PELLET MARET OVERVIEW · 2016-11-07 · PELLET MARKET OVERVIEW A N EXTRACT OF THE AEBIOM...

PELLETMARKETOVERVIEW

2016European Bioenergy Outlook

© 2016 European Biomass Association (AEBIOM)All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written per-mission of the publisher. For permission requests, write to the publisher, addressed “Attention: Permission use AEBIOM European Bioenergy Outlook” at the address below, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law.

European Biomass Association Place du Champ de Mars 21050 BrusselsT : +32 2 318 40 [email protected] www.aebiom.org

List of

Contributors

This report was commissioned by AEBIOM & EPC:

RESEARCH DIRECTION AND LEAD AUTHORSHIP

Gilles GauthierJean-Marc JossartCristina Calderón

RESEARCH SUPPORT

Prakriti Archambeau

COMMUNICATION

Antonino AveniJean-Baptiste Boucher

CONTRIBUTORS

Annalisa Paniz (AIEL), Laura Baù (AIEL), João Ferreira (ANPEB), Pablo Rodero (AVEBIOM), Rachael Levinson (Argus), Ludmila Wach (BAPE), Markus Hartmann (BBE), Hannes Tuohiniitty (Bioenergia), Ladislav Zidek (Biomasa), Rens Hartkamp (Biomass Consult), Ben Bell Walker (BTEC), Raoul Cvecic Bole (Croatian Biomass Association), Vladimir Stupavsky (CZPC), Matt Willey (Drax), Peter Kofod Kristensen (DONG Energy), Arnold Dale (Ekman), Brett Hogarth (ECOSTRAT), Hylko Brandsma (Energy Pellets Moerdijk b.v.), Yves Rykmans (ENGIE), Branko Glavonjic (Faculty of Forestry University of Belgrade), Nikos Damatis (HELLABIOM), Anders Evald (HOFOR), Ken Kojima (Japan Pellet Club), Didzis Palejs (LATbio), Guna Rasa (LATbio), Vilma Gaubyte (LITBIOMA), Viktorija Kazlauskaite (LITBIOMA), Bengt-Erik Löfgren (Pelletsförbundet), Stefan Ortner (ÖkoFEN),Christian Schlagitweit (ProPellets AT), Martina Caminada (ProPellets CH), Ronnie Kristensen (ProPellet DK), Eric Vial (Propellet FR), Frank Aaskov (UKPC), Benoît Helsemans (Recybois), Catalina Parau (Romanian pellet and Briquettes Association), Nike Krajnc (Slovenian Forestry Institute), Joachim Colliander (Stora Enso), Thomas Isakson (Stora Enso), Gustav Melin (SVEBIO), Sofia Backéus (SVEBIO), Anton Egor Voronov (Russian Pellet Index), Viktor Kobets (Ukrainian Pellet Union), Pierre Martin (ValBiom), Brodie Vogan (Voyage Power), John Arsenault (WPAC), Andrew Lang (WBA)

Members

Observing members

The European Pellet Council (EPC) is an umbrella organisation of AEBIOM founded in 2010, aiming at representing the interests of the wood pellet sector and at ensuring its sustainable development at European level. EPC members are made up of 18 national pellet associations and related organisations, from 17 countries and 3 observing members.

EPC’s objective is to manage the transition of pellet from a niche product to a major energy commodity. To achieve this general purpose, EPC activities include an important participation to the standardisation and certification of pellet quality, communication and public affairs efforts, the development of key sectoral statistics and education and training seminars around issues of safety, quality and security of pellet supply. EPC also coordinates the ENplus quality certification and constantly adapts this system according to market needs.

For more information on the European Pellet Council, visit www.pelletcouncil.eu

For more information on the ENplus certification, visit www.enplus-pellets.eu

About the

European Pellet Council

A word from the President

Over the past 12 months, the European pellet industry has once again went through a complex time. Poor economic conditions, overproduction, mild winters, low fossil fuel prices, and a decline in public support are among the critical issues faced across Europe. Despite these circumstances, in the last year EU-28 pellet consumption increased by 7,8%, with an increase in heating of 4,2 % and 14,9 % in electricity, showing the vitality of the industry.

Hard times are a good time to consider the challenges to overcome. As such, I believe the pellet sector will have to address 4 key issues:

The first issue is technical, requiring to further pursue improvement of efficiency and quality in pellet production, of logistics and of heating appliance efficiency and technologies. This will not only create fewer emissions, but allow for extended ranges, giving consumers the convenience of smaller appliances.

Secondly, from a market standpoint, we must reinforce our actions in our current markets but also target underestimated markets such as the medium scale to extend pellet market’s share.

Thirdly, we have to realise the necessity of investing in efficient, fresh communication strategies that not only influence public perception, but gain visibility to current and possible pellet users in order to grow the sales in the pellet sector.

Lastly, from a political point, the past several months have seen large incentives from national governments showing their limits while in the meantime, uncertainty in ongoing debates at EU level on bioenergy future raised new questions. Advocating pellets benefits towards national and EU policy makers is key while working on the development of public support which could provide stable and long term vision is essential.

To overcome these challenges, each of us has to adjust his practices locally. However, I am convinced that we should also act and find solutions collectively at national level as well as European level, where pellets have been the main focus of attention over the past months. Bringing stakeholders together to work on technical improvements, communicating on the pellet industry benefits and showing commitment towards key stakeholders are among the key EPC and AEBIOM missions. This is high time to act together for the sake of the future of the European Pellet Industry, so join us! I hope you enjoy reading the insight on the 2016 European pellet market, which can be seen as one of the concrete actions we could only achieve collectively. In this regard, I would like to warmly thank all EPC members, experts and organisations that agreed to share the most updated national market information to create a greater knowledge of the sector at European level.

IN THE LAST YEAR EU-28 PELLET CONSUMPTION IN-CREASED BY 7,8%, WITH AN INCREASE IN HEATING OF 4,2 % AND 14,9 % IN ELECTRICITY, SHOWING THE VITALITY OF THE INDUSTRY.

Eric Vial, PresidentEUROPEAN PELLET COUNCIL

Foreword 5

8.1 Overview of world pellet sector 7

8.1.1 World pellet production 7

8.1.2 World pellet consumption 8

8.1.3 World pellet trade 11

8.2 Situation in Europe 12

8.2.1 European wood pellet production 12

8.2.2 European non-wood pellet production 21

8.2.3 European wood pellet consumption 22

8.2.4 European wood pellet trade 36

8.2.5 European wood pellet price 41

8.3 Latest developments of ENplus certification 46

8.4 Annexes 48

Table of

Contents

2016 PELLET MARKET OVERVIEW AN EXTRACT OF THE AEBIOM STATISTICAL REPORT

7

8.1 OVERVIEW OF WORLD PELLET SECTOR

WORLD PELLET PRODUCTION Global pellet production continues to expand year after year, amounting to 29,8 million tonnes of pellets produced in 2015 with a growth of 10%. With 14,1 million tonnes produced, the EU remains the biggest producer, accounting for nearly 50% of world pellet production. Production increased again in North America, while Russia & CIS and Asia (mainly Thailand, Vietnam, and Malaysia) have shown the highest growth in global production. 2015 also saw the emergence of new areas in pellet production, with South America showing a growing production, specifically in Brazil and Chile. Figure 8-1 World pellet production overview 2000-2015 (million tonnes)

Source: EPC survey, IEA Bioenergy Task 40 Figure 8-2 World wood pellet production shares in 2015 (percentage)

Source: EPC survey

1,7 2,2 2,6 3,0 4,05,2

7,69,7

11,7

14,515,7

18,321,0

0

5

10

15

20

25

30

35

Rest of world

Rest of Asia

China

Russia & CIS

North America

Other Europe

EU28

EU2848%

Other Europe2%

North America31%

Russia & CIS7%

China5%

Rest of Asia5%

Rest of world

2%

24,5

27,1

29,7


8

WORLD PELLET CONSUMPTION Responsible for around 80% of the world’s wood pellet consumption with 20,3 million tonnes, the EU remains a massive pellet consumer. The overall growth of pellet use has been close to 8% from 2014 to 2015, which is significantly higher than the 1% increase recorded during the last period (2013-2014). With 14.1 million tonnes of production, the EU supplies 70% of its pellet use.

The use of pellets for electricity production (from CHP and dedicated power plants) in the EU has shown a noticeable increase of almost 15% mainly due to the United Kingdom and Belgium. The use of pellets for heat (from CHP, domestic and commercial appliances) remains a strong sector, but has seen a slowdown in the last years with only a 4% growth from 2014 to 2015. This slowdown is largely due to external reasons that will be discussed further in this report. Most of North America faced a warmer heating season in 2015, leading to a drop in pellet consumption. With 2 million tonnes used for heat (mostly domestic heat), the US pellet consumption remains important, making it one of the largest pellets users outside the EU and one of the 10 largest pellet users worldwide. Its use could dramatically increase should the US convert their coal-fired power plants to pellets in the frame of the Clean Power Plan, but this seems rather unsure. Beside the European and North American markets, the Asian market is growing and has quickly become a significant pellet user, in particular Japan and South Korea. South Korea has a lack of natural energy resources which means it is almost entirely dependent upon imported fuels. South Korea’s Renewable Portfolio Standard, which requires the use of renewable electricity, is resulting in a dramatic increase of industrial pellet use in a very short period of time.

Figure 8-3 World pellet map and tradeflow (in 2015, million tonnes)


9

Figure 8-4 World wood pellet demand in 2015 - power, CHP and heating (million tonnes)

Source: EPC survey

Figure 8-5 Distribution of world wood pellet consumption in 2015 (percentage)

Source: EPC survey

0

2

4

6

8

10

12

14

16

Power CHP Heating (domestic andcommercial)

Rest ofthe worldAsia

OtherEuropeRussia &CISNorthAmericaEU28

EU2880%

North America9%

Asia8%

Other Europe2%

Russia & CIS1%

8,7

1,8

14,8


10

Figure 8-6 Top 10 wood pellet consuming countries by end-use in 2015 (million tonnes)

*2015 projection in 2015 survey Source: EPC survey

0

1

2

3

4

5

6

7

8

UK IT DK DE* US SE BE FR AT ES CA

Heating

CHP

Power

3,1

2,2 2,0 1,71,3

0,90,3

Oversupply, stagnant demand and falling prices has been the theme of the past year in the industrial wood pellet market. We witnessed increased production in North America, the Baltic region and now Russia that far outpaced new demand streams in Europe. The emergence of Russia as a growing supplier also arrived at a slightly unwelcome time from the perspective of other supply regions, adding low priced pellets into an already bearish market. The Argus spot index for delivery into Europe was USD$118.80 per tonne on 21 September 2016, a notable slide from the USD$161.90 per tonne recorded in September 2015. However despite the current negativity, we believe it is only a hiatus and the forecast from 2018 onwards looks stronger from a demand perspective. New plants and increased co-firing from Scandinavia, the Netherlands and the UK should add in excess of five million tonnes of new demand in Europe. Outside of Europe, the Asian market continues to gather pace and grow at a rapid speed. The Korean co-firing market is now consuming over two million tonnes of pellets each year. The vast majority of supply is imported from Vietnam at around the USD$100 per tonne on a delivered basis, which makes it challenging for producers from other regions to compete. In contrast, the Japanese market offers strong reasons to be optimistic about the future of biomass and wood pellets. Co-firing of wood pellets alongside coal already exists but the country has vast plans for a spate of new dedicated biomass plants that should conservatively add at least three million tonnes of new demand by 2020. The Japanese adhere to European standards on sustainability that should ultimately lead to large imports from North America, Russia and perhaps even the Baltic region.

