Pellet production business calculation

Hello dear readers and blog subscribers, Andrey Noak is in touch with you! today I will tell you, or maybe I will share my opinion - is it profitable to produce pellets.

Introduction

At the very beginning, I focused my blog on knowledge in the manufacture of particle boards. But, the production of the stove somehow slowed down at some stage. The whole point is most likely a huge investment in this production and a long return on it. For example, I worked for Altai Forest. We launched a particle board line in 2021. So this line was assembled for three years, then it was brought to its design capacity for four years. Only in 2021, in the summer, it began to generate income, and in the fall, the steel tape failed.

After the tape failed, a new one was bought in 2021. That is, in reality, the line began to move somehow only in 2021 - 2021. But there is already a crisis and no one needs a building board.

If you really look at things, today for a good profit you need to either revise the technologies in the manufacture of chipboard or make such a production so that at once 300 - 500 thousand finished products per year. So that the number of operators in a small production is 2 - 3 people and electricity costs are lower.

But in pellets it is not like in the board industry. Everything is much better and more profitable here.

About pellets

The production of pellets itself is quite compact and with a normal approach, it can organize the work of one or two operators per shift. The business plan for the production of pellets can be found here. I described how to achieve the minimum staff in production in my book, more about it in the section "MY BOOKS".

Working in the same company, the installation of our pellet production took place in six months. Bringing to the design capacity for another six months. For the production of pellets, only sawdust is needed, no resin and binders. Therefore, after six months, the pellets were already bringing us good income. The profitability of this workshop with a capacity of 1.8 tons per hour fluctuates in the region of 40 -42%. Below I give calculations for the payback of the technology. I did these calculations for a large company that wanted to decide whether they needed to open this business.

Calculation

The cost of sawdust is 300 rubles per solid cubic meter, if you do not know how to calculate it, then you are here. It will be difficult to obtain pellets from such a forest for Europe. But the client found high-quality sawdust and we consider it to be sold to Europe.

Starting your own business is always associated with certain financial investments and, accompanying any business, financial risks.

In order to convince investors of the advisability of investing in a particular project, and to be sure that the new production will bring profit, a multifaceted preliminary analysis of the market segment in which the company will operate is required.

This article is a brief business plan for the production of pellets.

Choosing pellet production as a business

First of all, it is necessary to assess the demand for the products that the new enterprise will produce, and to decide in which region it is most expedient to open it. The main trend in world development is an increase in interest in alternative and renewable energy sources, as well as a significant tightening of requirements for their environmental safety.

Pellets are a product of processing waste from enterprises for various purposes:

• woodworking ;
• sawmills ;
• a number of food industries;
• agricultural.

These products are often referred to as wood pellets or "Eurowood", but the production of pellets can be organized using waste from any of the above industries.

The main areas of use of pellets are, first of all, energy:

• heat and electricity generation;
• cogeneration at power plants and boiler houses;
• private households (boilers operating on pellets, or combined, pellet - gas);
• products are widely demanded by manufacturers of such a product as cat litter.

Variants of using pellets in industries of secondary importance are possible. For example, for the operation of industrial steam generators, absorbents, etc.

Pellets can be used to heat the room: they replace other types of fuel. The use of biofuels not only saves natural resources, but also helps to preserve nature. Pellets are made from recyclable materials, which are wood waste. Therefore, pellet production is a solution to the issue of wood waste disposal and, at the same time, an opportunity to earn money.

What are pellets and where are they used?

Pellets are biofuels in the form of cylindrical pellets. They are pressed under high pressure, without the addition of binders. The sizes of granules are 20 - 70 mm in length, 4 - 12 mm in diameter. Pellets are used in pyrolysis boilers due to the low material moisture content of 7 - 12%. The efficiency of boilers that run on pellets is 1.5 times higher than those that use firewood.

The calorific value depends on the quality of the pellets. If for agricultural pellets it is 15 MJ / kg, then for premium pellets it reaches 19.5 MJ / kg.

The energy contained in 2.5 kilograms of pellets is equal to one liter of liquid fuel. In this case, the granules are not prone to fire and are harmless to people prone to allergies.

