Argus Biomass Markets

Weekly biomass markets news and analysis

Issue 16-014 | Wednesday 6 April 2016

Market CommEntary European Industrial wood pellets

Atlantic Basin Industrial: spot continues fall Wood pellets - within 90 days (spot)
Week index Month index
The spot price for wood pellets delivered into the
Price Mar Feb Jan
Amsterdam-Rotterdam-Antwerp (ARA) region continued its
downward trend in the week to hit another all-time low. The cif ARA $/t 138.76 -1.19 140.98 145.54 152.23
fob Baltic /t 104.64 +0.01 107.07 111.36 113.10
cif ARA index shed $1.19/t to $138.76/t. A lack of bids in the
fob Portugal /t 104.75 -2.85 109.35 111.99 113.96
market and little hope among producers of shifting volumes
continued to weigh on prices. Wood pellets - within 90 days (spot)
With scarce buying interest to attract, sellers wanting Price
to offload pellets in storage driven by the prospect of
cif ARA $/MWh 29.39 -0.25
summer storage costs continued lowering their offers and fob Baltic /MWh 22.16 nc
in turn other sellers looking to sell wood pellets not yet in fob Portugal /MWh 22.18 -0.61
storage felt pressure to match them, leading to something
of a race to the bottom. And ports across Europe looking Wood pellets - forward prices
to increase throughput were pressuring those who have Bid Ask
been holding onto storage space for some months. Coasters cif ARA $/t
on both a fob Portugal and fob Baltic basis were available 2Q16 137.00 141.00 -2.00
at 100/t. The fob Baltic spot price held steady, closing 3Q16 138.50 142.50 -2.00

at 104.64/t while the fob Portugal spot price converged 4Q16 145.50 149.50 -0.50
1Q17 150.50 154.50 -0.50
towards the Baltic level in the week, shedding EUR2.86/t to
2017 156.50 161.50 -1.50
sit at EUR104.75/t. 2018 169.00 174.00 -0.50
Despite the falling offers, no spot trades were reported 2019 173.50 178.50 -0.50
in the week. But some buying appetite for European coaster fob Baltic /t
volumes could materialise in the coming weeks for third 2Q16 103.25 106.25 -0.25
3Q16 104.25 107.25 -0.50
quarter deliveries, traders said.
4Q16 109.50 112.50 -0.50
From North America, offers were still elusive with
1Q17 113.50 116.50 nc
minimal bids to attract in the week. If offers were to 2017 117.00 121.00 -0.50
emerge they would range in the $135-140/t range, traders 2018 124.50 128.50 -0.50
2019 127.00 131.00 -0.50
fob Portugal /t
Argus industrial wood pellet index
2Q16 104.00 107.00 -2.25
3Q16 106.50 109.50 -2.00
cif ARA ($/t, RH) fob Baltic (/t, LH) 4Q16 112.50 115.50 -0.50
fob Portugal (/t, LH)
1Q17 116.00 119.00 -0.25
120.0 165.0
2017 119.00 123.00 -0.50
160.0 2018 125.25 129.25 -0.50
115.0 2019 128.50 132.50 -0.50
155.0

110.0 150.0 Contents

145.0 Market commentary and industrial wood pellet prices 1
105.0 Premium wood pellet prices and wood chip prices 3
140.0
Wood pellet freight rates 4
100.0 135.0 Market news 6
21 Oct 15 16 Dec 15 10 Feb 16 6 Apr 16 Generation economics 10

Copyright 2016 Argus Media group

Argus Biomass Markets Issue 16-014 | Wednesday 6 April 2016

said. Despite the dollar weakening in the week the EUR/ Asian industrial wood pellets
USD exchange rate closed at $1.14 those offers would
still struggle to compete with European supply. European Vietnam fob export price (industrial wood pellets) $/t
Origin Delivery period Mid
coaster offers were as low as 117/t on a cif ARA basis
which was equivalent to $133/t and may have room fob Vietnam Spot 94.50 -0.50

to move downwards if a bid was found, traders said.

Handysize offers from the Baltics were also scarce but North american industrial wood pellets
could be available at similar levels to European coasters,
they added. US fob export price (industrial wood pellets) $/t
Origin Delivery period Mid Bid Ask
Some appetite was heard for swaps of second quarter
deliveries with fourth quarter 2016 and fourth quarter fob southeast US Spot 123.00 126.00 -1.00
2017 volumes. Discussions were in the early stages but the fob southwest Canada Spot 118.00 121.00 -1.00
fob northeast US Spot 125.25 -1.20
premium from the second quarter to the fourth quarter this
year was heard to have widened by around 2/t from the US fob export price (industrial wood pellets) $/MWh
premium discussed in recent weeks of around 4-6/t. The Origin Delivery period Mid Bid Ask
widening premium is the result of the sharp fall on the near fob southeast US Spot 26.05 26.68 -0.21
curve and did not reflect a firming on fourth quarter prices, fob southwest Canada Spot 24.99 25.62 -0.21
traders said. fob northeast US Spot 26.52 -0.25

Along the far curve, discussions were muted with little

Wood pellets - forward prices $/t
appetite for spot volumes. With both the premium and
Mid Bid Ask
industrial markets grappling with high levels of uncertainty
fob southeast US
over how much demand is expected to come online in the
2Q16 122.00 127.00 -2.00
next two years, many market participants are eyeing the 3Q16 124.00 128.00 -2.00
market with increasing caution and are hesitant to consider 4Q16 130.00 136.00 -0.50
trading beyond the first quarter of 2017. The lack of activity 1Q17 135.00 141.00 -0.50
2017 142.00 147.00 -1.50
helped keep prices along the far curve stable, widening the
2018 154.00 160.00 -0.50
spread with prompt prices. 2019 159.00 164.00 -0.50
fob southwest Canada
SE Asia industrial: Price dips 2Q16 118.00 121.00 -2.00
Fob Vietnam spot prices for biomass wood pellets dipped 3Q16 120.00 122.00 -2.00
4Q16 125.00 131.00 -0.50
slightly to $94.50/t, or 50 down over the week, as South
1Q17 131.00 135.00 -0.50
Korean tender buyers took a breather and Russian and other 2017 138.00 141.00 -1.50
competing suppliers waited in the wings. 2018 150.00 154.00 -0.50
The absence of outstanding tenders from Vietnams 2019 155.00 158.00 -0.50
fob northeast US
key South Korean buyers and competition from alternative
2Q16 125.50 -2.00
supply sources put a slight dampener on pricing, with
3Q16 127.00 -2.00
market participants expecting the market to remain steady 4Q16 134.00 -0.50
to slightly softer. 1Q17 139.00 -0.50
Little fresh bid-offer activity was reported for fob 2017 145.50 -1.50
2018 158.00 -0.50
Vietnam wood pellets exported from Ho Chi Minh, Hai
2019 162.50 -0.50
Phong, Hanoi and Quy Nhon over the week. Some market
participants reported that Russian supply was offered
fairly recently on a delivered basis in South Korea but that Argus Cif ARA monthly figures $/t
prices were largely in line with recent Vietnamese offers.
Balance of April 136.42
Russian supply has been bolstered by a devalued rouble, May 136.70
as well as by a steady increase in production over the past June 137.70
10 years. July 138.33
The figures above are an average survey result value for each month contained
Vietnam benefits from the plentiful wood waste its
in the 90-day spot period. They are shown for indicative purposes, to better
furniture manufacturing industry produces, giving it some illustrate the composition of the market-survey component of the spot cif ARA
of the lowest production costs in the regional. Large wood index. The spot index value can be found on page 1 of the report.

