wood pellets the other north american energy...

Wood Pellets – The OTHER North American Energy Revolution

Presentation for: American Association of Port AuthoritiesMaritime Economic Development Energy Projects SeminarPensacola, FL – February 2015

Derik Andreoli, Mercator International --- dandreoli@mercatorintl.com

Wood Pellets Consumption Growth Rates Eclipse Fossil Fuel Growth Rates

2/27/2015 DRAFT 2

Wood PelletsCAGR = 24.5%

Coal (4.1%)Natural Gas (2.6%)Oil (1.2%)

Wood Pellet Demand is Largely Driven by Rapidly Growing European Consumption

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0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2009 2010 2011 2012 2013

EU Imports of Wood PelletsMillion Metric Tonnes

18.779%

3.917%

1.0, 4%

Sources of Wood Pellet Demand (2013)Metric Tonnes (millions) and Share of Total

Europe North America Asia (incl. Russia)

EU ImportsCAGR = 35.7%

6X Growth

U.K.3.7

U.K. Electricity Generation by Fuel Type

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201345%18%

202012% Coal41% Renewables

200849%

9%

Competitive Advantage of Wood Pellets for Power Generation

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Comparison of Alternative Sources of Power Generation

Baseload Power Renewable Low Carbon Price/kWh

Hydro $4.10

Coal $14.89

Natural Gas (Combined Cycle) $21.84

Wood Pellet Conversion $24.03

Nuclear $65.76

Onshore Wind $75.36

Offshore Wind $95.46

Solar PV $125.31

$4.10 $14.89

$21.84 $24.03

$65.76 $75.36

$95.46

$125.31

$0

$20

$40

$60

$80

$100

$120

$140

Hydro Coal Natural Gas Wood PelletConversion

Nuclear OnshoreWind

OffshoreWind

Solar PV

$/kWh

HighCapacityFactors

LowCapacityFactors

North American Exports of Wood Pellets

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0.0

1.0

2.0

3.0

4.0

5.0

2009 2010 2011 2012 2013

North American Exports of Wood PelletsMillion Metric Tonnes

U.S. Canada

98% fromSoutheast

80% fromBritish Columbia

VolumesDouble

VolumesDouble

Map of Existing and Proposed Wood Pellet Plants

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Tennessee River System

New pellet plant locationsare guided by inland shippingcosts and economies of scale

Wood Pellet Export Supply Chain

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Low Grade/Burnt Feedstock

Sawmill/Logging Residues

Pellet Plant

Rail

Barge

Export Terminal

Rules of Thumb

Each 500 MW power unit produces approximately 4 TWH per year when operating at a capacity factor of 90%

0.5 million MTPY (metric tonnes per year) are required to generate 1 TWH

2.0 million MTPY are required for each 500 MW power unit

Supplying 2.0 million MTPY is efficiently handled via a weekly call of a 50,000 DWT vessel (large handymax/small supramax)

This requires a conveyor system capable of handling 1,000 MT per hour, and

Approximately 10 unit trains per week

Supplying one 500 MW power unit generates approximately domestic 3,500 jobs

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Overview of Wood Pellet Export Terminal Characteristics

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Three 1,400foot tracks& Covered

Offload Facility

Two 25,000 MTStorage Domes

Handymax/Supramax

Vessel~50,000 DWT

Covered Conveyor

System(1,000 MT/h)

Georgia Biomass Export TerminalSubsidiary of RWE InnogySavannah, GA

Estimation of Potential Incremental European Wood Pellet Demand

Power Plant

Nameplate

Capacity

Capacity at

80% Utilization

Total Energy

Generation

Total Wood

Pellet Demand

MW MW TWH/Y MTPY

DRAX 1* 650 585 5.12 2.6

DRAX 2* 650 520 4.56 2.3

DRAX 3 650 520 4.56 2.3

DRAX 4** 650 520 4.56 2.3

Lynemouth 350 280 2.45 1.2

Tees 295 236 2.07 1.0

Tilbury* 750 600 5.26 2.6

EON Langerlo 500 400 3.50 1.8

Netherlands 875 700 6.13 3.1

Total Incremental Demand 9.4

* DRAX 1 and DRAX 2 are already online at end of 2014

** DRAX 4 may or may not be converted

*** Tilbury may or may not be brought back online

European Power Producer Wood Pellet Demand Outlook

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DRAX POWER STATION – U.K.- Six 660 Megawatt Units- Supplies 7% of UK electricity

CASE STUDY

Asia Demand

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Note on Potential Technological Developments

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White Pellets:FragileHydrophilicLower Energy Density

Black Pellets:SturdyHydrophobicHigher Energy Density

Stages of Value Added ProcessingSteam Explosion and Torrefaction

2/27/2015 14

Thank You

Derik AndreoliMercator International

dandreoli@mercatorintl.com