Brodie Govan

Voyage Power Biomass Broker

5,9

2,3

0,8 0,4


11

WORLD PELLET TRADE The EU produces 14,1 million tonnes but consumes 20,3 million tonnes, making it the largest pellet importer in the world. The imported pellets are mainly sourced from North America but Russia & CIS countries are gaining importance in EU pellet supply.

The trade from North America1 to the EU has slightly increased from 5,15 million tonnes in 2014 to 5,76 million tonnes in 2015.

The imports from Russia & CIS countries to the EU have increased around 25% from 2014 to 2015 to reach 1,19 million tonnes. These pellets are mainly used for commercial heating appliances and CHP, but also partly for the domestic market.

South-East Asia, in particular Japan and South Korea, is the second largest pellet importer in the world which was previously sourcing a large part of its pellets from the West coast of Canada, but has almost entirely switched to Thailand, Vietnam and Malaysia.

1 Based on Hawkins Wright data


12

8.2 SITUATION IN EUROPE

EUROPEAN WOOD PELLET PRODUCTION With 14,1 million tonnes of pellets produced in 2015, the EU is the largest producer in the world amounting to nearly 50% of global production. The EU production has shown a continuous expansion over the years even though recent growth tends be less impressive with 4,7 % growth in 2014-2015 period. As a large portion of the EU pellet production is used in the heating market, it has been impacted by the market slowdown due to the mild winters and others factors including the low price of fossil fuels (e.g. heating oil), competition with other technologies and the declining sales of pellet heating appliances. As a consequence, a significant portion of producers located in countries with a great use of pellets for heating have overproduced in 2015, resulting in overstock for 2016.

But the situation differs significantly from country to country. Germany remains the biggest producer with 2 million tonnes produced in 2015, followed by Sweden with 1,6 million tonnes and Latvia which is showing a boom in production with more than 1,5 million tonnes. The Baltic states are investing heavily in the pellet sector, as Estonia is also witnessing a strong increase in pellet production, ranking 4th in the top 5 EU producers. Austria remains a strong pellet player with 1 million tonnes in 2015. Figure 8-7 Overview of European wood pellet production in 2015


13

Figure 8-8 Main EU countries' wood pellet production in 2013-2015 (million tonnes)

*2014 data Source: EPC survey

Figure 8-9 Trend of wood pellet production in 2010-2015 for 10 largest producers of EU28 (million tonnes)

Source: EPC survey

2,00

1,701,50

1,30

1,00 0,950,90

0,48 0,42 0,40

0,0

0,5

1,0

1,5

2,0

2,5

DE SE* LV EE AT FR PT ES RO IT

2013

2014

2015

0,0

0,5

1,0

1,5

2,0

2,5

2010 2011 2012 2013 2014 2015

DE

SE

LV

EE

AT

FR

PL

PT

ES

RO


14

Some countries showed a continuous growth or a flattening in production over the 4 last years: Figure 8-10 Countries experiencing continuous growth in 2012-2015 (million tonnes)

Source: EPC survey

Czech Republic: The production in Czech Republic is showing a continuous growth mainly due to the increase of

the export demand but also thanks to the growing local demand for domestic heating. New production plants have been recently built in the Czech Republic.

Croatia: The Croatian production is expanding over the years with a clear export profile showing the vast majority of these pellets being used in Italy. The raw material availability is progressively creating some concerns without affecting the production yet.

Estonia: Estonia had a limited pellet production a few years ago but very quickly became the 4th largest EU pellet producer and the 2nd biggest EU pellet exporter in 2014. The production has boomed in Estonia thanks to very high wood resources, good localisation (Baltic sea) and logistic (harbour), flexible wood industry and low working costs. The growth of industrial pellet demand in the EU is the main market driver. Big investments have been made with new plants being built and the capacity of existing plants being increased. Estonia clearly presents a huge potential for future growth but the current slowdown in EU demand will require the volumes to be adapted while the long term perspective for EU demand and Estonia growth is still very optimistic.

Italy: Despite the current slowdown in consumption, Italy remains the world’s biggest domestic pellet user. Regarding the local pellet production, Italy has most likely reached its peak because of a lack of raw material. Italy shows a rather high forest potential, but extraction is complex due to the limited accessibility of this wood, making any future noticeable growth of local pellet production very unlikely.

Latvia: Very similarly to Estonia, the pellet production in Latvia boomed making the country the 3rd largest pellet producer and the biggest exporter in the EU. The high raw material availability is attracting investment in the sector with new plants being built and capacity of existing plants being increased. The new plants are mostly built inland as the raw material in these areas is under less competition with the pulp and paper industry as the longer transportation distances are compensated by the high energy density of pellets. As for Estonia, Latvia clearly shows a huge potential for future growth but the current slowdown in EU demand will require the volumes to be adapted while the long term perspective for EU demand and Estonia growth is still very optimistic.

Netherlands: Despite the new ISDE subsidy scheme which will grow the pellets used for heat in Netherlands, the local production will only show a modest growth mainly due to the limited raw material resources.

Poland: Pellet production in Poland showed a strong development over the last years. New plants have been built lately and some existing plants have increased their capacity. The availability of raw material is currently affecting small and medium producers. The production doesn’t seem impacted by the crash of green certificate market in Poland as wood pellets are not used in these facilities but only agropellets.

1,66

1,50

1,31

0,87

0,48 0,400,30 0,28 0,24

0,11 0,10

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

1,8

SE LV EE PL ES IT NL CZ HR SI SK

2012

2013

2014

2015


15

Spain: As for all countries producing pellets mainly for the heating sector, Spain has been impacted by a third consecutive mild winter. Unfortunately, besides these unfavourable conditions, 15 new producers have popped up over the last 15 months. This situation is generating overstock which requires the producers to adapt their production.

Slovakia: The production has shown an important growth in Slovakia partly due to a growth of local use. Sweden: The pellet production of the second largest EU pellet producer has significantly fluctuated in the past

mainly due to the variable local pellet consumption. But for four consecutive years, Sweden has seen its production growing, reaching in 2015 the highest production ever recorded. It can be observed that Sweden was mainly producing pellet for local use but is gradually developing its export over the years. A new plant showing an interesting business model has been built in 2015. Indeed, this plant, using a CHP fuelled with waste, will produce heat for district heating during the winter and will only produce pellets during the summer, using heat from the CHP when there is no domestic heat demand.


16

Some countries showed a fluctuating development or even faced some decrease over the 4 last years: Figure 8-11 Countries experiencing fluctuating or declining production in 2012-2015 (million tonnes)

Source: EPC survey

Austria: Having shown an intense growth in the early stages of the pellet sector, the Austrian pellet production growth has recently plateaued mainly due to the limited availability and the high price of raw material coupled with lower pellet demand. Additional production plants might appear in the future if pellet prices show more favourable trends. As for the majority of the EU countries, the warm winter and other unfavourable market conditions have decreased the pellet consumption and the production decreased to adapt this.

Belgium: The production capacity has strongly increased since 2007 in Belgium. Nowadays, despite having a rather high use of industrial pellets, Belgium is still suffering from overcapacity as the sourcing of these pellets has progressively moved to North America exclusively. All the Belgian producers are then targeting the heat sector (domestic and commercial) which is unfortunately slowing down mainly due to the mild winter. This situation has also created some overstock for some producers. The raw material availability and the competition for its use is a growing concern for Belgian producers.

Denmark: Despite scarce raw material availability, the Danish production is growing thanks to a recent production plant partly sourcing raw material from outside Denmark.

Finland: the production has slightly decreased to adapt the current lower demand. The long term perspective for the Finnish market is still positive thanks to the pellet use with pellet peak up plants and a growing a midscale sector.

Germany: The production has grown over the years making Germany the biggest EU pellet producer. This evolution is mainly due to the growing local use of pellets even if Germany exports a part of its production to other EU countries. The production has slightly decreased in the last years to adapt to the levelling consumption due to the recent unfavourable conditions. The production is not foreseen to grow dramatically in the coming year showing a certain maturity of the German sector.

2,00

1,00 0,950,85

0,420,32 0,30 0,30 0,30

0,15

0,0

0,5

1,0

1,5

2,0

2,5

DE AT FR PT RO BE FI UK LT DK

2012

2013

2014

2015


17

France: Over the last years, France has witnessed a dramatic increase of its production to cope with the growing local consumption. Despite the current unfavourable conditions, the production capacity is still growing while the actual production is adapting to the slowdown of pellet use. The potential for raw material remains high, signalling a bright future for further production expansion.

Lithuania: The third Baltic country is not witnessing the same boom as for Latvia and Estonia, but is seeing some additional investment being made. In 2017, two new plants, for an overall capacity of 220.000 t/annum will start producing pellets.

Portugal: Having shown a continuous growth from 2010 to 2015 Portuguese pellet production witnessed a considerable contraction explained by the high prices of raw material and the low pellet price at European level. Producers have adapted this situation by reducing their production.

Romania: The production has grown quite drastically over the last years but has slowed down in 2015 due the unfavourable conditions as Romanian pellet production is exported to domestic heat markets.

United Kingdom: Despite a limited raw material potential the United Kingdom, production increased the last year before experiencing a slowdown in 2014 followed by an increase in 2015 most likely due to an encouraging growth in pellet use where the Renewable Heat Incentive subsidy scheme had a very positive impact. The recent changes in this scheme will certainly affect boiler sales and hence the further growth of pellet production.

Within the data collection ran by EPC, the partners2 have identified main raw material used for pellets production in Europe. Three categories have been defined: Primary feedstock = Roundwood and harvesting residues (i.e. wood extracted for pellets production.) Secondary feedstock = any by-products from wood industry e.g. sawdust, shavings, etc. Tertiary feedstock = any used wood

For the five biggest producers in EU, the vast majority of pellets are made of residues followed by roundwood and used wood.

Figure 8-12 Estimate of raw material types shares per European country (percentage)

Source: EPC survey

2 For this survey, only the national pellet associations were consulted. Not all of them have consulted their local producers.

