Small Log Conference 2015

North American Wood Pellet Exports

Wood pellets in Japan Thursday, March 26, 2015

Takanobu AIKAWA [email protected]

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Outline

I.

Domestic pellet production and heating sector

II.

Pellet Imports and large scale power plants

III. Small scale power plants using domestic biomass

Unit conversion 

1JPY≒0.80USD



1m3 ≒35.3 ft3



1ha≒2.47a



1m2 ≒10.7 ft2

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Overview of Japanese biomass: Different drivers by size  Small scale heating: competing with fossil fuels

 Middle-scale power generation: supported by FIT. Fuel procurement is the key challenge for this sector.  Large-scale coal power plants with co-firing will be depend on imported pellets, because of small production capacity in Japan Category

Typical size

Biomass

Market driver

Heating

10kW-1MW

Chip, pellet: 100t/yr

Up rising of fossil fuel price, subsidy for boilers

Middle-scale electric power generation (inc. CHP)

2MW-20MW

Chip (domestic forest residues, decomposition, PKS etc): 100,000t/yr

Feed-in-tariff

Large-scale electric power generation (co-firing)

100MW~

Pellet (imported): 100,000t/yr

CO2 reduction of major electric power companies Source）T. Aikawa

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Wood pellets production in Japan  Pellet mills and production has been increasing during 2000s. (Thousand ton)

120.0

108

120

109

Production 100.0

Production

60.0 40.0

60

58.2 50.7

29

10

3.8 2003

16

6.0

21.5

80

78.3

47 38

0.0

98.0

24.9 29.9

40

Number of facilities

75 Average size: 63 1,000t/mill

Number of mills

80.0

20.0

100

85

36.4 20

0 2004

2005

2006

2007

2008

2009

2010

2011

2012

(FY)

Source） Forestry Agency

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Wood pellets production in Japan  Small production capacity (1,000t/yr),  Using logs, but sawdust.

High price with relatively low quality

Typical pellet mill in Japan

Source） Ueno Village

Pellet made from log

Photo） T. Aikawa

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Wood pellets consumption in Japan  Pellets made in Japan are mainly used in small scale heating sector  From stoves (house) to boilers (city halls, hot-springs and green houses, etc.)

Photo） T. Aikawa

Source） T. Akawa

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Heating sector: competition with fossil fuels  The market is still in an early developing stage, due to the relatively high cost of pellet Comparison of biomass fuels prices with fossil fuels 14.00

Pellet (45,000JPY/t) Heating oilA重油

10.00

Fuel oil

8.00

灯油

ペレット（45

6.00

ペレット（25 Pellet (25,000JPY/t)

4.00

チップ（12,0 Wood chip

(12,000JPY/t)

2.00

Source） Aikawa

May-14

Jan-14

Sep-13

May-13

Jan-13

Sep-12

May-12

Jan-12

Sep-11

May-11

Jan-11

Sep-10

May-10

Jan-10

Sep-09

May-09

Jan-09

Sep-08

May-08

Jan-08

Sep-07

May-07

0.00

Jan-07

(JPY/kWh) Energy ー単価（円/kWh） ネルギprice エ

12.00

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Wood pellet import in Japan  Pellet import has been increasing steady.  The price has also risen up (21,500JPY/t in 2012→26,700JPY/t in 2014)  PKS could be a rival (234,000Mt in 2014, CIF price 12,100JPY/t) Import of wood pellets (source country) (Mt/yr)

120,000 96,745

100,000 83,769 80,000

71,981

60,000 40,000 20,000

0 2012

2013

2014

Canada Thailand Vietnum USA Indonesia NZ Malaysia Finland Singapole total

Caloric value is almost same for wood pellet

90,676 2,682 1,979 563 410 280 128 15 12 96,745

Source） Trade statistics of Japan

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Pellet import will grow faster?

World Coal Imports 2010

 IEA Task 40 predicts Japan and Korea will be major consumers of pellets in the world.  After Fukushima accident, Japanese electric power companies begun to re-invest for coal firing.  FIT scheme support co-firing,

 On the other hands, METI will set energy efficiency standard for new plants, high quality bio fuels will be favored (ex. torrefied pellet)

Source） IEA Bioenergy Task 40

Major Consumers of Wood Pellets (million t)

2010 Western Europe

2015

2020

10.8

16.4

22.8

Japan/Korea

0.2

3.8

13.5

China

0.6

3

10

North America

3.4

4.3

5.6

Source） IEA Bioenergy Task 40

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New coal plants needs biomass  More than 40 plans of new coal power plants /re-powering (total capacity:17,600 MW)

 High energy efficiency and GHG reduction are required for new plants by regulation  More than 10 plants announced biomass co-firing.  Environmental NGOs are on the watch for carbon emissions and biomass sustainability. Example: Osaka-Gus co-firing plants in Aichi



Operator: Gas and Power Co.,Ltd. (100% subsidiary of Osaka Gas Co., Ltd.)



Capacity: 110MW



Fuel: Coal with biomass pellet (about 30% of total fuel)



Pellets will be imported from sawmills in North America

Chance for certified pellets

Source）Osaka Gas Co., Ltd.

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Small scale plants using domestic biomass  FIT scheme was launches in 2011 to develop renewable energy sector in Japan.  Purchasing prices of biomass generation are classified by feedstock (forest residues are paid well).  Standard business model has been reconsidered from 5MW mono-generation to smaller than 2MW of CHP considering the energy efficiency and biomass procurement. Mono-generation with steam turbine(5MW-)

Photo）T. AIkawa

CHP with innovative technologies(-2MW)



Gasification (some plants imported from Europe will use certified)



ORC (Organic Rankin Cycle)



Small-scale steam turbine that realize co-generation

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Summary  Pellets production in Japan has been increasing, however;  Current high production cost due to the small production capacity is needed to be cut down to compete with fossil fuels in heating sector.

 Rapid growth of imported pellets for co-firing is predicted  Electric power companies are investing for coal power plants that require biomass co-firing to reduce carbon emission.  Those plants will adopt high quality and reliable biomass, such as torrefied pellets to realize high energy efficiency and keep cooperate reputations

 Small scale biomass plants will use domestic biomass  Forest residues are paid well, but small CHP plant would use pellets as high-quality biomass fuels

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