Another key factor which has created rapid increases in the price of wood pellets within the last year has been the dramatic fluctuations between wood pellet demand and supply.
Wood pellet stove sales increased rapidly at the time when oil prices began to rise. The rapid increase in wood pellet stove users resulted in a rapid increase in the demand for premium wood pellets. Wood pellet supply was insufficient to meet this new customer base, and as a result wood pellet prices began to increase. This was partly due to limited supply of raw material softwood and hardwood by-products, but it is also due to how pellet production currently operates.
Currently pellet production is mostly large-scale pellet production. Large-scale production has its advantages in terms of energy efficiency, and when demand is know producing wood pellets at a lower price due to economies of scale. However it does have several disadvantages in terms of lack of flexibility to demand changes and competitive pricing.
Large-scale wood pellet production lacks flexibility to react to rapid increases in demand, as the time and cost to increase plant size and capacity are both significant. Therefore large-scale pellet production plants will not increase capacity until they are sure that market demand is stable and they can guarantee raw material supplies to justify plant capacity.
The answer is a combination of large scale and small-scale wood pellet production. Small-scale set-up time and cost is much less, and requires less raw material supply to justify the investment. Also small-scale mobile pellet production applications can move to resources that would otherwise be unfeasible and reduce raw material and pellet transport costs. All of these factors reduce dramatic shifts in wood pellet supply to changes in market demand. This in return keeps prices stable also aided by increased market competition due to the increase in wood pellet producers.
The PelHeat Mobile Pelletizer can process resources including wood into fuel pellets. If you would be interested in registering your interest in the PelHeat Mobile Pelletizer and receiving updates on our progress and informed when the pelletizer is on sale please send us an email to:
Contact @ PelHeat . Com
For more information please visit:
www.PelHeat.com
Thank you for your interest
