Pellet Market Overview

8/12/2019 Pellet Market Overview

1/15

Pellet Market Overview

The wood pellet market is booming in Europe at a growth rate of 25% year to year; theEU 2020 target for renewable energy, i.e. 20% in gross energy consumption (GEC), is apredominant driver for this boom. The annual pellet production in Europe amounted to 8

million tons in 2008, which corresponds to approximately $2.4 billion. According to theEuropean Biomass Association, Europe is expected to reach a consumption level of 50million tons per year by 2020, which is approximately equal to $15 billion in 2009 unitprices.

In 2009, around 60 % of the produced pellets were of high quality, suitable for usage insmall-scale residential combustion. Main producing countries are Sweden, Germany,

Austria and Italy. The other 40 % were industrial pellets of lower quality. Again,Germany and Sweden contribute large shares but also countries such as Belgium andthe Eastern European countries (e.g. Poland and Estonia) are important industrial pelletproducers.

In 2008, approximately 630 pellet plants produced about 8 million tons of pellets in 30European countries. Imports from North America amounted to over a million tons. 95%of the produced and imported pellets were consumed in EU 27 (representing a 0.1%share of the Gross Energy Consumption). For 2009 imports in Europe are estimatedwith about 3.4 million tons, of which about the half of it can be assumed as EU intratrade. Total export is estimated with 2.7 million tons, mainly intra trade. While somelarge markets, such as Germany and Austria, are largely self-sufficient, other marketsdepend on the import of wood pellets, like the Netherlands, Belgium, and Denmark.Rotterdam is one of the major hubs for imported pellets, St. Petersburg and Riga thosefor export. Bulk pellets for power production show higher price fluctuations, compared tothose for district heating. Different price ranges observed in 2006 and 2007 forresidential heating in individual countries moved towards the same range in 2008,leading to the assumption, that a European pellet market begins to develop.


2/15

Figure 1: Balance of pellet volumes for the major European country markets 2008

Future Development:- The demand for high quality pellets in the residential sector and particularly in the

medium scale sector (e.g. community solutions) is likely to continue growingstrongly, not only in the traditional markets (Germany, Austria, Italy) but also incurrently small markets such as France, Spain and also in Eastern Europe.

- it is unclear how the demand for industrial use (e.g. in CHP applications) willdevelop. In this sector, growth is anticipated in countries such as Poland butplants using pellets for co-firing are usually very flexible concerning the fuel used.Changes in pellet prices or other factors such as changes in support policiescould have large influence on the future demand in this sector.

- The uncertain demand development in the large-scale sector is accompanied byan ongoing build-up of additional production capacities for industrial pellets(Canada, USA and Eastern Europe, incl. Russia) while the increasing demandfor high quality pellets is challenged by a difficult raw material supply situation inEurope.

- Long-distance transports of high quality pellets are rarely reported. The logistics

of pellet supply to the residential sector therefore still seems to be mainly basedon national or even regional supply chains. Exceptions are the pellet trade frome.g. the Baltic States to Denmark or the pellet transport from various Europeancountries to Italy.

- In contrast, the international trade with industrial pellets has reached impressivevolumes. One reason for this of course is the fact that large-scale pelletconsumption mainly occurs in countries without significant domestic pelletproduction (e.g. the Netherlands, UK and Denmark).


3/15

- This picture might change in the future and the long-distance trade with highquality pellets (e.g. from Canada or Russia to Europe) might become necessary.

A common characteristic of all pellet markets in Europe is the ongoing rapid growth onthe demand and supply sides that even occurs in mature markets. On the other hand,

the availability of raw materials becomes more and more limited due to the competitionwith other industries. This effect is currently intensified following the low activity of theconstruction sector and other wood processing industries and, as a consequence,decreased timber sales.

Even if the recovery of these industries can be foreseen, the European pellet industrywill have to meet two major challenges in order to provide for further market growth.

Firstly, a broader raw material basis is necessary to increase pellet production inEurope. Further R&D effort is needed to facilitate the use and to show theenvironmental and economical viability of alternative wood and non wood feedstock.

Namely, forest thinnings, wood chips, short rotation coppice, agricultural residues (e.g.straw) and dedicated herbaceous energy crops are considered.

