Pellet market in 2023: status and prospects

Along with the world's largest forest resource, Russia has enormous potential for the development of the bioenergy industry. The pellet fuel market has been actively developing over the past 20 years, but during this time the industry has not become truly widespread. Read about the state of the market and the main prospects for biofuels in our material.

Until 2022, almost all pellet fuel was exported, but under sanction pressure, some companies were forced to suspend or repurpose their production, and the enterprises that continued to operate have not yet formed a new permanent sales market. This is due to the fact that domestic consumption of pellets is only about 200–300 thousand tons per year, with an annual production volume of almost 3 million tons. It was possible to redirect some of the volumes through parallel exports, but these are critically small figures. According to experts, the current surplus of biomass is about 1.5 million tons per year.

The development of the pellet market in 2023 can be helped by the instructions of the President of the Russian Federation following the meeting on the development of the timber industry complex, including the provision of additional infrastructure budget or special treasury loans in the amount of at least 15 billion rubles in 2023 and 2024. for the modernization of existing boiler houses to switch from fossil fuels to biofuels.

Another important point is the operation of modernized boiler houses. The level of automation, mechanization, and software in conventional coal and pellet boiler houses varies greatly. Accordingly, advanced training and a good service component are necessary. According to experts, even with full government support, this process will take at least a year.

The experience of regions that have successfully implemented the use of bioenergy needs to be scaled up at the country level. Among the leading ones are the Komi Republic and the Arkhangelsk region, which, with the support of regional authorities, have already gained practical experience in the use of pellet fuel. Thus, with the support of the Komi Republican Industrial Development Fund under the Forestry Industry Projects program, one of the entrepreneurs has already received a preferential loan of 15 million rubles. With these funds, he modernized the pellet line for the production of wood fuel briquettes.

Olga Kalyuzhnaya, President of the Russian Forest Association: “It is important to take into account the characteristics of individual boiler houses in terms of the efficiency of the transfer, in particular, the modernization of old boiler houses. It is necessary to carry out a technical and economic calculation, comparing different types of fuel and the conditions for its supply. In some cases, it is more effective to switch to gas, in some cases to wood chips, and in others to pellets. Everything is individual. In general, switching boiler houses to biofuel will help producers of such fuel solve sales problems. At the same time, it is important to understand that fuel suppliers must maintain positive profitability, and tariffs for the population or organizations from such boiler houses should not increase.".

The pellet market remains attractive for investment: in August 2023, a new workshop for the production of fuel pellets was opened in the city of Bratsk, Irkutsk region, as part of an investment project. The volume of investments is 2.37 billion rubles. The investment project is being implemented by the DeKom company (member of the Russian Forest association), the project is included in the list of priorities for the development of the forestry complex.