Due to the war in Ukraine, there is a shortage of approximately 10% of pellets on the global market, which primarily affects power plants that generate electricity using pellets; the situation also impacts the heating sector, which is feeling the increased demand as prices for imported pellets rise. As a result, in some Western European countries, the price of wood pellets is significantly higher than it was a year ago.
Germany
High demand, combined with high production costs, is driving the rise in pellet prices. However, compared to heating oil and natural gas, the price advantage of pellets is more than 40%. As reported by the German Pellet Institute (DEPI), the average price for ENplus A1 quality wood pellets in the country is €431.56/t. This is 9.7% higher than the previous month and 95% higher than in June 2021, and corresponds to 43.16 cents/kg or 8.63 cents/kWh.
“The turmoil in energy markets is also clearly visible in the pellet market,” notes Martin Bentele, Managing Director of the German Pellet Institute. However, there is no direct link between fossil fuel and pellet costs. Wood pellets are more than 40% cheaper than oil and gas. Nevertheless, the rise in electricity and fuel prices affects the production and transport of pellets, making them more expensive. Consumer uncertainty and the associated very high demand are also reasons for the rise in pellet prices, points out M. Bentele.
Austria
In Austria, too, the industry association proPellets Austria reports a price increase in April: for 6 tonnes of pellets, one must pay an average of €367.1, with delivery not included in the price. Compared to the previous year, the price increase in Austria was 66%, and 9.3% compared to the previous month. Heating oil and natural gas are 112.6% and 35.6% more expensive than pellets, respectively.
Switzerland
The Swiss industry association Propellets warns of rising pellet prices and advises filling storage facilities now. Currently, there is high demand for wood pellets for heating across Europe. At the general meeting of the pellet industry on 17 June, it was emphasized how important it is for the Swiss supply that customers fill their storage facilities in good time to avoid supply bottlenecks in winter. There is currently no point in waiting for a price drop, as prices are likely to rise, Propellets advised.
Pellet prices rose slightly again in May 2022 – to an average of 473.2 CHF/t (€480.23/t). The increase compared to the previous month is a solid 1%. However, Swiss pellet suppliers report that wholesale prices are being raised several times a month. Overall, pellet prices in Switzerland increased by an average of 43% compared to the previous year.