Pellets

Pellets are solid fuels produced from solid wastes such as sawdust, wood chips, peat and agriculture waste (rice straws, wheat straws, cotton stalks, corn stalks, baggasse, fruit branches) by the process of pelletizing. High density and high energy content, standardized properties and consequently reduced cost for transport storage and handling makes pellets a preferred choice over unprocessed biomass for fuel applications. Wood pellets from wood waste and biomass pellets from agri-waste forms the lion’s share of pellet market, with wood pellets being enjoying a more matured than biomass pellets. The end uses and applications of pellets are the same as that of briquettes.

Value Chain

The manufacturing process is determined by the raw material or the waste that is used as feedstock but usually the production includes the following steps: reception of raw material, screening, grinding, drying, pelletizing, cooling, and packaging. The processes and various steps are self explanatory. Sieving and cooling are essentially conditions steps and hence are not considered mandatory.   

 

 

Business Opportunities from the Value Chain

Pelleting could well be a preferred business to venture as the process is fully developd, well understood and market ready. The elements of value chain and hence the business opportunities have been well understood. While there could be some degree variability within the operation itself, based on plant layout, type of feedstock, and utility, those variations are small. The analysis of business opportunities could hence be generalized for this mature industry.

Feedstock Suppliers

Biomass Pellet can be made from any type of Agro-Forestry waste including Groundnut-shell, Sugarcane Biogases, Caster Shells/Stalk, Saw dust, Coffee Husk, Paddy Straw, Sunflower stalk, Cotton stalks, tobacco waste, mustard stalk, jute waste, bamboo dust, tea waste, wheat straw, palm husk, soybeans husk, coir pitch barks/straws, rice husks, forestry wastes, wood chips and many other agro wastes. It is hence understandable that similar to briquettes, even in the pelletizing industry, feedstock supply is a very attractive opportunity to cash in. typically any type of biomass that could be used for briquette can be used for pellets with the only constraint being the moisture content should be less than 12% for feedstock.

The feed stock for wood pellets is wood waste products, and consists primarily of sawdust from sawmills. Some pellet producers use wood chips and others use scraps from the furniture and other secondary wood industries. These materials which have generally been considered low value ones, are now enjoying a descent market due to the development of pellet industry.

Opportunities in Manufacturing Sector

There are several pieces of equipment that are used in the commercial wood pellet manufacturing process. These can include primary grinder, hammer mills, dryers,(belt dryer, rotary dryer), pelletizers (pellet mill), coolers, baggers, sifter sorter, conveyors, cyclones, air locks, dust filter, piping and boilers to name a few of the major ones. There are auxiliary units that support these pelletizing machines and these machines also needs the installment of conditioning chambers, to enhance the product quality. The equipment industry is a rather matured one and there prevails less opportunity and immense competition.

While open air storage systems have been the preferred choice for high moisture raw materials there are many other supporting components such as bins, cement pads or piles etc that are used to stockpile raw materials for continuous process. In cases where there is a wide range in the types of raw material being received, some facilities incorporate a blending set up to process it.

Service Opportunities

Being a considerably mature industry, the opportunities for consulting and feasibility studies are comparatively less in pellets than any other solid fuel that is under discussion in this report. However, one cannot rule them out and for a profitable pellet business, consulting at every stage stands vital. Services are provided in setting up pellet plants and in deploying a suitable design. For any industry be it emerging or mature, logistic services, is something that stays unaffected. That is precisely true for pellet industry too where raw materials can’t always be sourced locally to the plants for further processing. In the case of long distance transport low bulk density makes them too costly. Hence there arises an opportunity for packing the raw materials.

Global scenario and Market Segment

A high proportion of pellet manufacturing companies are concentrated in North America and Europe. Sweden, together with USA and Canada, are the world’s largest producers of pellets with an annual production capacity exceeding 3.5 million tons of wood pellets in 2006. A second group of countries is composed of several EU Member States with a production ranging from 200,000 to 600,000 tons, including Austria, Germany, Italy, Estonia, Latvia, Russia, Poland and Denmark. The remaining countries produce much lower amounts. Sweden is also the largest market so far, and trends show that Sweden will be still leading market in the near term. Other large markets include mainly central European countries, such as Austria, Italy, Germany, the Netherlands, Denmark and Belgium.

Wood pellet has become a hot topic for both residential and industrial users, albeit for obvious green reasons. The residential pellet business is local with regional trade, while industrial pellets are traded globally.  Global demand for wood pellets reached nearly 12 million tons in 2008 and is worth approximately €2 billion (£1.7 billion). Europe and North America accounted for 97% of global demand. The market has grown rapidly: a compound annual growth rate (CAGR) of 27% in Europe and 17% in North America from 2005 to 2008. Needless to say the global demand for pellets will take the uphill route only. European biomass organization estimates that by 2020 up to 80 million tons of pellets could be used in the EU alone and this corresponds to 33 million tons oil equivalent. However, these growth rates will slow as markets mature.

It’s not all about EU and the USA, but pellets are increasingly being used in other areas of the world as a fuel as well. A number of countries are exploring the option of producing fuel pellets. Some of these are considering exports as well as domestic use. Asian customers have not been a big piece of the North American wood pellet export market, but the opportunities may grow. Pellets are increasingly being used as animal bedding, but that is not yet an established market. Since pellets sold for this purpose use command a higher price than those sold as a fuel, this might well become a promising new market. Niche markets may exist where businesses rely on low heating costs to remain profitable.

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