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Pellet Production_V08.doc
Preliminary Study of
Preliminary Study of
Pellet Production
Pellet Production
in Ireland
in Ireland
Wood Pellet Production in reland
1 Management Summary
1.1 Business in brief
1.2 Factors of success
1.3 Economic side in brief
1.4 Vision
1.5 Targets
2 Product strategy
2.1 Product portfolio
2.2 Product sustainability
2.3 Know How resources
2.4 Quality Management
2.5 Possible substitute products
2.6 Product Uniqueness
3 Market strategy
3.1 Market Analysis
3.1.1 Pellet Market Development
3.1.2 Potential of the rish Heating Market
3.1.3 Export market
3.1.4 Segmenting market
3.1.5 Current situation in reland
3.1.6 Relevant market
3.1.7 Target group
3.2 Competitor Analysis
3.2.1 Competitors
3.2.2 Position in the market
18, REO 2004 Page 2/59
Pellet Production_V08.doc
Wood Pellet Production in reland
3.2.3 Competitor behaviour
3.3 Supply Analysis for Pellet producers
3.3.1 Sawmill residues
3.3.2 Equipment
3.4 Distribution possibilities
3.5 Unique selling proposition (USP)
3.6 Price strategy
3.6.1 Development of the prices
3.6.2 Price Policy & Potential
3.7 Communication / Marketing
3.7.1 Advertising
3.7.2 Public Relations
3.8 Start-up Strategy
3.9 Company and ndustry
3.9.1 Competency
3.9.2 nput for the future
3.9.3 Motivation
4 Business
4.1 Business Participants
4.2 Strength/weakness of the other rish Pellet Market participants
4.2.1 Pellet consumers
4.2.2 Pellet boiler supplier
4.2.3 nstallation & Maintenance
4.2.4 SE
4.2.5 Financial backer
26, REO 2004 Page 3/59
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Wood Pellet Production in reland
4.2.6 Supporting Organisations
4.3 Cooperation with SE
4.3.1 Competency
4.3.2 Experience and nput of SE
4.3.3 Motivation
5 Description of the method in brief
5.1 Process line
5.1.1 Efficient pre/treatment of raw materials
5.1.2 Pelleting
5.2 Technical Demands for success
5.2.1 Pellet supply
5.2.2 Pellet delivery
5.2.3 Pellet storage room
5.2.4 Pellet silos
5.2.5 Pellet storage with container
5.2.6 nstallation and Service
5.2.7 Pellet boiler
6 Financial program
6.1 Production costs
6.2 European Examples
6.3 Scenario
6.3.1 for sawmills (34,800 tonnes of pellets/year)
6.4 Financial Resources
6.4.1 SE RD&D Programme
6.5 Risk analysis
38, REO 2004 Page 4/59
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Wood Pellet Production in reland
6.5.1 Most sensitive cost factors
6.5.2 Typical technical problems of poor products:
7 Our recommendation
7.1 Boiler LEASNG and Fuel buying
7.2 Heat contracting
8 Reference & useful links
9 Appendix A: Heating Costs Comparison for a customer
10 Appendix B: Summary of benchmarks
11 Appendix C: Pellet Production Equipment supplier
12 Appendix D: wood pelleting process in detail
13 Appendix E: Specification of Properties for Pellets.
Based on:
COFORD Strategic Study, Maximizing the Potential of ood !se for "nergy #eneration in
%he de&elo'ment of (ood 'ellet mar)ets in "uro'e
*Ch Ra)os+",-,. the .ustrian "nergie .gency/
and 'resentations from the S"$ ood "nergy Conference 0110 and 0112*rene(a3le energy, reference centre/
For further information please contact: Sustainable Energy Ireland
Renewable Energy Information Office,
Shinagh House,
Bandon, Co. Cork
el.! ""#$# %# %& '%( &#
)a*! ""#$# %# %& ($', REO 2004 Page 5/59
Pellet Production_V08.doc
Wood Pellet Production in reland
1 Management Summary
1.1 Business in brief
This paper represents a brief summary 'How and/or Why to implement pellet
production' in reland.
t offers information and support for the creation of this new market, with an
innovative product, called wood pellets.
1.2 Factors of success
1. Upgrading of waste residues to high quality product with the possibility of
selling it at an adequate price level
2. Leader in a new market with few competitors
3. Achievement of payback within target period
4. Provide a bigger range of products and decrease the risk of downturns in one
particular product
5. Contribution to emission reduction and opportunity to engage in emission
certification trading
6. A Green mage in the consumer and business markets
Wood pellets are CO
This means when you burn biomass
you cause CO
emissions, but the
same abount will have been absorbed
by the tree when it was growing.
7. Better connections with international companies.
8. mproved info exchange due to international trading
1.3 Economic side in brief
After starting with the wood pellet production the price level of wood pellets will be
A scenario is developed for a pellet plant in an existing sawmill the NPV (Net present
value)wouldbeC5.5millionandapositivecashflowisreachedafter2years., REO 2004 Page 6/59
Pellet Production_V08.doc
Wood Pellet Production in reland
1.4 Vision
Become a leader in a new market segment and establish the company as a
professional partner for wood pellet supply
1.5 Targets
Develop sales and customer base with a new innovative product
Have a good payback of the investment
Ensure the survival of the company in future years
Sustain existing jobs and develop new one
Have an adequate production output to deliver to the new market
Successful development of new markets:
step larger buildings and industrial heat market reland
step consumer heat market reland
in parallel with 1 and 2 export market
Development of partnership / distributors / joint ventures with boiler and stove
suppliers, distribution /haulier companies, REO 2004 Page 7/59
Pellet Production_V08.doc
Wood Pellet Production in reland
2 Product strategy
2.1 Product portfolio
BIO!"" !# $%C$&&$#' B("I#$""
Raw materiaIs of pellets from own residues of the existing production
The peIIets processing line fits into the existing production process
Ensured future suppIy of raw material at competitive prices due to
huge nvestment in rish forestry in the last years
The technical Know How of wood is available and can used immediately
Existing market structure of solid fuels can be adapted for pellet sales
PotentiaI Export market
No Energy taxes Currently proposals are at government consultation
stage, which involve new taxes on natural gas, coal and peat and additional
taxes on the other fossil fuel products. The promise underlying a carbon energy
tax is that taxation would be applied according to the carbon content of those
(fossil) fuels that produce CO
t is envisaged that carbon energy taxation together with emission trading would
act as a price signal by applying across all sectors of the economy and to all
relevant fuels. The rational for this approach is the polluter pays principle, which
is defined in the National Climate Change Strategy as one that 'correctly
allocates the cost of pollution, energy consumption and environmental resources
use and the production and disposal of waste to the responsible polluters and
consumers, rather than to society at large or future generations'.
)$&&$'" *!C'"
+ry matter content 90-92%
!sh content 0.5%
+iameter 6-8mm
&ength 4*diameter,
+ensity 650 kg/m
,olume 1.54m
/tonne pellet,
$nergy 4.9kWh/kg pellet
Benefit 1kg wood pellet replaces 0.41kg of light fuel oil
Wood pellets are upgraded or refined wood fuels which have been produced from
sawdust, grinding dust, shavings, bark or cutter chips by drying and pressing with
air. No additives are needed to produce them. Lignin released in the pressing
process binds the wood material.
They are compact and easy to store and use for fully automatic burning in wood
pellet boilers or stoves., REO 2004 Page 8/59
Pellet Production_V08.doc
Wood Pellet Production in reland
2.2 Product sustainability
The heating market is generally a market which contains guaranteed long term
customers. f a customer makes a decision about the investment for future heating
system he wants to 'buy' satisfaction for years.
The key issues are to convince the customers at the point of decision of the new
heating option and to provide them the best services during the live cycle of the
wood pellet heating system.
2.3 no! "o! resources
Existing Know How at the sawmill and/or AGR-CO-OP
Wood pellet production is approximate to animal pellet feed mills
Developing Know How of Pellet Boiler nstallers in reland
Sustainable Energy reland
(Experience of other international companies, nformation, Training, Results,
Reports, Study Tours.)
COFORD, the National Council for Forest Research and Development, are
supporting a number of supply/chain projects in the area of biomass energy
BOHEAT a European effort to stimulate the use of biomass for heating
countries including member states and accession countries participate in the
project, (((,3ioheat,info
2.4 #uality $anagement
Successful development of an rish market for wood pellets relies on production of
high quality pellets so as to ensure reliability and customer satisfaction.
The quality aspect is very important from the consumer's point of view.
Defined quality types of pellets are necessary for comparison different suppliers, to
find the optimal solution for each heat requirement and to ensure the functionality of
the wood pellet heating system.
