The Danish wood pellet market belongs to the largest worldwide. Similar to the situation in Sweden, wood pellets are being used in all sizes of combustion plants: Small boilers in single family houses, small block heating centrals, medium sized district heating plants and large power plants producing power and heat for large district heating systems.

More than half of the residential heat demand in Denmark is supplied via district heating. The utilisation of wood pellets started in the district heating sector in the late 1980’s and the annual pellet consumption quickly reached around 100,000 tonnes and since the beginning of the 1990’s this has been the consumption in the district heating sector.

The wood pellet consumption in individual boilers for space heating in private dwellings, public institutions and other large buildings also increased rapidly. The drivers would be biofuel tax exemption in combination with high taxes on fossil fuels for heating purposes and from 1995 a subsidy scheme for wood fired combustion systems with a nominal capacity below 250 kW. Since spring 2007 the pellet prices in Denmark have remained constant at a level which is low enough to encourage consumers to change for pellets and high enough to be attractive for suppliers.

Based on a variety of drivers parts of the Danish utility sector started to show interest in co-firing wood pellets into coal fired dust burners in the beginning of the new century. This resulted in a significant amount of wood pellets being utilised mainly in the advanced Avedøre 2 power plant south of Copenhagen. In the near future other large plants will follow.

Wood pellet production in Denmark is to a large extent based on dry wood residues from the numerous wood processing industries. Only recently some manufacturers have invested in facilities for drying feedstock. A utility based large pellet production plant was commissioned in 2003. The capacity of the plant was 180,000 t/y wood pellets based on logs and wood chips from a nearby wooden floor manufacturer and 120,000 t/y straw pellets. Currently, the wood pellet part is closed down and the equipment is for sale.

In the beginning of the century the national production capacity and the actual production of around 200,000 t/y was able to cover half of the demand. Currently the production is decreasing due to changes in the feedstock availability and as the demand has increased rapidly, Denmark has become a large importing country.

Please refer to the Publication section for a comprehensive report on the Danish pellet market.