When the European Union adopted its goal of reducing emissions and renewable energy more than a decade ago, we immediately seemed to be able to imagine a glittering future market where, in addition to wood products, a large number of global players wanted to seize this Opportunity - While some have been successful, the rest have been unable to get a share of the unmanageable export markets, and beyond that, companies need more than passion, patience and perseverance to be key to their success.
Subsequent landslides in North America led to the emergence of a number of exporters of wood pellets, which have seen exponential growth in output over the years. The EU consumer market is an important catalyst but suppliers are seeing new opportunities in Asia, but even if The new market is coming and the EU is the current strong market and is expected to remain a key driver for at least the next few years with many of Europe's large particulate consumption projects coming online by 2020.
Production and consumption trends
According to 2016 statistics, nearly 29 million tons of wood pellets are produced worldwide (excluding China), with nearly half of the EU's output reaching 14 million tons, accounting for 65% of the EU's own 21.7 million tons of demand, while the rest 35% mainly from North America, a small amount from other regions including Russia.
Pictured: 2016 global wood pellets production and marketing map (excluding China) In contrast to the large-scale production in the United States, the production of wood pellets in many EU member states is scattered and not concentrated in certain regions. Due to the increasing demand, the EU's output has been on an upward trend for many years. However, with 2014-2015 (13.5 million -14.1 million tons) at a 4.5% annual rate of production and production fell to 14 million tons in 2016. Gauthier, president of the European Pellet Association, said: "The unfavorable weather conditions are a major factor in stagnation in 2016. It is worth mentioning Yes, the industrial market is less dependent on the weather and has been on the rise for many years.
According to the annual report of the European Biomass Association, 61.7% of the 21.7 million tons of wood pellets consumed by the EU in 2016 were for residential heating (42.6%), commercial (11.8%) and cogeneration-CHP %); The remaining 38.3% is consumed by the power plant.
Pictured: 2016 European wood pellet yield distribution
Pictured: 2016 European wood pellet consumption distribution Fiona Matthews, research manager at Hawkins Wright (Global Forest Research Institute), says they have seen very different rates of growth due to the very different drivers of the home and business sectors: "We expect residential The growth in the heating market will slow down. The industrial market is characterized by very few users but very high consumption per user, although demand for industrial pellets will soar due to the two new projects, Lynemouth and MGT Power , But for the moment we do not envisage any additional demand growth. '
Five new industrial-scale particulate consumables are expected to come online between 2018 and 2020, the largest of which is EPH in Lynemouth, England. The 420 MW coal-fired power plant is being converted to use up to 160 000 tons of wood pellets, which will be operational by early 2018. Some of the projects going to the Netherlands this year will also generate about 1.5 million tons of new demand; and finally, MGT Power's 299MW power project in the United Kingdom will consume annually from 2020 About 1.1 million tons of particles.
Seth Walker, a senior economist at FutureMetrics, points out that unlike most power projects that use particulates, MGT can be said to be particle-specific and says many of these projects are designed to extend coal-fired power plants The use of pellets does not mean once and for all, and I think demand will likely stabilize in the coming years.
This is interesting, at least for the moment, for utilities (power stations) in all member states turning to wood pellets. Hannes Lehner, Senior Manager, Pöyry Management Consulting, Lechner said: "We are still receiving inquiries from electricity customers in Europe including Spain, Portugal, Germany and France's coal companies, hoping to convert to biomass, which are no longer favored by coal and will soon cease completely The only option for their survival is to convert to biomass, but they also need the right support system, which is often a drag on. The government generally does not support large-scale biomass projects.
In addition to these potential conversion factors, like Walker, Lechina also said that demand will stabilize by 2020 and then be stable, while demand is expected to contract from 2026. Lechner Said: "It will contract very significantly, especially when Drax and Lynemouth endorsement ended in 2027. That could have had a considerable impact on U.S. suppliers, while potential in Portugal and the Baltic region of Europe Of course, the change will not come soon, but as the current situation suggests, demand will shrink significantly.
In preparation for the transfer market, Canadian suppliers have already entered into cooperation agreements with Japanese companies. Like the US supplier Enviva, Lechina pointed out that although producers in the southeastern United States may not be able to easily obtain the same success in Asia as in the European market. "If you look at the cost-of-supply curve for wood pellets entering Japan and South Korea, then the United States will not be as well positioned as the United States is rather expensive compared to supplies from countries such as Malaysia, Indonesia and Russia," he said And that's where we see potential for growth in the future, and suppliers that are high in the cost curve will find it hard to compete for long in this nascent Asian market, so they will have to do something - possibly turning to the west coast of the United States, where biomass Can consume limited, but can accept higher prices, or directly in the Asia Pacific region to establish a localization platform to bring their expertise and technical essentials to the local market.
Walker said while Europe's industrial grain growth is slowing, he believes residential, commercial or small-scale combined heat and power generation or district heating is likely to remain large.
'Residential / Commercial' Demand and growth have been slow for years due to intense fuel price competition and warm winters, so there is little incentive to change, 'Walker said.' In the UK, these markets are heavily affected by Driven by fiscal subsidies from renewable thermal incentives, changes in rules and support programs have led to a start-up in demand, Matthews said.
RHI went through some controversy over the implementation of the flaws and the serious overruns, but to a large degree succeeded in it. "He said:" These are the real issues in Northern Ireland. In England, Wales and Scotland there is no mismanagement or This is a very generous reward program that has been phased out, but the government still supports RHI. '"He said." If you want to decarbonise your energy system, biomass is a few viable for heating and cooling "We expect the further growth in the biomass heating market in the UK to fall short of what we expect, but growth is certain, and we aim to increase domestic resources and avoid importing and relying on international markets."
