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    Global Pellet Markets and Growth of Co-Firing

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    Norzuriani Mohamed Seberi
    Saku Rantanen of Pöyry gave a presentation on global pellet markets and the growth of biomass co-firing. Key points included: global pellet consumption is estimated to grow from 12 million tonnes in 2008 to 26 million tonnes in 2015, driven by increases in Western Europe, North America, and emerging markets in Asia and South America. Major pellet producing countries currently include Canada, the US, and several European nations, while demand is strongest in Western Europe, emerging in Asia. Co-firing pellets with coal at power plants offers significant potential to increase pellet demand but is not currently economically viable without subsidies. Risks to future growth include volatility in feedstock prices and availability

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    Global Pellet Markets and Growth of Co-Firing

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    Norzuriani Mohamed Seberi
    116 views28 pages
    Saku Rantanen of Pöyry gave a presentation on global pellet markets and the growth of biomass co-firing. Key points included: global pellet consumption is estimated to grow from 12 million tonnes in 2008 to 26 million tonnes in 2015, driven by increases in Western Europe, North America, and emerging markets in Asia and South America. Major pellet producing countries currently include Canada, the US, and several European nations, while demand is strongest in Western Europe, emerging in Asia. Co-firing pellets with coal at power plants offers significant potential to increase pellet demand but is not currently economically viable without subsidies. Risks to future growth include volatility in feedstock prices and availability

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    Global Pellet Markets and Growth of Co-firing

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    Saku Rantanen of Pöyry gave a presentation on global pellet markets and the growth of biomass co-firing. Key points included: global pellet consumption is estimated to grow from 12 million tonnes in 2008 to 26 million tonnes in 2015, driven by increases in Western Europe, North America, and emerging markets in Asia and South America. Major pellet producing countries currently include Canada, the US, and several European nations, while demand is strongest in Western Europe, emerging in Asia. Co-firing pellets with coal at power plants offers significant potential to increase pellet demand but is not currently economically viable without subsidies. Risks to future growth include volatility in feedstock prices and availability

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    116 views28 pages

    Global Pellet Markets and Growth of Co-Firing

    Uploaded by

    Norzuriani Mohamed Seberi
    Saku Rantanen of Pöyry gave a presentation on global pellet markets and the growth of biomass co-firing. Key points included: global pellet consumption is estimated to grow from 12 million tonnes in 2008 to 26 million tonnes in 2015, driven by increases in Western Europe, North America, and emerging markets in Asia and South America. Major pellet producing countries currently include Canada, the US, and several European nations, while demand is strongest in Western Europe, emerging in Asia. Co-firing pellets with coal at power plants offers significant potential to increase pellet demand but is not currently economically viable without subsidies. Risks to future growth include volatility in feedstock prices and availability

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    GLOBAL PELLET MARKETS & GROWTH OF BIOMASS CO-FIRING

    BIOMASS PELLET TRADE ASIA, JAKARTA


    September 27, 2010 Saku Rantanen, Head of Bioenergy, Asia-Pacific

    AGENDA

    Short Pyry Introduction Market Fundamentals Production and Consumption Trade Flows and Industry Players Growth of Biomass Co-firing Price Trends

    BIOMASS PELLET TRADE ASIA 27 September 2010

    THE POYRY GROUP: CONSULTING AND ENGINEERING



    The global thought leader in engineering balanced sustainability for a complex world Net sales in 2009 EUR 674 million Listed on the NASDAQ OMX Helsinki since 1997 7,000 experts in about 50 countries Project experience in more than 100 countries 17,000 projects annually

    BIOMASS PELLET TRADE ASIA 27 September 2010

    SELECTED EXAMPLE PELLET PROJECTS


    2010 2010 2010 2010 2009 2009 2009 2009 2009 2009 Evaluation of pellet market opportunities and future trends. Technical and economical assessment of pellet production and valuation of market opportunities. Evaluation of biomass price development and future trends in biomass consumption. Assessment of biomass availability development and biomass trade trends in the future. Business strategy development and market evaluation of wood pellet market in the UK. Assessment of business opportunities and due diligence and of a large scale pellet production. Global pellet supply and demand assessment and detailed market analysis, multiclient study. Development of sales strategy and advisory services for solid biofuel producer. Wood biomass potential in Romania and business opportunities identification. Technological assessment of torrefaction viability and evaluation of business potential.