Only the right quaIity to each consumer will guarantee an expanding of this new
This fact was recognised rashly by the first European pellet producers and so the
national wood pellet co operations developed different common standardisation
e.g. "wedish )ellet Club in Sweden and the )ellets-erband !ustria in Austria, REO 2004 Page 9/59
Pellet Production_V08.doc
Wood Pellet Production in reland
As result of integrating and optimising of these several local standards the European
Committee is present working on an European standard.
The developed standards for solid biofuel specifications and classes will be adopted
here in reland.
The present version is available at "uro'ean Organization: C"4, %C 225, Solid
Likewise, certification of wood pellet stoves and boilers will assure development of
heating systems of the highest quality, which will encourage customers to change
over to wood pellet heating systems.
2.5 Possible substitute products
Many Old rish Boilers & Power Plants could easily be re-powered with wood pellets.
Pellets are an alternative for existing fuels like coal and oil.
The competition of wood heating systems would reduce reland's dependence on
includes a reduction of 85,000 tonnes of CO
2.% Product &ni'ueness
An innovative, high quality product
from Ireland
for a new market
with few competitors, REO 2004 Page 10/59
Pellet Production_V08.doc
Wood Pellet Production in reland
3 Market strategy
3.1 $ar(et )nalysis
./1/1 ./1/1 )ellet arket +e-elopment )ellet arket +e-elopment
a) In Europe
Pellets are product with a proven trade record and sustainable and growing markets
across Europe.
The following figures underline the rapidly growth of the pellet market in different
European countries over the last years.
+$,$&O)$#' O* )$&&$' !01$' I# "W$+$#, REO 2004 Page 11/59
Pellet Production_V08.doc
Wood Pellet Production in reland
+$,$&O)$#' O* )$&&$' !01$' I# +$#!01
Source: 6e''e B7erg, D) %e)ni)
+$,$&O)$#' O* )$&&$' !01$' !("'0I!
Source: "-., ., 0112
Also in Austria, the market for wood pellets has exploded in the last five years.
n 1997 over 400 wood pellet boilers were sold whereas in 2001 this figure was
almost 5000.
b) In the nited States of America
Today, over sixty pellet mills across North America produce in excess of
680,000 tons of fuel per year, a figure that has more than doubled in the last five
years. Source: Pellet fuel $nstitution + (((,'elletheat,org, REO 2004 Page 12/59
Pellet Production_V08.doc


Wood Pellet Production in reland
./1/2 ./1/2 )otential of the Irish Heating arket )otential of the Irish Heating arket
&!02$ B(I&+I#2 H$!' !01$'
The Large Building Heat Market is represented by the potential of buildings with
existing heating systems and a high annual average of heating consumption above
250000kWh per annum. (Buildings like education centres, companies, office
buildings, hotels, leisure centres, hospitals, prisons, guest houses,...)
Figure: Fuel Used for Heat in the Commercial and Public Sector - Excluding Electricity
n the Commercial & Public sector there has been strong growth in use of oil and
The Office of Public Works (OPW) have responsibility for maintenance and utility
supplies for all public buildings in reland.
COFORD has approached OPW seeking to have some buildings fuelled with wood
pellets. A response is awaited. However the initial installations are most likely to
come from the private sector.
If we assume that up to the year 2334 135 of oil heating systems are replaced by
wood pellet heating systems6 an annual amount of 2376892 tonnes of pellets would
be re:uired/
To evaluate the resulting potential of this market segment, please go to point
3.1.6. Relevant market, REO 2004 Page 13/59
Pellet Production_V08.doc
Wood Pellet Production in reland
I#+("'0; "$C'O0 H$!' !01$'
Figure: Fuel Used for Heating in the Industry Sector (Excluding Electricity
n the ndustry sector, there was strong growth in heat usage during the boom years
of the late 90s, but a slight decline is expected in the next 10 years. Use of oil and
gas for heat has expanded at the expense of coal, and this trend is expected to
Wood used for process heat in the wood processing industry accounts for the usage
of renewables. Though small, this has grown overall by 47% since 1990, although
the ESR projection assumes it will remain constant in future., REO 2004 Page 14/59
Pellet Production_V08.doc
Wood Pellet Production in reland
0$"I+$#'I!& "$C'O0 H$!' !01$'
Figure: Fuel Used for Heat in the !esidential Sector (Excluding Electricity
The residential sector reflects an annual growth of ~50.000 new buildings per year.
(n the year 1998 the number of households in the state was 1.12 million)
The absolute amounts and proportions of coal and peat have fallen in the last 10
years, and the absolute amounts and proportions of oil and gas have increased.
The small consumption of renewables has remained constant over the last 10 years.
Most opportunity exists in households currently using oil or bottled gas.
If we assume that up to the year 2313 135 of oil heating systems and 235 of peat
heating systems are replaced by wood pellet heating systems6 an annual amount of
16<=3644. tonnes of pellets would be re:uired/
Estimate from the Quarterly National Household Survey, Housing and Households, Central Statistics
Office., REO 2004 Page 15/59
Pellet Production_V08.doc
Wood Pellet Production in reland
./1/. ./1/. $>port market $>port market
Great potential is given by entering the international pellet market.
That's an existing market with established competitors and will require high efforts to
get there a market player.
Especially at beginning of the rish market development it's of a high attractiveness
to export the pellets in other European countries.
Major European importers of pellets:
Denmark: current consumption 400 000 ton/year (of this app. half is imported)
Sweden: mports between 50 000 and 150 000 ton/year
(and exports 40 000 ton)
taly: imports app. 100 000 ton/year
Major European exporters of pellets:
Finland: Exports 90 000 ton/year, REO 2004 Page 16/59
Pellet Production_V08.doc
Wood Pellet Production in reland
./1/8 ./1/8 "egmenting market "egmenting market
&!02$ "C!&$ H$!'I#2 )&!#'"
+/- not sensitive to pellet quality
+ low prices
&!02$ B(I&+I#2 !#+ I#+("'0; !01$'
+ lower specific costs of the boiler
+ fewer actors that can be directly addressed
+ less resources for fuel logistics and service network
+ can become a niche for developing the structures to support diffusion
the domestic sector
I#+I,I+(!& HO("I#2
+ option: pellet stoves as "low barrier system
+ higher prices of competing fuels
+ large market
- high marketing costs
- high initial requirements for fuel supply and service logistics
- high requirements for education of professionals
A domestic heating system with an Output of ca. 17 000kWh per annum
needs 3-4 tonnes pellets.
./1/4 ./1/4 Current situation in Ireland Current situation in Ireland
Wood pellets are imported
wood pellet burner installed (University of Limerick)
wood pellet boiler installation (Laois Sawmills)
Partnership between rish and European wood stove and boiler
manufacturers and suppliers
Wood Pellet Stove Distributor opened August 2003
4 Wood Pellet Production Feasibility Studies
The first pellet production starts in Co. Fermanagh,
at BaIcas Timber Ltd. in 2004
Balcas Ltd, a timber company near Enniskillen, is to build a new wood pellet
production facility. The plant will use local sawmill by-products and forestry residues,
with the potential use of energy crops.
A wood-fired combined heat and power (CHP) plant will provide heat and electricity
for the pellet production. The pellet production due to start in 2004 will produce
50,000 tonnes annually thus providing heating for 10,000 homes.
The new generator will benefit the company through reduced electricity costs; the
environment through reduced emissions and the production of a new source of
green fuel; and the local economy and community through the safeguarding of jobs
in the forestry sector., REO 2004 Page 17/59
Pellet Production_V08.doc
Wood Pellet Production in reland
./1/7 ./1/7 0ele-ant market 0ele-ant market
For the early implementation of the new pellet market, the &!02$ B(I&+I#2 !#+ I#+("'0;
!01$' is the best segment/
The advantages of this market are a perfect fit for setting up the pellet market in
Lower specific investment costs than detached family houses or district
heating plants
Local market with close partnerships to everyone in this structure,
like boiler equipment, operation & maintenance companies, bulk delivery
Product quality is determined by the CEN standards
The development in this market will be supported by an European
programme, called BOHEAT
BOHEAT promotes the development of wood heating in large buildings. ts activities
include research current market conditions, barriers, opportunities, the organisation
of study tours and seminars and the carrying out of feasibility studies into wood
heating for large buildings., REO 2004 Page 18/59
Pellet Production_V08.doc
WH!' !0$ ?&!02$ B(I&+I#2"@A
The Large Buildings market segment provides a wide spectrum of different building types with a high heat requirement
during the year like Hospitals, Shopping and Leisure centres, ...