0

10

20

30

40

50

60

70

80

90

100

AT CZ DE DK EE EL ES FI FR LT LV NL PT SE SI AL BA CH ME RS

Primary feedstocks Secondary feedstocks Tertiary feedstocks


18

Table 8-1 European wood pellet production in 2015 compared to 2014

2014 2015

Number of operating

production plants

Production capacity (in

tonnes)

Actual production (in tonnes)

Number of operating

production plants

Production capacity (in tonnes)

Actual production (in tonnes)

EU28 554 17.923.700 13.484.274 645 21.689.175 14.114.675

AT 37 1.478.000 945.000 37 1.481.000 1.001.000

BE 12 760.000 395.000 12 760.000 320.000

BG 40 400.000 150.000 40 400.000 150.000

CY na na na na na na

CZ 19 300.000 210.000 22 380.000 280.000

DE 54 3.200.000 2.100.000 54 3.200.000 2.000.000

DK 5 250.000 80.000 5 250.000 150.000

EE 16 1.280.000 995.000 18 1.440.000 1.308.500

EL 6 130.000 36.000 14 130.000 40.000

ES 64 1.125.000 410.000 79 1.250.000 475.000

FI 27 630.000 330.000 28 623.500 302.000

FR 45 1.600.000 1.030.000 50 1.800.000 950.000

HR 7 240.000 220.000 16 300.000 240.000

HU na na 3.140 na na 3.140

IE 1 40.000 31.000 na 40.000 31.000

IT 24 325.000 300.000 30 450.000 400.000

LT na na 250.000 10 350.000 300.000

LU 1 50.000 50.000 1 50.000 50.000

LV 23 1.480.000 1.320.000 27 1.750.000 1.500.000

MT na na na na na na

NL 7 350.000 300.000 7 350.000 300.000

PL 50 1.050.000 870.000 50 1.050.000 870.000

PT 26 na 1.000.000 26 1.941.875 850.000

RO 22 750.000 430.000 22 750.000 420.000

SE 67 2.285.700 1.576.910 65 2.236.185 1.662.525

SI na na 100.000 14 130.000 110.000

SK 10 200.000 100.000 10 200.000 100.000

UK 4 na 252.224 8 376.615 301.510

Other Europe

AL 6 8.000 4.900 8 33.000 28.000

BA 32 296.000 206.000 33 305.000 213.000

CH 24 280.000 160.000 24 280.000 160.000

ME 1 5.000 4.000 2 30.000 31.300

NO na na 56.500 na na 56.500

RS 60 450.000 250.000 56 485.000 229.650

UA 172 1.200.000 510.000 172 858.000 585.900 Source: EPC survey The full table including all countries outside Europe is available in the Annexe of this report.


19

A consultation has been carried out for the partners3 to identify the main markets for the pellets produced in each European country. Two main categories were identified: countries mainly producing pellets for the heating market (domestic and commercial), and countries mainly producing pellets for industrial use. Latvia, Estonia and Portugal are the only countries mainly producing for industrial use. The remaining countries are producing from a “50-50” split for industrial use and for heating until producing exclusively for heating. The total EU production is mostly dedicated to the heat sector with an 80% share.

This distribution may change for certain countries:

In Belgium, a large part of the production was dedicated to a local use in power plants from 2007 to 2011. However, utilities have increasingly sourced their pellets from abroad (mainly from North America). Consequently, Belgian producers have switched to the domestic heating market creating a severe overcapacity.

The situation in Portugal is also changing with a growing proportion of pellets dedicated to heat, as well as in neighbouring countries such as Spain.

Figure 8-13 Estimate of European national wood pellet producers’ main markets by end-use in 2015 (percentage)


3 For this survey, only the national pellet associations were consulted. Not all of them have consulted their local producers.

0

10

20

30

40

50

60

70

80

90

100

AT BE* CZ DE DK EE EL ES FI FR IT LV NL PT RO SE SI AL BA CH ME UA RS

Small scale domestic appliances (<50 kW) Commercial appliances (>50 kW) Power plants/CHP


20

The main concerns of EU pellet producers4 have also been collected. When comparing the results from 2013, 2014 and 2015 one can observe clear trends. In 2013 the lack of demand was a minor concern but grew over the year to become the biggest concerns confirming that the current unfavourable market conditions are heavily impacting European producers. The competition with importers is again gaining importance in 2015. The fierce competition and price war that has been reported by some market players confirm the results of this survey. The availability and price of raw material are losing importance as the main concern of pellets producers is to be able to sell product and avoid overstock. Figure 8-14 European wood pellet producers’ perception of the main difficulties in 2013 (percentage)

Source: EPC survey

Figure 8-15 European wood pellet producers’ perception of the main difficulties in 2014 (percentage)

Source: EPC survey Figure 8-16 European wood pellet producers’ perception of the main difficulties in 2015 (percentage)

Source: EPC survey

4 For this survey, only the national pellet associations were consulted. Not all of them have consulted the local producers.

23%

41%

12%

24%Lack of raw material

Price of raw material

Lack of client

Competition withimporters

19%

21%49%

11% Lack of raw material


Lack of client


13%

24%

37%

26%Lack of raw material


Lack of client



21

EUROPEAN NON-WOOD PELLET PRODUCTION Despite the difficulties encountered by some EU producers to source wood, the agropellet market is not properly taking off as it only represents +/- 5% of total EU pellet production (11% of all European pellet production) without showing an impressive growth over the years except in a few countries. The main European agropellet producers are Ukraine (960.000 tonnes in 2015), Poland (500.000 tonnes in 2015) and Romania (30.000 tonnes in 2015). These pellets, made of agricultural (by)products (e.g. straw, sunflower husks, etc.), are mainly used in industrial plants (power plants and CHP). The biggest agropellet consumer is Poland, having used 1 million tonnes before the crash of green certificate market which has strongly impacted the market. No expansion of agropellet use is foreseen in some countries like Austria and Switzerland due to boiler emissions limitations. Figure 8-17 European pellet production by raw material in 2015 (percentage)

Source: EPC survey

Non-wood pellets

11%

Wood pellets89%


22

EUROPEAN WOOD PELLET CONSUMPTION Figure 8-18 Overview of wood pellet consumption in Europe in 2015


23

8.2.3.1 PELLET CONSUMPTION FOR HEATING Figure 8-19 Overview of wood pellet consumption for heating in Europe in 2015

The use of pellets for producing heat (domestic heat and commercial, CHP excluded) remains a strong sector in the EU, showing continuous expansion over the years with 38,8 % growth from 2011 to 2015. While the EU pellet for power market relies on policy frameworks, the EU pellet for heating market, which is rarely supported by any scheme, has shown to be stronger and more reliable. Unfortunately, a third consecutive mild winter impacted the market expansion ending with a growth of 7,45% over the 2014- 2015 period (pellet use for domestic, commercial and heat from CHP excluded) and 4,2 % growth with CHP pellets use for heat production included. Additional factors have also affected the market development such as the very low price of fossil fuels (especially heating oil), the competition with other technologies like heat pumps and the increasing energetic efficiency in buildings. It has been observed by numerous heating appliance manufacturers/installers that the price difference between the pellets and the heating oil is the main driver for people to purchase a pellet heating appliance. As this difference tends to be lower lately, the annual sales of equipment is stagnating or even decreasing in a lot of countries, which is affecting the further growth of pellets use. Regarding the increasing energy efficiency in buildings, its improvement will lower the output demand from domestic boilers or might even make it needless. Indeed, having only a stove for heating the entire house can be sufficient for highly insulated buildings, while passive buildings do not require any heating system. Yet despite these unfavourable conditions, the heating sector grew, showing the strength of this market segment.


24

Every national market will be affected in a different way depending on its market structure (being more domestic, commercial or CHP “oriented markets”) and on its degree of maturity. Indeed, the countries showing an important use of pellets in commercial appliances could be less weather dependant than the countries having most of their pellets used in domestic appliances. The countries being still at the early stage of pellets use could see their market still growing despite the current unfavourable conditions while the more mature market could be more impacted. Figure 8-20 Evolution of EU wood pellet consumption for heating domestic and commercial excluding CHP (million tonnes)

*2O15 2015 projection from 2015 Pellet Market Overview

Source: EPC survey

Figure 8-21 Evolution of domestic (<50kW) EU wood pellet consumption (million tonnes)

*2O15 2015 projection from 2015 Pellet Market Overview

Source: EPC survey

Figure 8-22 EU28 pellet consumption in heat production in 2015 (million tonnes)

*2015 projection from 2015 Pellet Market Overview

0

2

4

6

8

10

12

14

2011 2012 2013 2014 2015

OtherNLBEPTFIESDKATFRSEDE*IT

9,2

10,8 10,9 11,7

0123456789

2013 2014 2015

OtherNLUKESBESEDKATFRDE*IT

0,90,3 0,1

2,21,8

0,03 0,07 0,4 0,31,0

3,2

0,05 0,1 0,2 0,2 0,2

1,6

0,1 0,20,0

1,0

2,0

3,0

4,0

AT BE CZ DE* DK EE EL ES FI FR IT LT LV NL PL* PT SE SI UK

2/3 of CHP

7,7

8,25 8,19 8,55


25

Source: EPC survey

Figure 8-23 Evolution of wood pellet consumption for residential and commercial heating (excluding CHP) in the 10 highest consuming EU countries in 2013-2015 (million tonnes)

*2014 data Source: EPC survey Austria: The Austrian market is strongly impacted by current unfavourable conditions. Indeed, most of the Austrian

pellet market is made of domestic boilers, having their sales suffer from low oil prices. As a consequence, the consumption of pellets decreased due to the mild winter while possible consumption growth is limited by the decrease of appliance sales.

Belgium: Like Austria, the Belgian market is heavily impacted by the current market conditions. Both the sales of pellets stoves and boilers have decreased, that along with the mild winter, have impacted the possible consumption growth.

Denmark: Despite the unfavourable conditions, the use of pellets for domestic heating is still growing in Denmark. Finland: The Finnish heating market is still growing but at a lower rate due to current market conditions. France: Like Denmark, the use of pellets for domestic heating is still growing in France. This is mainly due to a

continuous growth of stove sales while boilers sales have slowed down in 2015. An annual growth of 15-20% of pellet use for domestic heating is foreseen in the next 5 years. The commercial heating sector is also seen as promising in France.

Germany: Like all countries having an important use of pellets for domestic and commercial heat production, the consumption of pellets has been impacted by the mild winter. Despite these conditions, the market is still expanding but at a slower rate. For 2013-2015 period, the growth of pellet use in domestic heating production has been lower than in commercial heating production at 8,6% and 20,2% respectively, confirming the high potential of the commercial heating market and its higher resistance to unfavourable conditions.

Italy: Italy has also been impacted by the unfavourable market conditions. Even if a careful approach is needed for pellet use and appliance sales for this scattered market, some clear trends can be observed. The annual sales of pellet stoves have slowed down in 2015 compared to 2013 and 2014, but the sales of pellet boilers (<50 kW) are seeing growth. As for Germany from 2013-2015 period, the growth of pellet use in domestic heating production has been lower than the growth for pellet use in commercial heating production, confirming the high potential of the commercial heating market and its higher resistance to unfavourable conditions.

Portugal: The Portuguese market is heavily impacted by the current market conditions seeing both the sales of pellet stoves and boilers decreasing, impacting the possible consumption growth.

Spain: The Spanish market was growing dramatically until the winter 2013-2014, since then it is impacted by the current unfavourable conditions.

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

2013

2014

2015

IT DE* SE FR AT DK ES BE FI PT

Residential heating Commercial heating

3,1

2,2

1,5

0,9 0,8 0,7

0,4 0,3 0,2 0,2


26

Sweden: The Swedish domestic market is impacted by the current unfavourable conditions but as for Germany, the growth of pellets use in domestic heat production for 2013-2015 has been lower than the growth for pellets use in commercial heat production with respectively -6,26 % and 14,2 % confirming the high potential of this market and its higher resistance to unfavourable conditions. Even if the CHP pellet use is not included in the figure above, it can be noted that the use of pellets in CHP has been reduced in 2015 mainly due to low electricity price.

