Aug. 1, 2017 - Western Canada’s longest-running wood pellet producer is setting itself up for major growth next year.
By Andrew Snook
A few months ago, Pinnacle Renewable Energy announced that it plans to build an $85-million, 475,000-tonne wood pellet plant in Entwistle, Alta., a little over 100 kilometres west of Edmonton.
While I was initially surprised by the investment, the more I thought about it, the more I realized the potential dividends a plant like this could pay.
With an annual production capacity already over 1.5-million tonnes, Pinnacle Renewable Energy is one of the world’s largest producers of wood pellets.
By adding the 475,000-tonne capacity plant to its arsenal, Pinnacle is positioning itself to be able to handle increased demands in markets overseas in Asia and Europe.
This could prove vital if more and more countries take advantage of the carbon neutrality of wood pellets for heating – especially with so many countries agreeing to meet their emissions targets within the Paris climate accord.
Think about what would happen if, say, China decided to make wood pellets a more significant part of its renewable energy strategy?
In FutureMetrics’ Global pellet market outlook in 2017, written by William Strauss, he states that if China embraced co-firing of wood pellets, even at modest ratios, that it would increase demand significantly. In the article he writes, “…a five per cent co-firing rate, in 2020 if only 16 per cent of China’s coal power plants are co-firing, demand would be almost 40 million tonnes per year.”
And that’s just one country (granted, a huge one).
What would happen if several countries decided to walk the same path? Having an additional near half-million tonnes capacity would certainly be advantageous.
But the decision to build a massive wood pellet plant in Alberta doesn’t just position Pinnacle for growth. It protects the company’s current market share.
The allowable annual cuts for timber harvesting in British Columbia are declining in several areas, and with those declines comes sawmill closures and less available high-quality wood fibre.
By building a massive pellet plant outside of B.C., several hours away from some the most competitive areas in the country for high-quality fibre, Pinnacle’s new plant should give the company new opportunities to increase its fibre security in a cost-effective manner.
And if the company ever needed to temporarily shutter one of its B.C. plants due to fibre shortages, they could always make up the production in the massive Entwistle facility.
Don’t get me wrong, $86 million is a big investment, but with the way Pinnacle is positioning itself for the future, it looks like a pretty sound bet to me.