Peculiarities of producing wood pellets and company growth strategies

Abstract

The article states that Ukraine is among countries with a high potential level of biomass, which serves as a raw material for the production of solid biofuels. As Ukraine’s economy is developing, there is an increased demand for energy resources. In response to energy dependence and steadily rising prices for fuels, there has also been a shift in the focus towards using alternative energy sources such as biofuels, particularly, wood pellets. The paper covers the factors leading to the growth of the pellet industry, namely: improving the ecological situation, reducing carbon emissions, increasing prices on extracted fuels, waste recycling optimization, etc. The peculiarities of wood pellet production are outlined and their impact on decision-making processes in enterprises, especially in logistics-related areas, is discussed. A particular attention is paid to technology aspects of producing wood pellets and technological organization of manufacturing processes. The article summarizes a list of required production equipment, which affects initial investment, projecting production cost and financial results of operations.

Some peculiarities of woodworking enterprises which provide raw material for wood pellet plants are considered. The major challenges and prospects related to forming a long-term strategy for producing wood pellets are highlighted. Based on the results of the study, a principle for optimizing production costs, particularly raw materials costs, is suggested. The optimization model includes all production costs incurred when producing pellets. It is also found that the optimal distance from the furthest sources of raw material should be up to 50 km.

The article concludes that addressing various aspects of producing and consuming biofuels in Ukraine is relevant and important. Further studies should be performed into defining criteria for management in such type of plants.