The "Large building starts at an annual fuel consumption of app. 50 tonne wood pellets or an annual fuel demand of 900
GJ (250 000 kWh) which in turn corresponds to a 100 kW (fuel input) boiler with 2 500 equivalent full capacity operational
At this point we want to show some examples, calculated from benchmarks taken from $nergy $fficiency Best )ractice
)rogramme )ublications of UK. !ll benchmarks are shown in !ppendi> B/
Reference ModeI benchmarks typical
consumption Equivalent to pellets
BuiIding types Reference ModeI [kWh/m2] [m2] [kWh] [tonnes/a]
University UCD BELFELD 164 200000 32,800,000 6,694
HospitaI-acute and maternity, MATER PRVATE HOSPTAL 492 55000 27,060,000 5,522
Shopping Centre -department store 220 15000 3,300,000 673
HoteI -hoIiday 50m2/room*100 room 400 5000 2,000,000 408
Offices -naturaIIy ventiIated office, open pIan FNGAL COUNT HALL 151 11170 1,686,670 344
Sports Swimming pool centre 866 1500 1,299,000 265
IndustriaI -Iight manufacturing 300 2000 600,000 122
Supermarket -retaiI outIet LDL 290 1500 435,000 89
Nursing and residentiaI homes 40m2/room *2bed/room*30 bed 417 600 250,200 51, REO 2004 Page 19/59
Pellet Production_V08.doc
./1/< ./1/< 'arget group 'arget group
For existing Large BuiIdings
Building owners, company managing directors and facility managers can be targeted
with the wood pellet heating proposal. A calculation of investment costs and fuel
price comparison would be important tools in the sales approach.
For new Large BuiIdings
Here Architects, Engineers and Consultants are the real decision makers.
The building owners are given advice by them to the best solutions for their heating
So it is important to convince also this decision makers of the advantages of a pellet
heating system.
An economic argument for pellet heating systems is that:
the wood fuel systems investment costs are higher, however the operational costs
are generally lower than for conventional heating systems.
3.2 *ompetitor )nalysis
./2/1 ./2/1 Competitors Competitors
Competitors of the pellet supplier will be
every other heat fuel supplier, especially the oil, peat and gas suppliers
in future years other pellet producers
and international import companies of pellets
./2/2 ./2/2 )osition in the market )osition in the market
The pellet supplier should determine its position in the market as a professional
partner, which is able to provide the best experience in this sector in reland., REO 2004 Page 20/59
Pellet Production_V08.doc
Wood Pellet Production in reland
./2/. ./2/. Competitor beha-iour Competitor beha-iour
t is assumed that the big international coal, oil, gas suppliers won't be able to
vary their prices for the rish market in the same way like a local supplier who is
able to adapt the pellet price to the customer market.
Other pellet producers in future years will probably cause more price
mporter of pellets are maybe interested to receive rish pellets to better
3.3 +upply )nalysis for Pellet producers
././1 ././1 "awmill residues "awmill residues
the supply of sawmill residues in reland is secured in future years
The market potential for wood pellets in reland is considerable owing to the ready
availability of sawdust, from the mechanical forest industry. Moreover, while the
current level of forestry cover is 9%, this is projected to increase to 17% by 2035,
which will produce an associated growth in the mechanical forestry industry and
subsequently the quantity of wood residues available for the production of refined
wood fuels.
Source: "nergy u'date R"$O, Sustaina3le "nergy $reland
././2 ././2 $:uipment $:uipment
On the international market exist several of companies, which are able to deliver
pellet production equipment for rish pellet producer. Some of them are shown at the
Appendix C.
3.4 ,istribution possibilities
t will recommend using the existing fuel supply network i.e. to distribute the pellets
through different fuel suppliers.
On the other side the pellet producer can make the pellet distribution itself. f
adequate networks are available .e. animal feed network of CO-OPS
3.5 &ni'ue selling proposition -&+P.
The following USP can be proposed to the heat customer
!ocal heat fuel supply on your doorstep " Easy to order
E#cellent Service, personal contact
!ocal demonstration sites and visit of an installed
pellet boiler, REO 2004 Page 21/59
Pellet Production_V08.doc
Wood Pellet Production in reland
3.% Price strategy
./7/1 ./7/1 +e-elopment of the prices +e-elopment of the prices
$%I"'I#2 !01$'" *O0 "!WI&& 0$"I+($"
Represented Data on current markets and prices for sawmill residues was provided
by the rish Timber Council (2002).
"ar#ets and Prices for Sa$mill !esidues
Product Princi%al "ar#ets Price %er &et tonne
Chi,s -anel board mills .%#
Sawdust -anel board mills0 use in
sawmills for heating0 animal
Bark Horticulture0 ,anel board mills
1including as boiler fuel2
./7/2 ./7/2 )rice )olicy B )otential )rice )olicy B )otential
t is important to keep the price of pellets on a competitive level with the other fuel
possibilities. Wood pellets are most competitive with oil. t will be difficult for wood
pellets to compete with natural gas. However there is a large market outside the gas
network. Also pricing strategy can be structured to take larger profit margin when
competing with oil, lower margins when competing with gas., REO 2004 Page 22/59
Pellet Production_V08.doc
Wood Pellet Production in reland
Fuel must be completive priced in particular because the pellet boiler investment
costs are significantly higher then other heating boilers. And the major argument for
pellet heating systems is the fuel cost savings over the economic life.
'H$ "$&&I#2 )0IC$ O* )$&&$'" C(00$#'&; 0!#2$"C
at the US market anywhere from 120-200 per ton and averages 150,
Price varies by region, availability, and season, just like other heating fuels. Because
bags of pellets stack and store easily, many prudent customers take advantage of
lower off season prices and ensure their winter fuel supply by buying early.
Selling price, of course, is only a part of the cost picture. The primary issue is the
cost of energy, which is measured in Euro per MWh. (see 3.7.1 Fuel cost per unit of
energy costs of oil.
3./ *ommunication 0 $ar(eting
./</1 ./</1 !d-ertising !d-ertising
?)$&&$'" !0$ ! #IC$ *($&@
Major Environment Benefits Emission neutral, no oil pollution, no
additional Energy tax

Energy Price Stability Stable supplies at competitive and affordable prices;
local fuels rather than costly import
Energy Security &, Flexibility Reduces our over dependence on imported
energy, ensures our future energy supply and gives options.
Energy for our children's children bio energy will not run out
Prosperity New investment in modern equipment for long term benefits, REO 2004 Page 23/59
Pellet Production_V08.doc
Wood Pellet Production in reland
$heaper % &reen
FueI costs per unit of energy
(energy content based on the lower heating value of f resh matter)
PeIIets FueI oiI NaturaI gas


Source: (((,3ioheat,info *870C/tonofdeliveredwoodpelletsateuly200)
An example for a heating cost comparison for customer is shown in Appendix A.
WH; )$&&$'"A
ncreased density
Simpler handling, less volume to transport and store
Reduction of cost of transportation
Possibility to store energy without risk of moldering or self-ignition
The storage time is unlimited and the energy content does not change during
Homogenous fuel leads to more stable combustion
Environmental advantages
./</2 ./</2 )ublic 0elations )ublic 0elations
The leaders in pellet production will certainly get a lot of public attention. n particular
Sustainable Energy reland will support the information interchange about this new
product in reland.
Also the green image of a company will enhance the goodwill of the public., REO 2004 Page 24/59
Pellet Production_V08.doc
Wood Pellet Production in reland
3.1 +tart2up +trategy
D+$&I,$0 'H$ +I**$0$#' !01$'" "'$) B; "'$)/
t's recommended to start with an initial project to collect experience and get in
contact with this market.
Therefore the pellet supplier should search a customer and/or partner for a local
pellet market. This close partnership business will be able to demonstrate How the
Irish pellet "upply chain will work.
The next important milestone is to sign the contract with fixed prices for delivery
over a defined period.
(t should be possible to fix the price as the sawmill is familiar with the price
development of the raw materials over the last number of years and can assess the
future raw material cost and their planned production)
The Pellet Start-up Strategy should be pIanned very carefully and therefore all
participants of the future market (sawmill, building owner, boiler supplier, installation
and maintenance, financial backer, supporting organisations, SE, COFORD and
other nformation resources like universities...) should establish a suitable
information interchange platform.
During setting up the Start-up project also the export market and the 1
market should be alike addressed., REO 2004 Page 25/59
Pellet Production_V08.doc
Wood Pellet Production in reland
3.3 *ompany and 4ndustry
./9/1 ./9/1 Competency Competency
The rish sawmills are part of a good developed market sector.
