6. PROFITABILITY OF USING WOOD FUELS

Fuelwood is the traditional and most common source of energy for rural processing activities in third world countries. Many cottage and village enterprises, as well as industrial users of fuelwood now, however, face an uncertainty in terms of supply and price increase, and are looking for suitable substitute fuels. To be acceptable, the cost per unit of useful energy delivered by the substitute fuel should not be more than that generated by fuelwood. The substitution should neither involve large capital investment in new equipment or unnecessary modifications of the existing energy conversion system, or significantly affect production during the transition period. In general, if the owner is satisfied with the profit he is presently making, it would be difficult or impossible to persuade him to opt for any substantial operational changes, including fuelwood substitution. This situation has, for example, been noticed by Bhattacharya (17) in Thailand, where a noodle manufacturer refused an offer of an energy study of his industry for possible savings, and a lime producer was not willing to accept a free direct heat gasifier that, evidently, would have saved energy.

In many small-scale enterprises, the supply, availability and costs of fuel are not the only constraints of problems, but in many cases this is obviously the situation. For example, wood fuel costs account for 30 % of bread production costs in household bakeries in Peru, 20 % of beer brewing costs in Burkina Faso (19), 30 % of pottery production costs in Sri Lanka (16), and a high 65 % of lime production costs in Thailand (10). The significance of improved energy conversion coefficiencies and reduced wood fuel consumption at these enterprises is, without doubt, a prerequisite for survival in many cases.

There is, however, an abundance of indications to conclude that even where the supply of fuel is not the major constraint, energy-related interventions, which fulfill several functions will be welcomed, provided they are sufficiently low in cost. The most common features of such interventions are reductions in emissions, improvement in handling and safety, and restrictions in production time. All of these can often be combined with improvements in fuel efficiency.

Where fuel costs are a major component of production costs (see table 6.1) - as for example in the case of food and beverage production, potteries, brick, tile and lime industries - there is an obvious financial benefit for the entrepreneur to consider improvements in processing technologies and techniques that reduce fuel costs, or to change over to a cheaper substitute fuel, provided the associated costs are not unacceptably high. The incentive to improve fuel efficiency may be reduced by the fact that many producers at the village and rural industrial scale can easily pass on the increasing costs of fuel to the consumer. So multi-purpose interventions may also be relevant here, if they can provide reduced labour or maintenance costs, or a higher product quality.

In the production or processing of typical cash crops, as rubber, tea, coffee, cocoa and tobacco, where fuel costs account for only a small percent of the product costs, the interventions are not that clear. A 10–20% improvement in the efficiency of the energy conversion system or a corresponding reduction in wood fuel consumption has in many cases only a marginal influence on the production profitability and cannot be motivated and implemented, in case some extra costs are associated with the efficiency improvements. The regular and uninterrupted supply of fuel is, instead, of major importance and can even persuade the manager or entrepreneur to substitute wood with a more expensive fuel.

In terms of cost of thermal energy generated from a fuel, wood is in most cases the cheapest resource, except for agricultural residues under certain conditions and/or for some places, where cheap fossil coal, lignite or peat is locally available. It is, however, rather difficult to compare the cost of useful heat obtained from different sources, particularly in the case of rural industries. The difficulty arises from a lack of information on efficiency of combustion or conversion systems, based on different sources of energy. Generally the conversion efficiency rises with homogeneity, energy density and reduced particle size and moisture content, and is better for liquid and gaseous fuels than for solid fuels. In order to get an idea of the relative cost of useful heat from different fuel sources, the following comparative table, based on assumed combustion/conversion efficiencies and net calorific heat values can be compiled. In practice, the improved thermal conversion efficiencies cannot be reached with the same equipment, but are connected with some extra investment costs.

The relative cost of energy generated from different fuels indicates that the commercial sources of energy are in general far too expensive and would not be acceptable to users under present or similar circumstances. In addition, in order to utilize a modern source of energy, a high initial investment is required to install the necessary appliances. There is also a cost associated with maintenance of such appliances. These factors would further tend to make the modern energy sources unattractive for industrial applications in rural areas.

