From exogenous to endogenous development in Scottish forestry: the feasibility of small-scale wood energy enterprise

This paper presents a change in the Scottish forestry policy from the exogenous to the endogenous development approach, and feasibility of heat entrepreneurship based on locally produced woodfuels in the Highlands of Scotland. The cost structure and heat pricing in the case of an 800 kW solid fuel boiler is presented, and the profitability of local heat entrepreneurship is analysed with scenarios of different investment costs and fuel prices. The results indicate that a district heating (DH) system, using locally produced woodchips, could produce heat at a lower price than single-house heating systems using light fuel oil. The profitability of replacing existing heating units by investing in a new district heating (DH) scheme is very dependent on the available investment support, price level of woodchips and substituted light fuel oil, and the amount of sold energy. In the case of an 800 kW DH scheme, and woodchip prices of 14 and 22 €/MWh, investments should remain under break-even points of 280 and 420 €/kW of heating power (230,000–335,000€).