Economic evaluation of short rotation coppice systems for energy from biomass - A review

Since economic profitability is the most important factor for the adoption of short rotation coppice (SRC) for energy from biomass, our objective was to analyze and summarize published knowledge about the economic evaluation of SRC. Of 37 studies, 43% reported economic viability of SRC in comparison to a reference system; whereas 19% stated economic disadvantages of SRC, and 38% reported mixed results, depending on the underlying assumptions. We found a wide variety of underlying assumptions, underlying costs, process chains and methods used to evaluate SRC systems. Of the 37 studies, 8% used static approaches of capital budgeting, 84% used dynamic approaches and 8% applied approaches in which uncertainties were taken into account. Due to the long-term nature of investment in SRC, and therewith, the uncertain development of sensitive assumptions, approaches which consider uncertainties were best suited for economic evaluation. The profitability of SRC was found to be most sensitive to the price for biomass and biomass yield, but site-specific biomass data was lacking. Despite the wide variation within each cost unit, costs for land rent, harvesting, chipping, and establishment consistently made up the largest proportion of overall costs, and should therefore, be chosen carefully. We close with suggestions for improving the economic evaluation of SRC and enhancing traceability and comparability of calculations.