They have a strong voice in reland through the rish Timber Council (TC), which
was founded in 1918 and represents all the major sawmills.
The sawmilling sector plays a key role in ensuring that the annual output for rish
supplied by State and private growers.
./9/2 ./9/2 Input for the future Input for the future
The business with wood is an established sector and will continuously improve.
three years 1999-2001 and these developments, in conjunction with existing capacity
will ensure that the sawmilling sector will be capable of processing all the available
logs coming on the market up to the end of this decade.
./9/. ./9/. oti-ation oti-ation
The TC plans to further develop and expand domestic and export markets, to
continue to promote the image of rish timber and timber products and to co-operate
with other organisations and sectors in the production of a strategic plan for the forest
industry in reland.
The TC's mission is:
To promote and represent members' interests on all key issues those affect the
profitability and competitiveness of their businesses
To grow the timber processing sector in partnership with customers, suppliers
and other processors
To continuously improve quality standards to maximise the use of rish timber t
the domestic and export markets
To co-operate with research, education and training agencies in developing add
value products, REO 2004 Page 26/59
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Wood Pellet Production in reland
4 Business
4.1 Business Participants
Pellet supplier
Pellet consumers
Boiler supplier
Financial backer
nstallation & Maintenance service company
Other product/service suppliers: transport, storage suppliers, insurance services
4.2 +trengt50!ea(ness of t5e ot5er 4ris5 Pellet $ar(et participants
8/2/1 8/2/1 )ellet consumers )ellet consumers
Supported by a EU ALTENER programme, 'ipperary $nergy !gency6 produced in
Sept 2002, 7 mplementation Plans, which detail the technical and financial
requirements for the installation of the wood pellet heating system.
8/2/2 8/2/2 )ellet boiler supplier )ellet boiler supplier
European Pellet boiler suppliers are high interest to encourage the development of
the rish pellet Market. Therefore they provide good support in each context with
Pellet Heating.
Retailer in reland* e.g.
Windhager entralheitung AG,
offered by:
Total Energy Management
Kevin Devine, Galway
Tel.: +353 091769174
Oekofen Heitechnik,
GLLES Produktion und Handel GmbH
Baxi A/S
BioEnergy Devices Ltd. UK
.. ..
9%his list is not an accreditation of the Rene(a3le "nergy $nformation Office of the
com'anies named
8/2/. 8/2/. Installation B aintenance Installation B aintenance
Given high standards that most of suppliers identified operate to many raised
concerns regarding the issue that they have not suitably trained personnel to install
and maintain any system at the moment., REO 2004 Page 27/59
Pellet Production_V08.doc
Wood Pellet Production in reland
The consequence is that they in general prefer to sell well-known heating boiler
So it is important for the whole development of the market to train rish personnel in
the heating industry.
8/2/8 8/2/8 "$I "$I
Training programmes in Austria have proved to be very successful and preliminary
discussions have been made with regard to linking with these programmes in the
future to formulate at training programme in reland. n the short term, it will be
necessary to train some key individuals for installation/maintenance of wood pellet
heating systems for a demonstration programme.
8/2/4 8/2/4 *inancial backer *inancial backer
t is also necessary to convince the financial backer of the utmost probability of
success of this project.
The pellet supplier should also try to develop cooperation i.e. a bank investment with
the financial backer, whereby the boiler financing is arranged as a lease agreement
between the financial institution and customer or indeed between the pellet supplier
(as Heat Service Provider) and the customer.
8/2/7 8/2/7 "upporting Organisations "upporting Organisations
Universities and Research nstitutions might be also very interested to support and
overview the initial demonstration Project of the Start-Up-Strategy.
4.3 *ooperation !it5 +E4
8/./1 8/./1 Competency Competency
Sustainable Energy reland has a central role to play including involvement in the
Promotion, information, training and advice
Aid market identification, increase awareness and promote best
practice demonstration projects and further market development
8/./2 8/./2 $>perience and Input of "$I $>perience and Input of "$I
Production of information brochures, facts sheets, conferences, training
Specific biomass campaign for nformation/workshops/PR/Education material
and events,
Establish group of key personnel from biomass energy plants put into
operation in the coming years to exchange information and experiences as well
as to bring new knowledge to the market
Wood Fuel ndustry Forum
Visits to other countries to collect information about pellet production there
E.g. Austrian pellet plants visited in June 2003
1) Leitinger Holindustrie E43 333t of pellets/annumF
Mr. Lex Peter
Preding, REO 2004 Page 28/59
Pellet Production_V08.doc
Wood Pellet Production in reland
2) Loitl-Hol E= 333t of pellets/annumF
Mr. Hannes Loitl
8/./. 8/./. oti-ation oti-ation
Sustainable Energy reland (SE) is reland's national energy agency, established on
May 1
2002 under the Sustainable Energy Act 2003.
SE has a mission to promote and assist the development of sustainable energy.
This encompasses environmentally and economically sustainable production, supply
and use of energy, in support of Government policy, across all sectors of the
economy. ts remit relates mainly to improving energy efficiency, advancing the
development and competitive deployment of renewable sources of energy and
combined heat and power, and reduction the environmental impact of energy
production and use, particularly in respect of greenhouse gas emission., REO 2004 Page 29/59
Pellet Production_V08.doc
Wood Pellet Production in reland
5 Description of the method in brief
The technology of pellet heating & production is improved continually. The results
are automatically heating systems with the comfort of a heating oil system and the
advantages for the environmental.
5.1 Process line
L. Bloch_ Sprout Metador_Wood Energy 2003_July 2003
Storing raw materials
Storing pellets
4/1/1 4/1/1 $fficient pre/treatment of raw materials $fficient pre/treatment of raw materials
t is recommended to grind the raw materials in a hammer mill to get homogeneous
pellets. The large surface and open fibres of the ground products facilitate
absorption of team in the cascade mixer. Steam and increased temperatures in the
cascade mixer soften the wood lignin.
4/1/2 4/1/2 )elleting )elleting
The energy consumed to operate the pellet mill and heat the steam corresponds to
2.5-3% of the energy content of wood.
Cooling and finishing treatment
(excluded the drying process)
Due to the friction generated in the dry
during the pelleting process, additional
heat is developed in the pellets, and it
must be removed before the pellets are
sieved and stored.
The pellets are cooled by air taken in
from the surrounding room, and therefore
the pellet temperature will always be
5-10 degree Celsius above room
Cooler retention time and wood pellet
diameter are decisive for the
dimensioning of the cooler.
