Another important factor that influences wood pellet prices is market competition. With relatively small numbers of large-scale wood pellet producers, the higher the probability of high prices due to lack of competition. However setting up new large-scale pellet production plant is not an easy task. Firstly the equipment set-up costs easily go into the millions of dollars, and firm guarantees need to be established on raw material supply and market share to justify the investment.
Therefore in many cases the wood pellet market is in a ‘catch 22’ scenario. People will not invest in setting up large-scale wood pellet production plants until there is a guaranteed customer base. And many people will not invest in a pellet stove or boiler until there is a guaranteed supply of wood pellets. Basically it’s the scenario of what comes first the chicken or the egg?
The risks are real with large scale wood pellet production, for example here in the UK over the last year 2 pellet plants went bankrupt as local wood pellet demand was not sufficient they had to look further a field for customers. The transportation costs to give these customers competitive prices dissolved their profit margins and leaded to bankruptcy.
As the wood pellet market is relatively new in many countries and still a young market, small-scale pellet production is a way to reduce the risk both to the pellet producer and the end customer. The pellet producer on a small scale has lower set-up and equipment costs, low raw material demands and therefore lower transportation costs. A small-scale producer requires a much lower customer base, and this could be supplied within the local area reducing pellet transportation costs and thus retaining profit margins to keep in business. These lower pellet transportation costs mean a cheaper fuel for the customer and the environment due to reduced CO2 emissions.
Many small-scale pellet producers compared to a few large scale producers means more market competition and therefore more price comparison points to create a more accurate average on what the price of wood pellets should be.
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
