11.10.2011
German Pellets: First Pellet Plant in the US
Wismar / Stuttgart / Tyler County, Texas, October 5, 2011: German Pellets goes to America. The largest wood pellet manufacturer in Europe is building its first pellet plant in the United States. In Tyler County, East Texas, the company intends to manufacture 500,000 metric tons of wood pellets per year. This was announced by the company this week in the context of the Interpellets exhibition in Stuttgart. The first pellets will be produced in the third quarter of 2012. In the coming years, German Pellets plans to further expand its production capacities in the U.S.
The United States is an attractive location due to its timber resources. The southeastern U.S., with its mild climate and fertile soils, has significantly higher forest-growth rates in cubic feet per acre than Europe. “This high volume of raw materials makes the region attractive for us and supplements our existing sources of supply,” said Peter Leibold, CEO of German Pellets. In addition, the paper and pulp industry in the region has significantly reduced its production levels and even closed entire facilities, meaning that sufficient quantities of wood are available on a long-term basis and at reasonable prices. Supply contracts for the required quantities have already been signed with local forest owners.
Within the scope of this strategy, German Pellets would respond to continued market growth by developing additional capacities in the U.S. once production is successfully underway in Texas. An increased production capacity of up to two million metric tons per year is feasible in the medium term. Experts have predicted that the global market for wood pellets will develop significantly in the coming years. By 2020, pellet consumption in Europe alone is expected to increase from the current annual consumption of eleven million metric tons to 15-25 million metric tons. The European Biomass Association (AEBIOM) and the European Pellet Council (EPC) have predicted even higher growth. “We are certainly noticing the increased demand,” said Peter Leibold. The market for industrial-grade pellets will continue to experience especially strong growth due to the number of coal-fired power plants switching from coal to pellets. An increasing number of energy suppliers are using environmentally and climate friendly wood pellets for power generation and looking to secure their supply of pellets in the long term. This trend can be seen, above all, in Germany’s European neighbors, but not in Germany, which still lacks the political conditions required for the use of wood pellets for energy production. Recently, the energy supplier RWE announced its intention to start using pellets in its existing power plants in Germany as well.
Canada is currently the largest exporter for the European power plant market. Last year, the Canadians exported roughly one million metric tons of wood pellets to the European market, which accounted for approx. 75 percent of the total Canadian production volume. Canada plans to start using a larger percentage of its wood pellets for its own energy production. Furthermore, producers from British Columbia are exporting more pellets to Asia. This opens up new sales opportunities for German Pellets in Europe. The shipping distance from the new German Pellets facility is just over half of the distance pellets are shipped by Canadian competitors.
The pellet plant for German Pellets Texas, LLC, is being built on the approx. 80-hectare (198-acre) site of a former wood-chip mill. “One advantage of building on this site is the possibility of using the existing supply structures and infrastructures, especially with respect to raw material supply,” said Peter Leibold. German Pellets can also take advantage of the large number of skilled workers from the local wood industry. Roughly 250 jobs will be created, both directly and indirectly, through the construction of the pellet plant in Tyler County. The pellets from the U.S. plant will be transported by ship to Europe via a nearby port.
Wood pellets are the fuel of the future. They are produced from the renewable raw material wood, meaning that a sustainable supply is guaranteed. In addition, wood pellets are significantly less expensive than fossil fuels. Pellets are a clean, CO2-neutral fuel, which means they do not contribute to climate change or pollute the environment. They are used as a fuel for heat production in pellet heating systems and stoves, as well as for the production of green power in large power plants.