Baseload, Bioenergy

Russia May Shift from Export to Domestic Use of Wood Pellets

In the near future, Russia may take advantage of production of renewable energy from wood pellets for the needs of remote towns and villages where such practice could cut the cost of energy nearly ten times, according to a recent study of National Research University — Higher School of Economics.

“For the population of the peripheral small towns and villages of the North of European part of Russia, use of pellet boilers instead of fuel oil and diesel can reduce the energy cost of up to 10 times, while for eastern regions [Siberia] savings could be even higher,” the study said.

The initiative has been supported by numerous market participants, who indicated Russia has enormous potential in terms of development of wood pellets use. Currently, the country is producing 2 million tons of pellets per year, exporting most part of that amount to Europe.

“The industry of wood pellet production is actively developing in our country over the last decade due to the increasing demand for biofuels from wood at the international market,” Andrei Ptichniko, the director of the Russian Forest Stewardship Council (FSC), said, adding that Russia is exporting up to 90 percent of all pellets.

“Russia is rich with two things: oil and gas as well as timber,” Vladimir Markov, CEO of Russian construction company TekhnoNIKOL, said. “If for oil and gas we are already well-developed, then for forest use, there are [oceans] of opportunities. So virtually all investments in wood processing in Russia strategically seem very attractive.”

Alexander Perov, the director of public relations of Russian Forest Group, agrees.

“We have huge resource base literally at hand,” he said, adding that there are still complications. In Russia, sometimes the distance from a producer to consumer of pellets could reach up to 1,500 km in all directions.

Ptichnikov said that, at the moment in Russia, there are already a number of projects in the area of use of wood pellets under development, including in Republic of Komi, Republic of Karelia and Krasnoyarsk Krai. He also added that Russian pellets have EN+ and often FSC certification, as in recent years, the designations are necessary for conducting export supplies to the European Union.

According to Perov, demand for wood pellets for production of bioenergy in the world greatly exceed demand, with the Asia-Pacific region being the main driver of growth. At the same time, he said that the European market is conventional, so it is not likely to grow or reduce in the near future.

However, experts believe that development of wood pellets use in accordance to the recommendations of the study is slipping with active support of gasification in remote regions of the country.

“Amid active gasification of [remote] settlements, the pellet energy segment is developed mainly through the efforts of enthusiasts and private business. State support of this segment is presented only where there are significant restrictions on the gasification due to expensive fuels,” Ptichnikov said, adding that state support can really give the segment a strong impetus for development.