Poland Biomass Pellet Production and Market Development

Coal reserves of Poland are in the front rank in Europe, which accounts for 48% of Poland energy generation. As a major European exporter of coal, Poland uses coal as the primary fuel in production of their energy. However, due to the non-renewable feature of coal as an energy resource, the development of renewable energy is imperative. Biomass pellet is the most commonly used renewable energy source. Forests cover 28.8% of Poland's land area, so it is beneficial to make wood pellets, which are a relatively clean fuel. Pellet production started in Poland in 2003. At the early stage, the wood pellets they produced with pellet plant were mainly exported to Sweden, Denmark, Germany and Italy. With times goes by, more and more people show their interest in wood pellet production with pellet plant. Now, Poland pellet market is growing in a fast speed.

1. Poland biomass pellet market drives and barriers
Green certificates for electricity produced by RES have an approximate value of 250 zl/MWh, while “red certificates” issued for cogeneration have a value of 120 zl/MWh for small plants < 1MW. Recent changes in legal regulations promoted the use of agricultural biomass (energy crops, agricultural residues and residues coming from food processing industry) to the detriment of residues from forestry and their processing, thus increasing the interest in MBP. The new regulation published by the Ministry of Economy on 14 August 2008, Dz.U. 156, Poz. 969 states that power plants using biomass with power output exceeding 5MW, have to assure that   the agricultural biomass weight ratio (energy crops, agricultural residues and residues coming from food processing industry) should be at least reaching 85% in 2014 and 100% in 2015.



Power plants exceeding 20 MW, have to assure that the agricultural biomass weight ratio (energy crops, agricultural residues and residues coming from food processing industry) should be at least 30% in 2014, 40% in 2015, 50% in 2016, and 60% in 2017, respectively. The Polish energy market is mainly coal-based. For decades coal was the main energy carrier, exploited by power plants, district heating systems and individual heating systems. Private households without any access to district heating network are equipped with either coal, gas or oil installations. These are mainly rural areas where biomass is used in the form of log wood, fired in old, inefficient installations. The Polish pellets market is still very young: production activity started since 2003, but its rate of growth is very fast. A large portion of the production volume is exported every year, but this trend is recently changing with the growth of domestic consumption. Due to rising prices of fossil fuels, as well as the risk of unstable deliveries, more and more people show their interest in pellets. Also, large consumers like CHP plants started to co-fire biomass with coal, thus resulting in a major rise in pellets production which occurred in 2008. Therefore, no wonder that biomass is the most commonly used renewable energy source (its share in RES exploitation in 2007 was equal to 91.3%). 

READ: BIOMASS PELLET MARKET IN FRANCE
 
2. Production capacity and feedstock
For Poland, it has a short history of wood pellets market since it was until 2003 that wood pellets production began. A rapidly growing interest in pellets as an alternative to oil and natural gas led to extensive investments in pellets production over the past few years. In 2008, 21 companies were active in the production of wood pellets, while in 2010 the number of producers had already increased to 30 units. The majority of pellet plants have a production capacity below 30,000 t; however they are characterized by a high utilization rate. They are small or medium-sized pellet plant companies that buy their raw materials from wood processing industries in their vicinity and operate their own regional distribution system. In 2010, only 2 plants had a production capacity of above 100,000 tons/y and another one around 80,000 tons/y. In 2010 the pellet production capacity of Poland was 914,840 tons while the actual  cumulative production of was 656,240 tons (Source: Bioenergy International, 2011).

READ: HOW TO START A PELLET PLANT
 
For small and medium scale wood pellet manufacturers, they mainly utilize raw materials from wood processing industries nearby and has their own wood pellets distribution system.  Forests cover 28.8% of the area of Poland (8.9 mln ha). National forests cover the area of 7.4 mln ha and a further increase in the forestation is planned, until they cover 32% of the country in 2020. The technical potential of forest wood that may be used for energy purposes equals 6.1 mln m3, which is sufficient to produce 42 PJ of energy. The technical potential of wood residues from wood processing industry and other sources equals 58 PJ (8.3 mln m3). Wood shavings and saw dust are the raw materials mainly used for pellet production. The quality of the raw materials originating from furniture or construction industry is good. Saw dust from small sawmills may be contaminated with bark and sand, or even with larger pieces of wood, and therefore must be sieved before the pellets production process begins. Wood chips are used in tiny amounts so far.
 
3. Consumption
The existing legal duties concerning the compulsory production of green energy result in the increased interest of both district heating companies and CHP plants in biomass utilization, in order to co-fire it with coal. In 2009 about 80,000 tons of pellets were consumed for residential heating and over 150,000 tons were used for co-firing with coal in power plants.

READ: GERMAN PELLET DEVELOPMENT ANALYSES
 
4. Trade and logistic aspects
In 2010 the quantity of pellets exported was estimated around 130,000 tons, mainly to Denmark (104,834.3 tons), and to a lower extent to Italy and Germany.
Imports in 2010 reached around 43,000 tons yet mainly from Ukraine (25,380 tons), from which the volume equaled to more than half of the total imports. Other trade partners were Germany (7,461tons), Russia (3,620.04 tons), Belarus (2,333.64 tons), Romania (2,192.4 tons) and Lithuania (1,792.32 tons) respectively.

READ: RUSSIAN PELLET MARKET AND DEVELOPMENT
 
5. Pellets quality and standard
There is no national standard for the quality control of pellets. Some pellets meet the requirements of the German standard DIN 51731 and their quality is certified. Producers often claim that their pellets meet the requirements of the Austrian standard ÖNORM M 7135, or of the German DIN Plus, but have no certificate to prove it. 
 
6. Price trends
In the period 2006 to 2009, an average 10% increase of biomass prices was experienced due to increasing demand increasing transport costs form longer distances. In 2010, the cost of biomass delivered to power plants was 25zl/GJ. The reasons for this growth were: increasing competition between the power plants and increasing distances of biomass transportation. While smaller consumer can source biomass from local suppliers, large power plants must shoulder long distance transports and this often reflects on 10-20% additional costs for biomass delivery. As far as agricultural biomass was concerned, sunflowers husks pellets were imported from the Ukraine with an offered average price of 28 PLN/GJ (16MJ/kg). (Source: in 2008) 

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