Having started in the late 1990’s the pellet market in the UK is beginning to reach a developed stage, with approximately 68 suppliers of pellets and around 15 manufacturers (the first of whom started manufacturing in 2002).
Pellet production and use remained relatively small in the UK until the commissioning (in 2005) of the Balcas Ltd pellet plant at Enniskillen in Northern Ireland with a production capacity of 50,000 tons (now increased to 55,000 tons). This combined with the introduction of a number of grant programmes has meant that the pellet market really started to gain momentum in the UK from 2006 onwards. However, the potential for further development of UK based pellet production is limited due to a lack of raw materials.
Consumption of pellets in the UK occurs on both the large and small scale. On the small scale pellets are consumed by householders and on the large scale they are co-fired in power stations for the production of electricity. What pellets are not generally used for in the UK is the production of heat and power in Combined Heat & Power Plants and for the production of heat in District Heating schemes, both of which are relatively rare (especially fuelled by biomass).
The consumption of high quality pellets in the residential sector is marginal so that significant amounts of these pellets are exported to e.g. Ireland or Italy. On the other hand a large share of the total consumption (almost 180,000 tons in 2008) is used for co-firing. This development was driven by the Government’s targets for the generation of electricity from renewable sources, as implemented through the Renewables Obligation. This will continue to be a driver for the use of pellets in co-firing although their use in existing coal fired power stations might start to tail off as the value of the ROCs (Renewables Obligation Certificates) from burning non-energy crop pellets are reduced and existing coal fired power stations close down rather than implement the environmental reforms required by the Large Plant Directive from 2015.
The largest share of pellets co-fired in the UK is imported. It is difficult to determine trade patterns for co-firing since imported feed stocks are typically purchased on spot markets and operators have the ability to switch between different suppliers and different feedstocks to pursue best value for money. However, it is clear that pellets are imported from the Baltic States, but possibly also from other European countries (e.g. Germany) and North America.
Looking forward the main driver for residential market development is likely to be the Renewable Heat Incentive which has been proposed by the UK Government for implementation in 2010. Set at an appropriate rate, for a reasonable length of time, it should act as a major incentive to prospective customers for pellet fuel systems as it will help compensate them for the additional costs involved in having such a system installed as against the cost of having a gas or oil boiler installed.
Please refer to the Publication section for a comprehensive report on the pellet market in United Kingdom.