Most European countries have defined the targets for energy and carbon emissions by 2020 at least for now, and Lechina said: 'We see more EU countries are looking at how much their EU biomass resources are really supporting Biomass heating growth and how much biomass resources should be used In focusing on this, they do not consider stimulating biomass that is imported into the domestic market over long distances, since then you are on the path to sustainability and carbon footprint Discussion, which is the current politicians are very vigilant.
However, according to Leschner, in some cases it is economically advantageous to import wood pellets for domestic heating. "This is mainly due to the high cost of raw materials in many EU countries and the fact that pellet plants are often relatively large-scale Small, not as efficient as those of 200,000 or 500,000 tonnes in North America. Suppliers can compete in the market, but demand will undoubtedly increase. '
At present, the sustained growth of industrial and household consumption in the EU market (after 2020) depends mainly on the policy.
Need to pay attention to the policy
Gartner said 2018 by 2020 will be a crucial year for renewable energy development in the future, saying: 'In fact, EU policymakers are discussing a very important piece of legislation to be implemented by 2020 The future legislative framework for renewable energy, including bioenergy, will be formed by 2030.
For bioenergy, which will depend on the outcome of the negotiations, there are some important developments that could be opportunities or challenges for the industry.Gartier first identified the sustainability criteria for both solid and gaseous biomass, he explained: 'Only biofuels meet the sustainability criteria by 2020. The legislation currently under discussion is anticipating the sustainability requirements for solid biomass, including particulates, and most likely the result is that only facilities of more than 20 megawatts will meet These requirements, but the details are still under discussion, and other thresholds are taken into account, such as 1 MW.
Another important policy is to develop renewable energy targets in the area of heating and cooling (H & C) and to improve the energy efficiency of buildings, saying: 'The emphasis on hydrocarbon decarbonization can be seen as an important market opportunity, Especially at the civilian level, but this new focus has also drawn attention to biomass emissions and air quality, especially in the area of distributed stoves and boilers.
Finally, the negotiations are restricting the electricity generation of biomass cogeneration, Gartner said, limiting restrictions that could prevent member countries from generating electricity solely from biomass.
According to Matthews, the European Union's timber pellet market policies and subsidies that continue to promote residential and commercial projects, in addition to the UK RHI, include the Fonds Chaleur Calorie Program in France, the Renewable Calorie Support Program in Ireland, Conto Termico in Italy and Biomass boiler subsidies implemented in Austria, Germany, Poland and the Netherlands.
In the industrial sector, the UK's Renewable Energy Obligations and Differentiation Contract Policy (ROC), the Netherlands SDE + and the Danish Heat Tax are both important policy drivers.
Matthews said things are always changing in the short term with regard to policy-making challenges. "The current balance of supply and demand is quite tight, especially in the case of a downturn in heat due to low inventories, the consolidation in Italy, and the bursting in some areas With the cold, the heating market is declining. The long-term trend still exists. The biggest issue is the possible impact of the rising demand in Asia. '
If the heating industry continues to grow and industrial projects come one after another, Gartner believes that the main challenge may be to ensure adequate production capacity to prevent a supply shortage in the market.At present all consumption of biomass in Europe The level is much higher than production, which, according to Gartner, is 55% higher in 2016 and therefore requires the import of wood pellets from the United States. "The competition between the United States and the EU producers is still small." However, the lack of The main factor in the competition is the fact that Particles is a large industrial user in the EU's target market, while the EU's local suppliers supply primarily to the individual and mid-market.
As Matthews pointed out, the market is changing rapidly, and Walker pointed out that a few years ago we had predicted that Germany would become a net importer of wood pellets, but this is not the case now, saying: 'The market is shifting in the opposite direction - stagnation Sales have fallen, and everything is different now from a few years ago.
In the end, Lechner pointed out that the EU Commission could change the rules at any time, adding: "The situation can change very quickly and is very significant - with many factors and uncertainties." For example, if Germany really needs health Material demand for electricity generation, demand may rise immediately, as are coal-fired power plants in Spain and Portugal, lobbying the government and we must look at developments, a rather uncertain future but with potentially more Upside. By 2026-2027, suppliers must remain vigilant on the verge of this cliff because it is no longer far from that moment, and they must really be strong enough to find a survival strategy instead of leaving behind some stranded assets '
Editor's Note: As of press time, the British government announced its response to further control of biomass conversion costs under the Renewable Energy Obligation Law (ROC), which recommended that cap be enforced at RCO units at the power station level, rather than by ROC for prospective students In response, Drax, the largest power plant in the UK, announced that it will convert its fourth unit into wood-burning pellets and plans to complete the work by the second half of 2019. Drax's existing units consume annually Approximately 2.3 million tonnes of wood pellets, the availability of the fourth unit may be lower than that of the three existing ones because Drax intends to run it when electricity demand is high.
In the meantime, the European Parliament has confirmed and refined the revision of the 'Renewable Energy Act' and the 'Energy Efficiency Act' to ensure the sustainability of bioenergy consumed by the EU from 2021 to 2030. The European Biomass Association issued a statement of approval, It is pointed out that this approach will allow solid biomass to continue to play a key role in Europe's energy transformation and will provide consistent and realistic sustainable safeguards, but the biomass energy sector will have to be cautious in parliamentary panel negotiations.
