The UK’s renewable energy targets are boosting US wood pellet exports, as Europe turns its coal-fired generation into co-fired or standalone biomass plants.
Source: US Energy Information Administration, based on US International Trade Commission (click to enlarge)
According to the US Energy Information Administration, based on data from US International Trade Commission, 73 percent of wood pellet exports were delivered to the UK in 2014. Overall, US wood pellet exports increased by nearly 40 percent between 2013 and 2014, from 3.2 million short tons to 4.4 million short tons. The US continues to be the largest wood pellet exporter in the world.
According to the UK Department of Energy and Climate Change, electricity generation from plant-based biomass in the UK has increased 47 percent from 8,933 GWhours in 2013 to 13,138GWhours in 2014. This has been driven by the ongoing conversion of the Drax power plant in north-central England from coal to biomass, as part of the European Commission’s 2020 climate and energy plan.
Source: US Energy Information Administration, based on US International Trade Commission and the Drax Group (click to enlarge)
In 2014, the 3,960MW Drax plant alone accounted for more than 80 percent of all of the UK’s wood pellet imports from the US and almost 60 percent of all US wood pellet exports to all countries. Overall, the US supplies 58 percent of Drax’s demand for pellets followed by Canada, which provides another 22 percent. Only 2.8 percent of Drax’s wood pellet supply was domestically produced.
The expected continued growth for the industry has leading utility-grade wood pellets supplier Enviva Partners setting terms for an initial public offering (IPO), as it looks to expand in northern Europe, South Korea and Japan. As we pointed out in our editorial this week, the burgeoning biomass industry is providing a range of opportunities for alternative asset managers, including private equity, infrastructure and timberland fund managers.
Reporting by Andrew Coffman Smith.