Vapo to bring the Ilomantsi pellet plant online and begin recruiting personnel immediately
Markus Hassinen, Director of Vapo’s Heat and Power business area, is very pleased to see the power plant and pellet manufacturing plant brought back online. The decision was facilitated by an amendment to the terms of the district heating business lease agreement between Vapo Oy and Ilomantsin Lämpö Oy, as well as the increase in domestic demand for pellet.
Under the previous contract terms and using the old boilers, district heating produced for Ilomantsi was unprofitable for Vapo. Without the energy requirement of the pellet plant, the relatively new power plant on the same plot of land could not be used. Heat had to be generated using two smaller boilers nearing the end of their life cycles, which use up oil at a high rate, particularly when the boilers are run at top capacity.
Under the new agreement, the price of district heating in Ilomantsi will increase gradually between now and the end of next year. However, the price of district heating for key consumer groups will remain under the Finnish national average. “Under this new agreement, everyone wins,” Hassinen says. “We will not have to generate heating at a loss using old boilers, and we will be able to take advantage of our unused production resources. The reliability of energy generation will improve, and Ilomantsi will benefit from new jobs and tax revenue,” Hassinen adds.
According to Hassinen, the direct employment effect of the integrated power plant and pellet manufacturing plant is seven new jobs at a minimum. The fuel supply chain will additionally employ an estimated 20 people, and there are also positive employment effects related to the pellet plant’s end product logistics. Vapo will also purchase maintenance services to meet the requirements of the power plant and pellet manufacturing plant.
According to Markku Lappalainen, Municipal Manager of Ilomantsi, the municipality has sought various solutions to continue production at the pellet plant in Ilomantsi. “To evaluate our alternatives, we partnered with Josek Oy, with funding provided by the Regional Council, to produce a comprehensive survey of pellet’s usability, markets and development prospects. The survey supported the decision we have now made,” Lappalainen explains.
Lappalainen says the goal of Ilomantsi municipality is to increase the use of domestic and local raw materials for heating energy. Lappalainen is pleased that the active negotiations held over a period of more than a year have led to a result that has such a positive impact on employment in Ilomantsi and entrepreneurship in the forestry industry. “This solution strengthens trade and industry in Ilomantsi, but it also creates an increasingly acute need to upgrade road and rail infrastructure,” Lappalainen says.
According to Olli Summala, Managing Director of Ilomantsin Lämpö Oy, the company has investigated several different alternatives for generating district heating energy. “Based on our analyses, all of the available alternatives would, regrettably, lead to an inevitable increase in the consumer price of energy.” Following a comprehensive survey and instructions issued by its majority owner, Ilomantsi municipality, the Board of Directors of Ilomantsin Lämpö Oy decided on 18 June 2014 to approve an amendment to the agreement concluded with Vapo Oy in 2003. The amendment will lead to a gradual increase in the price of district heating. The consumer price of district heating in Ilomantsi is currently among the lowest in Finland. The energy price is approximately 30% below the Finnish average,” says Olli Summala, Managing Director of Ilomantsin Lämpö Oy.
Vapo will immediately begin recruiting the necessary personnel for the power plant and pellet manufacturing plant with the aim of having the integrated plant online in autumn 2014. The raw material for the pellet plant will be primarily sourced from Vapo’s sawmills in Lieksa and Nurmes. The target pellet production volume is approximately 40,000 tonnes in 2015.
Further information:
– Markus Hassinen, Business Area Director, Vapo Oy, tel. +358 40 159 03 14
– Olli Summala, Managing Director, Ilomantsin Lämpö Oy, tel. +358 40 104 3301
– Markku Lappalainen, Municipal Manager, Ilomantsi municipality, tel. +358 40 104 3001