How much does it cost to build a wood pellet factory?

Nowadays, under the pressure of spending cuts and environmental protection, the demand for alternative energy is increasing. Therefore, wood pellet fuels become the most popular energy. Compared with coal, oil and gas, wood pellets are relatively cheaper. And they are also carbon-neutral and non-pollutant. For these reasons, many acute investors have decided to start their own wood pellet business. Here comes the question: how much does it cost to build a wood pellet factory?

The cost of pellet production equipment

A complete wood pellet production line is composed of a series of equipment. Generally, you need to have wood pellet mills, hammer mills, rotary drum dryer, counter-flow cooler, feed mixer, pellet packing machine, and belt conveyor or screw conveyor. They can complete the process of raw material drying, crushing, conveying, and the wood pellet making, cooling and packing.

Different raw materials requires different types of equipment. For example, hard wood and soft wood need different compression ratio, so you should choose the right wood pellet mill.

The size of raw materials also influence the equipment portfolio. Over-sized raw materials cannot pass through the pellet mill, so they need hammer mills or wood chippers to reduce size. If the size of raw materials is less than 30mm, they need to be processed by a hammer mill, or they need a wood chipper. Therefore, you should count the pretreatment equipment in the wood pellet production line.

Besides, the pellet production capacity determines the cost. For higher production requirement, you need to install more expensive equipment, and build larger workshop. All these will increase the construction cost.

The cost of biomass materials

The raw materials for making wood pellets can be recycled wood or native fibers. Recycled wood is $55-65 per ton, cheaper than native fibers, whose price is $70-80 per ton. Of course, wood pellets made of native fibers have higher quality and can sell higher price.

The cost of raw materials is also influenced by the moisture content. The average moisture content of raw materials is 40%-60%. The high the moisture content, the higher the pellet production cost. Because you need to spend more money for drying. In this regard, recycled wood is more economical than native fibers because the water content is lower.

Don’t ignore the delivery cost of the raw materials. If your wood pellet factory is near athe raw material production area, it can save your a lot of transportation cost. At last, you can calculate the cost of raw materials according to the production capacity of your wood pellet plant.

The cost of power, storage and transportation

Besides the cost of equipment, workshop and raw materials, you should not ignore other factors. As calculated by Deloitte Consulting, to product 1 ton of wood pellets, the electric consumption is $10, the maintenance cost is about $5, and the bulky transportation cost is $2.5. And the cost of pellet storage and railway loading device is around 2 million dollars.

The cost of labor

In terms of labor cost, if the annual production capacity is 150,000 tons, the labor cost is around $10 per ton. Overall, if the wood pellet factory have the capacity of 100,000 tons, the annual cost can be $125 per ton.

Location factors

The total cost of a wood pellet factory is also depend on the location. Compared with America and Canada, the cost in Europe is higher, because the energy price is higher.

In a word, the cost of a wood pellet factory includes the workshop, production equipment, raw materials, power, maintenance, labor, storage and transportation, etc. Besides, it is influenced by the production capacity, raw material quality and location.