Proposal : Research the viability of pellet heating in Australia

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Proposal Research the viability of pellet
heating in Australia
Graham PalmerMIET2127October 2006
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Introduction

• What is pellet heating?
• Pellet heaters
• Characteristics
• Existing pellet markets
• Logistics of pellet heating market
• Heater market in Australia
• Opportunities
• What next?

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What is pellet heating?

• Small pellets manufactured from wood dust without
  additives
• Potential to revolutionise wood heating
• High efficiency
• Low emissions
• Automatic operation
• More expensive than log burners

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Pellet heater
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Pellet space heaters
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Pellet boiler - Kunzel
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Characteristics

• Energy density 18 MJ/kg
• 3 to 4 times more energy than timber per unit
  volume
• Efficiency 80 to gt 90
• Open fire 10, combustion 40-60
• Ash content lt 5
• Empty tray few times a year
• Emissions
• Biomass emissions have decreased by 3 orders of
  magnitude in 2 decades

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Historical emissions improvement- measured
biomass heater in Austria
Source Rakos (2002)
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Existing markets

• Sweden, Austria, Germany etc - already using wood
  mix of other fuels including gas, oil, coal,
  electric
• US - high mains gas, electric some oil
• UK - high mains gas penetration some oil
• Australia - one importer and one manufacturer

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Results of a subsidy scheme in Salzburg (Rakos,
2001)
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Pellet production by country 2005 (tonnes)
Sweden 1,356,000 Two plants producing over 130,000 tonnes per year, 15 producing over 30,000 tonnes
Canada 1,000,000 Five plants over 80,000 tonnes, several plants in the 200,000-tonne range
Russia 758,000 Two 100,000-tonne plants, seven over 30,000 tonnes
USA 600,000
Denmark 535,000 One 280,000-tonne plant and two over 80,000 tonnes
Finland 460,000 Six plants over 30,000 tonnes
Austria 409,000 Four plants over 30,000 tonnes, three in 80,000-100,000 tonne range
Germany 388,000 Six plants over 30,000 tonnes
Poland 356,000 One 100,000 tonne plant and three over 30,000 tonnes
Estonia 345,000 Three plants over 80,000 tonnes
Note Australian price for pellets
360/tonne Sources Bioenergy International
December 2005 (see note in text) Wood Pellet
Association of Canada
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Key logistical issues

• Pellet manufacture
• Quality
• Reliability of supply
• Sufficient competition
• Pellet distribution and logistics
• Bulk
• Bagged
• Pellet burners and boilers

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Economics of pellet heating

• Economics of existing heating
• Gas - ducted, wall, hydronic
• Electric element
• Electric reverse cycle - ducted, wall, split
• Wood - open fire, combustion, pot belly
• Oil
• Floor slab
• Solar
• Economics of pellet heating
• Heaters
• Pellets
• Pelletising equipment
• Distribution

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The pellet paradox

• No-one will buy a heater without access to
  pellets
• No-one will maufacture pellets unless there are
  heaters to make use of them
• Europe overcame problem because importing was
  feasible, and fuel costs of competitors are higher

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Main reason for purchasing heater - Australia
Source ABS (2005)
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Heating in Australia
Source ABS (2005)
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Opportunities

• Victorian timber communities
• Cool climate, access to raw material, log burning
  already, no mains gas
• Launceston
• Cool climate, access to raw material, problem
  with particulate pollution from log fires

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Cost of pellets in Melbourne(updated since
original presentation)

• 2006 360/tonne
• 2008 475/tonne
• 2009 600/tonne
• little competition and captive market
• Assuming 18 MJ/kg, 600/tonne equates to 3.3
  cents/MJ compare gas at 1 cent/MJ and
  electricity 5.6 cents/MJ (20 cents/kWh)

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TBL Analysis

• Economic
• Support local industry
• Competitive except with mains gas
• Develop regional industry

• Social
• Maintain energy autonomy within a regional
  district
• Consumers may prefer pellet heating
• Greenhouse challenge front runner

• Environment
• Net greenhouse benefit
• Less particulate pollution
• Increased resources for forest management
• High efficiency
• Close the carbon loop

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Interested parties

• Users
• Consumers
• Retailers
• Installers

• Creators
• Appliance manufacturers
• Pellet manufacturers
• Manufacturer associations

• Supporters
• Australian Greenhouse Office
• Sustainability Victoria
• RMIT
• Investors

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What next?

• Complete a credible report on performance,
  environmental impacts, economics and market
  opportunities of pellet heating
• Bring together interested parties
• Lobby for support
• Greenhouse a big issue
• Part of the biomass debate (enthanol, biodiesel,
  biogas)
• May be cost effective outside of mains gas
• Local pollution in urban areas