Wood pellets prices

Wood pellets prices

Wood pellet prices have undergone significant fluctuations since they first went on the market years ago. Only recently, however, have they become a significantly cheap, viable source of heat as crude oil and fuel costs soar.

With heating costs measured in BTU in the United States, most recent reports indicate that the cost per million BTU in 2008 was $19.59 – equating roughly $6.66 per standard bag of pellets (with bags weighed in at 40 pounds). Corresponding prices in Europe one year later in 2009 were seen as quite a bit lower, with purchases being able to be made are roughly $16 per million BTU with individual purchase costs depending on how wood pellets are bought (either in bulk or individual sacks). The reason for this price difference can be seen mostly in production capability and market use of wood pellets, with the United States lagging behind most European countries in both fronts.

There are current developments in some locations of the US, however, targeted at improving both wood pellet production as well as usage. Maine Energy Systems, for example, is hoping to convert 10% of all homes in Maine to wood pellet use over the next 5 years. This increase in both production as well as market demand will help to increase worldwide competitiveness while driving down consumer costs as pellets become more available to the general public, thus making them much more viable of an energy source for wide-spread usage across any number of areas.

The secondary hurdle for wood pellet costs to cross after simple production lies in the production and acquisition of suitable biomass for processing. Currently farmed trees are a major provider of crude biomass for pellet production along with sawmill waste, however if production increases significantly over a short period of time the basic supply may not be able to keep up with the needs of the producers. This same phenomenon occurred a short while back when corn prices skyrocketed as ethanol production because a key focus for many energy providers. Unless suitable infrastructures are put in place beforehand this could mean a potential price hike later on as companies would be forced to increase their production costs to match growing supply costs.

Still, wood pellet prices are looking to maintain a steady decline in the near future as no real push is being done in many consumer areas right away, allowing for a slow progressive industry growth to foster a competitive market and bring about the greatest immediate benefit to people now. In the following decade, however, this could change depending on whether or not enough fertile farm lands can be converted into biomass production while still maintaining the near carbon neutrality that most biomass fuels are looking to aim for. Wood pellets are, in general, a very efficient fuel source and produce significantly lower emissions than most other combustion fuels, however if production needs become too heavy this could end up damaging wood pellet market potential and possibly shift public interest onto other cleaner energy sources, something that may end up having a similar effect upon wood pellet prices as is happening now and cause further increases in pellet prices should production facilities be forced to stop production (either temporarily or permanently).

No Comments »

No comments yet.

Leave a comment