    Source: Buhler Group


    BIOMASS PELLET TRADE ASIA 27 September 2010 4

    PELLET MARKET FUNDAMENTALS

    GLOBAL PELLET MARKETS & GROWTH OF BIOMASS CO-FIRING


    September 27, 2010 Saku Rantanen

    WOOD PELLET PRODUCT DESCRIPTION


    Densified biomass typically produced from forest
    industry residues Pure or white pellets Sawdust, woodchips, or wood shavings (softwood) Bark or brown pellets Harvesting residues Recovered wood High density transporting efficiency Hygroscopic and need to be stored and transported carefully in order to prevent exposure to moisture The energy content of 4.8 MWh/t

    Source: Finnish Pellet Association

    BIOMASS PELLET TRADE ASIA 27 September 2010 6

    GLOBAL PRODUCTION AND CONSUMPTION

    GLOBAL PELLET MARKETS & GROWTH OF BIOMASS CO-FIRING


    September 27, 2010 Saku Rantanen

    GLOBAL PELLET CONSUMPTION 2008 AND 2015 OUTLOOK


    Estimated growth 12 million tonnes in 2008 26 million tonnes by 2015 CAGR of 12%
    9.0 5.3 2.0 North America Western Europe Eastern 0.3 0.9 Europe <0.1 0.1 Russia

    15.5

    0.1 0.4

    China 3.4 0.2 SE Asia and Oceania

    South <0.1 0.3 America

    Million tonnes 2008 2015

    GLOBAL PELLET PRODUCTION AND RAW MATERIAL AVAILABILITY, 2008-2015


    9.7 7.7 6.3 2.2 2.9 North America Western Europe 1.7 Eastern Europe 0.6 1.4 Russia

    0.1 0.4

    China

    2.2 <0.1 South America Production (million tonnes) 2008 2015


    Woody biomass availability
    Increasing harvest potential Stable harvest potential

    2.4 1.4 SE Asia and 0.1 Oceania

    Stable harvest potential but in high demand Raw material deficit

    CAPACITY INCREASE HOTSPOTS

    BIOMASS PELLET TRADE ASIA 27 September 2010 10

    10

    PELLET TRADE FLOWS & INDUSTRY PLAYERS

    GLOBAL PELLET MARKETS & GROWTH OF BIOMASS CO-FIRING


    September 27, 2010 Saku Rantanen

    WORLD PELLET TRADE FLOWS IN 2008 AND EMERGING FLOWS

    600 500 200 1,300 *

    600 1,300 100

    50

    Trade flows in 1,000 tonnes, >50,000 Current Emerging * Intra Western European net trade

    12

    BIOMASS PELLET TRADE ASIA 12 27 September 2010

    12

    TOP 15 GLOBAL PLAYERS

    Pellet production capacities in 2015

    Suzano Energia Renovvel Plantation Energy Australia Intrinergy German Pellets JCE Group Magnolia Biopow er VAPO Vyborgskaya Cellulose Graanul Invest RWE Pinnacle Pellet Canadian Bio Pellets General Biofuels Point Bio Energy Lantmnnen Agroenergi 0 500 1,000 1,500 2009 2,000 Planned/decided 2,500 3,000 3,500

    1,000 metric tonnes

    BIOMASS PELLET TRADE ASIA 27 September 2010 13

    13

    GROWTH OF BIOMASS CO-FIRING

    GLOBAL PELLET MARKETS & GROWTH OF BIOMASS CO-FIRING


    September 27, 2010 Saku Rantanen

    MARKET SEGMENTATION

    Source: Finnish Pellet Association

    Residential users (small) Private residences 4-8 tonnes per household/a High quality wood pellets Bulk and large sacks

    Commercial users (medium) Industrial and office buildings,


    schools, hotels Annual consumption 100-500 tonnes Bulk or in large sacks Ash content up to 2%

    Industrial users (large) CHP, district heating Mainly mixed with coal,
    chips and peat. Annual consumption can be up to 400,000 tonnes Bulk pellets Higher levels of impurities and ash

    BIOMASS PELLET TRADE ASIA 27 September 2010 15

    15

    MARKET SEGMENTATION EXAMPLES

    The pellet market initially developed to serve residential heating demand. The commercial and industrial sectors by comparison are relatively young market segments, and expected to demonstrate the highest growth potential.

