Profitability of willow cultivation for energy production in Finland

This paper focuses on short rotation willows as a potential renewable energy source in Finland. The aim of the study was to evaluate the profitability of willow cultivation for energy production in Finland. The specific objective was to analyze the effects of selected cultivation costs, land rent, interest rate and subventions on the profitability of cultivation on private farms. In this study the traditional NPV (Net Present Value) method was chosen, which is also supported by an IRR (Internal Rate of Return) analyses and the calculation of B/C-ratios (Benefit-Cost-Ratio). The basic growth and yield data used in this study are based on results from several experimental willow plantations in Finland. The profitability calculations are based on those cultivation and harvesting systems which are seen to be most likely in Finland in the early stages of commercial willow cultivation. Without any subventions, the minimum profitable energy price required was about 130 FIM MWh−1, when the average yield level was 8000 DM ton ha−1yr−1. The average price for wood energy at the moment is around 60 FIM MWh−1. In conclusion, the results of this study resemble those in other Nordic countries; subventions are needed to make willow cultivation profitable for private farmers when using available machinery and existing energy price levels. However, willow cultivation seems to be competitive in comparison with most other agricultural energy plants.