Copyright 2016 Argus Media group Page 2 of 14

Argus Biomass Markets Issue 16-014 | Wednesday 6 April 2016

pellet factories in Vietnam have also helped improve its European premium wood pellets
economies of scale compared with competing exports
from Thailand, Indonesia and Malaysia. Vietnamese Wood pellets - within 45 days (spot) /t
Delivered northern Italy Mid Low High
producers break-even costs are estimated by some market
participants to be in the $85-$91/t range for fob supply, Bulk 145.00 140.00 150.00 nc
which is around $1-2/t lower than Thai producers and well Bagged 190.00 180.00 200.00 nc

under the costs of some Indonesian suppliers at as much as

$90-95/t. Industrial wood chips
Meanwhile this weeks lull in demand for Vietnam wood
pellet exports may not last long as state-controlled Korea NWE wood chips - within 90 days (spot) /GJ
Week index Month index
South East Power (Kosep) was expected by several traders
Price Mar Feb Jan
to announce a tender as soon as this month for delivery
cif NWE 5.75 nc 5.75 6.25 6.50
over the months ahead. While one trader expects Kosep
to seek only 20-25,000t, some others say Kosep prefers Wood chips cif NWE - forward prices /GJ
to issue larger tenders. They expect upcoming tenders Bid Ask
to be announced soon for a total of up to 240,000 t for 2Q16 5.75 6.25 nc
delivery in second half 2016. Other state-controlled Korean 3Q16 6.00 6.60 nc
generating companies are also expected to issue more 4Q16 6.35 6.75 nc
2017 6.65 7.15 nc
tenders fairly soon, which should tighten supply in the 2018 6.85 7.35 nc
region. 2019 7.05 7.45 nc

South Korean authorities suggested last year that their

biomass imports might fall slightly in 2016, but several North American wood chips (spot) $/GJ
market participants said this week that cheaper delivered Location Market Bid Ask
wood pellet prices will continue to attract utility buyers this Portland, Oregon (inc. Longview) fob export 6.20 6.40 nc
year. They see the average delivery duty paid (DDP) price Tacoma, Washington fob export 6.30 6.50 nc
Vancouver, British Columbia fob export 6.30 6.70 nc
for landed product at a South Korean generator averaging
Mobile, Alabama fob export 5.00 5.30 nc
around $110-$120/t in recent months well down on South Morehead City, North Carolina fob export 5.10 5.40 nc
Korean bidding in the first half of last year, which ranged Sheet Harbour, Nova Scotia fob export 5.30 5.70 nc

from DDP $132/t to $143/t in March 2015, and from $120-

130/t in second-quarter 2015. for over 80pc of palm oil plantations and palm oil production
Meanwhile, the palm kernel shell (PKS) market has been globally, ensuring that PKS shipments from the two countries
trading in an average range of $70-$80/t for Malaysian and make up most of the supply.
Indonesian fob export cargoes. Traders say the market is
growing for cargoes, which are typically transported in bulk European Premium: bulk prices slip
shipments of 10-20,000t around the region. In the premium pellet market, high and low ranges for
Malaysia and Indonesia are jointly estimated to account EN plus certified A1 pellets delivered into northern Italy
$: exchange rate widened in the week, amid a worryingly quiet market,
0.95
market participants said. Bagged pellets delivered into the
region held steady at 190/t while bulk pellet premium
0.94
pellet prices slipped by 2.50/t to 145/t.
0.93 Pellet colour remains very important to consumers in the
0.92 Italian market, with pale pellets preferred. Darker pellets
were priced at the lowest end of the range, traders said.
0.91
And hardwood pellets likewise have more consumer
0.90 traction than those made from softwood. Pellets from
0.89 central Europe made from beechwood both a hardwood
and pale in colour were well accepted despite low
0.88
production costs, making such supply highly competitive,
0.87 market participants said.
12 Oct 15 10 Dec 15 7 Feb 16 6 Apr 16

Copyright 2016 Argus Media group Page 3 of 14

Argus Biomass Markets Issue 16-014 | Wednesday 6 April 2016

Competing Fuels Wood pellet freight rates

Argus competing fuel assessments Argus wood pellet freight indications, spot cargo
Units Delivery Price Route Tonnage Units Rate

Europe Aveiro-ARA 3,500 /t 14.00 nc

Coal cif ARA $/t 90 days 44.42 Aveiro-Copenhagen 3,500 /t 16.00 nc

Gasoil heating oil German cif NWE $/t prompt 306.00 Aveiro-Hull (UK) 3,500 /t 14.00 nc
Riga-ARA 5,000 /t 17.00 +0.25
Gasoil heating oil French cif NWE $/t prompt 303.00
Riga-Copenhagen 5,000 /t 12.00 nc
Natural gas NBP /MWh May 11.32
Riga-Stockholm 5,000 /t 11.50 nc
US
St Petersburg-ARA 3,500 /t 23.00 -0.50
Coal Central Appalachian Nymex spec $/st May 43.55
St Petersburg-Copenhagen 3,500 /t 15.00 nc
Fuel oil 1% New York Harbor $/bl prompt 24
St Petersburg-Stockholm 3,500 /t 13.75 -0.25
Natural gas Nymex $/mn Btu May 1.95
Mobile-ARA 25,000 $/t 15.20 nc
European Emissions
Mobile-ARA 45,000 $/t 11.40 nc
CO2 EU ETS /t CO2e Dec 2016 5.24 Savannah-ARA 25,000 $/t 14.50 nc
CO2 CDM CER /t CO2e Dec 2016 0.42 Savannah-ARA 45,000 $/t 10.80 nc
UK Rocs auction price /MWh prompt 42.19 Vancouver-ARA 45,000 $/t 19.50 nc

North America wood pellet freight 25,000t $/t Wood Pellet Freight /t

Savannah-ARA 25kt Mobile-ARA 25kt

19 Aveiro-ARA 3.5kt Riga-ARA 5kt
19
18
18
17
17
16
16

15 15

14 14

13 13
21 Oct 15 16 Dec 15 10 Feb 16 6 Apr 16 21 Oct 15 16 Dec 15 10 Feb 16 6 Apr 16

New Biomass Content

Available In Argus Direct
Argus DeWitt Butadiene Annual 2015
Argus Direct subscribers can now access biomass fundamentals
data including: This new study features historic and forward-
Russian wood pellet export plants looking analysis of supply and demand for all
Baltic, Iberian wood pellet export plants notable butadiene markets.
North American wood pellet export plants
International wood pellet trade For more information, contact us today at:
South Korean wood pellet tenders
European biomass plant projects consulting@argusmedia.com
European operational biomass power plants

