EU pellet production covered 70 percent of EU demand 2015

According to the “AEBIOM Statistical Report 2016“, the EU-28 produced 14.1 million tonnes of pellets covering 70 percent of its demand 2015, rebutting claims to the contrary. The balance of the demand in the EU came primarily from the US and Canada with Russia and CIS countries completing the supply. This trade balance is likely to change however with the UK’s vote to exit the EU (BREXIT), though technically BREXIT has yet to be formally effectuated. Nonetheless, according to UK bioenergy analysts Hawkins Wright, the UK accounts for 29 percent of the total pellet consumption and 69 percent of pellet imports to the EU. Thus if and when BREXIT is effectuated, the EU pellet supply/demand and trade flow statistics will change accordingly.

EU production continues up

According to the brief, wood pellet production in the EU-28 is continuing an upward trend, growing by 4.7 percent between 2014 and 2015. Germany is the biggest producer of wood pellets producing 2 million tonnes followed by Sweden, Latvia, Estonia and Austria. It should be noted that the implications of the German Pellets bankruptcy at the start of this year, then the largest pellet producer in Europe, have yet to show. The brief also highlights that wood pellet production is spread throughout Member States (MS) and is a significant contributor to rural and regional economies while mobilizing local resources to reduce energy dependency of the EU-28.

Heat a hot driver

Among the top five pellet consuming Member States (MS), the proportion of wood pellet use varies. In France, Italy and Germany, the majority of wood pellet use goes to the residential heating market, representing 95 percent, 92 percent and 58 percent respectively. In Denmark, 56 percent of wood pellets are used in CHP plants for heating production and in Sweden, 60 percent of pellets go to heating installations for commercial purposes.

Almost 64 percent (12.9 million tonnes) of the 20.3 million tonnes of pellets consumed in the EU-28 2015 was used for heat. Despite mild winters and low oil prices, pellet consumption for heating increased by 4.2 percent and has penetrated all heat markets across the EU-28. Italy was the biggest consumer of pellets for heat using 3.1 million tonnes in 2015.

The pellet heat market is subdivided into three distinct sectors; residential heating is the largest with 42.2 percent share of pellets consumed 2015 followed by commercial heating (15.7 percent) and heat generated from combined heat and power (CHP) at 6 percent. The remaining 36.1 percent was used in dedicated power only production. The brief notes that the technologies for producing energy out of pellets for heat, electricity or both are mature, offering efficient and reliable processes. It also highlights that “commercial heating” is often seen as the heating market segment offering the highest potential but suffers from “a clear lack of awareness” about the possibility to use pellets in industry and services such as hotels, swimming pools or public buildings.

Pellet power rising

The “pellets for power” market increased almost 15 percent between 2014 and 2015. In contrast to the heat market, the pellet power market is concentrated to the UK and Benelux with the former being the single largest consumer. Its consumption went up 21.4 percent between 2014 and 2015 to 5.7 million tonnes. Belgium on the other hand increased its consumption by a massive 67 percent to 1.1 million tonnes. Germany observed a slight increase, in Denmark, pellets for power stagnated, while in Sweden consumption dropped 25.7 percent. The technologies used for electricity production differ from country to country: the UK, Belgium and Netherlands are converting dedicated power plants while the Nordic States are converting CHP plants.