Case Study: FutureMetrics reduces wood-price risk and quantifies ROI with Palisade's @RISK

FutureMetrics Uses @RISK to Hedge Wood Prices in Production of Burning Wood Pellets

FutureMetrics, a consultancy specializing in biomass thermal energy economics, faced the challenge of accurately estimating wood costs and hedging volatile wood prices—one of the biggest drivers of ROI for wood pellet projects. To quantify that uncertainty and test hedging strategies, FutureMetrics used Palisade’s @RISK to model price behavior and its impact on project cash flows.

Using Palisade’s @RISK, FutureMetrics built econometric and Monte Carlo simulations with distribution fitting and tornado-chart sensitivity analysis to compare hedged vs. unhedged outcomes. The analysis showed a median ROI of 25.14% over 20 years and only a 9% chance of negative NPV for a 300,000‑ton/yr plant, and demonstrated that an aggregator’s mean expected loss fell from $143.9M (89.5% chance of loss) to about $18,000 when hedged—delivering clear, measurable risk reduction via Palisade’s solution.

Futuremetrics

William Strauss

President and Founder