Access new content and discover the benefits of Market Reporting

Argus Direct - sales@argusmedia.com Market Reporting Consulting
Consulting illuminating the markets Events
illuminating the markets Events

Copyright 2016 Argus Media group Page 4 of 14

Argus Biomass Markets Issue 16-014 | Wednesday 6 April 2016

Weather

European weather - Departure from normal temperatures C

07 Apr 08 Apr 09 Apr 10 Apr 11 Apr Precipitation
Location (mm)
Avg normal* Avg normal* Avg normal* Avg normal* Avg normal* 5-day 15-day

UK Aberdeen Dyce 7.3 0.1 6.4 -0.8 5.6 -1.7 5.6 -1.8 7.7 0.2 20.9 49.6
UK Manchester Hulme 8.0 -0.2 8.2 -0.1 6.3 -2.1 7.2 -1.3 8.6 0.0 23.3 60.9
UK London Heathrow 9.0 -0.8 9.5 -0.4 8.5 -1.5 8.6 -1.5 10.1 -0.2 16.4 40.8
Norway Bergen Florida 7.3 1.0 5.9 -0.6 6.4 -0.2 7.8 1.1 9.6 2.7 3.7 32.4
Norway Oslo Blindern 6.1 0.9 6.3 0.9 6.4 0.8 6.9 1.1 8.2 2.2 7.3 25.9
France Paris Orly 7.5 -2.9 8.1 -2.4 7.8 -2.9 8.9 -1.9 10.3 -0.6 15.7 40.1
The Netherlands Amsterdam Schiphol 8.4 -0.5 8.3 -0.7 8.3 -0.9 9.2 -0.1 10.6 1.1 12.4 39.2
Germany Essen 7.9 -1.2 7.6 -1.7 9.0 -0.5 10.3 0.7 11.8 2.0 8.6 33.9
Germany Hamburg Fuhlsbuttel 8.5 0.7 7.7 -0.3 7.8 -0.4 9.7 1.4 10.4 1.9 4.2 27.1
Germany Berlin Tempelhof 9.3 0.6 8.8 -0.1 9.3 0.2 9.9 0.6 11.0 1.5 1.3 20.7
Germany Dusseldorf 8.3 -1.0 7.9 -1.5 9.2 -0.4 10.3 0.6 12.2 2.4 8.6 33.9
Germany Nuremberg 8.0 -0.2 7.7 -0.7 8.5 0.0 9.6 0.9 11.8 2.9 3.0 24.4
Poland Warsaw Okecie 12.6 5.0 12.0 4.2 9.7 1.7 9.9 1.7 11.0 2.6 18.0 36.7
Czech Republic Prague Ruzyne 10.7 2.7 8.7 0.5 8.0 -0.4 8.5 -0.1 10.0 1.2 5.9 24.0
Hungary Budapest Lorinc 16.3 5.1 17.3 5.9 12.4 0.8 11.9 0.1 14.4 2.4 11.5 21.1
Serbia Belgrade Surcin 19.9 8.0 18.9 6.8 14.3 2.1 12.1 -0.3 14.7 2.2 9.1 18.1
Romania Bucharest Imh 19.2 8.7 15.7 5.1 15.5 4.7 13.6 2.6 13.8 2.7 18.6 29.7
Spain Madrid Barajas 11.1 -0.9 9.7 -2.4 10.5 -1.7 9.5 -2.8 8.8 -3.6 9.3 33.6
Italy Milan Linate 16.5 3.4 14.1 0.9 14.0 0.7 14.2 0.7 15.0 1.4 25.1 45.6
*normal means cleaned 10-year average (2004-2013 inclusive)
Ensemble forecasts (12.00 GMT) provided by Speedwell Weather

Weather derivatives - 1 Apr 2016 - Argus weekly assessment

HDD (C) CAT (C)
10-year Mid vs 10-year 10-year Mid vs 10-year
Location Month Bid Offer Mid +/- Bid Offer Mid +/-
average average average average

Amsterdam/Schiphol Apr 204 230 217.00 -11.00 234.13 -17.13 - - - - - -

May - - - - - - 390 420 - -1.85 -1.85
Essen Apr 190 215 202.50 -9.50 221.55 -19.05 - - - - - -
May - - - - - - 400 440 - -0.31 -0.31
London/Heathrow Apr 183 213 198.00 -2.00 209.48 -11.48 - - - - - -
May - - - - - - 415 440 - 3.23 3.23
Paris/Orly Apr 168 188 178.00 -3.00 187.74 -9.74 - - - - - -
May - - - - - - 440 475 - 0.58 0.58
Note HDD (basis 18C) apply October - April, CAT apply May - September, 10-year average data supplied by Speedwell Weather

Weather derivatives - 1 Apr 2016 - Argus implied daily average temperatures

HDD (C) CAT (C)
10-year Mid vs 10-year 10-year Mid vs 10-year
Location Month Bid Offer Mid +/- Bid Offer Mid +/-
average average average average

Amsterdam/Schiphol Apr 11.20 10.33 10.77 -0.37 10.20 0.57 - - - - - -

May - - - - - 12.58 13.55 13.06 - 13.12 -0.06
Essen Apr 11.67 10.83 11.25 -0.32 10.61 0.64 - - - - - -
May - - - - - 12.90 14.19 13.55 - 13.56 -0.01
London/Heathrow Apr 11.90 10.90 11.40 -0.07 11.02 0.38 - - - - - -
May - - - - - 13.39 14.19 13.79 - 13.69 0.10
Paris/Orly Apr 12.40 11.73 12.07 -0.10 11.74 0.32 - - - - - -
May - - - - - 14.19 15.32 14.76 - 14.74 0.02
Daily values are derived from the weekly assessment. HDDs are divided by the number of days in the month and then subtracted from 18C to give a daily value while
CATs are divided by the number of days in the respective month to give the daily value.

