Profitability of short-rotation biomass production on downy birch stands on cut-away peatlands in northern Finland

• Dense downy birch stands intended for energy biomass production can be established at low cost.
• Mean annual biomass production can exceed 3 t DM ha−1.
• Bare land value remained positive for all but the youngest stand, even with an interest rate of 5%.
• The profitability of biomass production is strongly influenced by the cost of harvesting.

The economic feasibility of short-rotation energy biomass production was evaluated from measurements on six naturally afforested 15–26-year-old downy birch-dominated (Betula pubescens Ehr.) stands in a former peat-production area in northern Finland. In the financial analysis, afforestation by natural or broadcast seeding was assumed, and the stands were regenerated by coppicing after the first, second, and third rotations. With respect to the first rotation, the sales revenues from whole-tree fuel chips covered their production costs in five cases out of six when a 21 EUR MWh−1 price for energy on delivery was assumed. The bare land value (BLV) was positive even with a five per cent discount rate in five cases, reaching a maximum of 995 EUR ha−1. With an interest rate of three per cent, for example, the break-even stumpage price for energy wood (assessed as the net present value of the first generation equal to 0) fluctuated between approx. 1 and 7 EUR per cubic metre, implying an economic surplus to be reached without subsidies in these cases. The unit price of energy (when bare land value equals 0) for the majority of the stands was well below the assumed price level, indicating noteworthy long-term financial incentives associated with the production.