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The European market for pellets in domestic heating
Trends and opportunities Christian Rakos
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European$Pellet$demand$for$the$Heat$Market$
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EU pellet production and demand for heat markets
Pellet production
Heat market demand
Growth p.a. average 10%
Growth p.a. average 15%
Pellet stoves: heating of single rooms Simple low cost solution (1500-3000€)
Pellet boilers: solution for buildings with central heating (10.000- 20.000 €)
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Possible"pellet"boiler"sales"in"key"heat"markets""assuming"average"growth"rates"over"the"last"4"years"
Germany:"17%"
Italy:"30%"last"year"
Austria:"8%"
France:"30%"
Source: AEBIOM statistical report 2013, EPC calculations
Cumulated number of pellet boilers in Austria
425 1.746 3.874 7.340 12.272
16.764
21.957 28.034
36.908
47.375 51.290
62.391
70.837
78.978
89.378
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111.849
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Bestand an Pelletkesseln in Österreich (Kleinfeuerungsanlagen < 100 kW, jeweils Jahresende)
Quelle:&Ing.&Karl&Furtner&und&DI&Herbert&Haneder,&Landwirtscha;skammer&NÖ&(Prognose&2013<.&VÖK&und&ppa);&Grafik&proPellets&Austria;&Jan.&2014&
Bestandswachstum 2010: 11% 2011: 13% 2012: 13% 2013: 10%
Growth of the stock
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2005" 2006" 2007" 2008" 2009" 2010" 2011" 2012" 2013" 2014" 2015" 2016" 2017"
Possible"pellet"stove"sales"assuming"the""average"growth"rates"over"the"last"4"years""
Germany:"3%"Italy:""7%"Austria:"7%"France:"40%"
Source: AEBIOM statistical report 2013, EPC calculations
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Sources: e-control, IWO, BMWFJ, proPellets Austria; May 2014
Average annual prices for heating fuels in Austria
Heating oil
Natural Gas
Pellets
Economics is the driver for heat market development
If economics is the driver – why are so few markets developing?
! Because policy support is needed to start market development
! Pellet heating is a new and unknown technology for most EU consumers
! SMEs are driving the development: no financial capacities to do effective promotion
! Higher upfront investment and lack of confidence in new technology is a barrier – investment support is helpful
! Skills and information of professionals is major issue
Is investment support for pellet heating distorting the market?
Investment(subsidy(for(pellet(boiler 3000 €Energy'production'p.a.'(20kW) 30 MWhEnergy'production'during'lifetime 600 MWhSubsidy'/'MWh 5,0 €/MWhSubsidy(/(ton(of(pellets 1,0 €/t
How will growing demand for pellets for the heat market be satisfied?
! European pellet production is levelling off
! North American industrial pellet producers & international pellet trade are discovering the EU heat market
! Sharply increasing imports will stop further increase of pellet prices and wood fiber prices
! In a mid term perspective agricultural byproducts & residues could supply massive volumes of pellets
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"ENplus"cer8fed"pellet"produc8on"capacity"in"North"America"since"1/2013"
Trade routes for wood pellets – projection for 2015
Why are pellet imports from the US increasing so much?
What about the carbon footprint?
Source of emissions CO2 Emissions (kg / mt Pellets)
Supply of raw material USA 17
Pelletproduction 108
Transport to the port 20
Transatlantic shipping (ARA) 55
Assumed transport to end consumer
43
Sum 244
CO2 Reduction: 88% reduction compared to coal (power plant ARA) 81% reduction compared to heating oil (domestic use)
Will the further growth of pellets for heating threaten EU panelboard & paper industries?
! NO!
! No further increase of fiber prices in Europe due to growing pellet imports
! Producers of panelboard and paper outside Europe will also face competition for fiber dedicated to energy use
! Low wood fiber prices cannot be sustained in an environment of high energy prices
Conclusions
! Wood pellet use can significantly contribute to reducing heating costs of EU households
! It will not lead to the decline of EU panelboard and paper industries
! Only few member states have started to develop this opportunity
! EU policies should encourage all MS to emphasize renewable heat generation as a competitive way to meet its RES targets
Thanks for your attention!