Monday, 28 October 2013 08:28

The demand for pellets in Poland dropped sharply - Ukrainians have to develop a domestic market

Because of the sharp drop in demand for solid biofuels from Polish power stations, which until recently were the main customers of Ukrainian producers, the price of pellets in Poland fell by 25%, and the level of consumption halved. Today pellets in Poland are acquired at 90-100 euro per ton, for Ukrainian producers this means to sell the production almost at cost. At the same time, in 2013 the cost of raw materials for wood pellets in Ukraine increased by 15-20%.

pellets ukr fbrAs it was previously informed by Ukrainian Biofuel Portal, in 2013 Polish government decided to reduce subsidies for thermal power plants. In addition, Polish Energy Regulatory Office tightened the criteria of supporting producers generating energy from biomass. Now such companies must prove that during the production they do not use a full timber. Otherwise, the company will not receive “green certificates”, which then can be sold. As for “green certificates”, in Poland this market faced a serious meltdown. The experts have been talking for a long time about an augmented supply of such property rights as well as their low cost compared to traditional energy payment.

Now when the situation on the European market has seriously deteriorated, the Ukrainian producers of solid biofuel are forced to develop their distribution channels within the country. It should also be noted that due to the functioning of a so-called system of "green tariff" for electricity generated from biomass (1 kWh is equal to 12.39 euro cents) the own bioenergy sector in the country is gradually developing. For example, this year from January to August, the total power of boilers running on biofuels increased by 31 % and reached 84 MW.

In addition to power generating companies the industrial companies in Ukraine are also changing over to alternative fuels. The producers of cement and bricks as well as fat and oil mills have already started replacing natural gas by biomass of sunflower husk. According to analysts of Ukrainian Biofuel Portal, in the first half of 2013 thanks for the use of biofuels the mentioned plants reduced their gas consumption by 110 million m3.

Due to the fall in demand for Ukrainian pellets from the EU there are two versions of events in the future of Ukrainian bio-energy sector. Some experts forecast that in 2014 the consumption of wood pellets in the domestic market will be almost doubled and will reach 570 thousand tons. Thus, the share of purchases from domestic customers will increase from 20 % to 40 % of total production. At the same time, less optimistic experts believe that today the Ukrainian domestic market with its poor infrastructure is not ready to accept such amounts and thus offset the sharp decline in biofuel export. As a result, the number of Ukrainian pellet plants will gradually shut down or seriously reduce their output.

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The demand for pellets in Poland dropped sharply - Ukrainians have to develop a domestic market

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