Secondly, pellets are traded internationally in significant amounts already today. Withgrowing demand this source of pellet supply will gain importance. Reliable and costeffective trading schemes need to be developed in order to ensure stable pellet marketsin Europe.

Above all, the sustainability of all current and future supply chains needs to beassessed. Trading schemes and production systems that are environmentally or sociallyharmful must be avoided.

Based on preliminary 2009 production and trade figures, the consumption for 2009 isexpected to be about 8 million tons in 2009 which is an increase from 1.5 million tons in2001. Countries having a high consumption level are Sweden, Denmark (both: mainlybulk pellets for combined heat and power), the Netherlands, Belgium (both: pellets forlarge scale power production), Germany (mainly bulk pellets for residential heating) andItaly (pellets in small bags). Sweden is by far the largest user of pellets (1.8 milliontons), whereas the other countries cited have estimated consumption levels around 1.0million tons.

What is the Potential for pellets in Europe?

Current use of heating oil in the EU is 75 Mtons per year. Assuming that wood pelletswould substitute primarily fuel oil consumption, this corresponds roughly to 150 Mtons ofpellets. According to the European Biomass Association, Europe is expected to reach aconsumption level of 50 million tons per year by 2020, compared with 8 million tons in2009. This is likely to exceed European biomass production capacity, which isapproximately 14 Mton per year (including EU + non-EU Europe). Thus Europe wouldrely heavily on alternative supply sources to meet this rapidly increasing demand.


4/15

Ref: European Bioenergy Services

Drivers for the global growth can be summarized as;- Oil/Gas/Coal prices raising further- IEA sees serious shortages both in oil and natural gas supply ahead- Constant increase of global power demand- New and advanced processing technologies ahead- More developed trading mechanisms


5/15

- Increased security of supply by diversification of resources

Figurecomparison of average fuel prices in Europe

Consumer CharacteristicsThe individual consumers in Europe can be characterized as follows (Aebiom 2008):

Small scale residential users with a demand of less than 10 tons pellets per year.They consume pellets for heating of individual houses using pellet stoves, like inItaly, or pellets boilers for warm water heating systems. The delivery is organizedusing bags (for pellet stoves) or as bulk (for boilers), where trucks blow the

quantity needed for one year into a pellet storage room or container. Small to medium scale users with a demand between 10 and 1,000 tons pellets

(in bulk) per year. Typical users of this size are companies, hotels, the servicesector, and bigger residential units. The market share is rapidly growing due togrowing prices of heating oil.

Medium and large scale users with a demand above 1,000 tons per year. Powerplants, industries and large district heating companies may typically consumeseveral hundred thousand tons per year in a single plant.


6/15

FigurePer capita pellet consumption in residential heating (2008)

REFERENCE:http://www.eubia.org/uploads/media/NEF_B_WtE_Investment_trends_01.pdf

European Pellet Consumption
http://www.eubia.org/uploads/media/NEF_B_WtE_Investment_trends_01.pdfhttp://www.eubia.org/uploads/media/NEF_B_WtE_Investment_trends_01.pdfhttp://www.eubia.org/uploads/media/NEF_B_WtE_Investment_trends_01.pdf


7/15

Historical Pellet Consumption

Expected Growth Trends to 2030


8/15

Shipping Costs


9/15

Note: Freight costs based on shipping 40,000 tons pellets from Vancouver to Europe

Cost Break Down (2009)Raw Material $23.6Production $70

ShippingCharter rate $26Fuel oil/diesel $22Loading/discharging $5.5Fees/customs/duty $5.5Harbor dues / Mis. $3.6Margin $23.9Selling Price in ARA $180

