Demand for wood pellets is currently growing at a faster rate than supply in Europe, European Pellet Council (EPC) President Christian Rakos said at the AEBIOM Annual Conference in Brussels in May. He said that that the reason behind this was mainly economic, as pellets are a reasonably priced fuel that offer significant savings to users.
Rakos said that pellets cost around 5 cents per kWh, compared to 9 cents for heating oil, which means that they currently offer a saving of 45%. It seems that this saving is being recognized by the market, as EU pellet consumption for heating has grown by more than one million tons per year since 2010 to reach 8 million tons in 2012.1
However, the EPC president noted that only a few EU wood pellet markets were experiencing vibrant development, specifically those in Germany, Italy, Austria and France. The pellet market is largely driven by relatively small companies with insufficient financial resources to promote the technology. Consequently, the market is developing best in those countries where it receives policy support. Rakos stressed that this support is needed to kick-start the market, as pellet heating is generally unknown to the consumer and there is no trust in this new technology.
In response to criticism that this investment support distorts the market, Rakos stressed that the level of support involved is negligible in market terms: once-off subsidies vary between EUR 1000 and EUR 2500. Over the lifespan of the average boiler this works out as a subsidy per ton of pellets consumed of 1 euro, so the effective subsidy per unit of fuel is less than half of a percent of the fuel price (based on the current price of EUR 250 per ton). Even subsidies being paid to power plants to run on pellets amount to about 10% of the fuel price, which is still quite low, he said.
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1 European Biomass Association: A Bioenergy Outlook 2013.