What is happening in the pellet market in terms of price?
There are several reasons for the increase. The first, and I think the most important, is the increase in costs. The pellet mills use electricity, pallets, plastic for bags and raw materials, and everything has increased a bit in price. There is also an increase in demand. Already before the war, in November and December, many boilers and stoves began to be installed because it was a cheaper solution than fossil fuels. People have chosen biomass and, for example, the sale of stoves has increased by up to 40%. And exports have also increased because Europe has banned imports from Russia, and now other countries like France or Italy are looking for that offer in Spain. Most of the manufacturers cover the demand of their regular customers as well as the national demand. It is difficult for a new customer to buy pellets because the factories are 200% trying to cover the demand of their regular customers.
When did prices start to rise? How much have they increased?
At the beginning of the year there is already an increase in the price due to the increase in demand. As other fossil fuels were increasing a lot, people opted for biomass. The factory price has risen by 70%, has not doubled and already it seems that the curve is flattening out. From Avebiom we do an index every month and we see that it continues to rise, but less. This affects the user’s price.
He points out that they now do an index every month, why did they decide to change the periodicity?
Because of the volatility and because there are several partners who have asked us for it. For example, energy service companies are a great buyer who has to make his own predictions. We all thought it was a good idea to monitor the factory price index ex-factory every month, rather than every three.
Is there a solution to lower prices? Will it be this winter?
For this winter it will be difficult because there will be a lot of tension, but for next year it can improve a lot. I am pretty sure that within two years it will be 100% resolved as there are many factory projects underway across Europe which will solve a large part of the situation.
Until a few months ago, biomass was also an economical alternative to fossil fuels. Will it continue to be so in the coming months?
It will continue to be the cheapest and that differential will increase relative to diesel or natural gas. Obviously the prices of everything are going up, and compared to what we paid a year ago it will be more. But the differential with fossil fuels will increase; it will be even more convenient.
What message would you like to send to a pellet consumer?
A message of calm. It is obvious that the prices of all energies have risen, but biomass is still the cheapest and will be resolved soon enough. In short, calm and tranquility, that consumers do not anticipate purchases or double the usual amounts because an excess of demand is generated which does not help the situation.
• This interview is included in the October issue of Renewable energy on paper (ER 215), which you can download for free in PDF format here
