The 2018 pellet market outlook is robust as governments worldwide look to hit emissions targets through converting coal fired power stations to biomass.
Demand is particularly strong in Asia, North America and Europe. Research from Hawkins Wright’s Outlook for Pellets report shows that global wood pellet demand increased +13% to 3.7 million tonnes in 2017, compared to the +6% rise in demand seen in 2016.
Biomass-derived pellets fall into three general categories, specifically white wood pellets, torrefied pellets and “Advanced Pellets”. AEG’s CoalSwitch™ falls into the category of Advanced Pellets with one very important distinction. Specifically, CoalSwitch™ is derived from forestry and agricultural residues including bark and “slash” that would otherwise be discarded and allowed to decay producing tonnes of the potent greenhouse gas methane or burned releasing CO2 and other pollutants. White pellets, torrefied pellets and the other Advanced Pellets are produced from high-value wood that could otherwise be used for lumber. The table below provides a side-by-side comparison of coal and the four categories of biomass-derived pellets.
Competitors Biomass Analysis
|Coal||Conventional White Pellets||Torrified Pellets||CoalSwitch|
|Calorific Value MJ/Kg||23.6 MJ/Kg||17 MJ/Kg||24 MJ/Kg||23 MJ/Kg|
|ASH %||8.5||~ 3%||> 5%||< 1%|
|Mass Balance @45% moisture||n/a||1.5:1||3:1||2:1|
|Bulk Density Kg/m³||>800 kg/m³||500 kg/m³||<400 kg/m³||>900 kg/m³|
Comparision of Biomass-Derived Pellets and Coal
As white pellets dominate the biomass-derived solid fuel market, the market price for white pellets sets the price for all pellets. White wood pellet prices are historically volatile and as such have been perceived as high risk investments. As the chart below illustrates, the greatest cost associated with pellet production is the feedstock cost. White and torrefied pellets (along with the “other” advanced pellets) are produced from expensive feedstock. Active Energy reduces this cost by utilising cheaper waste wood which, uniquely, can be utilised in the CoalSwitch™ process.
As the chart below shows, CoalSwitch™ remains viable despite considerable price changes.