'he wood pelleting process in detail is
shown in !ppendi> +/, REO 2004 Page 30/59
Pellet Production_V08.doc
Wood Pellet Production in reland
5.2 Tec5nical ,emands for success
4/2/1 4/2/1 )ellet supply )ellet supply
Supply security: major concern of potential customers
Quality of pellets: low dust content and mechanical stability is fundamental for
small boilers
4/2/2 4/2/2 )ellet deli-ery )ellet deli-ery
Delivery vehicles must evacuate the dust simultaneously with blowing in
must have adequate pumping
force (not too strong)
should be able to weight the
pellets delivered
standardised connections to the house
inlet necessary
drivers must be trained (e.g. to
inspect the storage room)
4/2/. 4/2/. )ellet storage room )ellet storage room
Pellet storage rooms are common for the residential sector. The requirements are:
no electrical installations (danger of dust explosion)
solid walls
dustproof door
4/2/8 4/2/8 )ellet silos )ellet silos
For large buildings, industries and municipal councils it is recommended to us pellet
silos. The main reason therefore it bulk delivery, which represent the most
convenient, most efficient and cheapest way of handling fuel pellets in this sie., REO 2004 Page 31/59
Pellet Production_V08.doc
Wood Pellet Production in reland
For the big consumer, there is a
wide range of round or square
silos for both indoor and outdoor
use, with capacities up to 70
Beside are some ideas how to place the
silo, given from the Swedish company
!*! i Gngelholm !B
*(((,mafa,se/, REO 2004 Page 32/59
Pellet Production_V08.doc
Wood Pellet Production in reland
From Sweden
AB AKRON-maskiner
(Pellet silos)
SE-531 04 JRPS
Tel.: +46-(0)510-914 00
Fax: +46-(0)510-916 49
Alf Bjurenwall AB
(Pellet silos)
Box 55
SE-730 40 KOLBCK
Tel.: +46-(0)220 - 404 90
Fax: +46-(0)220 - 401 03
Bernt Sandberg AB
(Pellet storages, silos)
SE-942 92 LVSBN
Tel.: +46-(0)929-200 93
Fax: +46-(0)929-203 00
Expound AB
(Automatical pellet handling systems)
Tel.: +46-(0)514-391 90
Brand/Mark: Pellmag
Firefly AB
(Systems for dust- and ignition detection)
Box 92201
Tel.: +46-(0)8-449 25 00
Fax: +46-(0)8-449 25 01
Brand/Mark: Detector GD, Detector FD,
Detector OAD
ng.firman Hans Koolman AB
(Draw limiters, counter-draw hatches)
Contact: Mr. Hans Koolman
Skedet 7
SE-443 34 LERUM
Tel.: +46-(0)302-135 90
Fax: +46-(0)302-174 34
Brand/Mark: KW, SD
MAFA i ngelholm AB
(Pellet storages, silos)
Framtidsgatan 3
Tel.: +46-(0)431-44 52 60
Fax: +46-(0)431-41 15 01
Brand/Mark: Succ, Mini, Maxi, UB, Kon
Svenska Trpelletsfrrd
(Pellet storages)
AH Fretagsutveckling
Svedjevgen 52
Tel.: +46-(0)960-200 95
Fax: +46-(0)960-201 71
Brand/Mark: PF6 Villa
Termoventiler AB
(Charging units, heat regulators, checkvalves,
thermometers, thermostates)
Nolhagavgen 12
SE-523 93 MARBCK
Tel.: +46-(0)321-261 80
Fax: +46-(0)321-261 89
Brand/Mark: Laddomat, Thermomatic
9%his list is not an accreditation of the Rene(a3le "nergy $nformation Office of the
com'anies named, REO 2004 Page 33/59
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Wood Pellet Production in reland
4/2/4 4/2/4 )ellet storage with container )ellet storage with container
Pellets are transported by normal trucks or by exchangeable, tiltable containers,
which also serve as fuel storage. The pictures below show an example from Sweden
4/2/7 4/2/7 Installation and "er-ice Installation and "er-ice
trained key personal for installation and maintenance of pellet equipment
4/2/< 4/2/< )ellet boiler )ellet boiler
Quality control / Certification of boilers is fundamental
Schemata of the pellet boiler, REO 2004 Page 34/59
Pellet Production_V08.doc
Wood Pellet Production in reland
Example of pellet boiler from windhager, REO 2004 Page 35/59
Pellet Production_V08.doc
Wood Pellet Production in reland
6 FinanciaI program
%.1 Production costs
)$&&$' )0O+(C'IO# CO"' CO#"I+$0 I# WO0&+WI+$ !,$0!2$ O*C
(source: The! "#er#erger! 1st $orl% conference on pellets &00&'
(h. )aos! *.+., the ,ustrian *nerg- ,genc-! The %evelopment of woo% pellet marets in
The greatest expense factor of production costs are:
raw material costs
drying costs
The figure above shows clearly the dependence of costs on the moisture of the raw
material and drying.
Generally the residues of sawmills are relatively dry.
The raw material costs should determined as the possible profit of the sale of the
production residues to the panel mills.
So in fact the variable costs of a pellet production are very low in sawmills.
That consequence is that the most important factor at pellet production for sawmill in
reland will be the investment cost with the payback period., REO 2004 Page 36/59
Pellet Production_V08.doc
Wood Pellet Production in reland
'H$ $**$C' O* !##(!& O)$0!'IO# HO(0" O# )$&&$' )0O+(C'IO# CO"'"
Source: M, "nglisch, Bioenergy .ustria, hite Coal 0110
Another fact that highly affects pellet production costs is the amount of operation
hours per year.
As the figure based on Austrian experiences shows the specific production costs
decrease with the increase of operation hours.
Operation hours Specific production cost
8 shift, 5 days:(ee) ;<<=>?@AAB
0 shift, 5 days:(ee) ;C;=>?@AAB
2 shift, 5 days:(ee) DC=>?@AAB
2 shift, E days:(ee) FG=>?@AAB
)$&&$' )0O+(C'IO# CO"'" I#
!# !("'0I!# )$&&$' )&!#'
E286333 'O##$ )$0 ;$!0F
!#+ ! "W$+I"H )$&&$' )&!#' E=36333
'O##$ )$0 ;$!0F
Source: %he), O3er3erger, 8st orld conference on 'ellets 0110
The main differences of the general frameowrk conditons are shown in the table
parameter unit Austria Sweden
Production rate (plant capacity) T/h 3.0 10.0
Price for electricity C/MWh 50.9 27.1
Total electricity consumption GWh/a 3.6 11.0
Specific heat costs (steam) C/MWh 22.0 18.0
Profit from heat selling C/MWh - 21.7
nvestment costs drying system C 470,000.0 2,400,000.0
Total nvestment costs C 2,095,620.0 5,933,750.0
Specific electricity consumption kWh/tPellets 153.6 137.7
Specific heat consumption kWh/tPellets 1,020.0 504.4, REO 2004 Page 37/59
Pellet Production_V08.doc
for a 436333 tonnes production plant
Wood Pellet Production in reland
The direct comparison of typical pellet production costs shows the Swedish pellet
production costs are considerably lower.
Economies of scale
Lager plant capacity of the Swedish pellet plant
Cheap electricity price level in Sweden (50% less)
Combination with CHP plant and recovery of heat for district heating
%.2 European E6amples
!("'0I!6 &$I'I#2$0 HO&HI#+("'0I$
Holindustrie Leitinger is one of Austrias leading timber processing companies and
successfully combines tradition and innovation.
Employees 500
Turnover of all products ~87 Mio C
Pellets sales /year ~7 Mio C
Pellet production/year 50 000 tonnes
Pellet presses 2 tonnes
Pellet per hour 3.5 tonnes per hour / press
nvestment costs for Pellet production 2.5-3 Mio C
+nvestment costs for drying plant 1-1.2 Mio C
24 hour operation
Pellet price with delivery 170 C/tonnes
Pellet price without delivery 145-150 C/tonnes
Average annual Cash-flow (first 5 years) 4.2 Mio C
"W$+$#6 !B *O0""IJ B0(1
Employees 24 new jobs in O & M
Turnover of the sawmill 22 Mio C
Turnover of pellet plant 5.5 Mio C
Pellet production/year 45 000 tonnes
Pellet presses 2
Pellet per hour 7 tonnes per hour / press
Pellet price per bulk 215 C/tonnes
Pellet price per sack 230 C/tonnes
Drying plant 7 MW
Annual savings 12 Mio C
- Substitution for oil, replacing import of 430 000 barrels of oil per annum
- Emission savings of 84 000 tonnes of Carbon Dioxide equivalent per annum, REO 2004 Page 38/59
Pellet Production_V08.doc
Wood Pellet Production in reland
%.3 +cenario
7/./1 7/./1 for sawmills E.86=33 tonnes of pellets/yearF for sawmills E.86=33 tonnes of pellets/yearF
)&!##$+ "IH$
t is difficult at present to determine what an economical scale of plant will be in
But it has been noted at a number of wood pellet conferences that the minimum
economic scale for a wood pellet plant is 10 000 tonnes per annum.
I#,$"'$#' CO"'"
O)$0!'IO# !#+ !I#'$#!#C$
Of special importance is the electricity consumption in the pellet presses.
0!W !'$0I!& CO"'"
Are calculated with the possible profit of the sale of the production residues to the
O)$0!'I#2 HO(0" )$0 !##(
rish sawmills operate at the moment 8 hours a day, 5 days a week.
The pellet production is assumed with 3 shift operation for 5 days a week. Minus
holidays and unavailable times, it's in average 5800hours of full production/year.
So a pellet press output of 6 tonnes/hours is demanded.
