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Increasing use of woody fuels requires that nontraditional types of raw materials are exploited, including logging residues and small-diameter trees. Although medium-scale combustors often use pellets, they could conceivably use dried chips of sufficiently narrow size distribution (henceforth pellet chips). The influence of the following factors on the relative cost-effectiveness of producing pellets and pellet chips was investigated for three plant sites in northern Sweden: (1) harvesting and transporting of forest residues; (2) the potential of existing energy plants to supply drying heat in periods of capacity surplus; (3) the distance to potential end-users. Data from the national forest inventory were used to estimate raw material costs. The resulting production costs were 144–176 $ per oven-dry tonnes (OD t) for pellets (27.4–33.5 $ MWh−1) and 143–173 $ OD t−1 (27.2–33.0 $ MWh−1) for pellet chips, with harvesting, forwarding, chipping, and transporting of logging residues to the sites amounting to 114–122 $ OD t−1 (21.7–23.2 $ MWh−1) for both fuels. Even though the differences in production costs were minor, the production of pellet chips requires significantly less electricity input per OD t of produced fuel. For cost reductions improved methods for wood fuel procurement, compacting and transporting of chips, small-scale low-temperature drying and foliage and bark separation are needed

Production Costs and Markets for Pellet Chips: Case Studies in Northern Sweden