Profitability of pellet production from sawdust
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Are you wondering how profitable pellet production from sawdust can be? This is influenced by a number of factors which have been discussed in detail in this article. We have carefully analyzed three scenarios that will allow you to estimate what rate of return you can expect from your investment, whether you have your own dry or wet raw material, or whether you use purchased sawdust for pellet production.
First, we will present the factors common to all calculations:
Among other things, the price of electricity must be taken into account, which varies depending on the electricity supplier. The average energy price, according to the G11 tariff, is PLN 1.4 net per 1 kW. It consists of:
- Variable/network distribution fee
- Fixed distribution/transmission fee
- Transitional fee
- Subscription fee
- All-day cogeneration fee
- All-day RES fee
- Capacity fee
- Quality fee
Source - https://globenergia.pl/ile-kosztuje-1-kwh-energii-elektrycznej-z-czego-sklada-sie-rachunek/
Appropriate equipment has a significant impact on the profitability of pellet production from sawdust. There are many models of pellet mills and granulation lines with different parameters available. We will carry out our calculation based on work on the LDG-3000 KOMBI pellet production line, which includes the following elements:
2. Moistening system
4. Calibrator – granulate / pellet cooler KC-100
5. Closed extraction system SO-2
6. Control panel
The total power consumption of the line is 25 kW per hour.
The high-quality LDG-3000 KOMBI granulation line equipped with a pellet mill with new-type rollers allows you to produce approximately 350 kg of pellet per hour. A quick calculation shows that within 8 hours it is possible to produce 2,800 kg of pellet, that is 56,000 kg of pellet per month.
We assume that the average salary of an employee at a pellet production line is PLN 4,000 net. This means that per hour the employee receives remuneration of PLN 23.81 net.
The price of a die for the PRIME-300 pellet mill is PLN 2,440 net per piece (die lifespan: up to 70 tons). It can be calculated that the die depreciation cost for the production of 1 kg of pellet is PLN 0.03 net (PLN 2,440 / 70,000 kg = 0.03).
In the same way, we will calculate the depreciation cost of roller shells and bearings. The cost of a bearing set for the PRIME-300 pellet mill is PLN 560 net (lifespan up to 40 tons). Bearing depreciation for the production of 1 kg of pellet is PLN 0.01 net.
The set of roller shells costs PLN 2,200 net. Depreciation of the shells for the production of 1 kg of pellet is PLN 0.02.
In our calculations, we assumed that the market price per ton of finished pellet averages PLN 1,000 net, although it is worth remembering that good quality pellet can reach higher prices.
Let us move on to a more detailed discussion of the 3 cost estimates.
Pellet production from dry sawdust
Let us assume that you run a carpentry workshop and can use your own dry wood waste. In this variant, the raw material for pellet production is free for you.
Based on the above data, the cost of pellet production can be estimated:
25kW (line) * 1.4 (net cost of 1 kW) * 8 (machine working hours) + PLN 190 (employee remuneration for 8 hours of work) + 2800*(0.03+0.01+0.02) = 770.61 – daily production cost of 2,800 kg of pellet
This means that the cost of producing 1 ton of pellet from dry sawdust using free raw material is approximately PLN 275.22 net.
Profitability of pellet production from wet sawdust
In a similar way, a cost estimate can be prepared, for example, for sawmills that have wet sawdust available. To produce pellet from moist wood waste, the sawdust must first be dried. For this task, an additional machine will be useful, namely the SA-400 aerodynamic sawdust dryer, whose power consumption is 5 kW. Additionally, the calculation should also include the remuneration of a second employee who will be needed to operate the dryer.
30kW (line + dryer) * 1.4 (net cost of 1 kW) * 8 (machine working hours) + PLN 380 (remuneration of two employees for 8 hours of work) + 2800*(0.03+0.01+0.02) = 1,017.09 PLN net - daily production cost of 2,800 kg of pellet.
The cost of producing 1 ton of pellet from wet sawdust using free raw material is on average PLN 363.24 net.
Pellet production from purchased dry sawdust
If you do not have your own free raw material for pellet production, the cost estimate must include the purchase price of dry sawdust. The average price of 1 cubic meter (mp) is PLN 50 net, although you can also find offers at a lower price or even free of charge.
To produce 1,000 kg of granules, an average of 6 cubic meters (mp) of sawdust is used. Therefore, 19.2 mp of sawdust are needed for the daily production of 2,800 kg of pellet. In this scenario, our calculations are as follows:
25kW (line) * 1.4 (net cost of 1 kW) * 8 (machine working hours) + PLN 190 (employee remuneration for 8 hours of work) + 2800*(0.03+0.01+0.02) + PLN 960 net (19.2 mp of sawdust) = 1,758.13 PLN net – daily production cost of 2,800 kg of pellet
The production of 1 ton of pellet, including the purchase price of dry sawdust, costs approximately PLN 650.22 net
Profitability of pellet production - summary
The discussed scenarios made it possible to estimate the approximate costs associated with pellet production and the expected profits. As can be seen, the profitability of pellet production may vary depending on whether we have our own dry or wet wood waste available or whether we have to purchase the raw material. The highest profitability is guaranteed by pellet production from dry sawdust when we have access to free raw material.
It is difficult to include all factors affecting the profitability of pellet production, because the calculations do not take into account possible downtime, taxes, transport costs and rental of premises. In our assumption, a fairly large cost is the employee’s remuneration, which in turn leads to higher production costs. It is clearly visible that even taking into account the relatively high cost of the employee’s salary, pellet production is a profitable activity, because the average market price of 1 ton of high-class pellet is at the level of PLN 1,000 net.
It is worth remembering that the demand for pellet is constantly growing. This is related to the global trend of caring for the environment and, consequently, the growing interest in ecological heating methods. In Poland, the program subsidizing the replacement of heating boilers under the “Clean Air” project is very popular, which also translates into increased demand for pellet.
More information about pellet production machines can be found on the TechnoMaszBud company website and the YouTube channel. If you are considering purchasing a pellet production line, you can contact our specialists at +48 732 081742 or use the special form. We will be happy to answer your questions and help you choose equipment suitable for your needs.
The demand for pellet is increasing every day. This is related not only to the program subsidizing the replacement of heating boilers under the “Clean Air” project, but also to the global concern about climate change. Of course, today not only sawdust is used for pellet production, but also straw, hay, reed, miscanthus, etc. You can learn more videos and information on our YouTube page: https://www.youtube.com/c/TechnoMaszBud/videos
