Proposal : Research the viability of pellet heating in

Australia

Graham PalmerMIET2127

October 2006

Introduction

• What is pellet heating?• Pellet heaters• Characteristics• Existing pellet markets• Logistics of pellet heating market• Heater market in Australia• Opportunities• What next?

What is pellet heating?

• Small pellets manufactured from wood dust without additives

• Potential to revolutionise wood heating

• High efficiency

• Low emissions

• Automatic operation

• More expensive than log burners

Pellet heater

Pellet space heaters

Pellet boiler - Kunzel

Characteristics• Energy density 18 MJ/kg

– 3 to 4 times more energy than timber per unit volume

• Efficiency 80 to > 90%– Open fire 10%, combustion 40-60%

• Ash content < 5%– Empty tray few times a year

• Emissions– Biomass emissions have decreased by 3

orders of magnitude in 2 decades

Historical emissions improvement- measured biomass heater in Austria

Source : Rakos (2002)

Existing markets

• Sweden, Austria, Germany etc - already using wood + mix of other fuels including gas, oil, coal, electric

• US - high mains gas, electric + some oil• UK - high mains gas penetration +

some oil• Australia - one importer and one

manufacturer

Results of a subsidy scheme in Salzburg (Rakos, 2001)

Pellet production by country 2005 (tonnes)

Note: Australian price for pellets $360/tonne

Sources: Bioenergy International December 2005 (see note in text); Wood Pellet Association of Canada

Sweden 1,356,000 Two plants producing over 130,000 tonnes per year, 15 producing over 30,000 tonnes

Canada 1,000,000 Five plants over 80,000 tonnes, several plants in the 200,000-tonne range

Russia 758,000 Two 100,000-tonne plants, seven over 30,000 tonnes

USA 600,000

Denmark 535,000 One 280,000-tonne plant and two over 80,000 tonnes

Finland 460,000 Six plants over 30,000 tonnes

Austria 409,000 Four plants over 30,000 tonnes, three in 80,000-100,000 tonne range

Germany 388,000 Six plants over 30,000 tonnes

Poland 356,000 One 100,000 tonne plant and three over 30,000 tonnes

Estonia 345,000 Three plants over 80,000 tonnes

Key logistical issues

• Pellet manufacture– Quality– Reliability of supply– Sufficient competition

• Pellet distribution and logistics– Bulk– Bagged

• Pellet burners and boilers

Economics of pellet heating• Economics of existing heating

– Gas - ducted, wall, hydronic– Electric element– Electric reverse cycle - ducted, wall, split– Wood - open fire, combustion, pot belly– Oil– Floor slab– Solar

• Economics of pellet heating– Heaters– Pellets– Pelletising equipment– Distribution

The pellet paradox

• No-one will buy a heater without access to pellets

• No-one will maufacture pellets unless there are heaters to make use of them

• Europe overcame problem because importing was feasible, and fuel costs of competitors are higher

Main reason for purchasing heater - Australia

Source : ABS (2005)

Heating in Australia

Source : ABS (2005)

Opportunities

• Victorian timber communities– Cool climate, access to raw material, log

burning already, no mains gas

• Launceston– Cool climate, access to raw material,

problem with particulate pollution from log fires

Cost of pellets in Melbourne(updated since original presentation)

• 2006 $360/tonne

• 2008 $475/tonne

• 2009 $600/tonne

• little competition and captive market

• Assuming 18 MJ/kg, $600/tonne equates to 3.3 cents/MJ – compare gas at 1 cent/MJ and electricity 5.6 cents/MJ (20 cents/kWh)

Economic

• Support local industry

• Competitive except with mains gas

• Develop regional industry

Social

• Maintain energy autonomy within a regional district

• Consumers may prefer pellet heating

• Greenhouse challenge front runner

Environment

• Net greenhouse benefit• Less particulate pollution• Increased resources for

forest management• High efficiency• Close the carbon loop

TBL Analysis

Users

• Consumers• Retailers• Installers

Creators

• Appliance manufacturers

• Pellet manufacturers• Manufacturer

associations

Supporters

• Australian Greenhouse Office

• Sustainability Victoria• RMIT• Investors

Interested parties

What next?

• Complete a credible report on performance, environmental impacts, economics and market opportunities of pellet heating

• Bring together interested parties• Lobby for support• Greenhouse a big issue• Part of the biomass debate (enthanol, biodiesel,

biogas)• May be cost effective outside of mains gas• Local pollution in urban areas