Ensemble averages and cleaned weather data all supplied by Speedwell Weather Limited (12:00 GMT).
For more information visit: www.speedwellweather.com

Copyright 2016 Argus Media group Page 5 of 14

Argus Biomass Markets
News
European premium pellet consumption rises
European wood pellet consumption for heating rose to
11.7mn t in 2015, an increase of over 7pc from 2014 levels,
European Pellet Council president Christian Rakos said at
the Argus biomass conference on Tuesday
Italy is still the largest market in Europe, consuming over
3mn t in 2015, Italian wood pellet association Aiels Annalisa
Paniz said at the conference.
Wood pellet consumption for heating increased despite
the third mild winter in a row and falling fossil fuel prices.
In some European countries, such as Austria, wood pellets
still hold a competitive advantage over heating oil and
natural gas prices, although heating oil has been cheaper
than wood pellets in Germany since December.
The domestic heating market accounted for over
8mn t of European pellet consumption in 2015, while the
commercial heating market accounted for almost 3mn t.
Sales of wood pellet boilers and stoves in Europe
were affected by the lower heating oil prices but pellet
consumption was still high. Once consumers have converted
to pellet boilers they remove their old heating system,
helping to drive demand, Rakos said.
Pellet boiler sales in several leading European markets
Germany, Austria and France decreased in the past three
years and it has not been an encouraging start to 2016,
Rakos said.
The German, Austrian and French markets are driven
by high-end boilers that do not sell as well in the current
market environment, he said. Sales closely follow heating
oil prices. In Germany, the largest market for boilers, sales
have also been affected by competition from heat pumps.
The European pellet stove market is declining although
it remains large, Rakos said. Sales in Europe fell to 357,000
Argus Webinar:
Biomass trading and risk management
Click here to view this webinar
As the wood pellet market evolves, producers, buyers and traders
are exploring a range of risk management tools to optimise trade and
market efficiency. Join us as we discuss:
How counterparties can balance price risk, currency
risk and credit risk
How risk management tools are emerging
The developing swaps market
The advantages and barriers to more widespread
use of these tools to manage risk
argusmedia.com
Copyright 2016 Argus Media group
Issue 16-014 | Wednesday 6 April 2016
units in 2015 from 395,000 in 2014, Paniz said. Over 90pc
of pellet stove sales are in Italy, although the market is
declining it is large over 200,000 units were sold in 2015.
France is a growing market for pellet stoves, with
100,000 units sold in 2015, despite the low heating oil price.
Spain is also a promising market, with stove production
and sales growing in the country, Rakos said.
The pellet stove market has further potential, he said.
The price of stoves makes it a more economically viable
option for consumers than more expensive pellet boilers,
and offers a lot more comfort than logwood stoves, which
are still common in many areas of Europe.
SBP introduces new fees for biomass producers
The Sustainable Biomass Partnership (SBP) has introduced a
new funding model that puts the onus on biomass producers.
SBP certificate holders, including wood pellet producers,
and any entity taking legal ownership of SBP-certified
biomass and selling supply with a SBP claim, such as trading
firms, will have to pay the new fees. Only utilities supporting
the scheme have had to pay a membership fee until now.
The fees for wood pellet producers will be 0.15/t
(17/t) sold, effective from 1 October, while wood chip
producers will pay 0.08/t, effective from 1 April next year.
Traders will be charged an annual fee, depending
on volume. A fee of 25,000/yr is applicable for parties
that handle over 250,000 t/yr. And a 10,000/yr fee will
be charged for trading 100,000-249,999 t/yr. No fee is
applicable for less than 100,000 t/yr.
All fees will be paid on a quarterly basis, based on
forecast sales for that period, with adjustments for any over
or underpayment on the previous quarter's volume. The SBP
is exploring options for payments based on actual certified
sales.
The changes have been introduced following little
consultation with producers, Swedish trading firm Ekman's
vice-president for bioenergy, Arnold Dale, said at the Argus
biomass conference on Wednesday.
SBP certification is meant to be a voluntary scheme,
but it is required to sell pellets to European utilities,
which means that it is not voluntary, Canadian wood pellet
association WPAC executive director Gordon Murray said.
The utilities involved in the scheme the UK's Drax,
Sweden's state-owned Vattenfall, French firm Engie,
Germany's Eon and RWE, Danish state-controlled Dong
Energy and municipal company Hofor either strongly
encourage or specify that suppliers have SBP certification,
or that they are working towards it.
Page 6 of 14
Argus Biomass Markets
The new fees are in addition to costs related to the
annual inspection and certification process charged by
certification bodies.
The funding model was introduced by the utilities behind
the scheme to help "share the burden", SBP executive
director Peter Wilson said. The new fees will cover the
wider cost of administrating and developing the SBP
framework.
The SBP is a consortium of European utilities, formed
to develop a single biomass sustainability framework that
could ultimately replace companies' individual certification
schemes. A total of 18 biomass producers have now achieved
SBP certification.
Russian wood pellet export market to grow
Wood pellet production in Russia could reach 2mn t by
2020, Copenhagen Merchants sustainability manager Rens
Hartkamp said at the Argus biomass conference in London
on Tuesday.
Pellet production in Russia has grown at an average of
10pc/yr over the last ten years and domestic production is
expected to reach 1.2mn t of pellets this year, Hartkamp
said. The bulk of output around 750,000t in 2016 will be
exported from the western part of Russia. A smaller amount,
around 100,000t, will be exported to Asia, and around
100,000t by truck to European heating markets.
The deprecation of the rouble against the US dollar has
benefited Russian exporters, as has growth in the wood
processing sector which has led to more wood waste. In
Russia there is minimal domestic demand for wood waste
from the sawmill industry and low quality stems, Hartkamp
said. That, combined with ecological fines on dumping
sawmill wood waste, means there is an abundance of
available wood waste to use as raw material for wood
pellets. From 2017 new legislation will make it compulsory
to use wood waste in Russia.
But Russian producers must overcome several key
challenges in order to achieve sustained growth in pellet
exports to Europe. Underdeveloped logistics and cross-
border tensions in the region increase costs along the supply
chain, Hartkamp said. And EU trade sanctions on Russia in
the last two years have restricted the number of empty
containers available to the Russian exporters.
And for producers eyeing the European industrial and
heating market, certification processes can be complex and
expensive. Obtaining Forest Stewardship Certification (FSC)
and Sustainable Biomass Partnership (SBP) certification
alongside EN plus certification gives producers maximum
sales flexibility and increases trust in Russian production,
but the process is time consuming and strains tight budgets,
Copyright 2016 Argus Media group Page 7 of 14
Issue 16-014 | Wednesday 6 April 2016
Argus Media Blog
http://blog.argusmedia.com
Subscribe to our blog for expert updates
and analysis on the latest developments
in the global oil industry
Market Reporting
Consulting
illuminating the markets Events
Hartkamp said.
Without FSC certification it is difficult to sell to the
European industrial market but still possible to sell to the
European heating market if EN plus certification is achieved.
Interest in the EN plus market is growing in Russia with 18
EN plus certificates awarded in the last two years.
Despite the costs involved, many Russian producers are
working to achieve SBP certification to facilitate access to
European markets 15 producers have passed the main
audit.
German Pellets sells Hotts unit
Wood pellets producer German Pellets' Sudpell subsidiary
has sold Austrian wood pellet distribution and production
company Hot'ts Holzpellets to businessmen Gerhard and
Bernhard Glechner. The Glechners founded Hot'ts and were
the original owners.
Hotts produces around 90,000 t/yr from three plants
at Mattighofen and Oberweis in Austria, and Pfarrkirchen in
Germany. The company mainly sells to the Austrian domestic
market and has around 25,000 customers. Its main markets
are in Upper Austria, Lower Austria, Vienna, Burgenland and
Salzburg.
German Pellets acquired Hotts Holzpellets in 2012.
German Pellets filed for insolvency on 10 February.
Seven of its European subsidiaries have filed for insolvency
since then, including Sudpell on 15 March.
Law firm White and Case has been appointed as
insolvency administrator and is handling the sale of
German Pellets' assets. The law firm has asked investors in
German Pellets to register on the dedicated German Pellets
insolvency website to assist with the process and to be kept
informed.
German Pellets' US subsidiary Louisiana Pellets filed for
bankruptcy protection in February.
Argus Biomass Markets
German Pellets' Ettenheim plant running
Troubled biomass producer German Pellets' 128,000 t/yr
Ettenheim plant resumed operations this week, starting up
one production line.
The facility had been off line since the company filed for
bankruptcy in February.
Insolvency administrator Bettina Schmudde, a partner at
legal firm White and Case, has been granted an extension
to 1 May for the preliminary insolvency proceedings by the
Wismar district court. The extension was requested to help
continue business operations during the sales process.
The administrator has registered interest from around
130 parties for parts or all of the insolvent German Pellets
group. A shortlist of 30 has been selected, with Schmudde
preferring a sale of the entire group.
Assets to be sold include three German production plants
owned by German Pellets the Wismar, Herbrechtingen
and Ettenheim complexes, with 640,000 t/yr of combined
capacity and a 150,000 t/yr site in Torgau, part of German
Pellets Sachsen.
The Wismar plant is still producing around 2,100 t/week.
The Herbrechtingen and Torgau facilities are off line.
Chinas producers eye growing Japanese market
Chinas wood pellet exports fell sharply in 2015 but a
growing Japanese biomass market could support growth in
the coming years.
Chinas reported wood pellet exports fell by 70pc in 2015
from a year earlier, as producers struggled to compete with
cheap Vietnamese supply to South Korea. The spot price for
wood pellets from Vietnam was assessed at $94/t fob at the
end of 2015, a level that other regional suppliers struggle to
match. High production costs because tight wood resources
supply renders Chinese wood pellets less competitive,
market participants said.
South Koreas wood pellet imports from China fell to
3,000t in 2015 from 287,000t a year earlier and Chinas
share of South Koreas wood pellet imports shrank to under
1pc from 16pc. Vietnams portion of South Koreas wood
pellet imports increased to 70pc from 49pc.
Negotiations for domestic wood pellet production
within China have been affected by tight raw material
supply. Chinese wood pellets were around $110/t fob in the
fourth quarter of 2015 but tight supply of wood resources
meant traders had limited room for negotiation, they said.
Producers are largely concentrated in eastern China and
Guangdong province in the south.
But Chinese producers made gains in Japan, exporting
58,000t or 25pc of all Japanese wood pellet imports in
2015, from nothing in 2014. A contract with Japanese utility
Copyright 2016 Argus Media group Page 8 of 14
Issue 16-014 | Wednesday 6 April 2016
Soma Kyodo Power, which began receiving 5,000 t/month
for co-firing in its 2GW Shinchi coal-fired power plant in
February 2015, is solely responsible for the increase. Market
participants in China expect wood pellet exports to Japan to
rise again in 2016 but little trade has been reported so far.
Japanese buyers tend to be more concerned with
quality, reliability and sustainability than their South Korean
counterparts. Wood pellets sold into Japan must be Forest
Management (FM) certified and as a result command a
premium compared with those supplied to South Korea
which some market participants estimate at about $15/t.
Such requirements pose a hurdle to some Vietnamese
producers, opening up opportunities for other regional and
global producers that are FM certified. With 543MW of new
dedicated biomass-fired plants set to come on line in Japan
in the next 2-3 years, traders in China see the market as a
strong source of potential growth.
But wood pellet imports from China were more
expensive than from Vietnam and western Canada, one
Japanese trader said.
Chinas wood pellet imports remained minimal, as weak
demand was compounded by complex customs regulations.
Some southeast Asian traders have tried exporting to China
but bemoan bureaucracy and difficulties in obtaining import
licences. There is some tentative Chinese demand from
customers that prefer higher quality imported pellets but
many are not prepared to pay the higher prices, a market
participant said. This means that exporting to China is
not yet economically viable for many manufacturers. An
increase in enquiries has led to many to anticipate growth
Announcement
Argus completes and extends annual Iosco
assurance review
Argus has completed its fourth external assurance review
of its price benchmarks, extending the scope of the
process to cover petrochemicals and fertilizers for the
first time, as well as again covering crude, products,
biofuels, thermal coal, coking coal, natural gas and
biomass benchmarks. The review was carried out by
professional services firm PwC. Annual independent,
external reviews of oil benchmarks are required by
international regulatory group Ioscos Principles for Oil
Price Reporting Agencies, and Iosco encourages extension
of the reviews to non-oil benchmarks.
For more information and to download the review visit
our website http://www.argusmedia.com/About-Argus/
How-We-Work/
Argus Biomass Markets Issue 16-014 | Wednesday 6 April 2016

