0/●

Wood pellets in Japan

Small Log Conference 2015

Thursday, March 26, 2015

North American Wood Pellet Exports

Takanobu AIKAWA

aichu@murc.jp

1/●

Outline

I. Domestic pellet production and heating sector

II. Pellet Imports and large scale power plants

III. Small scale power plants using domestic biomass

Unit conversion

1JPY≒0.80USD

1m3 ≒35.3 ft3

1ha≒2.47a

1m2 ≒10.7 ft2

2/●

Overview of Japanese biomass: Different drivers by size

Small scale heating: competing with fossil fuels

Middle-scale power generation: supported by FIT. Fuel procurement is the key

challenge for this sector.

Large-scale coal power plants with co-firing will be depend on imported pellets,

because of small production capacity in Japan

Category Typical size Biomass Market driver

Heating 10kW-1MW Chip, pellet: 100t/yr Up rising of fossil

fuel price, subsidy

for boilers

Middle-scale electric

power generation

(inc. CHP)

2MW-20MW Chip (domestic forest

residues, decomposition,

PKS etc): 100,000t/yr

Feed-in-tariff

Large-scale electric

power generation

(co-firing)

100MW~ Pellet (imported):

100,000t/yr

CO2 reduction of

major electric power

companies

Source）T. Aikawa

3/●

Wood pellets production in Japan

Source） Forestry Agency

3.8 6.0 21.5

24.9 29.9 36.4

50.7 58.2

78.3

98.0

1016

29

38

47

63

75

85

108 109

0

20

40

60

80

100

120

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Nu

mb

er o

f facilities

Pro

du

ctio

n

Production

Number of mills

(Thousand ton)

(FY)

Pellet mills and production has been increasing during 2000s.

Average size:

1,000t/mill

4/●

Wood pellets production in Japan

Source） Ueno Village

Small production capacity (1,000t/yr),

Using logs, but sawdust.

Photo） T. Aikawa

Typical pellet mill in Japan Pellet made from log

High price with relatively low

quality

5/●

Wood pellets consumption in Japan

Source） T. Akawa

Pellets made in Japan are mainly used in small scale heating sector

From stoves (house) to boilers (city halls, hot-springs and green houses, etc.)

Photo） T. Aikawa

6/●

Heating sector: competition with fossil fuels

Comparison of biomass fuels prices with fossil fuels

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Jan

-07

May

-07

Sep

-07

Jan

-08

May

-08

Sep

-08

Jan

-09

May

-09

Sep

-09

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Jan

-13

May

-13

Sep

-13

Jan

-14

May

-14

エネルギー単価（円

/kW

h）

A重油

灯油

ペレット（45,000円/t）

ペレット（25,000円/t）

チップ（12,000円/t）

Heating oil

Fuel oil

Pellet (45,000JPY/t)

Pellet (25,000JPY/t)

Wood chip

(12,000JPY/t)

En

erg

y p

rice

(JP

Y/k

Wh

)

Source） Aikawa

The market is still in an early developing stage, due to the relatively high cost of pellet

7/●

71,981

83,769

96,745

0

20,000

40,000

60,000

80,000

100,000

120,000

2012 2013 2014

Wood pellet import in Japan

Source） Trade statistics of Japan

Import of wood pellets (source country)

Pellet import has been increasing steady.

The price has also risen up (21,500JPY/t in 2012→26,700JPY/t in 2014)

PKS could be a rival (234,000Mt in 2014, CIF price 12,100JPY/t)

Canada 90,676Thailand 2,682Vietnum 1,979USA 563Indonesia 410NZ 280Malaysia 128Finland 15Singapole 12total 96,745

(Mt/yr)

Caloric value is

almost same for

wood pellet

8/●

Pellet import will grow faster?

Source） IEA Bioenergy Task 40

2010 2015 2020

Western Europe 10.8 16.4 22.8

Japan/Korea 0.2 3.8 13.5

China 0.6 3 10

North America 3.4 4.3 5.6

Major Consumers of Wood Pellets (million t)

IEA Task 40 predicts Japan and Korea will be major

consumers of pellets in the world.

After Fukushima accident, Japanese electric power

companies begun to re-invest for coal firing.

FIT scheme support co-firing,

On the other hands, METI will set energy efficiency

standard for new plants, high quality bio fuels will be

favored (ex. torrefied pellet)

World Coal Imports 2010

Source） IEA Bioenergy Task 40

9/●

New coal plants needs biomass

Source）Osaka Gas Co., Ltd.

Example: Osaka-Gus co-firing plants in Aichi

More than 40 plans of new coal power plants /re-powering (total capacity:17,600 MW)

High energy efficiency and GHG reduction are required for new plants by regulation

More than 10 plants announced biomass co-firing.

Environmental NGOs are on the watch for carbon emissions and biomass sustainability.

Operator: Gas and Power Co.,Ltd. (100%

subsidiary of Osaka Gas Co., Ltd.)

Capacity: 110MW

Fuel: Coal with biomass pellet (about 30% of

total fuel)

Pellets will be imported from sawmills in North

America

Chance for certified

pellets

10/●

Small scale plants using domestic biomass

FIT scheme was launches in 2011 to develop renewable energy sector in Japan.

Purchasing prices of biomass generation are classified by feedstock (forest residues

are paid well).

Standard business model has been reconsidered from 5MW mono-generation to

smaller than 2MW of CHP considering the energy efficiency and biomass

procurement.

Photo）T. AIkawa

Mono-generation with steam turbine(5MW-) CHP with innovative technologies(-2MW)

Gasification (some plants imported

from Europe will use certified)

ORC (Organic Rankin Cycle)

Small-scale steam turbine that realize

co-generation

11/●

Summary

Pellets production in Japan has been increasing, however;

Current high production cost due to the small production capacity is needed to be

cut down to compete with fossil fuels in heating sector.

Rapid growth of imported pellets for co-firing is predicted

Electric power companies are investing for coal power plants that require biomass

co-firing to reduce carbon emission.

Those plants will adopt high quality and reliable biomass, such as torrefied pellets

to realize high energy efficiency and keep cooperate reputations

Small scale biomass plants will use domestic biomass

Forest residues are paid well, but small CHP plant would use pellets as high-quality

biomass fuels