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An integrated wood pellet supply chain development: Selecting among feedstock sources and a range of operating scales

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  • Boukherroub, Tasseda
  • LeBel, Luc
  • Lemieux, Sébastien

Abstract

An approach to developing a wood pellet supply chain (SC) which selects among several sources of biomass feedstock is proposed. The approach is based on a downstream to upstream analysis of the SC and includes five phases: (1) Identifying potential markets and projected demands. (2) Determining feedstock types, locations, and available quantities. (3) Evaluation of raw material and final product transportation options, potential plant location, and logistics components that can be integrated with existing forest products SCs. (4) Cost estimation of raw material supply, production, and final product delivery. (5) Utilizing a spatially explicit optimization and generic model to determine the optimal operational conditions under which the wood pellet SC is profitable while taking into account economies of scale. The model selects the best feedstock locations and determines the optimal quantities to supply as well as the optimal production capacity. The associated ROI is calculated to assess economic feasibility. To show the value of the approach, we applied it to a real case study proposed by a regional development agency interested in developing the wood pellet sector in Eastern Canada. The results show that implementing a 100,000-tonne plant using biomass harvested in the forest as the sole feedstock is profitable. However, harvesting costs must be shared among the pellet mill and other forest companies and the government must provide financial support. The use of sawmill residues in the mix of feedstock allows implementing a highly profitable 50,000-tonne plant without any government support or harvesting cost sharing mechanism. Under a high wood pellet selling price, harvesting cost sharing and government support, the production capacity can reach 150,000tonnes/year. An important finding is that government support is not necessary for ensuring profitability in all cases. Government support has a significant impact on profitability in the case where sawmill residues are not available as a feedstock for manufacturing pellets or the selling price is high enough to allow operating a profitable plant of large size.

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  • Boukherroub, Tasseda & LeBel, Luc & Lemieux, Sébastien, 2017. "An integrated wood pellet supply chain development: Selecting among feedstock sources and a range of operating scales," Applied Energy, Elsevier, vol. 198(C), pages 385-400.
    • Handle: RePEc:eee:appene:v:198:y:2017:i:c:p:385-400
    DOI: 10.1016/j.apenergy.2016.12.013
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    References listed on IDEAS

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    2. Santos, Andreia & Carvalho, Ana & Barbosa-Póvoa, Ana Paula & Marques, Alexandra & Amorim, Pedro, 2019. "Assessment and optimization of sustainable forest wood supply chains – A systematic literature review," Forest Policy and Economics, Elsevier, vol. 105(C), pages 112-135.
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    5. Ahn, Yuchan & Han, Jeehoon, 2018. "Economic optimization of integrated network for utility supply and carbon dioxide mitigation with multi-site and multi-period demand uncertainties," Applied Energy, Elsevier, vol. 220(C), pages 723-734.
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    7. Andrzej Bochniak & Monika Stoma, 2021. "Estimating the Optimal Location for the Storage of Pellet Surplus," Energies, MDPI, vol. 14(20), pages 1-16, October.
    8. De Laporte, Aaron V. & Ripplinger, David G., 2019. "The effects of site selection, opportunity costs and transportation costs on bioethanol production," Renewable Energy, Elsevier, vol. 131(C), pages 73-82.
    9. Vitale, Ignacio & Dondo, Rodolfo G. & González, Matías & Cóccola, Mariana E., 2022. "Modelling and optimization of material flows in the wood pellet supply chain," Applied Energy, Elsevier, vol. 313(C).
    10. Nicolas Mansuy & Julie Barrette & Jérôme Laganière & Warren Mabee & David Paré & Shuva Gautam & Evelyne Thiffault & Saeed Ghafghazi, 2018. "Salvage harvesting for bioenergy in Canada: From sustainable and integrated supply chain to climate change mitigation," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 7(5), September.
    11. Bruno Gagnon & Heather MacDonald & Emily Hope & Margaret Jean Blair & Daniel W. McKenney, 2022. "Impact of the COVID-19 Pandemic on Biomass Supply Chains: The Case of the Canadian Wood Pellet Industry," Energies, MDPI, vol. 15(9), pages 1-18, April.
    12. Zaher Abusaq & Muhammad Salman Habib & Adeel Shehzad & Mohammad Kanan & Ramiz Assaf, 2022. "A Flexible Robust Possibilistic Programming Approach toward Wood Pellets Supply Chain Network Design," Mathematics, MDPI, vol. 10(19), pages 1-27, October.
    13. Soares, Ricardo & Marques, Alexandra & Amorim, Pedro & Rasinmäki, Jussi, 2019. "Multiple vehicle synchronisation in a full truck-load pickup and delivery problem: A case-study in the biomass supply chain," European Journal of Operational Research, Elsevier, vol. 277(1), pages 174-194.
    14. Lenka Štofová & Petra Szaryszová & Bohuslava Mihalčová, 2021. "Testing the Bioeconomic Options of Transitioning to Solid Recovered Fuel: A Case Study of a Thermal Power Plant in Slovakia," Energies, MDPI, vol. 14(6), pages 1-20, March.
    15. Maaz Hassan & Naveed Usman & Majid Hussain & Adnan Yousaf & Muhammad Aamad Khattak & Sidra Yousaf & Rankeshwarnath Sanjay Mishr & Sana Ahmad & Fariha Rehman & Ahmad Rashedi, 2023. "Environmental and Socio-Economic Assessment of Biomass Pellets Biofuel in Hazara Division, Pakistan," Sustainability, MDPI, vol. 15(15), pages 1-23, August.
    16. Visser, L. & Hoefnagels, R. & Junginger, M., 2020. "Wood pellet supply chain costs – A review and cost optimization analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 118(C).
    17. Esther S. Parish & Latha M. Baskaran & Virginia H. Dale, 2021. "Framework for assessing land‐management effects on at‐risk species: Example of SE USA wood pellet production and gopher tortoise (Gopherus polyphemus)," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 10(1), January.

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