Rita Ehrig’s research while affiliated with BIOENERGY 2020+ GmbH and other places

This chapter gives an overview of related research and outlines the methods applied in the present study. The study is analysing three real case biomass supply chains with an in-depth assessment of individual variables underlying actual market actions. Because of increasing biomass resources and recent dominance over pellet imports into the European market, the considered origin countries are Western Canada, Western Australia, and Northwest Russia. Studied supply phases include the raw material production and delivery, pellet production, transport to Europe, as well as delivery and conversion in a coal based co-firing power plant in the EU. The specific supply costs from origin country to the EU are derived from current market and country related data. For evaluating the pellets production and end-conversion in power plants, a full cost account is applied. For most vulnerable, market-related cost items the imputed risk is evaluated as effect of underlying price changes in a 3- to 10-year period. Corresponding de-risk strategies are concluded from expert interviews.

This chapter summarises how market aspects affect total biomass supply chain economics and how highly volatile prices influence pellet supply costs. The individual ranges of price variations in a 3- to 10-year period are outlined with raw material prices, freight rates, and exchange rates between origin currency and Euro as the predominant factors. These price aspects - compared with the final EU market price–are discussed from a holistic and close-to-market viewpoint.

This chapter deals with the evaluation of most crucial supply risks, which exist under real market conditions in the biomass market. General risk parameters and relevant indices along the biomass supply chain are discussed in detail. A modelling of 10-year-price variations based on the three investigated supply chains is followed and current 3-year-price volatilities are presented. Raw material prices, shipping rates, exchange rates, and the final market price turn out to be the main drivers for actual price variations and investment decisions. They can have a major impact on supply chain economics and investment success. Finally, responding hedging strategies for biomass supply chains and related investment decisions are summarised.

This chapter describes the three chosen case studies for biomass supply from Canada, Australia, and Russia to the EU. The case studies contain a detailed cost outline from biomass resource to final consumer for the year 2011. The supply patterns include raw material, pellet production phase, transportation and shipping to the EU, delivery to the conversion plant and final conversion in a coal co-firing plant. The individual costs are summarised and compared, explaining the related market connections. Dedicated and region specific cost drivers and economic framework conditions are defined along the whole biomass supply chain.