Sawmill waste disposal
There are many possible solutions, but the comparisons have to be done for your circumstances.
If you debark before milling and the species is right, you can sell pulp chips if you use a disc chipper and screen for size. Making shavings, drying and bagging for animal bedding is another option. Either path requires significant capital equipment.
If there's bark on, you can hog or tub-grind and mix with fresh manure or sewage sludge (or other source of nitrogen) in the right proportions and compost it. If you can charge tipping fees for the nitrogen product, and if you have a good market for topsoil amendment, you have a good chance at making a modest profit at the volume you're talking. If you can increase the volume through tipping fees for diverting yard waste from the local landfill you will have a better chance of paying its way. Read the regulations on this kind of thing. Some composters are having problems with percolate contamination, so you might have to use a contained system like Ag-bag. If sewage sludge is the feedstock, you have to test for heavy metals, etc. before selling the product for domestic use. It also requires special handling techniques. Lots of basic biochemistry to learn for composting.
Electrical energy production is hard to make work at this size, but there are some very promising developments happening. Sign on the Wastewatts list (http://groups.yahoo.com/group/wastewatts) to get into a community of bioenergy innovators. The best prospects are micro CHP (combined heat and power). A gasification burner can be used to fuel a diesel genset with the waste heat to your kilns or greenhouse or something. Your gasifier can also generate steam for a small steam turbine but again, at this scale, the money is hard to justify without a waste heat load.
Check out your federal programs for assistance because there are various renewable energy incentives, depending on where you are.
Be prepared to spend a good deal of time researching your options. Many people will say you are too small to turn a profit at it. But you have to look at the big picture of your operation. Can you gain extra returns on your lumber product if your clients know of your drive for zero waste? What would be the disposal/environmental cost otherwise? Can you increase employment by doing something unusual like mushroom cultivation? People have fired pottery with wood for 8000 years. Slabs (with bark, no less) are perfect for high-end art potter's fires.
I am currently looking at firing a bronze casting furnace with my moulder shavings. Behind every obstacle is an equally large opportunity. Be creative with it and it will reward you.
I would (and will) opt for power generation with a steam engine. Not only do you get AC or DC power, you also have the exhaust steam/heat (many k's BTU's) for heating water, your house, kiln, bending wood, etc.
Sensible Steam has units ready to use, which produce 500 watts and up. They also sell individual components.
The first thing you should look at is the reduction of the waste stream to make it as small as possible. Wood is still more valuable than any other byproduct, so make sure that you are as efficient as possible in recovering every last piece of solid wood.
The biggest issue in recovery is the marketing of parts and pieces and the ability to add value to the material that you have.
Is your byproduct mostly going to be bark and particularly nasty scrap or are you going to be producing shorts, trims, edgings and slabs with some solid wood trapped within? If the later is the case there are many technologies available to recover this material. Look at your waste stream, look at the volume of the various points of generation and determine if there is still good wood there. Keep your mind clear of how to get the wood out of the piece at first.
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