Factors behind the development of forest chips use and pricing in Finland

In this study, factors were analysed that had an effect on the development of forest chips use and mill gate price from 2007 to 2016 in Finland. During this period the average price of forest chips has increased by 66% from 12.66 € MWh−1 to 20.69 € MWh−1. The competitiveness of forest chips use was the result of different incentives, price and taxation of competing fuels such as peat and fossil fuels, and the price of emission allowances. The sliding premium tariff bound to the price of emission allowances and excise tax of peat fuel had a straightforward effect on the price formulation of forest chips. During the reference period, both incentives and taxation levels were updated several times to implement the national objective set by the EU on increasing the utilisation of renewable sources. The future demand of forest chips is dependent on the price development of emission allowances and electricity. Their current low price has become a significant threat to CHP-plant investment activity. Policy regulation is needed to enable bioenergy CHP investments, which will also secure energy infrastructure and energy security in the future in Finland.