An Austrian Lesson in Market Development
Last week I was fortunate enough to travel to Wels, Austria for the European Pellet Conference which is co-located with the World Sustainable Energy Days. The trip was an illuminating one on multiple fronts, but largely I think the experience helped me understand the opportunity for industry growth that can be offered by the robust deployment of residential pellet heat.
In Austria, a country roughly the size of Maine but with over 8 million residents, nearly half of the homes are heated by wood pellets. As a result, Austria is a global leader in the development and production of pellet appliances. Conference organizers report that nearly 25% of the pellet appliances sold in Europe are manufactured in Austria. While growing the pellet market one residential appliance at a time is a far cry from converting massive coal-fired power generation plant to wood pellets in terms of the actual rate of growth, it does work.
Consider Italy. Annalisa Paniz from the Italian Agriforestry Energy Association connected Italy’s growing pellet consumption with the widespread deployment of pellet appliances there. She reported that Italy’s pellet consumption now exceeds 3 million tons annually and is growing at nearly a 10% clip each year. Why? Because pellet stoves are increasingly popular. There are roughly 2 million pellet stoves in Italy, to say nothing of the 200,000 installed pellet boilers in that country.
At first glance, this type of pellet usage would seem to generate a market for relatively localized producers only. Closer inspection though shows Italy imports a large share of the pellets it consumes and Italian production is actually going down. In fact, Paniz reported that there are North American pellets being burned in Italian pellet stoves. Our recently completed annual pellet plant data outreach effort here at Pellet Mill Magazine would certainly confirm that with four different facilities identifying Italy specifically as a marketplace they sell into.
Probably UK policy makers envisioned a scenario not unlike Italy when they built and signed into law their Renewable Heat Incentive (RHI). The RHI would pay homeowners and businesses a feed-in tariff for heat produced by renewable sources, including pellets. In an intentionally humorous presentation delivered by UK wood fuel distributor Edward Billington, he outlined the frustrations of seeing a favorable piece of legislation languish on its slow road to implementation. While the RHI has been signed into law, the program is not currently open to homes and the only guidance from the Department of Energy and Climate Change is that the announcement of the program will come out in the spring of this year. At this point in the presentation Billington raised his eyebrows, looked at his watch and got a hearty chuckle from the audience.
Is the UK the next Italy? If the policy has the effect its authors intended, will that mean increased opportunities for North American producers. It is hard to see how it wouldn’t. Pellet heat will never enjoy the market penetration in the United States that it does in Austria or Italy. Not in my lifetime anyway. That doesn’t mean that growing the residential market in places where it makes sense deserves anything less than our best efforts. We need to continue to advocate and push for policy parity for biomass thermal energy in North America, at every scale.