In Indonesia, for example, Koopmans (8) reports that for oil-fired lime kilns, the energy requirement is 16 % less than that for wood, but the energy price of oil is four times as expensive as that of wood and its use is thus prohibitive. Because the lime production at a small rural scale does not seem to be a very profitable business, the entrepreneurs cannot afford to purchase improved continuous-type kilns. However, the energy conversion efficiency could be improved from a low 20 % to over 50 %, although the pay-back time, because of decreased fuel consumption, could be very short.

In Thailand, Chomcharn (10) reports that the substitution of fuelwood by lignite and heavy fuel oil in lime kilns has failed for socio-economic reasons. The energy price of lignite is approximately 23 % higher than the average price of fuelwood.

In Malawi the cost ratios between fuelwood, coal and oil are 1:4:45 according to Whitelock (13), and consequently, the substitution of wood in the tea or tobacco industries is out of the question.

The recent trend of falling oil prices and rising wood fuel prices will, no doubt, adversely affect the profitability of small rural enterprises using wood fuels. It is, however, unlikely that substitution of wood by fuel oil would be a realistic alternative in view of the high initial and maintenance costs associated with such substitution. It is also unlikely due to the fact that most third world countries are already spending a significant fraction of their export earning on the import of petroleum products.

Certain renewable forms of energy, for example, producer gas, solar energy, biogas, geothermal energy, etc., could possibly meet the requirements of rural industries to some extent in the near future. At present however, their contribution is negligible. There are indications that residue-based producer gas systems are posed to play an important role. For producing heat the gasifier design can be quite simple, since tar, which is produced along with gas and inhibits gasifier applications, in the case of engines, is not really objectionable, if the tar-containing gas is directly burnt. Wood-fuelled producer gas systems are already in widespread use in the cement, brick and lime industries of Brazil and in the Philippines, for irrigation and in food processing facilities, and their introduction and use also in other countries will probably occur in the near future. New designs of pyrolyser/gasifier units fuelled with coconut shells have also been successfully tested in Sri Lanka (1).

In general, the gasifier systems are most economical where operating periods are long and load factors high, since the capital costs of these systems are comparatively high. The gasifiers also tend to look more viable with increasing scale because the marginal investment for each gasifier is less.

The economy of utilizing the above mentioned renewable energy sources in rural industries is, however, not yet established and should be carefully investigated.

Although large amounts of agricultural residues are generated in many third world countries, most of the residues would not be available for use as a source of energy in rural industries. The main problems are the scattered locations in which they are deposed and the costs involved in collection, transportation, handling and storage. For a residue to be suitable as a source of energy for industrial use, large amounts of it must be concentrated as specific locations at or near to where demand for energy also exists. This situation occurs in agro-industrial plants, such as, for example, rice, coconut, groundnut and sugar mills. Large amounts of residues are also available in sawmills in the form of sawdust. Partly these residues are already utilized within the plants, so that only the surplus is available for other potential users. The regionwise distribution of these residues should be known to decide about their suitability as an alternative to fuelwood at a certain location. The competition with other end-uses of agro-residues, such as animal fodder and fertilizers, must also be accounted for.

Islam et al. (37) have, for example, estimated the availability of rice husk and bagasse in Thailand and concluded that these could be utilized as fuelwood substitutes in the brick-making, pottery and tobacco curing industries in certain regions of Thailand. Likewise Nanayakkara (16) has recognized the potential of utilizing coir dust from the coconut mills and paddy husk from the rice mills in briquette form in small rural industries including hotels and eating houses, provided the appropriate cheap technology is available to manufacture briquettes on a large scale.

Industrial plants with electricity operated machinery may be able to generate their own electricity using crop residues as fuels. One option is to use the biomass as a boiler fuel to produce high-pressure steam and then to use the steam in a turbine generator. The economics of power generation through a steam engine or a steam turbine system are much more favourable if the plant also uses steam to process heat. Another way of providing mechanical power by biomass is through thermal gasification. The biomass is converted to producer gas which can be used alone in spark-ignition engines or can be mixed with 10 to 20 % oil in diesel engines.

Most of the cottage/village enterprises and rural industries under consideration have, however, a primary need for thermal energy and in very few cases a need for shaft or electric power and thus, residue-fuelled steam boilers or gasifiers will not be a potential alternative to wood-fuelled combustion units.