Japan wood pellet imports

in Chinese imports, but others note that importers making
Country Jan-Feb 2016 net Jan-Feb 2015
enquiries to several exporters may have led to an inflation
of real demand levels. Canada 46,883 38,798
The low cost of coal and cheaper biomass alternatives Vietnam 1,915 1,407
China 13 -5,015
stifle demand for industrial wood pellets, market
Other 99 -162
participants said. Some Chinese utilities burn different Total 48,910 35,028
forms of biomass such as rice husks, peanut shells, palm
kernel shells, sawdust and wheat husks.
Chinese energy company Evergreen Green Energy, which Canada has become increasingly dominant in Japan,
owns biomass-fired power plants with a total of around despite losing out to lower-priced Vietnamese supply in the
270MW of generation capacity. The plants burn various South Korean wood pellet market. Canadian manufacturers
forms of biomass including briquettes, straw, wood chips are better placed than many in southeast Asian to guarantee
and other local agricultural waste and have been modelled security of supply and the forest management certification
on European biomass projects. "Europe is at a different that Japanese buyers require.
stage of development with renewable energy, mainly in Japanese demand for imported wood pellets is likely to
thermal efficiency. The company is building biomass power continue to grow from this year, as Japan targets 22-24pc of
plants that can learn from this technology," Evergreen Green power to come from renewable sources by 2030.
Energy said. Domestic utility Joban Joint Power has already closed a
tender for 80,000t of wood pellets for April 2016-March 2017
Dutch open biomass sustainability consultation delivery, and expects to issue another for delivery from the
The Dutch government has opened a consultation on its fourth quarter.
biomass sustainability criteria under the renewable subsidy Japan's palm kernel shell (PKS) imports increased to
scheme SDE+. 48,000 t/month in January-February from 37,000 t/month a
The consultation will not address "the issue of year earlier. Japan received an average of 16,000 t/month of
sustainability criteria per se", but instead how the criteria PKS from Indonesia in the first two months of this year, down
can be translated into a workable verification procedure. slightly from 19,000 t/month in the same months in 2015.
The consultation was delayed awaiting Dutch economy PKS imports from Malaysia surged to 32,000 t/month in
minister Henk Kamp to outline the sustainable verification January-February, up from 18,000 t/month a year earlier.
process to parliament. Offers for Malaysian PKS at $75-85/t fob were slightly
A webinar was held on 31 March and interested parties lower than those for Indonesian PKS $76-87/t fob in
have until 20 April to submit their views on the draft February, giving Malaysian producers an advantage.
verification protocol. Publication of the final verification Indonesia has increased its export levy tariff for PKS to
protocol is expected in September. $3/t from this month, which could give Malaysian producers
an additional competitive edge. The tariff is expected to
Canadian pellets dominate Japanese demand rise again in March next year and 2018 to $10/t.
Japan's wood pellet imports were more than three times Japanese wood pellet imports by country t
higher than a year earlier in January-February, with
Canadian supply accounting for most of the growth.
Japan received 24,000 t/month on average in January- 60,000
Jan-Feb 2015 Jan-Feb 2016
55,000
February this year, up from 7,000 t/month in the same
50,000
period of 2015. The brisk start to the year followed strong 45,000
growth in 2015. About 142MW of dedicated biomass capacity 40,000
came on line in Japan in the last nine months of 2015, lifting 35,000
demand. 30,000
Imports from Canada increased to meet rising 25,000
20,000
consumption, reaching 23,000 t/month in January-February
15,000
this year, up from 4,000 t/month a year earlier. Receipts
10,000
from China fell to almost nothing from 2,500 t/month over 5,000
the period, while imports from Vietnam remained minimal, 0
at under 1,000 t/month. Canada China Vietnam

