WPAC – Pellet consumption continues to rise
June 3, 2014
By Gordon Murray
The Argus Biomass Trading Conference in London, England, held annually in April, has gained a reputation as one of the “must-attend” gatherings of international power utilities
The Argus Biomass Trading Conference in London, England, held annually in April, has gained a reputation as one of the “must-attend” gatherings of international power utilities, traders, ports, terminals, ocean shippers, pellet producers, equipment manufacturers and other sectors of the international wood pellet industry. This year’s event lived up to its billing. About 15 WPAC members made the trip to London.
The European pellet market consumed 19 million tonnes of wood pellets in 2013 – 10 million tonnes in the heat sector, and 9 million tonnes in the power sector. The heat sector is growing at least as rapidly as the power sector. The average price of residential wood pellets has increased by about €40€ per tonne over the past two years, according to Christian Rakos of the European Pellet Council. The largest European producing countries are now Germany, Sweden, Latvia, and Portugal. The largest European consumers are the U.K., Denmark, Germany, and Italy.
The US south now has 4.5 million tonnes of annual pellet production capacity, with a further 3.0 million tonnes set to come on line. In contrast, Canadian production capacity has temporarily stalled at 3.2 million tonnes, although there are
several projects in the pipeline.
Julian Skinner of Eggborough Power reported that the company is now uncertain whether it will convert from coal to biomass. Unless the U.K. Department of Energy and Climate Change (DECC) makes new CfD funding, the Eggborough Power Station could close in the next year or so. Eggborough is continuing to press DECC for an investment contract. Julian predicts that coal power generation will be uneconomic within the next two years due to the new U.K. Carbon Price Floor.
Italy consumed 3.29 million tonnes of wood pellets in 2013, reported Paolo Perini of Mefisto Pellets, of which the heat market accounted for 90 per cent. The Italian government supports pellet stove installations via a 50 per cent cost rebate, which is administered through personal income tax returns. Presently, domestic pellet production accounts for just 20 per cent of Italian pellet consumption. This is due to the scarcity of feedstock and high-energy costs.
Eric Vial of Propellet France told the audience that French pellet consumption has now outpaced domestic production and France will now be importing pellets for the country’s 250,000 pellet stoves. Bagged pellets account for 66 per cent of the market, while bulk pellets account for 34 per cent. Within France there is a fleet of 130 dedicated pellet delivery trucks. France is set to follow Italy in terms of market growth.
Richard Smith of Verdo reported that the Renewable Heat Incentive is driving growth of the U.K. heat market. He expects that, for the first time ever, in 2014 the U.K. heat market will outpace domestic pellet production and that residential-grade pellet imports will be required. There are one million homes in rural U.K. not served by gas and they are prime targets for wood pellets.
Arnold Dale of Ekman predicted that European pellet consumption will be 28 million tonnes of wood pellets by the end of 2015 and 42 million tonnes by the end of 2020. In comparison, Korea and Japan will consume three million tonnes by 2015 and seven million tonnes by 2020. Japan is the most difficult to predict because of its uncertain policy environment. Russia is best situated to supply Asia with pellets, but investment will likely remain stalled until the political environment is stabilized.
Although the biomass power sector is on the right track with its positive engagement strategy, it must remain vigilant by maintaining stakeholder communication as a high priority.
Conference delegates learned a great deal over two days of presentations, and the experience was significantly enhanced by the opportunity for face-to-face meetings with many of the most influential members of the international wood pellet industry.
Gordon Murray is executive director of the Wood Pellet Association of Canada. He encourages all those who want to support and benefit from the growth of the Canadian wood pellet industry to join. Gordon welcomes all comments and can be contacted by telephone at 250-837-8821 or by email at firstname.lastname@example.org.
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