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The Danish pellet boom

ABSTRACT: The Danish wood pellet market has been growing rapidly over the last two decades. New statistics
shows that consumption has exceeded 400.000 tons/year in 2002. Two power plants are presently starting using
biomass fuel pellets â€" 300.000 tons/year wood pellets and 150.000 tons/year of straw pellets respectively. The
Danish annual consumption of biofuel pellets will therefore soon exceed 850.000 tons/year â€" making Denmark the
largest European pellet market. Denmark will not only be the largest in terms of size but also the market with the
largest variety of pellets and technologies. No other markets have so broad experience in using different raw
materials and technologies from small-scale heat production to large scale CHP production. The purpose of this
presentation is to give an overview of the Danish development and experiences, and present the technical, political
and economical preconditions for this successful market penetration. The presentation will thereby give valuable
inputs and tools to authorities and market actors from European pellet markets for enhanced development of the
pellet markets.
Keywords: Pellets, market, implementation

1  THE DANISH PELLET MARKET IS BOOMING
The wood pellet market has been growing rapidly over the last decade. New statistics from the Danish
Energy Authority shows that consumption has exceeded 400.000 tons/year in 2002. â€" see figure 1.

 


Figure 1: Consumption of wood pellets in Denmark in 2002. Source. [3]
The  pellet consumption of district heating plants has remained constant during the last decade. The growing
market has been due to a growth of small and mediumsize consumers â€" se figure 2.

Figure 2: Development of pellets consumption in Danish villas 1990 â€" 2000. Source: Danish Energy
Authority
Two power plants are presently starting using biomass fuel pellets â€" wood and straw pellets
respectively.The 300 MWel Avedoere Power Plant withan annual consumption of 300.000 tons wood pellets and
the Amager Power Plant with an annual consumption of 150.000 tons straw pellets.
The Danish annual consumption of biofuel pellets will therefore soon exceed 850.000 tons/year â€" making
Denmark the largest European pellet market. Not only the largest in size but also with the largest variety in
terms of pellets based on different raw materials and technologies from small scale heat production to large
scale CHP production.

2 ECONOMICS
The market for small plants and block heating is expected to continue the considerable growth in the years
to come. Furthermore a Danish combined heat and power plant with a yearly consumption of 300,000 tons wood
pellets is planned to go into operation in the near future. This will further expand total consumption.

The increased use of pellets amongst small and medium scale consumers is a result of constantly
improved economic incentives for conversion to pellets heating. Rising oil prices and constant pellet prices has
increased the savings for small consumers from 7 to 17 EURO/GJ in 2001. Due to recent drop in oil prices and
rise in pellet prices the savings has been reduced to 10 EURO/GJ in the spring 2002 - see figure 3.

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The Danish pellet boom