Total Costs

Development of Pellet Production & Consumption in EuropeRef:http://www.pwc.com/en_GX/gx/forest-paper-packaging/events/pdf/ReEnergising1_PetriLehtonen.pdfGlobal and European Perspectives on Wood-Based Bioenergy, Petri Lehtonen, InduforOy Vancouver 14 May 2009
http://www.pwc.com/en_GX/gx/forest-paper-packaging/events/pdf/ReEnergising1_PetriLehtonen.pdfhttp://www.pwc.com/en_GX/gx/forest-paper-packaging/events/pdf/ReEnergising1_PetriLehtonen.pdfhttp://www.pwc.com/en_GX/gx/forest-paper-packaging/events/pdf/ReEnergising1_PetriLehtonen.pdfhttp://www.pwc.com/en_GX/gx/forest-paper-packaging/events/pdf/ReEnergising1_PetriLehtonen.pdfhttp://www.pwc.com/en_GX/gx/forest-paper-packaging/events/pdf/ReEnergising1_PetriLehtonen.pdfhttp://www.pwc.com/en_GX/gx/forest-paper-packaging/events/pdf/ReEnergising1_PetriLehtonen.pdf


10/15

Pellet Demand in Europe:

Fuel Cost Comparisons and Feasibility in Europe

Ref: European Biomass Association,http://www.aebiom.org/IMG/pdf/Pellet_Roadmap_final.pdf
http://www.aebiom.org/IMG/pdf/Pellet_Roadmap_final.pdfhttp://www.aebiom.org/IMG/pdf/Pellet_Roadmap_final.pdfhttp://www.aebiom.org/IMG/pdf/Pellet_Roadmap_final.pdf


11/15

CO2 Reduction Benefits:


12/15


13/15

GLOBAL PELLET EXPORTSRef: University of Utrecht, 2009

Pellet Potential in Turkey

Wood is widely used for heating and cooking purposes in Turkey. Annual fire woodproduction of General Directorate of Forestry (GDF) are about 3 Mt. (6million m3).According to GDF calculations, sustainable forest residue potential for bio-energypurposes is approximately 5 to 7 Mt annually.

Currently, electricity production from wood is made only in a paper factory for their ownneeds in Turkey. The paper sack factory use annually 6,000 tons wood residues forpower generation and the capacity of plant are 10 MW.

Furthermore, it is estimated that annually about 2 Mtons woody residues potential usedin forestry industry for heating purposes in some production processes.

Turkey has about 21.7 Mha forest areas. It is about 27% of the countrys land area ofwhich GDF has wood residue resources. Commercial removals are average annually 16Mm3 and annual increment is approximately 36 Mm3. Annual fire wood production isabout 6 Mm3.

In the residential sector, people in rural areas are the biggest users of wood energy.Currently industrial wood energy sector has not developed yet. There are only a few


14/15

wood briquettes production factories. Wood chips are only used in some processes forheat generation in big forestry factories.

Although there is no commercial wood and co-firing power plants in Turkey, due to thepromote legislation it is expected to be installed in coming years. On the other hand, the

growth of the biomass sector in Europe creates an opportunity for the development ofwood energy markets in Turkey.

Bui lding Statist ics & Heat ing Types in Turkey

Haber: Yap Dergisi/239 01.10.2001

Devlet statistik Enstits'nn (DE) 1984 ylnda yapt bina saym anketigeniletilerek yenilendi. DE 2000 Bina Saym statistikleri'nde konut yaps,kanalizasyon, su ve stma sistemleri inceleniyor. Elde edilen verilere gre son 16 yliinde bina sys yzde 78.6 orannda artarak 4 milyon 387 binden 7 milyon 838 bineykseldi. 1984'te binalarn yzde 80'i borulu su tesisatna sahipken 2000'de bu oran

yzde 90'a ulat.

Trkiye'de konut amal kullanlan bina says 6 milyon 635 bin olarak belirlendi.7.8 milyon konutun 6.8 milyonu stma gereksinimini soba ile karlyor. 255 bin konutkaloriferli. Doalgaz tesisat ulaan bina says ise 322 bin. statistikler Trkiye'debinalarn ortalama 2.1 katl olduunu ortaya koyuyor. Be ve daha yksek katl binasays 600 binin zerine ularken yalnzca 41.714 binann yangn merdiveni bulunuyor.7.8 milyon konutun yalnzca 966 bini ak ya da kapal otopa rka sahip.

2004 yl verilerine gre Trkiye'de toplam 17 096 000 adet konut mevcut olup, bu konutlardatketilen toplam enerji 16 565 000 TEP'dir. Bu tketilen toplam enerjinin 726 000 TEP (% 4.4) kadarfuel oil ile karlanmtr.