The sawmill should split the press output up on two pellet presses for a better
*($&" "!&$" )0IC$
'H$ CO#C&("IO# I"
Net present vaIue of 5,509,000
Years to positive cash fIow 1
And years to positive cash fIow (disc. cum. cash fIow) 2, REO 2004 Page 39/59
Pellet Production_V08.doc
Wood Pellet Production in reland
description/name unit FUEL ONLY
rated output tonnes of peIIets/h 6
anaIysed period (<=20) years 20
totaIinitiaIinvestment(C) C 4,200,000
operation&maintenancecosts(C) C 870,000
fueI+rawmateriaIs(forfueIproduction)costs(C) C/a 1,600,800
cost increase/infIation (%/a) %/a 4.50%
fueI + raw materiaIs price increase/infIation (%/a) %/a 2.00%
operating hours per year h/a 5800
fueI saIes (tonnes/a) tonnes/a 34,800
fueIsaIesprice(C/tonne) C/tonne 100
fueI saIes price increase (%/a) %/a 2.30%
equity in % of totaI initiaI investment % 20%
Ioan in % of totaI initiaI investment % 80%
equity(C)20% C 840,000
Ioan(C)80% C 3,360,000
credit period (years) years 10
interest rate % 6.95%
depreciation period (years) years 20
saIvagevaIue(C) C 0
generaI annuaI infIation rate % 4.50%
reinvestment rate % 10.60%
effective reinvestment rate % 5.84%
finance rate % 6.95%
effective finance rate % 2.34%
WACC % 7.68%
effective WACC % 3.04%
discount rate % 7.00%
tax rate % 12.50%
IRR % 56.46%
MIRR % 18.10%
NPV C 5,509,842
PI (NPV/equity) 6.56
PI (NPV/totaI investment) 1.31
years to positive cash fIow years 1
years to positive cash fIow (disc. cum. cash fIow) years 2, REO 2004 Page 40/59
Pellet Production_V08.doc
Wood Pellet Production in reland
%.4 Financial 7esources
7/8/1 7/8/1 "$I 0+B+ )rogramme "$I 0+B+ )rogramme
The Research, Development and Demonstration Programme of Sustainable Energy
There are two different categories of Funding:
Category 1: Demonstration Projects
Category 2: R&D incIuding feasibiIity
Up to 40% of approved eligible costs
Shared Cost R&D
R&D into innovative technology, systems or marketing approaches which
support commercial exploitation of renewable energy
Applied Research and Development technology transfer and adaptation
market research and feasibility
Combination Approach
Several large high profile demo projects for mature technology (Wood/
Biomass CHP)
Large number of small scale geographically spread biomass heat installation
(wood chips and wood pellets)
%.5 7is( analysis
7/4/1 7/4/1 ost sensiti-e cost factors ost sensiti-e cost factors
Raw material costs
Pellets throughput
equipment availability
heat demand for drying
heat costs
operating hours
investment costs
#ote the figureC "ensiti-e analyse of pellet production costs
7/4/2 7/4/2 'ypical technical problems of poor productsC 'ypical technical problems of poor productsC
Overheating of the boiler: slagging of ashes
High temperature corrosion
ash deposition in poorly designed heat exchangers: up to 50% efficiency loss
ash deposition in the burning one
serious back burn problems
unreliable pellet delivery from the storage room to the boiler
noise caused by wrong mounting, REO 2004 Page 41/59
Pellet Production_V08.doc
"ensiti-e analyse of pellet production costs
Source! hek, Oberberger, (st 9orld conference on ,ellets %""%, REO 2004 Page 42/59
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Wood Pellet Production in reland
7 Our recommendation
Provide a One-Stop-Shop !or heat Provide a One-Stop-Shop !or heat
Our recommended approach to ensure a market for the wood pellet fuel is for
the fuel provider to take part in the entire supply chain of wood pellet heating.
This means that the customer should have a one-stop-shop contract for heating.
This requires setting up a new structure or the fuel supplier company to offer the
following services:
Wood fuel
Operation and Maintenance
Fuel storage
Transport & delivery
Energy auditing (option to expand on energy services)
Financial services-leasing/insurance
Legal services-heat contract, boiler leasing
This means that the company either supplies these services or partners with
providers of same.
The best and most attractive ways to provide their cIients these services
1.the offer of a leasing contract for the boiIer or provide a singIe 5eating contract
The big difference between these two opportunities in general are that in a
leasing contract for the boiler the customer pays the leasing rent for the boiler
and buys the fuel, but he is also responsible for the care and maintenance of the
leasing asset.
Whereas at the heating contract the customer doesnt need to take care about
anything, he only buys his required heat from the heat provider.
The following is a detailed discussion of these two possibilities from the
customer point of view and also from the pellet provider's side., REO 2004 Page 43/59
Pellet Production_V08.doc
Wood Pellet Production in reland
/.1 Boiler 8E)+49: and Fuel buying
(((,raiffeisenHleasing,at, .ustria
&$!"I#2 K 'H$ CO#C$)'
Leasing is a special form of rental, in which the lessor (the leasing company)
grants the lessee (the customer) the right of use of a capital asset for a defined
period of time.
'H$ &$!"I#2 )!0'#$0"HI)
Characteristically, leasing is a three-cornered relationship between lessor, lessee
and manufacturer or supplier. The lessee decides on the assets to be acquired
and agrees the terms and conditions of purchase with the manufacturer or
supplier. The asset is however acquired by the lessor, who concludes the
purchase agreement with the supplier.
The lessor concludes the purchase agreement, and subsequently makes the
asset available for the lessee's use. The lease agreement provides for use of the
asset by the lessee for consideration and for a specific time.
&$!"I#2 C!)I'!& !""$'"
The lessor has the right of ownership in the asset, the lessee the right of use.
The lessee derives economic benefit not from ownership of the asset but only
from the right of use.
Lessee has rights and duties similar to those of an owner of an asset:
The lessee alone has the right of use of the leased asset
The lessee is responsible for the care and maintenance of the asset
The risk of loss (e.g., by fire or theft) is borne by the lessee, whereas in
the case of rental it remains with the lessor., REO 2004 Page 44/59
Pellet Production_V08.doc
Wood Pellet Production in reland
'H$ &$!"I#2 !20$$$#'
Typically, the points covered include:
Relinquishment of the right of use in an asset
Term of the agreement
Leasing installments
Responsibility for maintenance
Burden of risk
Sundry other matters.
The lessor's principal obligation is to make the asset available for use by the
lessee for a specified period. During this period the agreement is not terminable
by notice. The lessee's principal obligation is to pay the leasing consideration.
The lessor calculates the total consideration required and informs the lessee of
the lease installments to be paid.
!+,!#'!2$" O* &$!"I#2 *O0 'H$ &$""O0
Attractiveness of wood peIIets
The pellet producer makes this new heating system interesting in more different
ways than only the price competitiveness of the fuel itself.
win Iong-term customers
n addition to the advantages of a pellet heating system, the pellet producer
provides his customer with more convenience then other fuel suppliers.
So he wins secured clients for his product over years.
speed up the market deveIopment
This helps to advance the development of an adequate rish pellet market and to
establish pellet heating system for the future.
!+,!#'!2$" O* &$!"I#2 *O0 'H$ &$""$$
Investment without capitaI
Leasing represents wholly external financing. The lessee's liquidity is not
Straightforward caIcuIations
The first leasing installment becomes payable when the leased asset is first
taken into use: uniform installments spread over the life of the agreement are
simple to use for the purposes of calculation.
Low monthIy charges
The monthly charge to the customer is lower than with other forms of financing., REO 2004 Page 45/59
Pellet Production_V08.doc
Wood Pellet Production in reland
/.2 "eat contracting
Ieat Contracting (ith an electrical 'o(er su''lier, "JK Iinder Beat
Heat contracting is the second possibility mentioned.
'he customer doesnLt buy the heat system 6 only the heatM
The most sophisticated model is that the energy service company not only looks
at the fuel supply but also at energy efficiency in the building, and invests in
energy efficiency measures and in the wood heating system as well.
The customer keeps on paying the similar heating costs as before the
improvement until the whole investment costs are recovered. Ch, Ra)os, ",-,. the
.ustrian "nergy .gency
H$!' CO#'0!C'I#2 I# B0I$*
The Contractor (pellet producer)
- builds and pays the heat production facility
- operates and maintains the facility
- commits himself for supplying the agreed volume (power, energy)
The Contracting-Partner (customer)
- commits himself to take over the agreed volume and to pay the
fixed price
WH; O**$0 ! H$!' CO#'0!C'I#2A
EconomicaI aspect
The Contractor benefits from fuel sales. By increasing the use of this heating
system, the contractor can win good customers for many years and achieve a
better use of their infrastructures.
