Winter is Coming – Part 2
State of the Market – Now for the Good News and what customers can do about it.
By Julian Morgan-Jones | 13th December 2018
If you have read my other article ‘Winter is Coming – State of the Market – A perspective on what’s happening with Wood Fuel Autumn 2018’ you will know that the wood heating and wood fuel markets are experiencing some significant challenges this year. However it’s not all bad news and there are some things customers can do to mitigate some of these problems.
To start with, the significant hike in the price of oil to 60p/ltr (6p/kWh) will make new biomass boiler installs even at the smaller scales more attractive for large oil users, even with the lower RHI tariffs. With wood chip at 3.5-4.3p /kWh and RHI income of 2.9p/kWh there is still a business case for new boiler installs.
Torrefaction is one interesting development creating a charcoal like wood fuel from waste wood which has a higher energy value than chip or pellet and which can be left out in the rain. The use of agricultural residues for pellet production is also of increasing interest. Neither of these are quick wins though as use of them may require equipment modifications and changes to current boiler certification for RHI payments.
Customers can also do several things to keep costs as low as possible and / or ensure they have fuel while the problems still persist.
- Buy wood fuel under a contract. This allows suppliers to plan for your demand and buy the fuel you need ahead of time and hence to fix pricing rather than relying on spot pricing.
- Many users do not realise that small things can seriously affect how efficiently their boilers burn. Making sure boilers are working at optimal efficiency (find out how) to get the most from the fuel can save 5-10% of the fuel costs and improve boiler life.
- Users of pellets in bags could consider buying more than 1 pallet at time if they have space to store them in the dry.
- When pellet shortages begin to bite this increases lead times for pellet deliveries. Keeping a much closer eye on fuel stores and ordering bulk pellets in good time even if in smaller quantities to keep topped up.
We hope you find these tips useful. Let us know of any other tips or comments you might have and we can share them for others. Email us at email@example.com.
Julian Morgan-Jones is Managing Director of South East Wood Fuels, vice-chair of the Wood Heat Association and chair-person for the Biomass Suppliers List Advisory Panel .