An economic analysis of small-scale cogeneration using forest biomass and sawmill residuals in northern Ontario

The objectives of this thesis are twofold: the first is to investigate the economic feasibility of using biomass for cogeneration in northern Ontario and the second is to determine the institutional factors that may affect the establishment and operation of cogeneration facilities. Two fuel sources were evaluated for a cogeneration plant, namely, forest materials and sawmill residuals. To establish and operate a cogeneration plant, the policies of the Ontario Ministry of Natural Resources and Ontario Hydro needed to be analysed. Some of the benefits of using sawmill residuals for cogeneration were identified and an inventory of sawmill residuals was compiled. The welfare effects of three pricing schemes for non-utility generated electricity were described using a neo-classical welfare model. This model was further extended to include the effects of: subsidizing public utilities, and using biomass to generate electricity. A competitive market for electricity generation and related pricing structure was investigated.; The results of the capital budget indicated that using sawmill residuals and chipped forest materials as fuel for cogeneration would yield 22.7% and 8.7% for internal rates of return and net present values of {dollar}8,659,870 and {dollar}1,867,822, respectively. This implied that using sawmill residuals for cogeneration fuel would be both profitable and help to reduce possible harmful effects that current dumping practices may have on the surrounding ecosystem.