Taking the pellet plunge

In researching story leads for the inaugural issue of Biomass Power & Thermal’s biannual publication Pellet Mill Magazine, my fellow editors and I found the biomass pellet industry to be much more competitive than we thought.
By Lisa Gibson | April 01, 2011

In researching story leads for the inaugural issue of Biomass Power & Thermal’s biannual publication Pellet Mill Magazine, my fellow editors and I found the biomass pellet industry to be much more competitive than we thought. Although our first issue—scheduled for release with the May issue of Biomass Power & Thermal—is loaded with intriguing topics such as product standards, supply and demand, innovative feedstocks, and the market strategies of U.S. pellet mills, we were sometimes surprised at what we found.

Harold Arnold, president and CEO of Georgia-based Fram Renewable Fuels LLC, spoke candidly with me about the misunderstanding that seems to loom over the pellet industry in the U.S., specifically when it comes to exports. Because of Europe’s already huge and still growing biomass demand, Arnold is concerned about an incorrect perception of the pellet export industry as a fail-safe profit machine.  It’s not a “get-rich-quick-scheme,” he cautions, and takes an enormous amount of work, just like any other business endeavor.

Still, the industry is expanding rapidly, as North American wood pellet exports have doubled in the past two years and are not expected to plateau soon. New pellet mills are continuously being announced and constructed in the U.S., seemingly bolstered by President Obama’s National Export Initiative, and development around the globe is on the same path. Russian pulp producer Vyborgskaya Cellulose operates the largest mill in the world, at nearly 1 million metric tons per year, and German company RWE Innogy is building its own enormous 750,000 metric-ton-per-year pellet plant in Waycross, Ga., to supply feedstock for its parent company, RWE.

Offtakers for both mills are exclusively European power generators and CHP plants, illuminating an important contrast in pellet markets between Europe and the U.S.  Here, pellets are used predominantly in residential appliances, whereas in Europe, they are used extensively in both residential and commercial/industrial applications. Most industry stakeholders attribute that fact to Europe’s favorable clean energy incentives, as well as stricter renewable goals on both the national and European Union levels.

Needless to say, we are excited to delve into this industry and continuously learn more with the development of each Pellet Mill Magazine issue. Here’s hoping you’re equally excited to hear what we have to say.