Compressed sawdust creates the humble wood pellet, something so simple it never seems to quite fire the imagination of the general public or be appreciated by urban planners and architects. But this simple product can become a great source of heat and electricity. Wood pellets can be gasified to efficiently produce both heat and electricity. Alternatively wood pellets can simply be ignited to produce either heat or electricity or both at the same time in CHPs (combined heat and power). Wood pellets are an environmentally friendly replacement for coal, oil or gas as well as being an efficient energy source. Nowhere is this more easily done than in the medium scale heating sector. Scandinavian countries are leading the way with district heating systems of various sizes. However most countries on mainland Europe do not have district heating. But buildings of all shapes and sizes, no matter where they are, can be energy efficient whilst utilising wood pellets for heat. Medium scale heating appliances according to the classification are appliances of over 50 kW in output. Such appliances in most instances are locally made to burn local wood pellets. A simple way to create employment and it’s pleasing to see that there is an upward trend in this market sector even when winters are milder. All public buildings such as hospitals and schools need heat and all types of commercial buildings require heat and power in order to function properly. And there is no better way to do this than by using the humble wood pellet. With more awareness of the potential to use wood pellets for medium scale heating by urban planners and architects the medium scale heating sector will really take off!

Arnold Dale

Vice President Bioenergy Ekman


27

EPC has run a consultation to have the partners5 identifying the pellets quality classes being mostly used in the domestic heat market and commercial heat market for each European country. Several observations can be made on the results below. Some countries are mainly or even exclusively using premium quality both for the domestic and commercial markets. Some other countries use lower quality pellets only in the commercial sector while some countries are also using lower quality pellets even in the domestic market. Figure 8-24 Estimate of pellet quality classes shares for domestic heat market per European country (percentage)

Source: EPC survey Figure 8-25 Estimate of pellet quality classes shares for commercial heat market per European country (percentage)

Source: EPC survey

5 For this survey, only the national pellet associations were consulted. Not all of them have consulted the local producers.

0102030405060708090

100

AT CZ DK EL ES FR IT LV PT SE SI CH RS

A1 quality A2 quality B quality Out of B quality

0

10

20

30

40

50

60

70

80

90

100

AT CZ DK EL ES FR IT LV PT SE SI CH RS

A1 quality A2 quality B quality Out of B quality


28

Figure 8-26: Evolution of total amount of installed pellet stoves in 2013-2015 (thousand units)

Source: EPC survey Figure 8-27 Evolution of total amount of installed residential pellet boilers (<50kW) in 2013-2015 (thousand units)

Source: EPC survey

45 133 139 490

2.280

0

100

200

300

400

500

AT DE ES FR IT

2013

2014

20152.2001.900

116

246

12 5082

0

50

100

150

200

250

300

AT DE ES FR IT

2013

2014

2015

Since the year 2013 we saw decreasing sales numbers in nearly all biomass boiler markets and 2016 will follow this trend. The decrease is based on low energy costs, which is one of the most important drivers for the development of biomass boiler sales. In our case – as the specialist for wood pellet boilers – it is especially the price difference between heating oil and wood pellets which influences the market most. With decreasing boiler sales numbers we are noticing tougher competition in the popular markets on the one hand and surprisingly vanishing competitors in the less popular markets on the other hand. Due to innovations like the new generation of condensing wood pellet boilers and all-in-one “convenient” boilers, which enjoy very strong market acceptance all over Europe and especially in our main markets Germany, France and Austria, the ÖkoFEN brand developed better than the markets. It is very positive to see that we can recoup our investments in new technologies and product variations. The challenge for biomass boiler manufacturers will be to keep up with innovations and product development in times of low sales. In the short term we do not expect rising energy, but we notice an improvement in market sentiment so we are cautiously optimistic for 2017 to see a rise in boiler sales numbers again.

Stefan Ortner

ÖkoFEN CEO


29

Table 8-2 New pellet boilers and stoves installations per year in Europe (units)

Pellet stoves Boilers < 50 kW Boilers > 50 kW

2015 2016 Projection

2020 Estimate 2015 2016

Projection 2020 Estimate 2015 2016

Projection 2020 Estimate

AT 2.400 2.500 4.000 4.800 4.500 6.000 250 200 300 CZ 1.800 4.000 4.000 na na na na na na DE na 18.000 na na 19.000 na na 1.000 na EE 225 na na 750 na na 150 na na EL 3.000 2.000 8.000 1.000 1.000 3.500 200 200 800 ES 29.000 24.000 30.000 2.400 2.040 1.600 925 850 900 FI 100 200 500 500 500 700 100 100 200 FR 98.000 110.000 150.000 4.400 6.000 10.000 1.000 na na IE 250 na na 50 na na na na na IT 190.000 190.000 200.000 11.500 11.000 12.000 300 300 350 LT na 10 40 na 700 2.800 na na na LV 175 170 375 575 500 750 150 150 375

SE na na na 1.300 1.800 na na na na

Other Europe CH 500 500 500 617 600 900 194 200 300 RS 3.680 3.700 8.000 1.120 1.250 4.800 17 17 60

Source: EPC survey


30

Table 8-3 Total amount of installed pellet boilers and stoves in Europe (units)

Pellet stoves Boilers < 50 kW Boilers > 50 kW

2015 2016 Projection

2020 Estimate 2015 2016

Projection 2020 Estimate 2015 2016

Projection 2020 Estimate

AT 45.000 48.000 60.000 116.000 120.000 145.000 8.400 8.700 10.000 CZ 2.900 3.500 6.000 23.000 27.000 38.000 na na na DE 133.000 151.000 na 246.000 265.000 na 11.500 12.500 na EL 14.000 16.000 20.000 5.000 6.000 8.000 1.200 1.400 1.600 ES 139.000 163.000 300.000 11.520 13.560 20.000 9.000 9.850 13.450 FI 1.600 1.800 3.000 24.500 25.000 28.000 3.200 3.300 4.000 FR 490.000 600.000 1.120.000 50.000 56.000 90.000 2.800 na na IT 2.280.000 2.480.000 2.800.000 81.500 90.000 110.000 6.700 7.000 8.000 LT 50 60 na 4.800 5.000 7.000 na na na LV 1.300 1.500 3.000 7.700 8.000 12.000 1.500 1.700 2.600 PL na na na 38.000 na 60.000 2.500 na 4.000 SE 16.064 na na 86.099 na na na na na SI 553 600 700 6.285 6.350 6.800 na na na UK 26.710 26.710 na 11.832 12.500 na 13.903 15.300 na

Other Europe CH 10.400 10.800 12.650 14.300 14.900 17.400 1.020 1.060 1.250 RS 18.240 22.000 30.000 5.940 7.200 12.000 23 40 100 UA na na na 727 950 3.000 1.059 1.342 6.082

Source: EPC survey


31

A consultation was carried out to identify the packing requirements customers had for the domestic heat markets of the different European countries. Austria, Germany, Finland and Switzerland are fairly similar in that they have a domestic heat market mainly made of boilers equipped with a silo, with a capacity of several tonnes. This explains why these markets are mainly consuming bulk pellets.

Most of the other European countries are mainly using bagged pellets, and also big bags for some of them, either because their domestic appliances are mainly made of stoves (e.g. Italy) or because the boilers used are not often equipped with a large capacity separated storage.

In Italy, the share of bulk pellets in their total pellet use is growing.

Figure 8-28 Packaging of pellets in the domestic heat market (percentage)

*2014 Data Source: EPC survey

0

10

20

30

40

50

60

70

80

90

100

AT BE* CZ DE* DK EL ES FI FR IT LV NL PT RO SE SI AL BA CH ME UA RS

Bulk

Big bags

Small bags


32

Table 8-4 European wood pellet consumption for heating in 2015 compared to 2014 (tonnes)

2014 2015

Residential heating <

50 kW

Commercial heating >50

kW 2/3 of CHP Total

Residential heating < 50

kW

Commercial heating >50

kW 2/3 of CHP Total

EU28 8.047.600 2.918.658 1.457.357 12.423.615 8.549.764 3.171.531 1.220.577 12.941.872

AT 710.000 100.000 67 810.067 755.000 95.000 na 850.000

BE 315.000 8.000 5.333 328.333 315.000 8.000 13.333 336.333

CZ 72.000 22.000 53.333 147.333 80.000 25.000 3.333 108.333

DE 1.240.000 800.000 38.667 2.078.667 1.300.000* 890.000* 40.000* 2.230.000

DK 650.000 80.000 1.000.000 1.730.000 700.000 83.000 1.000.000 1.783.000

EE 29.400 41.475 0 70.875 28.000 8.000 0 36.000

EL 46.000 10.000 0 56.000 57.000 10.000 0 67.000

ES 205.000 145.000 0 350.000 240.000 160.000 0 400.000

FI 70.000 176.000 3.333 249.333 70.000 200.000 33.333 303.333

FR 770.000 130.000** 0 900.000 900.000 50.000** 0 950.000

IE 22.000 6.000 0 28.000 na na na na

IT 2.784.000 116.000 na 2.900.000 2.860.000 246.000 0 3.106.000

LT na na na na 39.000 11.000 0 50.000

LV 39.200 55.300 0 94.500 40.500 57.500 0 98.000

NL 30.000 180.000 na 180.000 30.000 130.000 0 160.000

PL 145.000 45.000 0 190.000 160.000* 50.000* 0* 210.000*

PT 125.000 125.000 0 250.000 115.000 100.000 0 215.000

SE 532.000 871.883 161.957 1.565.840 535.264 983.031 130.577 1.648.872

SI na na na na 90.000 40.000 0 130.000

SK 30.000 20.000 0 50.000 35.000* 25.000* 0* 60.000*

UK 200.000 na na 200.000 200.000 na na 200.000

Other Europe

AL 3.987 250 0 4.237 20.000 1.000 0 21.000

BA 26.100 3.600 0 29.700 73.000 3.000 0 76.000

CH 160.000 40.000 0 200.000 150.000 50.000 0 200.000

ME 3.500 550 0 4.050 4.800 940 0 5.740

RS 70.000 20.000 0 90.000 148.400 16.200 0 164.600 * 2015 projection from 2015 Pellet Market Overview ** Estimates Source: EPC survey The full table including all countries outside Europe is available in the Annexe of this report.


33

8.2.3.2 PELLET CONSUMPTION FOR ELECTRICITY PRODUCTION Figure 8-29 Overview of pellet consumption for electricity production in Europe in 2015

Source: EPC survey, Hawkins Wright The use of pellets for electricity production has grown by 14,9 % from 2014 to 2015. This is mostly because the United Kingdom consumed 1 million tonnes more in 2015 than in 2014. The increase in the usage of pellets is also due to the revival of industrial pellet use in Belgium. This revival was primarily a result of the regulatory dispute on pellet use being solved. Contrastingly, the implementation of SDE+ scheme in the Netherlands stopped the use of industrial pellets. These developments show once more the need for a stable policy framework to ensure the reliable and sustainable use of pellets for electricity production.