Areas of use of pellets:

• Fuel for boilers. Pellets are used to heat homes, offices and industries using different types of boilers.
• Filler. Granules are used as filler for pets: cats, hamsters and guinea pigs.
• Insulation. Pellets can be used to fill empty floors in a building under construction. Thanks to the granules, the room retains heat.
• Fertilizer. Pellets are used as fertilizer and also as a soil substitute for growing vegetables.
• Absorbent. At service stations, pellets are used as an absorbent for cleaning various technical fluids.

Making pellets What they are made of

Pellets are made by pressing dry crushed waste.

Waste type

Name

• 1 What are pellets and where are they used?
• 2 History of pellet production
• 3 Pellets - what are they made of? <
• 4 Pellet production technology
• 5 Business plan for starting a business for the production of pellets
  • 5. Market analysis
  • 5. Which room to choose for making pellets
  • 5. What equipment is needed for the production of pellets
  • 5. Pellet production staff
  • 5. Documents to open
  • 5. Sales of products
• 6 How much money to invest. The cost of equipment for the production of pellets
• 7 How much does pellets cost
• 8 How much can you earn from the production of pellets
• 9 Business Risks

Pellet production is one of the branches of the wood processing industry associated with sawdust processing. Modern business is focused on the implementation of the principle of waste-free production, and sawdust processing allows you to minimize the costs of their disposal. The second advantage is that such production provides an opportunity for additional benefits. Let's take a look at all the nuances of the pellet production business.

What are pellets and where are they used?

Pellets are pellets made from compressed wood waste. The main suppliers of inexhaustible raw materials for pellet production are sawmills, woodworking enterprises, furniture manufacturing workshops.

Pressed pellets have a wide range of applications:

• fuel for heating boilers, grills, fireplaces;
• cat litter;
• bedding for animals in stables, sheepfolds, etc. .;
• one of the options for covering playgrounds;
• raw materials for soil mulching;
• an adsorbent for spills of petroleum products and oils at gas stations and car services.

Usually, high-quality pellets with a low percentage of ash are used in heating systems, and low-quality ones with a high percentage of ash content of additives (bark, straw, any plant waste) are used as replaceable fillers.

Read also an overview of a business idea for launching a mini factory.

History of pellet production

In 1947, the owner of a sawmill in America, Rudolf Gunnerman, came up with a simple way to remove his own waste. To reduce disposal costs, he began to compress wood waste, because it is much more profitable to transport them in this form.

Contents

Brief Investment Memorandum

The popularity of pellets is explained by the fact that they are very convenient and profitable to use. Compared to standard types of heating, pellets benefit significantly.

Just don't think that saving is the only plus of such heating. In fact, they also differ in environmental friendliness. In particular, when burning, pellets do not emit smoke and, at the same time, during its combustion, carbon dioxide is not emitted. It is also noteworthy that very little ash is released from the burning of pellets. As for performance, you can get really good heating for the minimum volume. As far as maintenance is concerned, no special skills are needed to use the pellet boiler. All you need to do is load fuel and clean the stove at least once a season.

Pellet boilers also differ in safety - for this, manufacturers provide the appropriate certificates. However, they do not need any permissions to install them. There is no need to worry about the availability of fuel, because it is now sold in Russia in sufficient quantities. What can we say about the very efficiency of heating in this case - even within a day after the fuel is supplied, the stove is able to retain heat. It turns out that pellet heating has a lot of advantages.

Obviously, the demand for pellets will only increase over time. Moreover, it is not the first year that they have been supplied from Russia to European countries - this is also explained by the constant rise in prices for other means for heating. As for the direct business in the production of pellets, the raw materials for this are practically free.

The following points will be identified in this project:

• opening a plant for the production of pellets;
• purchasing equipment;
• recruiting;
• searching for business partners ;
• delivery of products.

Key financial indicators of the project:

• investments - 2 million 281 thousand rubles;
• average monthly revenue - 735 thousand rubles;
• net profit per month - 130 thousand 731 rubles.

Of course, the numbers here are very approximate, as in reality there may be deviations. The calculation is based on data from similar companies in the relevant industry. At the same time, deviations will be insignificant here, so there shouldn't be any special reasons for concern.