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USIPA Exporting Pellet Conference kicks off in Florida

By Tim Portz | October 28, 2013

The 3rd Annual U.S. Industrial Pellet Association Exporting Pellets Conference opened Oct. 28 in Miami with a blend of optimism and measured pragmatism. Harold Arnold, USIPA chairman and president of Fram Renewable Fuels LLC, welcomed attendees to the event and noted that registrations for the conference exceeded 500. Arnold then welcomed Seth Ginther, USIPA executive director and the event’s emcee, to the stage to set the table for the event’s program.

Ginther began by introducing John Bingham, an agricultural economist from U.K.-based Hawkins Wright, to provide a comprehensive overview of current and project wood pellet demand globally, with a focus on European demand. Bingham began by reporting that from 2000 to 2013 wood pellet demand has enjoyed an average annual growth rate of 23 percent and that the wood pellet market currently sits at around 10 million metric tons. Putting that number into context, Bingham noted that if just 1 percent of U.S.-based electrical generation capacity was converted the wood pellet fuels, the resultant demand would come in around 9 million tons.

Bingham moved quickly into an analysis of the policy goals driving future demand in Europe noting that the European Union has set an ambitious target of 20 percent of total energy coming from renewable sources by 2020. Bingham noted that the drive towards these ambitious targets, however, has generated some saying, “there is increased emphasis on the total costs of renewables.” Bingham moved quickly through a country by country analysis of the role biomass may play in Belgium, the Netherlands, Denmark, and Germany while saving the bulk of his comments for the United Kingdom.

Bingham began the United Kingdom portion of his presentation by stating, “This is the biggest story in the industry at the moment.” While Bingham talked specifically about the generating facilities known widely within the industry like Drax and Eggborough he spent a considerable portion of his comments informing the audience about the large amount of generating capacity currently scheduled to come off line in the UK. While the UK is working towards what essentially amounts to the de-carbonization of its electricity industry by 2050, it will have to accomplish while replacing nearly 20 percent of the currently installed capacity. As the margin between peak supply and peak demand shrinks the price of energy has been climbing and Bingham reported to the audience that, “energy prices have become very sensitive politically in the U.K.”

Bingham closed his comments with the morning’s boldest predictions for future pellet demand reporting that he is currently seeing a market opportunity in 2020 for nearly 27 million tons of wood pellet consumption worldwide, with nearly 20 million of those tons being consumed in Europe. Bingham also predicted increased wood pellet growth in the Asian marketplace (7 million tons), continued co-firing and coal conversion in North America (4 million tons), as well as growing markets for wood pellets in Europe for residential heating noting that the largest shipment of pellets bound for residential pellet boilers docked in Denmark just two weeks ago.

The morning’s opening stanza concluded with the first half of a European utility roundtable moderated by Enviva’s Thomas Meth. Joining Meth in the discussion were Pedro Guilherme Caboco Fontes of DONG Energy, Nigel Hildyard of Eggborough Power, Henry Pease of RWE Supply and Trading, Matthew Rivers of Drax Power and Jason Woods of Vattenfall. Representatives on the roundtable offered a more measured pragmatism to the attendees reminding them that converting facilities to run on a new fuel input was a decision making process that offered considerable risk to utilities.

“We have to go forward in a more measured way,” urged Nigel Hildyard of Eggborough. Hildyard continued by picking up on Bingham’s earlier prediction of a continued debate on the cost of renewables saying, “I think we are going to see a debate about the cost of renewable, low carbon energy, but one thing is for sure, we need to keep the lights on.”

Meth closed the first half of this panel discussion before the break by asking each of the panelists about their thoughts about some of the larger questions facing the industry as it moves into 2014. Nearly each panelist expressed concern about the unbridled enthusiasm that currently marks the industry as well as the need to clearly articulate the industry’s value proposition to other utilities, governments, NGOs and ultimately the energy consuming public.

The conference continues through Tuesday and additional panels include discussions about sustainability, the fiber supply chain and transportation logistics.

 

 

 

 

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