34

Figure 8-30 EU pellet consumption for electricity production in 2015 (million tonnes)

Source: EPC survey United Kingdom Representing 78% of the total EU pellets use for power production, the United Kingdom is and will most likely remain a predominant pellet user for power production with Drax being the only player today. Out of the 6 Drax units initially running on coal, two units were fully converted to use pellets in 2013 and in 2014 respectively. The 3rd unit started co-firing pellets in 2015 and the unit has been adapted to enhanced co-firing (85% pellets/15% coal) in the 3rd quarter of 2015, explaining the growth experienced in the United Kingdom in 2015. A full conversion of the 3rd unit is foreseen soon after clearance will be received for state aid. A 4th unit could also be converted in the near future however the final outcome of the project remains very unclear as the availability state aid is still uncertain. Some years ago several observers were expecting the United Kingdom to become an enormous pellet user, reaching a total annual consumption of 30-50 million tonnes by 2020. This is unlikely to happen as many projects never came to fruition (e.g. Rugeley (ENGIE) and Eggborough (EPH)). On the other hand, some other projects like Lynemouth (EPH, power plant conversion) and Teeside (MGT Power, CHP) are likely to be completed in 2018 and 2020 respectively. This would represent a total consumption of 2,5 million tonnes per year. Several other projects such as Southampton (Helius Energy), Uskmouth (SIMEC), Irondbridge (UNIPER) and the Real Venture project remain fairly uncertain. Depending on the scenario, the United Kingdom consumption figures could range from 9,7 million to 14 million tonnes by 2020. However, at this stage the impact Brexit will have is difficult to quantify. Netherlands Netherlands used to be an important player in the industrial use of pellets until 2012 (more than 1 million tonnes per year) but in 2015 not a single tonne of pellets were burned in any large scale power plant due to the subsidy regime changing from MEP to SDE+. The situation will change as Amer plant (RWE) and Massvlakte Rotterdam (ENGIE) have won the 2016 subsidy auction of the SDE+ scheme. Amer plant is foreseen to restart using wood pellets from early 2017 while Rotterdam might start doing this by the end of 2017 or early 2018. Unfortunately, there are still some uncertainties as the first grant of SDE+ for co-firing has been currently limited to 25 % of the maximum support obtainable. Secondly, the Dutch regulator has set a sustainability verification protocol. This means that the pellet suppliers have to pass the sustainability measures outlined in said protocol in order for utility companies to use their product. Several pilot tests

0,50 0,50

0,00

0,08 0,07 0,05 0,04

0,60

1,00

0,20

0,00

0,20

0,40

0,60

0,80

1,00

1,20

1,40

1,60

1,80

2,00

2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015

Uk BE DK NL SE Other EU28

CHP power Dedicated Power

4,70 5,70


35

have been carried out in Europe, Canada and the US but it appears that the system requires adaptation in order to be practically implementable. Lastly, a clarification from the Dutch government is required in order for RWE to restart using pellets as they announced willingness to close down some additional coal plants before 2020 which would also affect Amer co-firing plant. The Dutch government set a cap of 25 PJ of biomass use (corresponding to 3,25 million tonnes of pellets) by 2020. This will go forward if an agreement is reached on the sustainability requirements by the relevant regulatory agency. Belgium In Belgium, 2 converted coal power plants; Unit 4 (les Awirs, converted in 2005) and Max Green (Rodenhuize, converted in 2011) are using pellets exclusively as a fuel for a theoretical annual consumption of 1,2 million tonnes. In 2014, a dispute with the Flemish regulator stopped the allocation of the green certificates to the Max Green plant. As a result, ENGIE stopped burning pellets until this dispute was resolved in late 2014. Lately, les Awirs Unit 4 benefited from a regulatory change, granting certification with a higher banding factor than in the past for biomass plants allowing the plant to run on base load. These two factors explain the slowdown in 2014 consumption followed by a sudden growth in 2015. Some projects might increase the industrial pellet use in Belgium: the coal plant of Langerlo has recently been acquired by Graanul Invest, a large European pellet producer. This plant should be fully converted by 2018 and should use 1,8 million tonnes a year. However, in order to receive the green certification with a banding factor of 1, it has to be running by the end of 2018. Other projects in Belgium might ensue but the UNIPER project in Antwerpen will not materialise. In early 2016, the Walloon government launched a call for tender for granting subsidies to one or several power plants firing sustainable biomass up to a capacity of 200 MW. The Walloon Government has foreseen 1.028.160 green certificates in 2021 for centralised biomass plant(s). The biomass can be supplied from all affordable sustainable biomass sources including wood, agricultural residues or organic waste, with the exception of municipal solid waste. Pellet use in Belgium leading to 2020 is uncertain. Indeed, Rodenhuize MaxGreen is planned to be closed by 2017 and Les Awirs Unit by2020. Langerlo should be up and running while one additional project might be running by 2020, but not necessarily with pellets. Based on these assumptions, the use of pellets in Belgium for electricity production could amount to anywhere between 2 to 3,2 million tonnes by 2020. Denmark Danish pellet use for electricity, all of which is used in CHP, flattened in 2015 with 0,5 million tonnes (1,5 million for total CHP use in Denmark). Denmark’s renewable energy policies aim at ending the use of coal by 2030, and even sooner in the case of the city of Copenhagen. The main factor encouraging the switch to biomass is the carbon tax on fossil fuel, a support scheme for renewable electricity and low electricity prices in Northern Europe. As a result, several large coal-fired CHP plants are being converted to burn biomass, exclusively wood pellets and wood chips. DONG Energy plants like Avedøre and Studstrup will co-fire pellets from late 2016 and 2017. In Amager plant, HOFOR is currently building BIO4, a biomass CHP, that will replace Unit 3, a coal fired CHP. The industrial use of pellets in Denmark should reach at least 3 million tonnes by 2020 exclusively in CHP (i.e. 1 million for electricity production).


36

EUROPEAN WOOD PELLET TRADE Figure 8-31 EU28 Member States pellet balance by country in 2015 - production, consumption, export, import (million tonnes)

*2014 data **DE for consumption, 2015 projection from 2015 Pellet Market Overview Source: EPC survey, Eurostat

-6,0 -4,0 -2,0 0,0 2,0 4,0 6,0

AT

BE

BG*

CZ

DE**

DK

EE

EL

ES

FI

FR

HR*

HU*

IE*

IT

LT

LU*

LV

NL

PL

PT

RO*

SE

SI*

SK

UK

Consumption

Export

Production

Import


37

8.2.4.1 EU28 EXPORTING COUNTRIES Latvia is distinctly the country showing the most impressive growth with an export increase of more than 1 million tonnes or 175% from 2010 to 2016. This incredible growth is due to several factors: very high wood resources, good localisation (Baltic sea) and logistic (harbour), flexible wood industry and low working costs. The export volumes are similar to the production growth. This is because there is limited local demand.

Estonia is showing a situation very similar to Latvia (nearly 500.000 t increase or 125% from 2010 to 2016) for the same reasons.

Portugal has become over the years an important industrial pellet producer. The amount of exports has levelled off from 2013, mainly due to insufficient raw material availability. However, the local use of pellet is increasing.

In Germany export is decreasing because the pellet production is adapting to the current unfavourable market conditions.

Austria continues to be an important exporter. The current trade flows are not only due to a production excess but also because Austria is a logistic hub in central Europe.

Figure 8-32 Top 10 of the EU28 wood pellet exporting countries 2010-2015 (million tonnes)

Source: EPC survey, Eurostat Figure 8-33 Division of total EU28 exports (percentage)

Source: EPC survey, Eurostat

00,20,40,60,8

11,21,41,61,8

2010 2011 2012 2013 2014 2015

LVEEPTDEATROLTSEPLNL

LV24%

EE13%

PT10%

DE10%AT

8%

RO5%

LT5%

SE4%

PL3%

NL2%

Rest of EU2816%


38

Table 8-5 Top 10 wood pellet exporting countries in the EU28 in 2011-2015 (tonnes)

2011 2012 2013 2014 2015

LV

DK 268.035 DK 436.771 DK 504.857 DK 492.887 DK 537.619

SE 147.109 EE 130.040 EE 179.940 EE 306.500 EE 489.186

EE 108.789 SE 103.898 UK 161.703 UK 304.320 UK 391.960

Rest of EU28 97.170 Rest of EU28 231.124 Rest of EU28 209.181 Rest of EU28 172.593 Rest of EU28 201.042

Rest of the world 30 Rest of the world 126 Rest of the world 250 Rest of the world 458 Rest of the world 643

PT

DK 172.448 DK 210.006 UK 277.251 UK 481.609 DK 172.448

UK 155.807 NL 137.080 DK 252.076 DK 141.071 UK 155.807

NL 138.802 UK 107.248 NL 70.059 ES 71.718 NL 138.802



DE

DK 201.781 DK 178.196 AT 167.421 AT 201.240 UK 173.031

IT 112.879 AT 166.986 DK 121.539 IT 166.847 AT 141.294

AT 106.620 IT 160.223 IT 112.408 FR 89.445 IT 136.486


Rest of the world 36.996 Rest of the world 34.520 Rest of the world 75.408 Rest of the world 43.129 Rest of the world 52.749

EE

DK 257.360 DK 264.728 DK 375.956 DK 423.156 DK 257.360

SE 49.408 SE 122.465 SE 119.640 IT 56.223 SE 49.408

UK 48.131 UK 20.011 IT 43.735 SE 55.104 UK 48.131


Rest of the world 48 Rest of the world 5.022 Rest of the world 23 Rest of the world 72 Rest of the world 48

AT

IT 419.700 IT 404.455 IT 429.268 IT 440.114 IT 486.604

DE 85.729 DE 53.102 DE 36.494 DE 28.575 DE 29.368

CH 4.858 CZ 5.701 CH 8.119 CH 7.266 CZ 20.046


Rest of the world 739 Rest of the world 3.365 Rest of the world 1.420 Rest of the world 1.396 Rest of the world 2.344

RO

IT 126.015 IT 117.267 AT 205.191 AT 192.022 AT 120.887

AT 47.366 AT 94.362 IT 167.123 IT 128.826 IT 101.027

HU 16.644 EL 18.327 EL 28.047 BG 25.364 SI 35.544



LT

IT 109.200 IT 130.070 IT 159.211 IT 173.315 IT 137.574

DK 98.481 DK 94.581 DK 77.547 DK 55.346 DK 49.352

UK 10.624 DE 18.286 BE 31.272 BE 20.764 EE 27.647



SE

DK 160.046 DK 151.099 DK 121.934 DK 185.212 DK 214.890

DE 32.834 NO 30.377 NO 29.523 NO 26.827 NO 28.496

NO 17.676 DE 11.711 IT 9.359 IT 18.082 DE 473

Rest of EU28 3.389 Rest of EU28 1.479 Rest of EU28 1.485 Rest of EU28 21.860 Rest of EU28 328


NL

BE 42.317 BE 96.828 BE 95.727 BE 124.883 BE 115.834

UK 12.734 UK 24.073 DE 64.332 DE 104.783 DE 12.869

DE 9.004 DK 22.160 UK 2.539 UK 5.121 UK 8.464


Rest of the world 424 Rest of the world 98 Rest of the world 113 Rest of the world 97 Rest of the world 1.450

PL

DK 46.351 DK 51.793 DE 80.362 DE 82.822 DE 85.631

DE 6.734 DE 45.490 DK 69.265 DK 58.057 DK 70.953

IT 2.946 CZ 6.121 IT 25.850 IT 29.729 IT 42.224

Rest of EU28 582 Rest of EU28 8.015 Rest of EU28 11.051 Rest of EU28 10.799 Rest of EU28 16.291




39

8.2.4.2 EU28 IMPORTING COUNTRIES United Kingdom is the largest pellet importer in the EU, with the majority of their pellets being sourced from North America, due to the continuous increase of pellet use in their power plants in association with a limited local production.

