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