Copyright 2016 Argus Media group Page 9 of 14

Argus Biomass Markets
PKS tends to be cheaper than wood pellets, because
supply outweighs demand, regional traders said. But the
growing consumption of a range of biomass fuels in Japan
may push PKS prices closer to wood pellets in the future,
they said.
Japanese firms plans new biomass plant
Japanese pulp and paper firms Oji Green Resources, a
subsidiary of Oji Holdings, and Mitsubishi Paper Mills have
formed a joint venture to build a 75MW biomass power plant
at Mitsubishi Papers Hachinohe mill, in Japans Aomori
prefecture.
The power plant is due to be operational in June 2019.
Mitsubishi Paper will operate and maintain the plant,
while Oji Green Resources will procure biomass for the
plant. The plant will use wood chips, other biomass
including palm kernel shells, and coal.
Electricity generated will be sold to electric power
companies under Japans feed-in-tariff (FIT) scheme. The
biomass market in Japan has grown rapidly in recent years,
following the expansion of the country's renewable FIT
scheme to include biomass in July 2012.
Finlands Seinajoen Energia plans biomass plant
Finnish utility Seinajoen Energia plans to build a 120MW
biomass-fuelled heat plant in Seinajoki, western Finland.
A new 90MW biomass boiler will be supplied while the
existing heavy fuel oil boiler will be modified to a wood
pellet boiler with 30MW heat generation capacity, bringing
the total heat capacity of the installation to 120MW. The
heating plant will be run as backup for a peak load district
heating plant and commercial operations are expected to
begin in December 2016.
The new boiler will combust pellet dust from a range of
biomass fuels including wood pellets, wood briquettes, bark
and forest residues, agripellets, peat pellets and coal as a
reserve fuel.
Having a wide fuel envelope in the plant design was
especially important for us, Seinajoen Energia chief
executive Martti Haapamaki said.
Seinajoen Energia has contracted UK-based engineering
company Amec Foster Wheeler to supply the biomass plant.
Announcement
The holiday calendar showing which Argus reports are
not published on which days is now available online
http://www.argusmedia.com/Methodology-and-
Reference/Publishing-Schedule
Copyright 2016 Argus Media group Page 10 of 14
Issue 16-014 | Wednesday 6 April 2016
Q&A: Billington Bioenergy
UK premium wood pellet distributor Billington Bioenergy
was acquired by UK utility Drax last year. Argus spoke to
founder and director Edward Billington recently about the
changing premium pellet market and the potential impact
of proposed UK government changes to the renewable heat
incentive (RHI). Edited highlights follow:
Is the UK premium wood pellet market a viable growing
market? Will there be further growth this year?
The UK is lagging far behind the European average for using
compressed wood pellets for energy, so there is plenty of
room for growth this year and in future years.
We are committed to bringing our use of sustainable
biomass up to the European average. Increasing renewable
heat is very much part of that commitment.
The current situation is distorted by historically low
oil prices. But the advantages of sustainable biomass in
reducing carbon emissions and in long-term cost savings will
always come through, given a level playing field. What we
need, to allow this to happen, is a clear and stable policy
from the government. We hope that the RHI consultation
will contribute to that clarity and stability.
There has been quite a strong reaction to the Department
of Energy and Climate Changes (Decc) proposed changes
to the RHI. Will the proposed changes negatively affect
growth in the UK premium market?
The proposals are worrying, in that they are based on
supporting only very large-scale biomass heating schemes,
with a predicted eight-fold increase, and domestic
installations at a reduced rate of just 1,000 a year.
It is no exaggeration to say that this could lead to the
complete stalling of the UK heating pellet market. The
effect on investment and jobs in this sector would be
dramatic. We hope that Decc will continue to support the
growth of renewable heating through biomass and work with
us to bring the UK closer to the European average.
Decc intends to encourage further growth in the
large biomass boiler sector over 1MW. Will that be a
consequence of the changes?
Decc states that it is aiming to support the conversion of
installations that are generating more than 1MW and fuelled
by heating oil. We are not aware of how many installations
fit this description, but we doubt that there is potential for
the conversion rate of 60/yr that Decc speaks of.
Equally, we do not see this as a zero sum game. There
is no logical argument for requiring smaller biomass sectors
to be shut down in order to boost larger sectors. The more
Argus Biomass Markets
homes and workplaces that switch to biomass, the more we
will all benefit.
The changes propose guarantees on tariffs for projects
with longer lead times. Will that help to encourage growth
in the large boiler, and combined heat and power (CHP)
sectors ? Is Billington interested in supplying a CHP market?
We fully support tariff guarantees because they make it
easier for businesses such as ours to plan investment. We
would welcome guarantees for smaller installations than the
2MW proposed. CHP is an interesting technology with great
potential, but is really only just getting started in the UK.
Do you expect UK demand growth to be supported by
increased imports?
UK demand for wood pellets is now close to domestic
production capacity and we do not expect to see a
significant further expansion of that capacity.
If the market continues to grow, imports will play a
greater role. This adds to supply options, security of supply
and market stability. We know that sustainability criteria
can be met by imported pellets made of low-grade timber
by-products, such as thinnings, from overseas from Europe
and North America.
Do you foresee a time when the UK premium pellet
market can sustain itself and grow without the need for
government subsidies?
Once again, we argue for stable policies. Constant change
makes it hard for commercial ventures to plan their
investment. A steady period of consistent policy would
enable the market to grow and for economies of scale to
play their part.
As for subsidies, it is easy to see a situation when
Copyright 2016 Argus Media group Page 11 of 14
Issue 16-014 | Wednesday 6 April 2016
support will not be needed. Fuel oil prices were three-
times higher than they are now fairly recently, and will
doubtless rise as the rate of global economic growth
accelerates.
And it is unclear what the true subsidies for different
fuels are in relation to one another. Fossil fuels still receive
a great deal of support from the UK government, duty
on fuel oil is set deliberately low, and there is as yet no
framework for costing the relative emissions carbon and
pollutants of different fuels. Such a framework should
form part of the clear and stable policy we are asking for.
Sustainability has always been a major concern in the
industrial biomass market, but will it play a larger role in
the residential market as well?
Sustainability underpins everything we are striving to
achieve. All our wood pellets are, and will continue to be,
sourced from suppliers that guarantee the highest levels of
sustainability. Our customers value this guarantee and cite it
as one of the reasons they choose us.
The Biomass Supplier List is already helping to ensure
that sustainability can be supported as more companies
join the industry. Properly managed, it will help to keep
everyones standards as high as our own.
Biomass heating can and should be completely
sustainable. Indeed, it is and should be good for the health
of forests too, because it ensures a market for timber by-
products that might otherwise be valueless commercially
and left to rot.
The UK is far beneath the European average in using
biomass for energy. Discussion of the topic often seems to
be dominated by ignorance and suspicion. Decc needs to
work with commercial ventures such as us to overcome this
prejudice.
Argus Biomass Markets Issue 16-014 | Wednesday 6 April 2016