EcoIogicaI aspect
Creation of ecological advantages by an optimal operation of the available
heating technique and an increasing use of renewable energies
!+,!#'!2$" O* ! H$!' CO#'0!C'I#2
: No investments for the owner
: Discharge of risk (outsourcing)
: Ecological concepts become economical
: High plant quality in the interest of the contractor
+I"!+,!#'!2$" O* ! H$!' CO#'0!C'I#2
: Long-term commitment to the contractor
: Dependency of the customer on the contractor
: Restriction of the decision autonomy
However: Ending the contract is possible after repaying the current value., REO 2004 Page 46/59
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Wood Pellet Production in reland
Basic price
To cover the capital costs (depreciation, interest, etc.) has to be paid e-en if no
heat is consumed
Consumption price
: covering the variable costs (electricity, fuel, etc.) depends on the effecti-e
consumption Eheat counterF
: Prices are adapted to the national index once a year, REO 2004 Page 47/59
Pellet Production_V08.doc
Wood Pellet Production in reland
8 Reference & usefuI Iinks
COFORD Strategic Study, Maximizing the Potential of ood !se for "nergy
#eneration in $reland
%he de&elo'ment of (ood 'ellet mar)ets in "uro'e+Ch Ra)os+",-,. the .ustrian
"nergie .gency,
.nd other 'resentations from the S"$ ood "nergy Conference 0110 and ood
"nergy Conference 0112
(((,sei,ie *rene(a3le energy, reference centre /
car3on energy taxation
Source: htt':::(((,finance,go&,ie:4e(s:7ul12:mcc88L1consult,htm
De&elo'ment of Pellet mar)et in Denmar)
Source: 6e''e B7erg, D) %e)ni)
De&elo'ment of Pellet mar)et .ustria
Source: "-., ., 0112
"nergy "fficiency Best Practice Programme Pu3lications
Fuel costs 'er !nit of energy
Process line
M, Bloch+ S'rout Metador+ood "nergy 0112+6uly 0112
Pellet 'roduction cost consider in (orld(ide a&erage of:
*source: %he), O3er3erger, 8st orld conference on 'ellets 0110/
%he de&elo'ment of (ood 'ellet mar)ets in "uro'e
Ch, Ra)os, ",-,. the .ustrian "nergy .gency,
Pellet Production costs de'ended on the annual O'eration hours
Source: M, "nglisch, Bioenergy .ustria, hite Coal 0110
R"$O Calculator:ChashFlo(:P".
R"$O Calculator:%otal Ieating Cost Com'arison
Sensiti&e analyse of 'ellet 'roduction costs
Source: %he), O3er3erger, 8st orld conference on 'ellets 0110
Raiffeisen 3an) .ustria, (((,raiffeisenHleasing,at
Ieat Contracting
Ieat Contracting (ith an electrical 'o(er su''lier "JK Iinder Beat
Ch, Ra)os, ",-,. the .ustrian "nergy .gency
$nformation a3out ood Pellets + (((,'elletheat,org
and other $nformation currently a&aila3le of the $nternet, REO 2004 Page 48/59
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Wood Pellet Production in reland
9 Appendix A: Heating Costs Comparison for a customer
An rish customer with a heating requirement of 260,000 kWh per year is
considering retrofit to the existing oil heating system with a new 100kW boiler.
(Large Building category)
Therefore he compares two options with the 'Total Heating Costs Comparison' -
Calculator available from the www.sei/reio.htm webpage.
Option : Oil Fired Boiler and a new tank
Option : Wood Pellet Boiler plus the construction of a new
pellet storage room
The 'Total Heating Costs Comparison' was set up by SE Renewable Energy
nformation office and uses average prices for the fuel and equipment.
We have assumed that the wood pellet production has taken place in reland to
estimate the price level.
ResuIts:, REO 2004 Page 49/59
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10 Appendix B: Summary of benchmarks
!/. O,$0!&& B(I&+I#2 B$#CH!01"
he following benchmarks are taken from Energy Efficiency Best -ractice -rogramme
able ;#.( )ossil and electric building benchmarks from Energy Consum,tion <uides
Building ty,e Energy consum,tion benchmarks for e*isting buildings 1k9h=m%=yr 2
<ood ,ractice y,ical
)ossil fuels Electricity )ossil fuels Electricity )loor area
Offices!1ECO> (&2
. naturally ?entilated, cellular @& ## ($( $' reated
. naturally ?entilated, o,en ,lan @& $' ($( A$ reated
. air conditioned standard &@ (%A (@A %%B reated
. air conditioned ,restige ((' %#' %(" #$A reated
Industrial! 1ECO> (A2 C
. general manufacturing (%$ $" #%$ A$ <ross
. factory office ("" $$ %%$ ("" <ross
. light manufacturing &" #( #"" @" <ross
. storage and distribution A" %" (A$ '# <ross
Retail! 1EEB"(", EEB2
. .DIE. stores ($" (#" (&$ (B" Sales
. non+food sho,s A" %"" (#" %B" Sales
. non+food sho,s 1;ll. electric2 + %#" + #"" Sales
. de,artment stores ($" %'" %%" %&" Sales
. de,artment stores 1;ll.
+ %&" + #@" Sales
. small food sho,s A" '"" ("" $"" Sales
. small food sho,s 1;ll. electric2 + ''" + $$" Sales
. su,ermarket (B" B@" %&" &%" Sales
. su,ermarket 1;ll. electric2 + @$" + ("$" Sales
. ,ost offices ('" '$ %(" @" <ross
. ,ost Office 1;ll. electric2 + A" + ('" <ross
. banks F Building Soc. @" @" ("" ("" <ross
. banks F Building Soc. 1;ll.
+ ("" + ('" <ross
. high Street agencies ($" $$ %#" @$ <ross
. high Street agencies 1;ll.
+ &" + (B" <ross
Catering 1EEBGGG2
. Restaurants with bar (("" B$" (%$" @#" <ross
. )ast food restaurants 'A" A%" B@" A&" <ross
. -ub restaurants %@"" k9h=
(#"" k9h=
#$"" k9h=
($"" k9h=
. -ublic houses (.$ k9h=m%=
".A k9h=m%=
H(,""" turno?er
#.$ k9h=m%=
(.A k9h=m%=
Entertainment buildings 1EEBGGG2
. theatres '%" (A" B#" %@" <ross I
. cinemas $($ (#$ B%" (B" <ross I
. social Clubs ('" B" %$" ((" <ross I
. bingo clubs ''" (&" $'" %#" <ross I
-ublic buildings 1EEBGGG2
. churches A" (" ($" %" reated
. libraries ($" $" %(" @" reated
. museums and art galleries (#" &" (A$ (%$ reated, REO 2004 Page 52/59
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Wood Pellet Production in reland
. ,risons '#" (%" $'" ($" reated
. ,olice stations %&$ '$ '(" B" reated
. fire stations #A$ $$ $'" A" reated
. ambulance stations #$" $" 'B" @" reated
. crown and county courts (B$ ("" %%" (#$ >et
JOD buildings1ECO> @$2
. multi occu,ancy
%%$ %& + + <ross G
. worksho,s (@$ %& + + <ross G
. motor trans,ort facilities #(@ %" + + <ross G
. stores=warehouses 1occu,ied2 (A@ #' + + <ross G
. stores=warehouses
$' # + + <ross G
. hangars 1heated2 %%" %# + + <ross G
. Officers mess '.' k9h=meal %.$ k9h=meal + + -er meal
. Kunior mess %.$ k9h=meal (.' k9h=meal + + -er meal
Hotels! 1ECO> #B2
. small %'" A" #B" (%" reated
. holiday %B" A" '"" ('" reated
. lu*ury #"" &" 'B" ($" reated
Schools! 1ECO> @#2
. ,rimary (%B %" (@# %A reated
. secondary (#B %' (@' #" reated
)urther and higher education1ECO> $'2
. eaching s,aces @$ (A$ + + <ross
. Residential areas A$ %'" + + <ross
S,orts and recreation! 1ECO> @%2
. Local dry s,orts centre B' ($A ("$ #'# reated
. %$m swimming ,ool centre ($% $@# %#@ (##B reated
. Leisure ,ool centre (B' $@# %$A (#%( reated
. Combined centre &B %B' ($% $&A reated
. )itness centre (%@ %"( (&' ''& reated
. S,orts ground changing
&# ('( (B' %(B reated
. Ice rink (B@ ("" %$$ %(@ reated
>ursing and residential homes
1ECO> $@2
%'@ '' '(@ @& <ross
Hos,itals! 1ECO> @A2
. teaching and s,ecialist . ##& AB '(( (%% Heated
. acute and maternity . '%% @' $(" ("A Heated
. cottage . ''# $$ '&% @A Heated
. long stay . '"( 'A $(A @% Heated, REO 2004 Page 53/59
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11 Appendix C: PeIIet Production Equipment suppIier
9%his list is not an accreditation of the Rene(a3le "nergy $nformation Office of the
com'anies named
CPM Europe Ltd
Whitemill Industrial Estate tel !3"3 "3 23#33
Whitemil $a% !3"3 "3 2&#&#
We%$ord' Ireland http(())).cpm*
+or Ireland ,edler Limited
,edler -ouse .hil /il0ert
/los 2el !&& 34&"35 6#3#46
/L" 3E7 E8/L98: +a% !&& 34&"35 6#3#46
Compound Feed Engineering Ltd
;astleisland' ;o <erry tel!3"3 ## 64&2#""
Sprout-Matador A/S
/lente=e> "*6 2el. !&" 62 4#0 300
:< #60" Es0>erg +a% !&" 62 4#0 304
:enmar? E*mail )elcome1sprout*matador.d?