    Residential

    Commercial

    Industrial

    100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

    Sweden

    Italy

    Belgium

    BIOMASS PELLET TRADE ASIA 27 September 2010

    16

    INTRODUCTION TO CO-FIRING
    Combusting biomass and coal Commonly used in
    UK, Netherlands, Belgium and Japan

    Pellets can be milled together with coal Alternatives: woodchips, sawdust, straw,
    recovered wood, peat etc. Typical co-firing levels are 3-10%

    BIOMASS PELLET TRADE ASIA 27 September 2010 17

    17

    CO-FIRING POTENTIAL
    Current global pellet consumption is
    12 million tonnes If 5% of coal replaced with pellets the demand would be Europe 45 million tonnes US 70 million tonnes Japan and Korea 15 million tonnes Potential more than 10 times the current global pellet market
    35% 30% 25% 20% 15% 10% 5% 0%

    Share of total coal consumed in primary energy production, 2007

    BIOMASS PELLET TRADE ASIA 27 September 2010 18

    18

    CO-FIRING ECONOMICS

    Pellets compare financially unfavorable to coal


    Without governmental subsidy schemes, not economically viable solution

    The economics closely linked to


    Biomass pricing, carbon certificates and subsidies

    Government support systems


    Renewable portfolio standard Feed-in tariff Feed-in premium, Green certificate trading, Quota system, Fiscal incentives, Other subsidies

    The wood pellet market has largely been created by renewable energy policies
    Can be defined as artificial

    Pellet prices are seen as a main obstacle for large-scale co-firing of pellets

    BIOMASS PELLET TRADE ASIA 27 September 2010

    19

    PRICE TRENDS

    GLOBAL PELLET MARKETS & GROWTH OF BIOMASS CO-FIRING


    September 27, 2010 Saku Rantanen

    PRICE LEVELS

    Industrial pellets (CIF Rotterdam)


    EUR/tonne 160
    ENDEX 1 front Calendar Wood Pellet contracts, CIF Rotterdam

    Residential pellets (incl. VAT and delivery)


    EUR/tonne 260

    140
    240

    Sweden

    Germany

    Italy

    120
    220

    100

    200

    80

    180

    60 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09

    160 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09

    Source: Pellets@tlas

    BIOMASS PELLET TRADE ASIA 27 September 2010 21

    21

    RISKS

    GLOBAL PELLET MARKETS & GROWTH OF BIOMASS CO-FIRING


    September 27, 2010 Saku Rantanen

    RISKS, INDONESIAN PERSPECTIVE


    Feedstock security Feedstock pricing Feedstock sustainability Logistics Low entry barriers New major capacity announcement will
    create a risk of unhealthy overcapacity Industrial wood pellets compete with wood chips for a market share Japan and Korean markets still uncertain

    First mover advantages start to be shared

    BIOMASS PELLET TRADE ASIA 27 September 2010 23

    23

    MARKETS IN ASIA-PACIFIC

    GLOBAL PELLET MARKETS & GROWTH OF BIOMASS CO-FIRING


    September 27, 2010 Saku Rantanen

    PELLETS IN ASIA-PACIFIC

    Existing pellet production Australia, China, Japan Emerging in several SE-Asian countries Demand mainly from South Korea Japan China and Australia holds great potential but
    political will missing Raw material availability Indonesia Australia

    BIOMASS PELLET TRADE ASIA 27 September 2010 25

    25

    CONCLUSIONS

    Europe will keep the leadership position in


    the near future In many areas the market is still at nascent stage South-East Asia has great feedstock potential Fast growing market provides business opportunities Key risks Feedstock security and pricing Logistics Off-take Operational experience

    BIOMASS PELLET TRADE ASIA 27 September 2010 26

    26

    PYRY COVERS THE ENTIRE VALUE CHAIN FROM BIOMASS TO PRODUCTS


    Logistics

    Collecting and harvesting

    Processing

    Clean and Green Energy and Fuels with Pyry


    Energy / Biorefinery

    Resources

    Replanting Fuels

    Chemical Refining and Energy Use

    BIOMASS PELLET TRADE ASIA 27 September 2010 27

    27

    THANK YOU!

    CONTACT: NAME: SAKU RANTANEN TITLE: HEAD OF BIOENERGY, ASIA-PACIFIC MAIL: SAKU.RANTANEN@POYRY.COM PHONE: +65 9650 2889
    BIOMASS PELLET TRADE ASIA 27 September 2010 28 28

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