Generation Economics

UK
May /MWh 3Q16 May /MWh 3Q16
Power generation efficiency 30% 34% 38% 30% 34% 38% 30% 34% 38% 30% 34% 38%

Electricity 31.25 30.60 38.81 37.94

LEC 0.00 0.00 0.00 0.00
ROC 42.19 42.19 52.40 52.31
Coal efficiency adjusted cost 14.97 13.21 11.82 14.73 13.00 11.63 18.60 16.41 14.68 18.23 16.09 14.39
Coal carbon factor (t CO2/MWh) 1.136 1.003 0.897 1.136 1.003 0.897 1.136 1.003 0.897 1.136 1.003 0.897
Coal EU ETS cost at efficiency 4.79 4.23 3.79 4.81 4.24 3.79 5.95 5.26 4.70 5.95 5.26 4.70
Coal UK CPS cost at efficiency 20.45 18.05 16.15 20.45 18.05 16.15 25.39 22.42 20.05 25.36 22.39 20.02
Clean dark spread -8.96 -4.25 -0.50 -9.38 -4.70 -0.97 -11.13 -5.27 -0.62 -11.60 -5.79 -1.17
Pellets 20.83 21.09 25.78 26.06
Pellet efficiency adjusted cost 69.43 61.26 54.82 70.30 62.03 55.50 85.93 75.82 67.84 86.87 76.65 68.58
100% dedicated
ROC x 1.5 63.29 63.29 78.60 78.47
Nominal power value 94.54 93.89 117.41 116.41
Pellet spark spread 25.11 33.28 39.72 23.59 31.86 38.39 31.48 41.59 49.57 29.54 39.76 47.83
Clean dark spread minus pellet spark spread -34.07 -37.53 -40.22 -32.97 -36.56 -39.36 -42.61 -46.86 -50.19 -41.14 -45.55 -49.00
100% conversion
ROC x 1.0 42.19 42.19 52.40 52.31
Nominal power value 73.44 72.79 91.21 90.25
Pellet spark spread 4.01 12.18 18.62 2.49 10.76 17.29 5.28 15.39 23.37 3.38 13.60 21.67
Clean dark spread minus pellet spark spread -12.97 -16.43 -19.12 -11.87 -15.46 -18.26 -16.41 -20.66 -23.99 -14.98 -19.39 -22.84
85% up to 100% co-fired
ROC x 0.9 37.97 37.97 47.16 47.08
Nominal power value 69.22 68.57 85.97 85.02
Pellet spark spread -0.21 7.96 14.40 -1.73 6.54 13.07 0.04 10.15 18.13 -1.85 8.37 16.44
Clean dark spread minus pellet spark spread -8.75 -12.21 -14.90 -7.65 -11.24 -14.04 -11.17 -15.42 -18.75 -9.75 -14.16 -17.61
50% up to 85% co-fired
ROC x 0.6 25.31 25.31 31.44 31.39
Nominal power value 56.56 55.91 70.25 69.33
Pellet spark spread -12.87 -4.70 1.74 -14.39 -6.12 0.41 -15.68 -5.57 2.41 -17.54 -7.32 0.75
Clean dark spread minus pellet spark spread 3.91 0.45 -2.24 5.01 1.42 -1.38 4.55 0.30 -3.03 5.94 1.53 -1.92
Up to 50% co-fired
ROC x 0.3 12.66 12.66 15.72 15.69
Nominal power value 43.91 43.26 54.53 53.63
Pellet spark spread -25.52 -17.35 -10.91 -27.04 -18.77 -12.24 -31.40 -21.29 -13.31 -33.24 -23.02 -14.95
Clean dark spread minus pellet spark spread 16.56 13.10 10.41 17.66 14.07 11.27 20.27 16.02 12.69 21.64 17.23 13.78
Dedicated with CHP
Contracts for difference strike price 125.00 125.00 155.24 154.99
Pellet spark spread 55.57 63.74 70.18 54.70 62.97 69.50 69.01 79.15 87.16 67.82 78.08 86.17
Clean dark spread minus pellet spark spread -64.53 -67.99 -70.68 -66.18 -69.52 -72.13 -80.14 -84.42 -87.78 -82.06 -86.19 -89.42
Conversion
Contracts for difference strike price 105.00 105.00 130.40 130.19
Pellet spark spread 35.57 43.74 50.18 34.70 42.97 49.50 44.17 54.31 62.32 43.02 53.28 61.37
Clean dark spread minus pellet spark spread -44.53 -47.99 -50.68 -46.18 -49.52 -52.13 -55.30 -59.58 -62.94 -57.26 -61.39 -64.62

Pellet spark spreads are based on co-fired industrial wood pellet feedstock. A positive value for clean dark spread minus pellet spark spread implies that coal is the
more profitable fuel. A negative value implies that wood pellets are more profitable.
Coal and electricity prices are taken from Argus European Electricity and Argus Coal Daily International.
EU ETS emissions prices from Argus European Emissions Markets. The model does not take account of local taxes and transport costs, or capital
expenditure adjustments. Roc = UK renewable obligation certificate; LEC = UK levy exemption certificate. Pellet energy content (calorific value) = 17GJ/t equivalent to
4.722MWh/t. Efficiency bonuses not included.

