Catch up with PFI in this issue of the Pellet Wire!

October 16, 2020 

In this Week's Pellet Wire:

From the Director's Desk: Here We Go

The last two weeks of weather in the Upper Midwest have been about as good as it gets. Last week it was 83 degrees in Minneapolis with temperatures falling off quickly once the sun set delivering that perfect “sleeping weather” everyone likes to talk about. The most recent forecast suggests that these perfect days are on their way out and will be replaced by more normal seasonal temperatures; pellet burning temperatures.

While pellet burning end users may not yet feel like the 2020-21 heating season is underway, wood pellet retailers are buying and selling significant volumes. Next week the EIA will refresh their Monthly Densified Biomass Fuel Report bringing their 2020 data set current through July.

The accumulated data so far shows that our industry, despite the COVID-19 disruption and challenges is expecting and poised for a big year. Production in the first half of the year flirted with nearly 1 million tons and the summertime buying from retailers that producers have been hoping to see for years is finally happening. In the two month May-June timeframe producers sold 328,000 tons of pellets, the most in that two month stretch in the report’s 5-year history by a wide margin. Just last year that same time period saw producers move nearly 100,000 tons less at 238,000 tons.

These strong sales contribute to strong cash-flow positions with manufacturers and producers are using that cash flow to procure more fiber and make more pellets. Residual purchases in 2020 through June total 6.8 million tons, another new report record.
We’ll leave what the data tells us for the next edition of Pellet Wire but I haven’t heard anything in the past several months that lead me to believe the 2020 trend toward near record high production and sales numbers will be interrupted.

Market Making Across the Pond

Last week I signed up for and attended some of the Argus Biomass Conference, rebranded and reformatted this year as Argus Biomass Live – Virtual Conference. My interests were two-fold. First, I was curious to see how someone else deployed a virtual conference and how the platform they chose functioned. Second, I wanted to a deep dive into the wood pellet market from a global perspective.

While the conference agenda featured mostly discussions about the industrial wood pellet market, I was delighted to find and watch an entire panel dedicated to a discussion around the prospects for the heating market in Europe. Very quickly I was reminded of some stark differences between the European market drivers and our own here in the United States. Specifically, I was surprised to learn that the sale and installation of heating oil boilers, a heating technology that wood pellets compete with in the northeast, would be banned in France in 2022 and Germany by 2026. There is a case study for how this impacts wood pellet consumption already, in Italy where per capita wood pellet consumption is among the world’s highest.

Each country has devised its own support programs to help its citizens cover the cost of installing a non-oil technology and the panelists were already reporting strong appliance sales in both France and Germany.

While the sudden boom in pellet appliance sales is enviable, I doubt that kind of government manipulation in home heating markets would be tolerated here in the U.S. regardless of who’s boat was being floated or sunk.

This will be an interesting development to watch. Will these prohibitions on heating oil lead to a massive uptick in wood pellet consumption, or will other emerging competing technologies like heat pumps steal the show?

Tim Portz 
Executive Director

Socially Distant Congressional Outreach: U.S. Representative Warren Davidson (OH-8) (second from left) speaks with team members from BDL Supply and Easy Heat Wood Pellets during a recent visit to their South Charleston, Ohio facility. 

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Industry News

EIA: 1.8 million households to use wood as primary heating fuel
(Biomass Magazine)

The U.S. Energy Information Administration released its Winter Fuels Outlook and an updated Short-Term Energy Outlook on Oct. 6, reporting that approximately 1.8 million households will use cord wood or wood pellets as their primarily residential spacing heating fuel this winter...

Read More >

How to choose a pellet stove
(Bangor Daily News)
Having an effective indoor heat source is important to surviving a Maine winter. When the bitter cold settles in and the negative temperatures arrive, all you want is the most efficient and warmest heating system possible. Many Mainers gravitate towards pellet stoves for this reason...

Read More >

State looks to help people still burning coal for heat to change their ways
(VT Digger)

Anew incentive helps Vermonters who are still heating with coal to switch to renewable energy.

The program, designed by the Clean Energy Development Fund, pays 50% of the cost of installing advanced wood heat boilers and furnaces. Residents are eligible for up to $7,000, and businesses can receive up to $27,000 toward the change...

Read More >

Our Strong First Half
(Biomass Magazine)
In September, the U.S. Energy Information Administration’s Monthly Densified Biomass Fuel Report was updated with June data, providing a comprehensive look at how the industry fared in the first half of the year. The numbers show that not only have wood pellet producers managed to navigate the challenges of the business disruption presented by the COVID-19 pandemic, they’ve set themselves up with a legitimate chance at the biggest year in the report’s five-year history... 

Read More >

Virtually PFI: A Review
(Biomass Magazine)
While the COVID-19 pandemic has made it impossible to conduct in-person annual conferences, since its global debut, most associations—including the Pellet Fuels Institute—have leveraged technology to gather for discussions. The Pellet Fuels Institute hosted VirtuallyPFI, its web-based annual conference equivalent, over the course of two weeks in late July and early August. The agenda, pulled directly from the original annual conference program, focused on wood pellet manufacturers and their upstream and downstream partners... 

Read More >

WPAC puts spotlight on climate change, sustainability at annual conference
(Canadian Biomass)
Vaughan Bassett opened this year’s Wood Pellet Association of Canada’s Conference and Annual General Meeting with a reminder of how extraordinary and challenging 2020 has been...

Read More >

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