The UK market is not self-sufficient in the supply of wood pellets, and as with most commodities, we have relied on a certain level of imports for many years.
The supply of wood pellets into the UK comes primarily from Spain and Portugal, Baltic nations such as Estonia and Latvia, as well Russia and Belarus. In recent years 12-15% of global supply has historically come from Russia and Belarus.
The global market for wood pellets was already extremely tight even prior to the Russian invasion of Ukraine. Large power stations have been increasing their electricity output whilst aiming to utilise more sustainable sources of fuel where they could, rather than using fossil fuel.
This was partly driven by a desire to seek cleaner sources of energy but has also been impacted by rising gas prices post Covid, which in turn have increased electricity prices significantly across Europe. Combined with this, recent bad weather, container shortages and rising shipping costs has meant that prices of wood pellet have increased significantly in the last 12 months.
For more information on the UK supply road map, please visit our recent blog:
UK biomass: Road map
Is there any connection to supply Russian wood pellet?
In the past and like most suppliers in the UK, our onboarded suppliers have supplied Russian produced wood pellet, as well as UK, Irish, Spanish, and Portuguese material as part of the supply mix. Considering the current events in Ukraine, our suppliers have undertaken a thorough review of their sources of supply and are entering into agreements for products that are not sourced from Russia or Belarus moving forward.
As an organisation, we have also exercised thorough internal checks and processes, confirming that no links are present with Russia. Our Biomass suppliers for example, are all UK based/owned.
Why is the price of my wood pellet increasing?
Prices are extremely volatile given the uncertainty in Ukraine, and we expect the volatility to continue for some time. Where supply is short and demands high, prices inevitably increase.
Is biomass still cheaper than gas or oil?
Biomass still represents value for money as a heating source. The cost per kWh is still very competitive against oil, natural gas, and electricity, which are all seeing potentially even more significant cost rises.
When will the situation improve?
There are several factors affecting the situation, and the immediate outlook is very uncertain. However, biomass fuel, and wood pellet, has proven to be low cost and relatively stable priced heating fuel over the long term, and we fully expect that this stability will return in due course.
Supported by by AMP
If you have any questions or would like to know more about our new Renewable Biomass framework and how can YPO can help, please get in touch with the team!
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