Problems in Norwegian Wood Pellet Market
It was reported that the world’s third largest wood pellet plant based on Scandinavia in Norway closed by the end of 2012. Bio Wood Norway AS was commissioned in the spring of 2010 and its annual technical capacity of 450,000 tons. The close of this large wood pellet plant caused many confusions and nonconfidence of Norwegian wood pellet market. While what are the reasons of the failure of the pellet plant and what influence the Norwegian wood pellet market? The following maybe the answers.
Energy Structure in Norway
Norway is a country with plenty of energy resources. Norway has significant gas reserves in the North Sea which makes It the third largest oil exporter producing around 3 million barrels of oil/day. In addition, the coal reserves in Norway are also in large quantity. Except for these fossil fuels, hydropower, as a remarkable renewable energy is widely used by Norway. It is estimated that more than 99% of the electricity production in mainland Norway is covered by hydropower plants. Wind power, offshore wind power and wave power are also available renewable energy in Norway. Therefore biomass pellets really have limited market.
Overproduction of Wood Pellet in Norway
Through with plenty of wood waste resources in Norway, the wood pellet production capacity is large. In 2008, there were eight companies producing wood pellets with an annual production capacity of more than 164,000 tons. An in 2010, the wood pellet production capacity grew significantly due to the commission of the largest wood pellet plant built by Bio wood Norway in co-operation with a Swedish company with about 450,000 tons. The domestic wood pellet market do not have the capacity to consume so many wood pellets, so the wood pellet produced were intended to export to other countries. However, according the statistics, there were still a certain proportion wood pellets not be exported.
Low Price and Technical Problems of Wood Pellet in Norway
Wood pellet price in Norway is really low since there were abundance of waste wood in the form of the branches and logs. These wood wastes are pelletized into cheap wood pellets. However the cheap price of wood pellets can not support the running of such a big wood pellet plant. In additional, with technical problems, the Norwegian wood pellets are complained by the customers for incorrect size, stone content in wood chips and other quality problems, all of this lead the failure of the BioWood Norway AS wood pellet plant.
To sum up, the failure of wood pellet plant in Norway are caused by many factors. And to heat up the Norway wood pellet market, strong support from the government are needed and the technology of pelletizing should also be improved. In addition, a long term wood pellet supplier target should be planted if the pellets are exported to other countries.
