Roger Pearson, managing director (Biomass Fuels) at AMP Clean Energy
The beast from the east in February 2018 contributed to a shortage of biomass fuel leading to higher prices and significantly longer delivery times. With long range forecasts suggesting we could be on for a similarly cold winter this year how can you best protect yourself and ensure an uninterrupted biomass heat supply?
With countries around the world signing up to net zero by 2050, demand for biomass, a renewable fuel, is expected to continue to grow. Indeed, biomass continues to increase in popularity across Europe; it now accounts for around 80% of renewable heat across the continent and large energy users are switching to biomass heat, increasing demand and causing some supply constraints.
Aside from the great British weather, there are a number of other factors at play which will affect supply and demand of pellet and chip this winter heating season. These include: the level of industrial biomass use, the growing demand from biomass power plants and of course, Brexit.
Industrial biomass use can be hard to predict but the impact of large industrials switching on their biomass heat can be significant in terms of supply and demand. Another factor which has come into play this year is the rise in biodegradable plastics being made from wood fibre, which is also increasing demand. Industrial biomass use continues to grow in the UK and globally with biomass being a key source of renewable electricity.
In terms of Brexit, the industry as a whole has had to look at what steps it can take to minimise any potential disruption. A good fuel supplier will be sourcing from a variety of locations in the UK, Europe and further afield. A lot of biomass fuel is bulk shipped rather than driven into the UK by lorry, therefore avoiding the main route through Dover. A large vessel requires just one customs check and is therefore a relatively straightforward transaction. At AMP Clean Energy we have put a number of checks and balances in place to ensure that, whatever the outcome, our biomass fuel supply should not be significantly affected.
Wood chip costs have also been directly affected by supply and demand with fibre costs rising by 26% last year. Consistency of supply can also be regional. For example, in the South we have seen biomass power stations sweep up chip supply. In the north, where it is generally more heavily forested, supply has not been affected as much.
So, with both pellet and chip subject to supply and demand factors again this winter how can biomass heat users best protect themselves?
Organisations that lock in to a fixed term, fixed price fuel supply agreements limit their exposure to spot prices and lack of availability. This takes away the worry of stores running low and means organisations will avoid paying inflated prices to purchase inferior fuel supplies.
Ensuring security of supply is vital for any commercial organisation, particularly those providing residents or tenants with heat, where supply issues could have serious consequences as well as commercial implications. Shoring up regular, reliable fuel supply is the single best way organisations can ensure a warm stress-free winter, whatever the weather.