Denmark is the second largest, mainly souring pellets from Latvia, Estonia and Russia. There is a slight decrease in 2014 and 2015 that can be explained by an increase of local production and a limited increase of pellets use. However, Denmark has not much room for future production expansion. The use of wood pellets will continue to grow especially in the industrial sector with the ambition of Denmark to totally quit coal by 2030.

Italy is the third largest importer. However, the majority of pellets are used in the domestic heat market. These pellets are mainly sourced from Austria, Hungary and Germany. Canada was an important supplier of pellets for Italy in 2013 and 2014 but this is no longer the case in 2015.

Belgium is the fourth largest importer with the majority of pellets coming from North America. The fluctuations which happened in 2013 and 2014 were due to a decrease of industrial pellet use. This occurred because there was an unexpected regulatory dispute that led to the temporary withdrawal of entitlement to green certificates for biomass power generation.

One can observe that the pellets used in dedicated power production are mostly sourced from outside Europe, while the other markets are mostly sourcing their pellets in Europe.

Figure 8-34 Top 10 of the EU28 wood pellet importing countries 2010-2015 (million tonnes)

Source: EPC survey, Eurostat Figure 8-35 Division of total EU28 imports (percentage)


0

1

2

3

4

5

6

7

2010 2011 2012 2013 2014 2015

UKDKITBESENLDEATSIFR

UK49%

DK15%

IT12%

BE7%

DE3%

AT3%

SE3%

SI1%

NL1%

FR1%

Rest of EU285%


40

Table 8-6 Top 10 wood pellet importing countries in the EU28 with breakdown of origin in 2010-2015 (tonnes)

2011 2012 2013 2014 2015

EU

CA 1.160.199 US 1.764.394 US 2.775.929 US 3.889.833 US 4.286.614

US 1.001.103 CA 1.346.237 CA 1.963.270 CA 1.259.087 CA 1.474.785

RU 477.186 RU 645.258 RU 701.722 RU 825.842 RU 786.214

Other non-EU28 476.958 Other non-EU28 4.588.223 Other non-EU28 655.456 Other non-EU28 571.972 Other non EU 317.425

UK

CA 591.781 CA 854.602 US 1.573.493 US 2.894.916 US 3.527.986

US 274.453 US 475.337 CA 1.466.782 CA 889.353 CA 1.161.425

PT 90.068 LV 101.783 LV 165.190 PT 439.537 LV 995.125



DK

LV 418.644 LV 586.254 LV 705.984 LV 608.954 LV 601.771

EE 360.210 RU 347.961 EE 363.127 EE 465.257 EE 552.114

PT 242.887 EE 292.422 RU 333.964 RU 388.704 RU 333.085



IT

AT 245.148 AT 313.933 AT 349.491 AT 395.014 AU 405.017

DE 108.556 DE 137.445 CA 186.001 CA 229.435 HR 127.732

SI 104.603 HR 114.266 HR 129.338 US 179.966 DE 108.638



BE

US 203.143 US 571.933 US 587.619 US 422.774 US 628.970

CA 181.150 CA 205.469 CA 160.151 CA 107.238 CA 227.940

NL 34.652 UK 81.360 NL 78.160 NL 73.662 NL 65.440



SE

RU 162.013 RU 211.298 RU 236.256 RU 220.984 RU 150.726

EE 127.697 EE 101.314 EE 177.397 LV 80.925 LV 60.448

LV 96.206 DK 42.874 LV 63.542 EE 77.437 UK 57.230



NL

US 423.460 US 602.328 US 313.845 US 271.544 UK 56.803

CA 275.384 CA 180.572 CA 118.265 UK 108.059 US 38.048

PT 135.021 PT 107.368 BE 45.215 BE 29.093 BE 17.635



DE

DK 103.589 DK 86.966 DK 109.292 NL 73.966 RU 74.931

AT 29.114 AT 40.164 NL 97.826 AT 52.517 PO 68.792

SE 20.649 FR 32.569 BE 54.861 DK 51.048 DK 62.701



AT

DE 145.733 RO 103.724 RO 205.785 RO 190.941 RO 189.336

RO 99.982 DE 86.619 DE 83.201 DE 66.314 DE 92.956

CZ 47.463 CZ 57.721 CZ 57.215 CZ 53.289 CZ 70.645



SI

HR 21.958 HR 21.807 RO 20.392 RO 62.283 CZ 7.956

RO 2.609 RO 3.354 HR 17.102 AT 7.202 UK 6.152

AT 1328 UE 1.453 UK 2.343 HR 6.565 IT 3.120

Rest of EU28 1428 Rest of EU28 4.419 Rest of EU28 5.915 Rest of EU28 3.900 Rest of EU28 2.502


FR

DE 73.520 DE 17.087 EE 29.992 EE 34.689 DE 53.810

ES 42.137 LU 4.648 DE 21.971 DE 32.321 BE 53.570

BE 35.190 BE 2.022 BE 13.942 BE 29.740 US 12.917





41

EUROPEAN WOOD PELLET PRICE

8.2.5.1 EUROPEAN PRICE DEVELOPMENT OF DOMESTIC PELLETS The current unfavourable market conditions began due to the mild winters experienced in Europe in 2013-2014, 2014-2015 and also in 2015-2016. With warmer winters, the demand for pellets for heat production decreased, leading to overproduction and overstocking. This situation has been exacerbated as these factors have created fierce competition with external pellet importers in several countries. This unbalanced supply and demand condition has negatively impacted the pellet market price in several countries.

Figure 8-36 Estimation of bagged wood pellet prices in selected markets in EU between July 2015 and June 2016 (with: retail price, 1 pallet in €/t VAT incl.)

Source: EPC survey Figure 8-37 Variation of bagged wood pellet prices between July 2015 and June 2016 (with: retail price, 1 pallet in €/t VAT incl.)

Source: EPC survey

100

150

200

250

300

350

400

450

September2015

October2015

November2015

December2015

January2016

February2016

March 2016 April 2016 May 2016 June 2016

AT CZ EL ES FR IT LT LV SE

100

150

200

250

300

350

400

450

AT CZ EL ES FR IT LT LV SE

Highest price

Average

Lowest price


42

Table 8-7 Estimation of bagged wood pellet prices between July 2015 and June 2016 (with: retail price, 1 pallet in €/t VAT incl.)

September 2015

October 2015

November 2015

December 2015

January 2016

February 2016

March 2016

April 2016

May 2016

June 2016

AT 256 258 258 260 266 266 266 255 255 253

CZ 201 212 220 225 225 225 212 203 200 189

EL 280 280 290 300 300 310 310 280 260 260

ES 267 266 264 263 263 262 262 260 257 255

FR 269 280 280 280 289 289 289 261 261 261

IT 325 325 330 335 340 320 300 280 280 280

LT 433 431 399 402 387 392 377 367 378 421

LV 230 230 240 250 255 250 230 230 225 220

SE 252 247 249 249 256 256 256 256 256 256 Source: EPC survey, Figure 8-38 Estimation of bulk wood pellet prices in selected markets in EU between July 2015 and June 2016 (with: delivered 6t, distance 100 km, delivery fees included. In €/t VAT incl.)

Source: EPC survey,

100

150

200

250

300

350

AT

CZ

ES

FI

FR

IT

LT

LV

SE


43

Figure 8-39 Variation of bulk wood pellet prices between July 2015 and June 2016 (with: delivered 6t, distance 100 km, delivery fees included. In €/t VAT incl.)

Source: EPC survey, Table 8-8 Estimation of bulk wood pellet prices between July 2015 and June 2016 (with: delivered 6t, distance 100 km, delivery fees included. In €/t VAT incl.)

September 2015

October 2015

November 2015

December 2015

January 2016

February 2016

March 2016

April 2016

May 2016

June 2016

AT 236 236 237 237 243 244 242 231 229 229

CZ 198 207 218 222 222 220 205 200 196 185

ES 231 235 238 242 239 236 233 232 231 231

FI 275 275 273 273 273 273 274 274 274 274

FR 262 268 268 268 271 271 271 251 251 251

IT 307 307 312 316 321 314 307 300 300 300

LT 211 209 200 200 200 194 191 187 191 193

LV 125 125 128 129 132 128 125 123 121 120

SE 282 282 280 290 282 282 282 282 282 282 Source: EPC survey, Some countries are implementing a reduced VAT rate for pellets (orange font in the table below) but the situation has changed lately for some of them. Indeed, the VAT rate increased from 10 to 22 % in Italy in the later half of 2014. This change showed a limited impact on end-user behaviour but had an impact on the pellets suppliers’ profitability as most of the price increase was absorbed by the pellet producers and traders. In France, the VAT rate on pellets has gradually increased from 5,5 % before 2012 to 10% in 2014. No clear impact of sales has been noted and no further VAT increase is foreseen. In January 2016, Austria increased the VAT from 10 % to 13% in 2016. As for Italy the pellets price did not increase to that extent showing that most of the increase has been absorbed by the producers and traders.

100

150

200

250

300

350

AT CZ ES FI FR IT LT LV SE

Average

Highest price

Lowest price


44

Table 8-9 VAT rate for wood pellet compared with general VAT rate applied in European countries in 2015 in percentage (*2014; **2013)

2015

VAT rate for wood pellets General VAT rate

AT 13 20

BE 6 21

CZ 15 21

DE* 7 19

DK 25 25

EE* 20 20

EL 24 24

ES 21 21

FI 24 24

FR 10 20

HR* 25 25

HU** 27 27

IT 22 22

LT 21 21

LU* 6 15

LV 12 21

NL 21 21

PT 23 23

RO na na

SE 25 25

SI 22 22

UK 5 20

Other Europe AL 20 20

BA 17 17

CH 8 8

ME 19 19

RS 20 20 *2014 data **2013 data Source: EPC survey,


45

8.2.5.2 PRICE DEVELOPMENT OF INDUSTRIAL PELLETS

The Argus cif ARA wood pellet spot price has been on a steady downward trajectory this year, falling almost 24pc since 1 January. A heavily oversupplied market has weighed on spot demand and prices. New demand projects have not come online as expected in recent years, but production capacity has continued to rise. That, coupled with a consistently strong dollar, has meant any emerging demand above existing long-term contracts has been met by European sellers, further pressuring the dollar-denominated spot price. A third mild winter in a row meant the premium pellet heating market did not soak up the excess supply, instead contributing to the imbalance. Forward curve prices have been pressured by ambiguity over future demand. All of Argus’ cif ARA wood pellet calendar assessments have lost value in the year as upcoming projects are pushed back and uncertainty prevails. The picture does not look too different for next year but looks brighter further into the future. A number of European projects, in addition to potential Dutch co-firing, are lining up in the pipeline for 2018 onwards. Furthermore, anticipated new demand in Asia could tighten the global wood pellet market.

