The global particle market has risen sharply over the past decade, largely due to the needs of the industrial sector, and although the market for particle heating accounts for a large global demand, this article will focus on the analysis of industrial wood pellets.
Figure 1 shows FutureMetrics' prediction of the heating particle demand in each country. In recent years, the pellet heating market has been affected by declining costs of fossil fuels (oil and gas prices) and rising winter temperatures in North America and Europe.FutureMetrics predicts that a combination of rising oil prices and decarbonization will lead to particle demand in the 1920s Growth is restored.
Over the past few years, the industrial wood pellet industry is similar in size to the heated pellet industry and is expected to grow substantially in the next decade.
The industrial wood pellet market is driven by carbon reduction and renewable energy power generation policies.Industrial wood pellets are a low-carbon, renewable fuel that can easily replace coal in large utility plants.
Particles can be replaced with coal in two ways, either completely or co-fired. For complete conversion, the entire unit at the coal plant is converted from coal to wood chips, which requires processing fuel, feeding systems and burners The co-firing is a method of burning wood particles together with coal, and at low co-firing ratios, only minor modifications to the existing coal facilities are required In fact, in the lower proportions of the mixture To 7%), facilities need hardly change.
The historical actual demand in the industrial pellet market and the forecast for FutureMetrics are shown in Figure 2. The total demand for 2017 is estimated at 15.9 million tonnes. As shown in Figure 2, demand in the UK and the EU is expected to remain high by 2020. However, Japan and South Korea are expected to see substantial growth in demand by 2020. We also expect that by 2025, Canada and the United States will have some Coal-fired power plants using industrial wood pellets.
Particle demand
It is estimated that new large-scale public coal-fired and conversion projects in Japan, the European Union, the United Kingdom and South Korea, as well as many smaller independent power plant projects in Japan, are expected to add about 24 million tons of demand each year by 2025. The growth will come from Japan and South Korea .
FutureMetrics maintains a detailed project-specific database on all projects that expect to consume wood pellets, and most of the new pellet supplies the EU and the UK plan to add have been arranged with existing major producers, however, with new capacity in Japan and South Korea Provide the opportunity, most of the production capacity has not yet reached.
Europe and the United Kingdom
However, growth in Europe is slowing and is expected to stabilize by early 2020. The remaining growth in Europe's industrial pellet demand will come from projects in the Netherlands and the United Kingdom.
Demand from Dutch utilities remains uncertain as coal plants have postponed final investment decisions on co-firing until they can get assurances that coal plants will continue to operate, and most analysts, including FutureMetrics, expect these issues to be available , Demand in the Netherlands could grow by at least 2.5 million tons per year in the next three to four years and if all four coal-fired power stations that have been subsidized are planned, the demand in the Netherlands could increase to 3.5 million tons per year.
Two UK projects, EPH's 400MW Lynemouth Power Station retrofit and MGT's Teeside greenfield cogeneration project are currently under commissioning or under construction. Drax recently announced that it will convert its fourth generator unit to use pellet fuel for one year However, given investment decisions have been made, FutureMetrics estimates that the fourth unit will consume 900,000 tonnes of particles a year, and if they are fully loaded year-round, each of the Drax Power Station retrofit units Approximately 2.5 million tons can be consumed each year. FutureMetrics estimates the total new demand in Europe and the United Kingdom will be 6 million tons per year.
Japan
Japan's biomass demand is largely determined by three policy factors: FiT, coal thermal efficiency standards and carbon emissions targets.
FiT Secures Purchasing Price for Renewable Energy for Independent Power Producers (IPP) for a Very Long Contract Period - Biomass Energy for 20 Years At current prices, including pellets, imported chips and palm kernel (PKS ) To 21 Japanese yen / kWh (at the current exchange rate of approximately $ 0.214 / kWh) from 24 yen / kWh (1 degree) before Sept. 30, However, the electricity price of biomass independent power plants that receive higher FiT is not affected by this downward adjustment.
