In April of this year, at the International Biomass Congress and Exposition held in Atlanta, I participated in my first Roundtable of Biomass Industry Associations to discuss the relative strengths of our industry segments and the news of the day. The Biomass Energy Association, the American Biogas Committee, the Biomass Thermal Energy Council and the Renewable Thermal Energy Alliance.
The meeting provided me another opportunity to discuss Operation 100k, a strategic initiative of the Pellet Fuels Institute for annual sales of heating equipment. When I prepared my notes that morning, I I want to know if it is possible to figure out what the market would be like if Operation 100k was launched 10 years ago and it was a success.
Soon, I opened a spreadsheet and filled in the sales data published in Hearth & Home magazine, released in June 2017. Then I established a formula to calculate the annual excess and deficiency. By the way, In the past 10 years, the sales of particulate combustion equipment have been unsatisfactory (141,208 in 2008). Even in the case of over-utilization in 2008, from 2008 to 2017, the industry lost nearly 100,000 units of equipment annually. It has reached nearly 350,000 units. From then on, I began to quantify the annual effects of these missed sales.
In order to better understand the impact of particulate fuel producer members, I estimated the amount of demand loss, assuming that the particulate consumption of these devices is 2-3 tons per unit per year, with an approximate range of 700-105 million tons. The average wholesale price is 185 US dollars, which means that the income is between 1.29-1.95 billion U.S. dollars, not to mention the profit of US$40-60 million that our downstream retail partners will generate (according to the average retail price per ton, less than one ton Average wholesale price.) In general, the annual income loss is 1.7-250 million U.S. dollars.
Our industry can't afford to sustain another decade of declining burner sales. Facing the figures of the past decade, our plan to move to 100,000 particle burners per year seems daunting, but by focusing on burner sales to support demand It is the first issue. The business operations of our affiliates need to be as close as possible to their production capabilities in order to maximize their profit potential. The 100k action recognizes this and places the market expansion at the center of the FFPA.
The most obvious challenge that we must face as we strive to change demand is that we lack contact with consumers in making home and district heating decisions. Only after they decide to use particulate burners will particle producers participate in the process. If consumers choose to use non-particulate fuel source equipment, the demand for wood pellets is not affected. As an industry, we must find a way to allow customers to understand the value of particulate heat as early as possible in the decision process. This is PFI. Challenges that have been resolved.
The good news is that our members have a close relationship with special boiler retailers in the market. If our industry has any plans that may affect the demand side, then we will have to reconsider these relationships and how the retailers should sell More particle burners provide strong arguments.
We have to admit that we don't know all the answers, but the more we think about the 'How to grow the market for our products?', the more we determine that this is the right question.