Rachael Levinson

Editor Biomass Markets Argus Media

Figure 8-40 Development of Argus cif ARA wood pellet index 2015

x-apple-data-detectors://0/


46

8.3 LATEST DEVELOPMENTS OF ENPLUS CERTIFICATION

Figure 8-41 Worldwide ENplus certified producers

The ENplus certification scheme ensures wood pellet quality at the customer gate by guaranteeing the quality of the pellets on the entire supply chain (i.e. producers and traders). This certification is governed and managed by the European Pellet Council with the support of National Associations, which manage the certification on a national level. Since its introduction, the number of countries with certified ENplus producers has rapidly grown, reaching 36 countries in 2015 with a total volume of 6,7 million tonnes of certified pellets produced. According to the latest figures, there are several encouraging predictions for 2016. Continue growth is expected as in previous years and could be confirmed with a significant growth of ENplus certified producers in countries such as Belgium, the Netherlands, Sweden, Bosnia and Herzegovina, Bosnia, Hungary, Slovakia, Russia, Belarus and Vietnam. New countries have recently joined the scheme such as Albania, Chile, Israel, Luxembourg and Tunisia to total 41 countries. The number of ENplus certified producers worldwide recorded once again a sizeable growth, going from 301 at the end of 2015 to around 374 in 2016. As result of this continuous growth, the production of certified pellets is now estimated to reach more than 8 million tonnes of certified production volume in 2016. This would result in a growth of approximately 1,3 million tonnes when compared to 2015.


47

With these results, ENplus is well on its way to reach the aim of a harmonised pellet quality at a global level. Figure 8-42 Worldwide ENplus certified pellet production


48

8.4 ANNEXES

WORLD PELLET PRODUCTION

2014 2015

Number of operating

production plants

Production capacity (tonnes)

Actual production

(tonnes)

Number of operating

production plants

Production capacity (tonnes)

Actual production

(tonnes)

EU28 554 17.923.700 13.484.274 645 21.689.175 14.114.675

AT 37 1.478.000 945.000 37 1.481.000 1.001.000

BE 12 760.000 395.000 12 760.000 320.000

BG 40 400.000 150.000 40 400.000 150.000

CY na na na na na na

CZ 19 300.000 210.000 22 380.000 280.000

DE 54 3.200.000 2.100.000 54 3.200.000 2.000.000

DK 5 250.000 80.000 5 250.000 150.000

EE 16 1.280.000 995.000 18 1.440.000 1.308.500

EL 6 130.000 36.000 14 130.000 40.000

ES 64 1.125.000 410.000 79 1.250.000 475.000

FI 27 630.000 330.000 28 623.500 302.000

FR 45 1.600.000 1.030.000 50 1.800.000 950.000

HR 7 240.000 220.000 16 300.000 240.000

HU na na 3.140 na na 3.140

IE 1 40.000 31.000 na 40.000 31.000

IT 24 325.000 300.000 30 450.000 400.000

LT na na 250.000 10 350.000 300.000

LU 1 50.000 50.000 1 50.000 50.000

LV 23 1.480.000 1.320.000 27 1.750.000 1.500.000

MT 0 0 0 na na na

NL 7 350.000 300.000 7 350.000 300.000

PL 50 1.050.000 870.000 50 1.050.000 870.000

PT 26 na 1.000.000 26 1.941.875 850.000

RO 22 750.000 430.000 22 750.000 420.000

SE* 67 2.285.700 1.576.910 65 2.236.185 1.662.525

SI na na 100.000 14 130.000 110.000

SK 10 200.000 100.000 10 200.000 100.000

UK 4 na 252.224 8 376.615 301.510

AL 6 8.000 4.900 8 33.000 28.000

BA 32 296.000 206.000 33 305.000 213.000

CH 24 280.000 160.000 24 280.000 160.000

ME 1 5.000 4.000 2 30.000 31.300

NO na na 56.500 na na 56.500

RS 60 450.000 250.000 56 485.000 229.650


49

UA 172 1.200.000 510.000 172 858.000 585.900

AR na na na na na 11.000

AU 4 115.000 105.000 8 390.000 105.000

BR 14 400.000 60.000 na 400.000 60.000

CA 39 3.300.000 1.800.000 39 3.300.000 2.250.000

CL na na na na na 30.000

CN na na 1.400.000 na na 1.400.000

EG na na na na na 25.000

ID na na na na na 125.000

JP na na 80.000 142 na 126.035

KR na na na na na 15.000

MY na na na na na 175.000

NZ na na na 3 270.000 48.000

Other SE Asia na na na na na 100.000

RU 90 3.500.000 1.500.000 90 3.500.000 1.300.000

TH na na na na na 250.000

US 132 7.369.000 6.178.000 160 8.349.466 7.000.000

VN na na na na na 950.000


50

WORLD PELLET CONSUMPTION

2014 2015

Residential

heating < 50 kW (tonnes)

Commercial heating >50 kW (tonnes)

CHP(any output)

Residential heating < 50 kW (tonnes)

Commercial heating >50 kW

(tonnes)

CHP (any output)

EU28 8.047.600 2.918.658 2.186.035 8.549.764 3.171.531 1.830.866

AT 710.000 100.000 100 755.000 95.000 0

BE 315.000 8.000 8000* 315.000 8.000 20.000

CZ 72.000 22.000 80.000 80.000 25.000 5.000

DE 1.240.000 800.000 58.000 1.300.000* 890.000* 60.000*

DK 650.000 80.000 1.500.000 700.000 83.000 1.500.000

EE 29.400 41.475 0 28.000 8.000 0

EL 46.000 10.000 0 57.000 10.000 0

ES 205.000 145.000 0 240.000 160.000 0

FI 70.000 176.000 5.000 70.000 200.000 50.000

FR 770.000 130.000 0 900.000 50.000 0

IE 22.000 6.000 0 na na na

IT 2.784.000 116.000 na 2.860.000 246.000 0

LT na na na 39.000 11.000 0

LV 39.200 55.300 0 40.500 57.500 0

NL 30.000 150.000 na 30.000 130.000 0

PL 145.000 45.000 150.000 160.000 50.000 0

PT 125.000 125.000 0 115.000 100.000 0

SE 532.000 871.883 242.935 535.264 983.031 195.866

SI na na na 90.000 40.000 0

SK 30.000 20.000 0 35.000 25.000 0

UK 200.000 na na 200.000 na na

Other European Countries

AL 3.987 250 0 20.000 1.000 0

BA 26.100 3.600 0 73.000 3.000 0

CH 160.000 40.000 na 150.000 50.000 0

ME 3.500 550 0 4.800 940 0

RS 70.000 20.000 0 148.400 16.200 0

World

AU 12.500 0 0 5.000 0 0

BR 18.000 40.000 0 30.000 60.000 0

CA 200.000 20.000 0 225.000 25.000 0

RU 9 250.009 na 24.000 250.000 0

US 2.475.000 50.000 na 1.800.000 200.000 0

NZ na na na 17.500 0 0



51

COUNTRY ABBREVIATIONS

EU28 EU28 AL Albania AT Austria BA Bosnia Herzegovina BE Belgium CH Switzerland BG Bulgaria ME Montenegro HR Croatia NO Norway CY Cyprus RS Serbia CZ Czech Republic UA Ukraine DE Germany AU Australia DK Denmark BR Brazil EE Estonia CL Chile EL Greece CA Canada ES Spain AR Argentina FI Finland US United states of America FR France RU Russia HU Hungary KR South Korea IE Ireland CN China IT Italy JP Japan LT Lithuania KR South Korea LU Luxembourg ID Indonesia LV Latvia MY Malaysia MT Malta TH Thailand NL Netherlands VN Vietnam PL Poland EG Egypt PT Portugal RO Romania SE Sweden SI Slovenia SK Slovak Republic UK United Kingdom

Conventions to geographic regions: EU28: European Union member states. In the case when a new country has joined the EU, the country will be added also to previous years as a member of EU. Other Europe: Switzerland, Norway, Balkan countries Russia & CIS: CIS member states and associate states Rest of world: Oceania, Africa, South America

SYMBOLS AND ABBREVIATIONS AND DECIMAL PREFIXES

Symbol Meaning

, Decimal separator

. Thousand

- / na Data not available


52

GENERAL CONVERSION FACTORS FOR ENERGY

to from

1 MJ 1kWh 1 kg oe Mcal

1 MJ 1 0.278 0.024 0.239 1 kWh 3.6 1 0.086 0.86 1 kg oe 41.868 11.63 1 10 1 Mcal 4.187 1.163 0.1 1

FUEL PROPERTIES OF SELECTED BIOMASS FUELS

Fuel

Net calorific value,

dry content kWh/kg

(moisture content 0%)

(qp,net,d)

Moisture content

w-% (Mar)

Net calorific value, as

received=actual value kWh/kg (qp,net,ar)

Bulk density kg/loose m3

Energy density

(MWh/loose m3)

Ash content, dry, %

Sawdust 5,28-5,33 45-60 0,60-2,77 250-350 0,45-0,70 0,4-0,5 Bark, birch 5,83-6,39 45-55 2,22-3,06 300-400 0,60-0,90 1-3 Bark, coniferous 5,14-5,56 50-65 1,38-2,50 250-350 0,50-0,70 1-3 Plywood chips 5,28-5,33 5-15 4,44-5,00 200-300 0,9-1,1 0,4-0,8 Wood pellets 5,26-5,42 7-8 4,60-4,90 550-650 2,6-3,3 0,2-0,5 Steam wood chips

5,14-5,56 40-55 1,94-3,06 250-350 0,7-0,9 0,5-2,0

Lof wood (oven-ready)

5,14-5,28 20-25 3,72-4,03 240-320 1,35-1,95

Logging residue chips

5,14-5,56 50-60 1,67-2,50 250-400 0,7-0,9 1,0-3,0

Whole tree chips

5,14-5,56 45-55 1,94-2,78 250-350 0,7-0,9 1,0-2,0

Reed canary grass (spring harvested)

4,78-5,17 8-20 3,70-4,70 70 0,3-0,4 1,0-10,0

Reed canary grass (autumn harvested)

4,64-4,92 20-30 3,06-3,81 80 0,2-0,3 5,1-7,1

Grain 4,8 11 4,30 600 2,6 2 Straw, chopped 4,83 12-20 3,80-4,20 80 0,3-0,4 5 Miscanthus, chopped

5,0 8-20 3,86-4,06 110-140 1,72-2,19 2,0-3,5

Straw pellets 4,83 8-10 4,30-4,40 550-650 2,4-2,8 5 Olive cake (olive pomace)

4,9-5,3 55-70 1,00-3,10 800-900 1,46-1,64 2-7

Olive cake (olive marc)

4,9-5,3 <10 4,30-4,70 600-650 2,6-2,9 2-7

1kWh/kg = 1 MWh/ton = 3.6 GJ/ton Source: EUBIONET “Biomass fuel supply chains for solid biofuels”


53

ENplus REQUIREMENTS FOR WOOD PELLETS

Property Unit ENplus A1 ENplus A2 ENplus B Testing standard 11)

