Building an Export-Oriented Wood Pellet Plant from an Energy Plantation

Although geographically, Indonesia is the largest country in the Southeast Asian region and has a tropical climate, the export of wood pellets from Indonesia is still very small and far less than Vietnam. The destination of Vietnam wood pellet exports to Korea and Japan. Japan's wood pellet imports in 2018 are estimated to be more than 1 million tons, or that number is almost double that of 2017, with a percentage of 63% coming from Canada and 31% from Vietnam. It means a small area but able to export wood pellets to Japan with a minimum of 310 thousand tons / year, while Indonesia is estimated to be less than 100,000 tons / year.

Indonesia is also very potential to develop energy plantations for the production of wood pellets. Even the energy plantation can be integrated with large farms such as sheep, cows and goats and honey beekeeping, for more details, please read here. So that in addition to the energy sector, the food sector and environmental conservation in the form of water and land can also be maintained. Why are currently no wood pellet producers from export-oriented energy plantations in Indonesia? Even though the potential of raw materials and markets is huge. Profit estimates are also interesting especially with the optimization of land use and the energy plantation harvest.

There are several analyzes, to answer this, among others as follows, first is market access. The market or buyer is important for investment in a wood pellet factory worth hundreds of billions, so the market guarantee is very important. Abundant production but no one absorbs it or the buyer will make the factory stop production and go bankrupt. The characteristics of wood pellet products will also determine the user or user of the wood pellet. Although the same is for power plant consumption but the power generation technology is also different, so it requires different technical specifications of wood pellets.

Second, the cost factor. Cost factor may be the main obstacle, this is because wood pellet plants from energy plantations are not something cheap, but they are generally cheaper than palm oil mills and plantations, for more details, please read here. But with good prospects in the renewable energy sector from biomass, there should be many investors interested in investing in this business. Non-usurious mutual investment is the best choice to execute it. It is estimated that for wood pellet plant with a capacity of 10,000 tons / month (20 tons / hour), more than 100 billion rupiah.

Next, the third factor is infrastructure. A number of regions do not yet have adequate infrastructure despite the vast available land. Provision of infrastructure such as roads, bridges and so on is not something that is easy and inexpensive, so that it can be a significant obstacle. This is why site selection is important. The availability of electricity is another thing that needs attention and is an important consideration. Electricity is vital for wood pellet production or factories. If it turns out there is no electricity supply, then the wood pellet plant must make a power plant. With a range of 250 KW of electricity demand per ton/hour of wood pellet production, for wood pellet production with a standard export volume of at least 10,000 tons/month or 10,000 tons/shipment or 20 tons/hour requires 5 MW.

The power plant is quite large, as comparison because for the size of a large palm oil mill the electricity needs are only around 2.5 MW and the investment in power plants for each MW is 1 million US dollars, so for 5 MW it requires 5 million US dollars or around 70 billion rupiah. Infrastructure such as adequate ports is also very important. Wood pellet plants generally have wood pellet storage units close to the port so that they are easy to ship. The wood pellet storage facility with a capacity of 10,000 tons also requires a large enough building, estimated at more than 50 billion rupiah.

Wood pellet port with storage facility at Prince Rupert, BC, Canada

At present, wood pellet production generally only relies on sawmill waste and wood industry waste. Supply of raw materials fluctuating in both quality and quantity. In the rainy season in general, wood processing factories need more waste as fuel to dry wood they processed, so that wood waste that can be taken is reduced or only a little, even not left. This is different from the production of wood pellets from energy plantations because it guarantees a better supply of raw materials. But cultivation and harvesting technology must also be mastered properly to be able to better guarantee the supply of raw materials to the plant. For plants, guaranteed supply of raw materials is vital. The plant will immediately close if there are no raw materials to process. Wood pellet plant generally have a large warehouse of raw materials, which also functions as a buffer for their production.

Next is the mastery of wood pellet production technology itself. To maintain the quality and quantity of wood pellets that are as expected, the mastery of production technology is absolutely necessary, in addition to handling the product to the shipment. The critical points of the production process such as particle size, level of dryness, pelleting and cooling must be of particular concern. Wood pellet products that can be accepted by the international market almost all must meet two standard requirements, namely quality standards and environmental standards (sustainability). Quality standards are closely related to the technical aspects of the wood pellet itself or its production aspects. While environmental aspects are closely related to the origin of raw materials, and various environmental aspects that make wood pellet raw materials sustainable, and for more details can be read here.

The momentum of the energy plantation is predicted to not be long anymore, even Sri Lanka will soon produce wood pellets from the gliricidae energy plantation of 150 thousand tons/year or more than 10,000 tons/month, for more details, please read here. Gliricidae as well as calliandra are a group of leguminous plants (leguminoceae) and gliricidae are more popular and have been planted by the community since tens or even hundreds of years ago which is usually for hedgerows and leaves for animal feed. While the red calliandra, which may have been planted by the community for hundreds of years, is generally only for high areas. For a more detailed comparison of calliandra and gliricidae plants, please read here.