global pellet markets and growth of co-firing

8/2/2019 Global Pellet Markets and Growth of Co-firing

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GLOBAL PELLET MARKETS &GROWTH OF BIOMASS CO-FIRING

BIOMASS PELLET TRADE ASIA, JAKARTASeptember 27, 2010Saku Rantanen, Head of Bioenergy, Asia-Pacific


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AGENDA

Short Pyry Introduction

Market Fundamentals

Production and Consumption

Trade Flows and Industry Players

Growth of Biomass Co-firing

Price Trends

27 September 2010BIOMASS PELLET TRADE ASIA 2


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SELECTED EXAMPLE PELLET PROJECTS

2010 Evaluation of pellet market opportunities and future trends.

2010 Technical and economical assessment of pellet production and valuation of market opportunities.

2010 Evaluation of biomass price development and future trends in biomass consumption.

2010 Assessment of biomass availability development and biomass trade trends in the future.

2009 Business strategy development and market evaluation of wood pellet market in the UK.

2009 Assessment of business opportunities and due diligence and of a large scale pellet production.

2009 Global pellet supply and demand assessment and detailed market analysis, multiclient study.


2009 Development of sales strategy and advisory services for solid biofuel producer.

2009 Wood biomass potential in Romania and business opportunities identification.

2009 Technological assessment of torrefaction viability and evaluation of business potential.

Source: Buhler Group


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PELLET MARKET FUNDAMENTALS

GLOBAL PELLET MARKETS &GROWTH OF BIOMASS CO-FIRINGSeptember 27, 2010Saku Rantanen


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WOOD PELLET PRODUCT DESCRIPTION

Densified biomass typically produced from forestindustry residues

Pure or white pellets

Sawdust, woodchips, or wood shavings(softwood)

Bark or brown pellets

Harvesting residues

High density transporting efficiency

Hygroscopic and need to be stored and transportedcarefully in order to prevent exposure to moisture

The energy content of 4.8 MWh/t

Source: Finnish Pellet Association



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GLOBAL PRODUCTION ANDCONSUMPTION



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Estimated growth

12 million tonnes in 2008

26 million tonnes by 2015

CAGR of 12%

GLOBAL PELLET CONSUMPTION 2008 AND 2015 OUTLOOK

Russia

NorthAmerica

EasternEurope

WesternEurope

5.3

2.0

9.0

0.3 0.9


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GLOBAL PELLET PRODUCTION AND RAW MATERIALAVAILABILITY, 2008-2015

NorthAmerica

WesternEurope

EasternEurope

Russia

China

2.9

7.7

9.7

2.21.7 0.6

1.4

0.40.1

6.3

2.4

Production

(million tonnes)

SouthAmerica


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CAPACITY INCREASE HOTSPOTS



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PELLET TRADE FLOWS &INDUSTRY PLAYERS



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600

200

500

600

1,300*

1,300

100

WORLD PELLET TRADE FLOWS IN 2008 AND EMERGING

FLOWS

12

50

Trade flows in 1,000 tonnes, >50,000

* Intra Western European net trade

Current

Emerging

1227 September 2010

BIOMASS PELLET TRADE ASIA 12


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TOP 15 GLOBAL PLAYERS

VAPO

Magnolia Biopow er

JCE Group

German Pellets

IntrinergyPlantation Energy Australia

Suzano Energia Renovvel

Pellet production capacities in 2015


0 500 1,000 1,500 2,000 2,500 3,000 3,500

Lantmnnen AgroenergiPoint Bio Energy

General Biofuels

Canadian Bio Pellets

Pinnacle Pellet

RWE

Graanul InvestVyborgskaya Cellulose

2009 Planned/decided

1,000 metric tonnes


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GROWTH OF BIOMASS CO-FIRING



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Residential users (small)

Commercial users (medium)

Industrial users (large)

Source: Finnish Pellet Association

MARKET SEGMENTATION

r va e res ences

4-8 tonnes per household/a

High quality wood pellets

Bulk and large sacks

n us r a an o ce u ngs,

schools, hotels Annual consumption 100-500

tonnes

Bulk or in large sacks

Ash content up to 2%

, s r c ea ng

Mainly mixed with coal,chips and peat.

Annual consumption can beup to 400,000 tonnes

Bulk pellets

Higher levels of impuritiesand ash



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MARKET SEGMENTATION EXAMPLES

50%

60%

70%

80%

90%

100%

Residential Commercial IndustrialThe pellet market initially developed toserve residential heating demand. The

commercial and industrial sectors bycomparison are relatively young marketsegments, and expected to demonstratethe highest growth potential.


0%

10%

20%

30%

40%

Swe

den

Italy

Belg

ium


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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%

INTRODUCTION TO CO-FIRING



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Current global pellet consumption is12 million tonnes

If 5% of coal replaced with pellets thedemand would be

Europe 45 million tonnes

US 70 million tonnes

Japan and Korea 15 milliontonnes

15%

20%

25%

30%

35%

Share of total coal consumed in primaryenergy production, 2007

CO-FIRING POTENTIAL

Potential more than 10 times thecurrent global pellet market

0%

5%

10%



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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



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PRICE TRENDS



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240

260

EUR/tonne

Sweden Germany Italy

Industrial pellets (CIF Rotterdam) Residential pellets(incl. VAT and delivery)

120

140

160

EUR/tonne

ENDEX 1 front Calendar Wood Pellet contracts, CIF Rotterdam

PRICE LEVELS

Source: Pellets@tlas

160

180

200

Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-0960

80

100

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



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RISKS



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Feedstock security

Feedstock pricing

Feedstock sustainability

Logistics

Low entry barriers

RISKS, INDONESIAN PERSPECTIVE

New major capacity announcement willcreate a risk of unhealthy overcapacity

Industrial wood pellets compete with woodchips for a market share

Japan and Korean markets still uncertain

First mover advantages start to be shared



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MARKETS IN ASIA-PACIFIC



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Existing pellet production

Australia, China, Japan

Emerging in several SE-Asian countries Demand mainly from

South Korea

Japan

PELLETS IN ASIA-PACIFIC

China and Australia holds great potential but

political will missing

Raw material availability

Indonesia

Australia



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Europe will keep the leadership position inthe near future

In many areas the market is still at nascentstage

South-East Asia has great feedstockpotential

CONCLUSIONS

opportunities Key risks

Feedstock security and pricing

Logistics

Off-take

Operational experience



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PYRY COVERS THE ENTIRE VALUE CHAIN FROM BIOMASS TO

PRODUCTS Logistics

ProcessingCollecting

and harvesting

Energy /Biorefinery

Chemical Refiningand Energy Use

Fuels

Replanting

Resources

with Pyry



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THANK YOU!

CONTACT:NAME: SAKU RANTANEN

TITLE: HEAD OF BIOENERGY, ASIA-PACIFIC

MAIL: [email protected]

PHONE: +65 9650 2889


global pellet markets and growth of co-firing

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