15/15

Sanayi Sektr2004 yl verilerine gre lkemiz sanayisinde tketilen enerji miktar 27 406 000 TEP olup, bu enerjinin

4 110 900 TEP (%15) kadar fuel oilden karlanmtr.

Turkiyede Soba Kullanimi - 100 MLYON TLLK SEKTRSsler Soba Genel Mdr Cemal Dereolu, sobada sezon satlarnn ekim, aralk aylarnda olduunu, bu k, ar souklarve yksek elektrik ve doalgaz faturalar sebebiyle, kk bir kesimin sobaya geri dndn sylyor. Ancak, Dereolununverdii bilgiye gre, sobaya dnenlerin ou dk gelirli tketiciler ve odun-kmr sobas kullanm bykehirlerinvarolarna ve krsal kesime doru kesiyor. Byle olunca da, ucuz ve kalitesiz merdivanalt sobalara talep artyor. Zaten,geleneksel byk soba reticileri de (son yllarn trendini gz nnde tutarak) ya soba retimini terk ediyor, ya da yan iolarak srdrmeyi tercih ediyor.Dereolu, 17 milyon Trk hanesinde soba kullanm orannn yzde 20lere indiini ama her eye ramen Trkiyede yldaortalama 500 bin adet odun-kmr sobas satldn ve sektrn 100 milyon TLlik ulatn sylyor:

Sobann maliyeti (fiyat olacak her halde) 100-300 TL arasnda deiiyor. ou hanede de eski sobalar kullanlyor. Yenihanelerde zaten soba kullanm yok. Toplu konutlarda zaten merkezi stma var. Bu nedenle retim arlkl merdivenaltnakayd. Byk reticilerin byk ksm da farkl alanlara giriyor. Soba zaten sezonluk bir rn. Nisanda balayp aralk aynakadar sryor.Son krizde soba pazar daralsa da, yksek faturalardan kaan pek ok aile, ya tavan arasndaki sobay yeniden kurdu, ya dayeni bir soba ald. Cemal Dereolu, sobann geleneksel snma tr olduunu, zellikle ya ellinin zerinde olanlarn herzaman bu scakl aradn ve saylar az da olsa, sobaya dndklerini sylyor.Belediyelerin bedava kmr datmas da, dk gelirli ailelerin sobadan vazgememesine hatta sobaya dnmesine sebepoluyor. Tabii ki bu politikalar, zellikle bykehirlerde hava kirlenmesine sebep oluyor.zetle, evre kirlilii ve (doalgaz ve elektrie nazaran) kullanm zorluuna ramen, geleneksel odun-kmr sobalarnntketici nezdindeki tartmasn en byk arts, (Dedeolunun verdii rakama gre) yzde 30 ila 50 arasnda tasarrufsalamas.

KII 800 TLYE IKARTIRIYORstanbul Sultanbeylide eitli marka sobalarn satn yapan Ata Sobann kurucusu Kksal Ata da, odun ve kmrlesnmann yzde 50 tasarruf saladn iddia ediyor: Bir konut, k bir buuk ton kmrle karabilir. Bunun da maliyeti 800TLye denk geliyor. Dier snma trlerine gre hl hesapl. Ayrca 50 yan zerindekiler eski scakl zledikleri iindoalgaz yerine odun ve kmr sobasn tercih edebiliyor. Son dnemde yksek faturalar nedeniyle sobaya dn olsa da,yllarn soba satcs Ata, her k daha az soba satmaktan yaknyor, Gemii ok aryoruz. Doalgazn gittii yer saysarttka, soba says her geen yl azalyor diyor. Sobalarn daha ok, varo denilen, stanbulun Sultanbeyli, Samandra gibidk gelirli semtlerinde satldn syleyen Ata, soba alacaklara bir de tyo veriyor: Tulal soba aln ve zgarasnn st

seviyede ve koval olmasna dikkat edin!

SEKTR ADI ENERJ TKETM (Bin TEP)

Sanayi 30.996

Konut ve Hizmet 23.860

Ulatrma 15.010

Tarm 3.610

Dier 27.470

Pellet Market Overview

Documents

Transcript of Pellet Market Overview