Kiev is to be heated with pellets
Statistics shows that the greatest share of pellets produced is exported (about 573 thousand tons of the total 660,000 tons). But due to fierce competition in the international arena Ukrainian businesses have to study the internal market of Ukraine introducing the initiative of heating with biofuel in such a way.
Meanwhile, European countries are actively encouraging the practice of heating with pellets, allocating annual grants and paying back from 30 to 70% those households which use alternative fuels (Italy, UK).
The intention to convert Kiev boiler installations for heating with pellets was announced last year in September by the Kievenergo company.
Statistics shows that the greatest share of pellets produced is exported (about 573 thousand tons of the total 660,000 tons). But due to fierce competition in the international arena Ukrainian businesses have to study the internal market of Ukraine introducing the initiative of heating with biofuel in such a way.
Causes of low demand for pellets
First of all, the analysts say such happens due to stereotypes existing in the society. People are accustomed to traditional sources of energy, and most of the furnaces are not designed for alternative fuels. Besides that, the enterprises dealing with production of fuel pellets experience differences in staying afloat. Therefore, many businessmen either suspend production or combine it with a more profitable activity.
How enterprises survive in hard times
The first difficulty comes when buying raw materials. The thing is that the companies selling raw stock do not sign any contracts with pellet businesses. The price of raw materials is out of control, hence, instability appears.
We find it necessary to apply the regulatory mechanism for the industry pellets production to survive.
Business owners complain of constant challenges ranging from how to obtain raw materials and ending with how to sell the pellets.
European countries such as Poland, Czech Republic, Austria and Italy are the main consumers of pellets. Naturally, they demand a high quality product. In order to comply with this demand Ukrainian enterprises do their best. But the cost of equipment is very high. As a result, everything turns in a vicious circle.
Another failure is poor legislative support of the enterprises producing the pellets. There is the law on paper, but there is no legal framework that allows to take advantage of these benefits, for example, to import equipment.
The representative of one of the companies told about the difficulties they encountered when trying to get into the European market.
1) High cost of delivery
2) High standards of product quality
3) Competition (especially on Russian side)
In most cases, enterprises cope on their own, sometimes attracting investors indifferent.
What if you decided to run your own business?
The principal question: Where to get the equipment?
There are two options: buy it in any Ukrainian company (the expenses will be within $ 50-150 thousand), or get in touch with a foreign technology supplier (and spend over $ 1 million).
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