Vecoplan, LLL
"60@ A)arrie ,oad B 9rchdale' 8; 262#3
2el. 333#5@#4* #060
))), REO 2004 Page 54/59
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"())&I$0" !#+ $N(I)$#' !#(*!C'(0$0 *0O ("!
Bliss Industries Ponca City, OK
/reg 9lles
.ellet' hammer mill eCuip.
Bulldog Bag Ltd. ic!"ond, BC
8eil :a=ies
Bag supplier
CPM Ac#uisitions $roup %aterloo, IA
,on +uller
.ellet' hammer mills eCuip.
Creati&e Pac'aging, Inc. Loo'out Mountain,
+red Schumpert
.ellet $uel pac?aging eCuipment' printed
$ilms and 0ags
*coStrat (oronto, O)
:on Mc;lure
,a) material supplier
*SA Process *#uip"ent Vancou&er, %A
Eric Smith
.ellet' hammer mills eCuip.
KS *#uip"ent Sales Kec!i, KS
<e=in SchultEe
.ellet' hammer mills eCuip.
Laidig Syste"s, Inc. Mis!a+a'a, I)
Mar? <esler
Bul? storage and reclaim systems
MA,AM Pac'aging Colorado Springs, CO
Mi?e FG;onnor
.ac?aging eCuipment
M-*-C )eodes!a, KS
/ary +ollmer
Plassein International (!o"as&ille, )C
;raig Miller
Bag supplier
Polystar Pac'aging Pa+leys Island, SC
:a=e /arloc?
Bag supplier
Pre"ier (ec! Pac'aging, Canada
Simon ,oy
.ac?aging eCuipment
Pri"ary Pac'aging Boli&ar, O/
:a=e McIueeney
Bag Supplier
Salerno Plastics Corp. Paoli, PA
+ran? .. ScorEetti
Bag Supplier
S!ields Bag and Printing Co. 0a'i"a, %A
John 8agle
Bag supplier
(e1tron 2inancial Corp. $olden Valley, M)
Mi?e ;hinnoc?
Ani=ersal Milling 2echnology Lene%a' <S
Jim Joretic
.ellet mill eCuipment, REO 2004 Page 55/59
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12 Appendix D: wood peIIeting process in detaiI
By BNIM"R .# (((,3uhlergrou',com
Soft wood waste is the raw material and has to
be dried to about 10% moisture content and
reduced in sie to below 10x10x100mm, before
it can be processed into pellets. The core
process of the Wood Pelleting Plant comprises
of 5 stages: milling, conditioning, pressing,
cooling and screening

+tage 1 2 $illing;
The raw material is reduced to a particle sie of
about 3mm with a Hammermill DFC. The
Hammermill DFC is protected with a Heavy
Goods Separator DFAJ, which removes heavy
objects such as stones, alloys, ferrous materials,
etc. by separating the lighter product with an
adjustable air current. The product flow rate is
controlled to optimise the load of the
Hammermill rotor with the Hammermill Control
System DFAS, which regulates the feed gate of
the Heavy Goods Separator DFAJ.

Hammermill DFC with Heavy
Goods Separator DFAJ

+tage 2 2 *onditioning;
The material is conditioned with dry steam and
water to the required temperature and moisture
content to activate the lignin as a pellet binding
agent and to obtain the necessary malleability of
the product. This is the most critical stage of the
process to achieve an optimum performance of
the Pellet Press RWPR and to minimise wear on
the press die and rollers. Conditioning takes
place in two stages, a dosing screw feeder and
an agitator with adjustable paddles.

Pellet Press RWPR with
Conditioning Unit, REO 2004 Page 56/59
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+tage 3 2 Pressing;
The conditioned product passes over a
permanent magnet to remove any ferrous metal
before it is fed into the press chamber of the
Pellet Press RWPR. The pellets are formed by
forcing the product through the rotating die with
a pair of press rolls, achieving a compaction
ratio of over 3:1. t has to be appreciated that
the specification of the die hole profile, die
thicknessand corrugation of the press rolls are
critical to produce top grade Wood Pellets and
machine performance. The Pellet Press RWPR
is equipped with the latest sensor, control
instrumentation and PLC machine control
system to guarantee the expected reliability and
safety of a fully automated processing plant.

View of Pellet Die and
Press Rollers

+tage 4 2 *ooling;
Wood Pellets leave the Pellet Press RWPR at a
temperature of about 100C and need to be
cooled down to about 25C to harden the Wood
Pellet and to maintain the quality of the product
during storage and handling. The cooling down
process takes place in the Counter Current
Pellet Cooler DKFG, and is controlled with
adjustable gates on the vibratory discharge

Counter Current
Pellet Cooler DKFG

+tage 5 2 +creening;
The finished Wood Pellets are finally passed
over the Vibratory Pellet Screen DFTD to
separate the fines from the pellets. The fines are
returned to back into Stage 1, whereas the dust
free Wood Pellets are ready for storage or

Vibratory Pellet Screen DFTD
TypicaI Iayout of a Wood PeIIeting PIant, REO 2004 Page 57/59
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The unique modular concept of the Wood Pelleting
Plant gives total flexibility to plant design and future
extension of production capacity. The capacity of
one module comprising of stages 1 to 5 is based on
the throughput of one Pellet Press RWPR at 5 to 6t/
h. The most economical solution is multiples of
double modules at 10 to 12t/h capacity, comprising
of one Hammermill DFC, two Pellet Presses RWPR
and Steam Conditioning Units, one Counter Current
Pellet Cooler DKFG and one Vibratory Pellet Screen
DFTD. The space requirement is about 18m in
length for the first double module and 10m for any
subsequent double module, 10m in width and 15m in
height over 2 floors and a penthouse of about 7m
height to accommodate the Air Jet Filters MVRS and
Fans for the plant exhaust and pneumatic conveying

Flow diagram of a typical 20 to 24t/h Wood Pelleting Plant, REO 2004 Page 58/59
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13 Appendix E: Specification of Properties for PeIIets.
Master tabIe
According to clause 6.1 and Table 1
Woody Biomass (1),
Herbaceous biomass (2),
Fruit biomass (3),
Blends and mixtures (4)
Traded Form (see Table 2): Pellets
Dimensions (mm)
Diameter (D) and Length (L)*
6 mm 0,5 mm and L 5 x Diameter
8 mm 0,5 mm, and L 4 x Diameter
10 mm 0,5 mm, and L 4 x Diameter
12 mm 1,0 mm, and L 4 x Diameter
D25 25 mm 1,0 mm, and L 4 x Diameter
Moisture (w-% as received)
10 %
15 %
M20 20 %
Ash(w-% of dry basis)
1,5 %
A3.0 3,0 %
A6.0 6,0 %
A6.0+ 6,0 % (actual value to be stated)
SuIphur (w-% of dry basis)
0,05 %
0,08 %
0,10 %
Sulphur is normative only for chemically treated biomass
and if sulphur containing additives have been used
S0.20+ 0,20 % (actual value to be stated)
MechanicaI durabiIity (w-% of pellets after testing )
DU97.7 97,7 %
DU95.0 95,0 %
90,0 %
Amount of fines (w-%, 3.15 mm) after production at factory gate*
F1.0 1,0 % * n last possible place in the production site
F2.0 2,0 %
F2.0+ 2,0 % (actual value to be stated)
Additives (w-% of pressing mass)
Type and content of pressing aids, slagging inhibitors or any other additives have to be stated
Nitrogen, N (w-% of dry basis)
0,3 %
0,5 %
1,0 %
N3.0 3,0 %
N3.0+ 3,0 % (actual value to be stated)
Nitrogen is normative only for chemically treated
Net calorific value, q
(MJ/kg as received) or
energy density, E
(kWh/ m
Recommended to be informed by retailer.
Bulk density as received (kg/m
loose) Recommended to be stated if traded by volume basis
Chlorine, Cl (weight of dry basis, w-%) Recommended to be stated as a category
Cl 0.03, Cl 0.07, Cl 0.10 and Cl 0.10+ (if Cl 0,10% the
actual value to be stated)
* NOTE: Maximum 20% of the pressing mass may have a length of 7,5 x
Source: "uro'ean Organization: C"4, %C 225, Solid 3iofuels+ 6une 0112, REO 2004 Page 59/59
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