Wood pellets in competition with other energy carriers to provide heat – a market analysis

1. SERVICE MIT ENERGIE.
Wood pellets in competition with other energy
carriers to provide heat – a market analysis
Frank Schillig
International Pelletforum 2011, Stuttgart , 5.10.2011
© KWA EVIVA GMBH 2010 VOGELSANGER STRASSE 250 I 50825 KÖLN I GERMANY

2. SERVICE MIT ENERGIE.
Content
• Satisfying heat demand today
• Price and price development of different energy
carriers
• Excursus heat from biogas plants
• Economics of heat suppy
– Investment and O&M costs
– levelized heat costs
© KWA EVIVA GMBH 2010 Eviva – nachhaltige Energiedienstleistungen

3. SERVICE MIT ENERGIE.
Energy carriers to satisfy German heat demand
2006 2010
…and heat from renewable energy sources?
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4. SERVICE MIT ENERGIE.
Structure of heat supply from renewable energy sources in
Germany 2010
Total: 136.1 TWh
Biogenic solid fuels
(households):
53.4 %
Near-surface Biogenic solid fuels
geothermal energy: (industry):
3.9 % 15.0 %
Biogenic solid fuels (co-
generation power
Deep geothermal
installations and
energy:
Biogenic share of heating installations):
0.2 % Biogas:
waste: 5.3 %
5.6 % Biogenic liquid fuels:
Solar thermal energy: 8.7 % 3.0 %
3.8 % Sewage gas:
Landfill gas:
0.8 %
0.3 % Share of biomass *: 92 %
* Solid and liquid biomass, biogas, sewage and landfill gas, biogenic share of waste; Source: BMU-KI III 1 according to Working Group on Renewable Energy-Statistics (AGEE-Stat);
1 TWh = 1 Bill. kWh; deviations in the totals are due to rounding; as at: July 2011; all figures provisional

5. SERVICE MIT ENERGIE.
Energy from biomasse – heating values
• LHV wood/straw (absolute dry): ~18 MJ/kg
– ~ 65-70% hard coal
– ~40% fuel oil
– ~50% natural gas
• LHV vegetable oils: ~ 35 MJ/kg (~90% diesel)
• LHV biogas: ~ 20-22 MJ/m3 (~55-65% natural
gas)
© KWA EVIVA GMBH 2010 Eviva – nachhaltige Energiedienstleistungen

6. SERVICE MIT ENERGIE.
Price development of different energy
carriers
Wood chips
Wood pellets
Fuel oil
Natural gas
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7. SERVICE MIT ENERGIE.
Investment costs of different heating
systems
Oil heating gas heating pellet heating wood chip heating
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8. SERVICE MIT ENERGIE.
O&M costs – comparing wood chip with
oil heatings
Oil heating Wood chip heating
Annuised
Investment
O&M
Fuel
© KWA EVIVA GMBH 2010 Eviva – nachhaltige Energiedienstleistungen

9. SERVICE MIT ENERGIE.
Excurs biogas heat
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10. SERVICE MIT ENERGIE.
Local district heating grid
Heat exchanger
Biogas-
CHP-unit school pool Etc.
Heat offtake Heat offtake Heat offtake
Supply boundary
biogas pipeline
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11. SERVICE MIT ENERGIE.
Biogas heat from CHP
© KWA EVIVA GMBH 2010 VOGELSANGER STRASSE 250 I 50825 KÖLN I GERMANY

12. SERVICE MIT ENERGIE.
Why biogas heat? I
• Biogas plants: ~70% of the CHP-unit heat is
available
• >6000 biogas plants in Germany with >2200
MWel installed capacity >2300 MWth
capacity
• Heat usage limited: ~50%, often only to heat
farm buildings or neighbouring houses
• EEG 2012: heat usage > 60% !
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13. SERVICE MIT ENERGIE.
Why biogas heat? II
• Improved heat usage results in:
– Income from heat sales
– Income from CHP-bonus
improved economics
– Relating the heat price to fossile fuel prices
increased economic stability by hedging price
variations
– Constant EEG-tariffs + market driven heat sales
hedging the market variations in biogas substrate
prices
© KWA EVIVA GMBH 2010 Eviva – nachhaltige Energiedienstleistungen

14. SERVICE MIT ENERGIE.
Comparison of levelised heat costs for
different heating systems
Fuel oil
Natural gas
Wood pellets
Wood chips
Biogas heat
Levelised heat costs (€/kWh)
Operational years
© KWA EVIVA GMBH 2010 Eviva – nachhaltige Energiedienstleistungen

15. SERVICE MIT ENERGIE.
summary
• Heat supply from biomass more economic in the
mid- and long-term
• Today wood chips (HHS) and Pellets can be
competitive to oil and gas, depending on the case
– Investment costs higher for biomass based
heatings compared to oil or gas heatings
– Energy carrier prices of oil and gas higher than
wood chips or pellets
• Biogas heat can be very competitve if available
© KWA EVIVA GMBH 2010 Eviva – nachhaltige Energiedienstleistungen

16. SERVICE MIT ENERGIE.
Don‘t hesitate to contact us!
Frank Schillig
e: f.schillig@eviva-energy.com
t: +49-221-789469-10
w: www.eviva-energie.com
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