Economic sustainability of pellet production in Latvia

This paper emphasizes and evaluates the energy sector, which uses low quality wood. The main aim for this research study was to build a framework to analyse the development options for wood pellet production. A system dynamics model was created of energy wood supply, processing and consumption. Production capacity, energy consumption, technology efficiency, required labour, the price of wood, energy and labour are all taken into account. Validation and verification tests with available data and information have been carried out. These indicate that the model constitutes a viable dynamic hypothesis.