Wood biomass pellets: US and UK blossoming

12/13/13 10:23 PM

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Wood biomass pellets: US and UK blossoming

Bioenergy Crops
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US boiler manufacture and wood biomass pellets production are both

blossoming in United States as well as UK legislation moves forward to
increase co-firing. U.S. pellet producers who are selling into export

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markets in Europe are coming off an eventful year thats seen demand
continue to growthough not as quickly as some had hopedand some
certainty gained concerning the UK market and its renewable energy

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utilization goals going forward. Meanwhile, industrial pellet capacity in

the U.S. continues to zoom upward as new plants came on line last year,
while even newer plant projects were announced. Exports of wood pellets
from the U.S. to the European Union (EU) doubled from 2009-2011, and

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the EU took in an estimated 1.5 million tons of U.S. wood pellets in 2012,
according to Wood Resources International (WRI). Projections for the
future of EU pellet consumption vary, but all are pointing well upward,
from a rough consensus among third-party observers of 15-20 million
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Wood biomass pellets: US and UK blossoming

tons annually by 2020, to projections by some European interest groups of

12/13/13 10:23 PM

Photos from Flickr

pellet usage in the 60-80 million ton range across the EU by that time.

Wood pellet consumption in the USA and Canada. Numbers from 2007 onwards are estimates. Source: (Melin,
But also residential consumption in US is increasing dramatically. EIA
releases consumption, price data for wood and waste biomass. According
to the EIA, California led the nation with residential wood biomass pellets
consumption in 2011, with approximately 1.665 million cords consumed.
A cord is roughly equal to 128 cubic feet of stacked wood material.
Californias consumption equated to approximately 33.3 trillion Btu.
Missouri was the second largest residential consumer of w ood biom ass
ass,
with 1.166 million cords, or 23.3 trillion Btu consumed in 2011.

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Pennsylvania rounded out the top three, with 1.076 million cords, or 21.5
trillion Btu, of residential consumption. Total U.S. residential consumption
of wood equaled 22.5 million cords, which accounted for 450 trillion Btu

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of output. See full report of EIA h er ee.

biofuels

Biomass

C3 grass

Forecast of wood pellet exports from North America 2007-2017, in millionbiopower

tonnes. Source: Seth
Walker, Associate Bioenergy Economist, RISI

C4 grass CAM
Cardoon

UNITED KINGDOM: In 2012, a big impact on North Americas industrial

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Wood biomass pellets: US and UK blossoming

12/13/13 10:23 PM

UNITED KINGDOM: In 2012, a big impact on North Americas industrial

pellet industry came from the United Kingdoms Dept. of Energy and
Climate Change (DECC), which published a consultation decision on the
direction of British renewable energy policy for the near future. As part of
the decision, and because of inherently better energy utilization ratios,
combined heat and power generating facilities (CHP) are exempt from the
UKs dedicated biomass generating cap once they receive certification
under the DECCs CHP Quality Assurance Program. In essence, the
DECCs decision going forward favors the continued growth of biomass
co-firing and biomass conversion at existing UK coal-burning power
plants, while placing a cap on generating capacity coming on line for new,
dedicated biomass power plants. The non-legislative cap, which covers the
next five years, is set at 400 MW for new, dedicated biomass generating
capacity that will be supported under the countrys Renewable Obligation
Certificate (ROC) system.By establishing the 400 MW cap on new,

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pellets

perennials
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rotation
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dedicated biomass generating capacity, DECC officials believe there will be

more progress made in the process of taking coal-fired generating
capacity off-line (or converting it), while at the same time upholding ROC
value.
The Government may be convinced that there will be an equal split
between technologies, or even a skew in favour of heat pumps, but history
says that, if they genuinely want to deliver on renewable heat, they need
to concentrate on biomass (as they understood was the case before heavy
lobbying by the Big Six energy companies, who sell electricity and dont
sell biomass, persuaded them otherwise). Given the constraints on the
native resource in the UK, they will need to rely heavily on imported
biomass, which generally means pellets.
Production in countries like Canada, America, Russia and Brazil enjoys
some advantages, particularly of scale, energy and feedstock costs, even
over Austria, Germany and Sweden, let alone the UK. It is likely that highgrade pellets can be produced in these countries for around 110120/tonne in 2012 money. And the scale of the resource and limited local
demand suggests that they can supply tens of millions of tonnes
sustainably. But at the moment, the pellet-heating market in the UK is too
small to ship the pellets efficiently. If the market can only absorb a few
thousand tonnes at a time, the size of boat involved will cost over
20/tonne for the shipping, plus 5/tonne at either end for the handling
at the dock. Most of the pellet plants in these countries arent near the
sea, so they have significant additional costs getting the pellets to the port.
And boatloads of pellets have to be put into storage while the stock is
gradually run down, adding another 10-20/tonne of cost. The businesses
involved have to cover their overheads, and the supplier has to distribute
the pellets to the final user. That puts the cost of importing these pellets
above the cost of using British pellets in most circumstances at the

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Wood biomass pellets: US and UK blossoming

12/13/13 10:23 PM

moment. But as the delivered cost of British pellets rises above

200/tonne, and the size of the market enables the use of larger boats
(which could save 10/tonne of shipping costs), imports should become
competitive and import volumes should expand rapidly to supply the
excess demand. That is why we anticipate that imports will prevent prices
escalating beyond around 200-220/tonne (in 2012 money), even as
demand exceeds native production.
The one threat to this scenario is if governments subsidise biomass power
generation by so much that they start sucking up all the excess pellet
production. For example, if half (1.5 GW) of Drax power station were
converted to biomass (as is being considered) and run at a load factor of
68% (producing around 9 TWh or 2.5% of the UKs electricity), it alone
would need the equivalent of around 5,000,000 tonnes of wood pellets per
year. That is enough to heat around one-third of the off-grid residential
properties in the UK. The amount of the energy in the pellets that would
be wasted up the chimney (15 TWh) would be enough to heat around
1,000,000 homes.
Fortunately, so far, biomass generation has not been subsidised
sufficiently to enable it to pay more for pellets than biomass heat (quite
rightly, given the relative efficiencies and carbon savings). It is in no ones
interest to encourage inefficient use of the biomass resource, so if
governments place the interests of the economy and environment ahead
of the interests of big business, they will hopefully maintain the
differential that ensures that wood pellets are worth more for heat or CHP
than for power. We need to keep the pressure on them to remind them
where their priorities ought to lie.
Som e g ood ar ticles and publications on US and UK pellet
m ar k ets can be found h er e:
UN ITED STATES
Developments in international solid biofuel tradeAn analysis of
volumes, policies, and market factors (2012)
Analysis of U.S. residential wood energy consumption: 19672009
(2012)
Evaluation of wood pellet application for residential heating in British
Columbia based on a streamlined life cycle analysis (2013)
Technical and economic assessment for the production of torrefied
ligno-cellulosic biomass pellets in the US (2013)
Economic impact of wood pellet co-firing in South and West Alabama
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