The operators of the Ukrainian alternative energy market noted a sharp increase in demand for solid biofuels. The devaluation of the national currency, the increased export demand and the tendency to move away from traditional energy sources are among the causes of the boom.
Sergei Kozlov, the expert of Ukrainian Biofuel Portal pellets-wood.com, said that the main reasons hampering the Ukrainian pellet and briquette production were the high cost of production, shortage of raw materials, the high cost of logistics and stable prices for traditional energy sources. However, at the beginning of 2014, the situation on the Ukrainian biofuel market changed radically. Manufacturers and dealers noted an increase in domestic demand, which is the main sales market for wood biofuels. This was due to the fall of the national currency, rising prices for fossil fuels and the impossibility of a full replacement of gas with coal, which led to a sharp increase in domestic consumer demand for alternative fuels.
At the same time, the number of companies offering wood pellets for export is increased. In particular, according to the database of Ukrainian wood pellet exporters in 2014, published by Ukrainian Biofuel Portal, there were 246 companies, that was twofold increase compared to 2012-2013. Unfortunately, the quantitative increase did not give rise to a qualitative leap, what is common with a sudden change in market conditions.
At the same time, the geography of deliveries was expanded as well. Now it includes such countries as Panama (704 tons), the USA (43 tons) and South Korea (128 tons). In general, in 2014 Ukrainian enterprises exported 123 300 tons of wood pellets, what was 23.6% less than in 2013.
Another factor that can affect the development of the Ukrainian wood biofuel market could be changes in Ukrainian legislation. It should be mentioned the resolution of 25 February 2015 on the regime of gas tariff adjustments and linking them to the heating costs during the transition to other energy sources and a moratorium on the export of unprocessed timber.
Thus, we can say that the situation on the Ukrainian pellet market remains ambiguous and the dynamics of development is difficult to predict. Wherein the domestic pellet consumption is in the process of formation and the export markets reduce the volume of purchases, what sets new challenges for Ukrainian manufacturers.
Author: Ivan Prokhorov
