Pellet power moves closer to profit, EU says

Mar. 29, 2011, Perpignan, France – The
European Union directorate general for energy says that thermal power
generation from industrial wood pellets moved to its closest point to
profitability in the latest recorded period. In the third quarter of 2010, the
EU says that biomass spreads on the German market remained “negative, implying
that without any supportive measures, it was still unprofitable to sell power
generated from biomass and wood pellets.” However, the EU says the spread moved
to its closest point to a positive value since the organization started
tracking biomass values. The closing of the profit gap for biomass centred
around the fall of pellet prices plus freight to €72.50/MWh ($102/MWh) at the
end of the period, set against €75.5/MWh at the start.

“This input cost reduction combined with
base-load power prices amounting to almost €50/MWh by the end of September
resulted in the highest biomass spreads measured,” it says.

The EU spreads cost the difference between
the spot price of electricity plus carbon emissions against the price of
industrial wood pellets delivered to the Port of Rotterdam, the Netherlands.
The spreads do not include operational or maintenance costs, but do include the
transport costs of shipping the pellets along the Rhine River.

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