Diameter mm 6 ± 1 or 8 ± 1 ISO 17829 Length mm 3,15 < L ≤ 40 4) ISO 17829 Moisture w-% 2) ≤ 10 ISO 18134 Ash w-% 3) ≤ 0,7 ≤ 1,2 ≤ 2,0 ISO 18122 Mechanical Durability w-% 2) ≥ 98,0 5) ≥ 97,5 5) ISO 17831-1 Fines (< 3,15 mm) w-% 2) ≤ 1,0 6) (≤ 0,5 7)) ISO 18846 Temperature of pellets °C ≤ 40 8) Net Calorific Value kWh/kg 2) ≥ 4,6 9) ISO 18125 Bulk Density kg/m3 2) 600 ≤ BD ≤ 750 ISO 17828 Additives w-% 2) ≤ 2 10) - Nitrogen w-% 3) ≤ 0,3 ≤ 0,5 ≤ 1,0 ISO 16948 Sulfur w-% 3) ≤ 0,04 ≤ 0,05 ISO 16994 Chlorine w-% 3) ≤ 0,02 ≤0,03 ISO 16994 Ash Deformation Temperature1)

oC ≥ 1200 ≥ 1100 CEN/TC 15370-1

Arsenic mg/kg 3) ≤1 ISO 16968 Cadmium mg/kg 3) ≤ 0,5 ISO 16968 Chromium mg/kg 3) ≤10 ISO 16968 Copper mg/kg 3) ≤10 ISO 16968 Lead mg/kg 3) ≤10 ISO 16968 Mercury mg/kg 3) ≤ 0,1 ISO 16968 Nickel mg/kg 3) ≤10 ISO 16968 Zinc mg/kg 3) ≤100 ISO 16968 1) ash is produced at 815 °C 2) as received 3) dry basis 4) a maximum of 1% of the pellets may be longer than 40mm, no pellets longer than 45mm are allowed. 5) at the loading point of the transport unit (truck, vessel) at the production site 6) at factory gate or when loading truck for deliveries to end-users (Part Load Delivery and Full Load Delivery) 7) at factory gate, when filling pellet bags or sealed Big Bags. 8) at the last loading point for truck deliveries to end-users (Part Load Delivery and Full Load Delivery) 9) equal ≥ 16,5 MJ/kg as received 10) the amount of additives in production shall be limited to 1,8 w-%, the amount of post-production additives (e.g. coating oils) shall be limited to 0,2 w-% of the pellets. 11) As long as the mentioned ISO standards are not published, analyses shall be performed according to related CEN standards

Source: ENplus Handbook


54

GLOSSARY CHP heat pellets consumption/use

Volume of pellets used for the heat production within a combined heat and power appliance (CHP) corresponding to 2/3 of the total volume of pellets used in the CHP.

CHP electricity pellets consumption/use

Volume of pellets used for electricity production within a combined heat and power appliance (CHP) corresponding to 1/3 of the total volume of pellets used in the CHP.

Commercial heating pellets consumption/use

Volume of pellets used in dedicated heat boilers with a capacity greater than 50 kW. This class includes dedicated heat boilers used in residential buildings, public buildings, services, industry and excludes combined heat and power appliances (CHP).

Dedicated power pellets consumption/use

Volume of pellets used for electricity production in a plant only producing electricity without recovering the heat generated during the process.

Pellet consumption for electricity production

Without a specific note this corresponds to the total volume of pellets used in dedicated power plants and 1/3 of the total volume of pellets used in combined heat and power plants (CHP)

Pellet consumption for heat production

Without a specific note this corresponds to the volume of pellets used for residential heating, commercial heating and 2/3 of the total volume of pellets used in combined heat and power plants (CHP)

Residential heating pellets consumption/use

Volume of pellets used in domestic’s stoves and dedicated heat boilers with a capacity below 50 kW


55

LIST OF FIGURES Figure 8-1 World pellet production overview 2000-2015 (million tonnes) ........................................................................... 7 Figure 8-2 World wood pellet production shares in 2015 (percentage) ............................................................................... 7 Figure 8-3 World pellet map and tradeflow (in 2015, million tonnes) .................................................................................. 8 Figure 8-4 World wood pellet demand in 2015 - power, CHP and heating (million tonnes) ................................................. 9 Figure 8-5 Distribution of world wood pellet consumption in 2015 (percentage) ................................................................ 9 Figure 8-6 Top 10 wood pellet consuming countries by end-use in 2015 (million tonnes) ................................................. 10 Figure 8-7 Overview of European wood pellet production in 2015 ..................................................................................... 12 Figure 8-8 Main EU countries' wood pellet production in 2013-2015 (million tonnes)....................................................... 13 Figure 8-9 Trend of wood pellet production in 2010-2015 for 10 largest producers of EU28 (million tonnes) ................... 13 Figure 8-10 Countries experiencing continuous growth in 2012-2015 (million tonnes) ..................................................... 14 Figure 8-11 Countries experiencing fluctuating or declining production in 2012-2015 (million tonnes) ............................ 16 Figure 8-12 Estimate of raw material types shares per European country (percentage) ................................................... 17 Figure 8-13 Estimate of European national wood pellet producers’ main markets by end-use in 2015 (percentage) ....... 19 Figure 8-14 European wood pellet producers’ perception of the main difficulties in 2013 (percentage) ........................... 20 Figure 8-15 European wood pellet producers’ perception of the main difficulties in 2014 (percentage) ........................... 20 Figure 8-16 European wood pellet producers’ perception of the main difficulties in 2015 (percentage) ........................... 20 Figure 8-17 European pellet production by raw material in 2015 (percentage) ................................................................. 21 Figure 8-18 Overview of wood pellet consumption in Europe in 2015................................................................................ 22 Figure 8-19 Overview of wood pellet consumption for heating in Europe in 2015 ............................................................. 23 Figure 8-20 Evolution of EU wood pellet consumption for heating domestic and commercial excluding CHP (million tonnes) ............................................................................................................................................................................................ 24 Figure 8-21 Evolution of domestic (<50kW) EU wood pellet consumption (million tonnes) ............................................... 24 Figure 8-22 EU28 pellet consumption in heat production in 2015 (million tonnes) ............................................................ 24 Figure 8-23 Evolution of wood pellet consumption for residential and commercial heating (excluding CHP) in the 10 highest consuming EU countries in 2013-2015 (million tonnes) ...................................................................................................... 25 Figure 8-24 Estimate of pellet quality classes shares for domestic heat market per European country (percentage) ....... 27 Figure 8-25 Estimate of pellet quality classes shares for commercial heat market per European country (percentage) ... 27 Figure 8-26: Evolution of total amount of installed pellet stoves in 2013-2015 (thousand units) ...................................... 28 Figure 8-27 Evolution of total amount of installed residential pellet boilers (<50kW) in 2013-2015 (thousand units) ...... 28 Figure 8-28 Packaging of pellets in the domestic heat market (percentage) ..................................................................... 31 Figure 8-29 Overview of pellet consumption for electricity production in Europe in 2015 ................................................. 33 Figure 8-30 EU pellet consumption for electricity production in 2015 (million tonnes) ...................................................... 34 Figure 8-31 EU28 Member States pellet balance by country in 2015 - production, consumption, export, import (million tonnes) ................................................................................................................................................................................ 36 Figure 8-32 Top 10 of the EU28 wood pellet exporting countries 2010-2015 (million tonnes) .......................................... 37 Figure 8-33 Division of total EU28 exports (percentage) .................................................................................................... 37 Figure 8-34 Top 10 of the EU28 wood pellet importing countries 2010-2015 (million tonnes) .......................................... 39 Figure 8-35 Division of total EU28 imports (percentage) .................................................................................................... 39 Figure 8-36 Estimation of bagged wood pellet prices in selected markets in EU between July 2015 and June 2016 (with: retail price, 1 pallet in €/t VAT incl.) ................................................................................................................................... 41 Figure 8-37 Variation of bagged wood pellet prices between July 2015 and June 2016 (with: retail price, 1 pallet in €/t VAT incl.) .................................................................................................................................................................................... 41 Figure 8-38 Estimation of bulk wood pellet prices in selected markets in EU between July 2015 and June 2016 (with: delivered 6t, distance 100 km, delivery fees included. In €/t VAT incl.) .............................................................................. 42 Figure 8-39 Variation of bulk wood pellet prices between July 2015 and June 2016 (with: delivered 6t, distance 100 km, delivery fees included. In €/t VAT incl.) ............................................................................................................................... 43 Figure 8-40 Development of Argus cif ARA wood pellet index 2015 ................................................................................... 45 Figure 8-41 Worldwide ENplus certified producers............................................................................................................. 46 Figure 8-42 Worldwide ENplus certified pellet production ................................................................................................. 47


56

LIST OF TABLES Table 8-1 European wood pellet production in 2015 compared to 2014 ............................................................................ 18 Table 8-2 New pellet boilers and stoves installations per year in Europe (units) ................................................................ 29 Table 8-3 Total amount of installed pellet boilers and stoves in Europe (units) ................................................................. 30 Table 8-4 European wood pellet consumption for heating in 2015 compared to 2014 (tonnes) ....................................... 32 Table 8-5 Top 10 wood pellet exporting countries in the EU28 in 2011-2015 (tonnes) ...................................................... 38 Table 8-6 Top 10 wood pellet importing countries in the EU28 with breakdown of origin in 2010-2015 (tonnes) ............ 40 Table 8-7 Estimation of bagged wood pellet prices between July 2015 and June 2016 (with: retail price, 1 pallet in €/t VAT incl.) .................................................................................................................................................................................... 42 Table 8-8 Estimation of bulk wood pellet prices between July 2015 and June 2016 (with: delivered 6t, distance 100 km, delivery fees included. In €/t VAT incl.) ............................................................................................................................... 43 Table 8-9 VAT rate for wood pellet compared with general VAT rate applied in European countries in 2015 in percentage (*2014; **2013) .................................................................................................................................................................. 44

Sponsors

European Biomass Association Place du Champ de Mars 21050 BrusselsT : +32 2 318 40 [email protected] www.aebiom.org

www.aebiom.org

The Africa-EU Renewable Energy Cooperation Programme (RECP) is a multi-donor programme that supports the development of markets for renewable energy in Africa. It was launched by more than 35 African and European Ministers and Commissioners under the Africa-EU Energy Partnership (AEEP).

www.africa-eu-renewables.org

Africa-EU Renewable Energy Cooperation Programme

Vyborg Forestry Development Corporation

vfdc.ru/EN

Biffio Project

The BiFFiO project is an example of industrial symbiosis, initiated from aquaculture, agriculture and renewable en-ergy industries for a sustainable waste management by producing renewable energy from mixed aquaculture and agriculture waste, in addition to production of fertilizer, which will be used in agriculture sector. The partners will develop energy efficient, cost effective, easy to implement and easy to operate biogas reactor technology. BiFFiO has in total eleven partners including SME Associations, other enterprises, and research institutions participating in the project that will run until the end of 2016.

www.biffio.com

PELLET MARET OVERVIEW · 2016-11-07 · PELLET MARKET OVERVIEW A N EXTRACT OF THE AEBIOM...

Documents

Transcript of PELLET MARET OVERVIEW · 2016-11-07 · PELLET MARKET OVERVIEW A N EXTRACT OF THE AEBIOM...