PELLETS Unlike policy-driven power markets, some European residential and commercial space heating markets already have an advantageous cost differential to fossil fuels, driving demand. Figure 8.11 (above): EPC Survey of historical pellet production volumes and production projections to 2020. A country to note is Italy, a bagged market where domestic production has flatlined at 300 000 tonnes-per-annum. However demand (Figure 8.15 below) is eleven-fold. According to the EPC Survey, Italy commands the second-highest average price per unit of pellets. As Figure 8.15 above shows, Italy and France both display significant growth rates. (Figures: courtesy EPC). Bioenergy International PS1 2015 11 concluded. Though financial details surrounding the transaction remain undisclosed, the Swedish business daily, Dagens Industri, estimates the value of the deal to be in the region of 138-170 million EUR (1.3-1.6 billion SEK). At the end of October Enviva Holdings filed a US$100 million initial public offering (IPO) with the US Securities And Exchange Commission (SEC). As of January Enviva now owns and operates six pellet plants with a combined total annual nameplate capacity of 2.25 million tonnes. Notable too is that with this acquisition the company has increased its ENplus capacity almost fourfold, to 870 000 tonnes. Geopolitical divestment In December, RusForest, a Swedish forestry company with harvesting, sawmilling and pellet operations in Russia, announced it had completed the sale of its Arkhangelsk assets in northwest Russia. This includes its newly commissioned 100 000 tonne-per-annum pellet plant built next to its sawmill. The pellet plant began production at the start of 2014 with shipments to clients in Q2. The company concluded the sale with several buyers. ZAO Lesozavod 25 has been disclosed as the buyer for the Arkhangelsk LDK-3 sawmill and related pellet mill, as well as all of its forest leases and harvesting companies in the Arkhangelsk region. According to the company the original investment programme was to replace the sawmill with a new sawmill. However the ongoing crisis in Ukraine and the related sanctions against the Russian financial sector have made financing of such a project unfeasible. Instead it has decided to divest the Arkhangelsk operations and focus on its operations in Eastern Siberia. The company has also divested its subsidiary, Ystad Pellets AB, which owns a non-core wood pellet mill that has been idle for several years in Ystad, Sweden. Diversification and intergrated production An emerging trend amongst recent announcements seems to be the integration of pellet production operations into other operations utilising exisiting utilities or infrastructure or avoidance of feedstock transport. Whilst there is nothing new with co-locating pellet production with sawmills and mechanical wood processing industries it seems the trend is reverting to this type of integrated setup. For example, three of five announced projects in BC, Canada are such setups; the Canfor-Pacific BioEnergy plans for Dawson Creek and Chetwynd, and the Tolko-Pinnacle project in Lavington. In Sweden, Uddevalla another municipality- owned combined heat and power utility, is following the example of Falun Energi och Vatten by setting up a pellet plant to improve the overall performance of the CHP and its own fuel. In Brazil tannin extract producer Tanac revealed it had begun construction of a 400 000 tonne-per-annum plant at its Rio Grande port site. The company’s primary product is vegetable tannin, a high-value-added product mainly used by the leather industry, and in water and wastewater treatment. It is produced from the bark of Black Wattle (Acacia mearnsii). The residual wood is then chipped and sold as pulp or energy chips. The company has its own ”chip and ship” terminal with 700 000 tonnes capacity. According to Tanac the US$60 million plant is scheduled to be completed in early 2016, with the first pellets due for export in mid-2016. A long-term agreement for the supply of wood pellets has been entered into with the UK utility Drax Power. Portuguese paper producer Portucel S.A announced that it invest will US$ 110 million to develop a 460 0000 tonne wood pellet facility in South Carolina, US. Construction is expected to start this year for completion in Q3 of 2016. According to Portucel it has negotiated supply contracts with fixed price and 10-year tenure guaranteeing the sale of around 70 percent of the output. According to Portucel, the project represents an opportunity to leverage its knowledge in wood conversion and industrial processes while gaining a foothold into the bioenergy business sector, an industry where significant growth is expected. The full report, European Bioenergy Outlook 2014, can be found at www.aebiom.org Text & photo: Alan Sherrard PS1/4707/AS
Bioenergy nr 1 - 2015
To see the actual publication please follow the link above