

Abstract

Wood pellets are regarded as one of the substitutes for fossil fuels like coal and oil for heating and co-generation. Wood pellets are a successful example of market penetration of renewable energy in some countries in Europe, e.g., Sweden. An analysis process is proposed in this paper and used to conduct a techno-economic assessment of wood pellets production and applications in some areas in China with the consideration of technology transfer from Sweden by examining their market competitiveness with coal in these areas. Financial indices such as net present value (NPV), internal return rate (IRR) and year-to-positive cash flow are calculated to investigate the profitability of the technology transfer. Four locations of applications in China have been considered as case studies. The result indicates that in the market-only-based scenario, wood pellets production will not be profitable in all selected areas. New scenarios from the analysis process show that reducing investment and increasing the amount o...