Japan's Ministry of Economy, Trade and Industry (METI) has put together a so-called 'best energy structure' plan for 2030. In that plan, biomass power generation in 2030 accounted for 4.1% of Japan's total electricity generation, equivalent to 26 million tons of particles All biomass is wood pellets).
METI published a paper describing the best available technology (BAT) efficiency standard for thermal power plants in 2016, which sets the minimum energy efficiency standard for generators, with only about one-third of coal-fired power plants in Japan as of 2016 One of the ways to meet the new efficiency standards is to co-fire with wood particles.
Plant efficiency is usually calculated by dividing the energy output by the energy input, so if the plant uses 100 MWh of energy input to generate 35 MWh of power, the plant's efficiency is 35%.
The Ministry of Economy, Trade and Industry (MTI) has already allowed the biomass energy to be mixed to be deducted from the input.According to the new method, the power plant efficiency is calculated to be 35MWh / (100MWh - 15MWh) = 41.2% if 15MWh of wood pellets are co- Above the efficiency standard. FutureMetrics has calculated in relevant reports tons of wood pellets needed to convert inefficient plants in Japan to high efficiency. The report contains the expected demand for wood pellets, palm kernel shells and chips in Japan, and Detailed data on policies that promote this need.
The forecast for future grain demand by independent power producers in 2014 is about 4.7 million tonnes, based on an analysis of about 140 independent power plants detailed in the Japan Biomass Outlook.
By 2025, the total potential demand for Japanese utility stations and independent power plants may exceed 12 million tons per year.
Korea
South Korea's demand for industrial wood pellets has risen rapidly in recent years and this trend is likely to continue in coming years. In 2017, South Korea imported about 2.25 million tons of pellets.
South Korea is leading the power generation industry to adopt a renewable energy portfolio standard (RPS). The RPS project calls for the 13 largest power companies (with installed capacity of more than 500 MW) to steadily increase their share of renewable energy from 2% in 2012 to 2024 Of the 10%.
There are two ways for power companies to achieve their renewable energy goals: (1) investing in renewable energy installations on their own to obtain Renewable Energy Certificates or renewable energy power generation projects based on megawatt hours generated by renewable energy sources ; (2) purchase of renewable energy power generation projects in the renewable energy electricity market.
If the power company fails to accumulate the required number of RECs as required by the RPS, it should pay a fine equal to 150% of the average market price of RECs for each REC during the year.
South Korea's REC prices have been high in recent years. FutureMetrics analysis shows that the current REC price of KEPCO can significantly increase the profitability of hybrid pellet power generation.
However, the market price of RECs may vary widely, which is different from the guaranteed FiT price in Japan, which creates a problem for the market.Most pellet producers and project investors will not promise that in the absence of a long-term purchase agreement Bear the capital expenditures of the new pellet plant So far, the Korean public power companies have not yet participated in the long-term offtake agreement.The rapid growth of demand led to the rapid growth of production capacity in Vietnam to meet the needs of South Korea's bidding.This demand has contributed to Vietnam's production of low-cost Particles, which are produced mainly from residues in the wood furniture industry, it is hard to imagine how particle production can keep up with the growth in demand in South Korea without the long-term agreement.However, due to the risk of falling REC prices, South Korea Public power companies can not sign long-term agreements.
According to the announced mixed-burn and full-burn project data, South Korea's demand is projected to increase by about 9 million tonnes per year by 2024 if the REC prices remain high enough to offset the expected cost of competition in the area. Of the pellet market has tightened.Vietnam's pellet prices have risen from around $ 95 a tonne in the past six months to $ 133 (FOB Vietnam).
The above
Confidence in the continued development of the European industrial pellet market is very high.Japanese demand Once the IPP project is up and running, the benefits of FiT for large power plants should also be stable and likely to grow as predicted.As the price of RECs is uncertain The future demand for South Korea is more difficult to estimate. Overall, FutureMetrics estimates that by 2025 potential new demand for industrial wood pellets will exceed 26 million tonnes per year.
William Strauss is President and Founder of FutureMetrics Seth Walker is a Senior Economist and Business Development Director at FutureMetrics, Inc. Complete research reports are available at www.FutureMetrics.com