Copyright 2016 Argus Media group Page 12 of 14

Argus Biomass Markets Issue 16-014 | Wednesday 6 April 2016

Generation Economics

EU /MWh
Dedicated Co-fired
May 3Q16 May 3Q16
Power generation efficiency 30% 34% 38% 30% 34% 38% 30% 34% 38% 30% 34% 38%

Netherlands
Electricity 24.20 24.65 24.20 24.65
Feed-in premium 61.00 61.00 0.00 0.00
Pellet 25.78 26.06 25.78 26.06
Coal 5.58 5.47 5.58 5.47
Pellet efficiency adjusted cost 85.93 75.82 67.84 86.87 76.65 68.58 85.93 75.82 67.84 86.87 76.65 68.58
Pellet spark spread -0.73 9.38 17.36 -1.22 9.00 17.07 -61.73 -51.62 -43.64 -62.22 -52.00 -43.93
Coal efficiency adjusted cost 18.60 16.41 14.68 18.23 16.09 14.39 18.60 16.41 14.68 18.23 16.09 14.39
Coal EU ETS cost at efficiency 5.95 5.26 4.70 5.95 5.26 4.70 5.95 5.26 4.70 5.95 5.26 4.70
Clean dark spread -0.35 2.53 4.82 0.47 3.30 5.56 -0.35 2.53 4.82 0.47 3.30 5.56
Clean dark spread minus pellet spark spread 0.38 -6.85 -12.54 1.69 -5.70 -11.51 61.38 54.15 48.46 62.69 55.30 49.49
Germany
Electricity 21.25 22.60 21.25 22.60
Feed-in tariff 77.90 77.90 0.00 0.00
Pellet 25.78 26.06 25.78 26.06
Coal 5.58 5.47 5.58 5.47
Pellet efficiency adjusted cost 85.93 75.82 67.84 86.87 76.65 68.58 85.93 75.82 67.84 86.87 76.65 68.58
Pellet spark spread -8.03 2.08 10.06 -8.97 1.25 9.32 -64.68 -54.57 -46.59 -64.27 -54.05 -45.98
Coal efficiency adjusted cost 18.60 16.41 14.68 18.23 16.09 14.39 18.60 16.41 14.68 18.23 16.09 14.39
Coal EU ETS cost at efficiency 5.95 5.26 4.70 5.95 5.26 4.70 5.95 5.26 4.70 5.95 5.26 4.70
Clean dark spread -3.30 -0.42 1.87 -1.58 1.25 3.51 -3.30 -0.42 1.87 -1.58 1.25 3.51
Clean dark spread minus pellet spark spread 4.73 -2.50 -8.19 7.39 0.00 -5.81 61.38 54.15 48.46 62.69 55.30 49.49
France
Electricity 21.80 22.95 21.80 22.95
Feed-in tariff 49.00 49.00 0.00 0.00
Pellet 25.78 26.06 25.78 26.06
Coal 5.58 5.47 5.58 5.47
Pellet efficiency adjusted cost 85.93 75.82 67.84 86.87 76.65 68.58 85.93 75.82 67.84 86.87 76.65 68.58
Pellet spark spread -36.93 -26.82 -18.84 -37.87 -27.65 -19.58 -64.13 -54.02 -46.04 -63.92 -53.70 -45.63
Coal efficiency adjusted cost 18.60 16.41 14.68 18.23 16.09 14.39 18.60 16.41 14.68 18.23 16.09 14.39
Coal EU ETS cost at efficiency 5.95 5.26 4.70 5.95 5.26 4.70 5.95 5.26 4.70 5.95 5.26 4.70
Clean dark spread -2.75 0.13 2.42 -1.23 1.60 3.86 -2.75 0.13 2.42 -1.23 1.60 3.86
Clean dark spread minus pellet spark spread 34.18 26.95 21.26 36.64 29.25 23.44 61.38 54.15 48.46 62.69 55.30 49.49

Pellet spark spreads are based on co-fired industrial wood pellet feedstock. A positive value for clean dark spread minus pellet spark spread implies that coal is the
more profitable fuel. A negative value implies that wood pellets are more profitable.
Coal and electricity prices are taken from Argus European Electricity and Argus Coal Daily International.
EU ETS emissions prices from Argus European Emissions Markets. The model does not take account of local taxes and transport costs, or capital
expenditure adjustments. Roc = UK renewable obligation certificate; LEC = UK levy exemption certificate. Pellet energy content (calorific value) = 17GJ/t equivalent to
4.722MWh/t. Efficiency bonuses not inlcuded.

Copyright 2016 Argus Media group Page 13 of 14

Argus Biomass Markets Issue 16-014 | Wednesday 6 April 2016

Argus Biomass Asia 2016

Matching expectations
29-30 June 2016 Singapore
www.argusmedia.com/asia-biomass

For further information, promotion, and registration, please contact Ashrafe Hanifar:

ashrafe.hanifar@argusmedia.com +65 6496 9977

Argus Biomass Markets is published by Argus Media group

Registered office Trademark notice Publisher Customer support and sales:

Argus House, 175 St John St, London, EC1V 4LW ARGUS, the ARGUS logo, ARGUS MEDIA,  Adrian Binks Technical queries
Tel: +44 20 7780 4200 Fax: +44 870 868 4338 Argus Biomass Markets, other ARGUS technicalsupport@argusmedia.com
email: sales@argusmedia.com publication titles and ARGUS index names Chief executive All other queries
are trademarks of Argus Media Limited. Neil Bradford support@argusmedia.com
ISSN: 2041-2503
Visit www.argusmedia.com/Ft/trademarks London, UK
Copyright notice for more information. Global compliance officer Tel: +44 20 7780 4200
Copyright 2016 Argus Media group Jeffrey Amos Astana, Kazakhstan
All rights reserved Disclaimer Tel: +7 7172 72 92 94
All intellectual property rights in this publication and The data and other information published Commercial manager
Beijing, China Tel: +86 10 8535 7688
the information published herein are the exclusive prop- herein (the Data) are provided on an as Jo Loudiadis
erty of Argus and/or its licensors (including exchanges) Dubai Tel: +971 4434 5112
is basis. Argus and its licensors (including
and may only be used under licence from Argus. Without exchanges) make no warranties, express Editor in chief Moscow, Russia Tel: +7 495 933 7571
limiting the foregoing, by accessing this publication you or implied, as to the accuracy, adequacy, Ian Bourne Rio de Janeiro, Brazil
agree that you will not copy or reproduce or use any timeliness, or completeness of the Data or Tel: +55 21 2548 0817
part of its contents (including, but not limited to, single fitness for any particular purpose. Argus Managing editor
Singapore Tel: +65 6496 9966
prices or any other individual items of data) in any and its licensors (including exchanges) shall Peter Ramsay
form or for any purpose whatsoever except under valid not be liable for any loss, claims or dam- Tokyo, Japan Tel: +81 3 3561 1805
licence from Argus. Further, your access to and use of age arising from any partys reliance on Editor Argus Media Inc, Houston, US
data from exchanges may be subject to additional fees the Data and disclaim any and all liability Laura Tovey-Fall Tel: +1 713 968 0000
and/or execution of a separate agreement, whether related to or arising out of use of the Data Tel: +44 20 7199 3491 Argus Media Inc, New York, US
directly with the exchanges or through Argus. to the full extent permissible by law. biomass@argusmedia.com Tel: +1 646 376 6130

Bioenergy
illuminating the markets