Pellet market in Germany 2008

Before starting analysis of the pellet market trends in Germany in 2008 it is necessary to give some general remarks about of pellet markets in Europe. One should point out that European pellet markets show very dynamic growth – both in production and in demand in spite of the difficulties of 2006. It is noteworthy that the market development started lately ( 1999/2000) , since then dynamic growth also due to favorable conditions.

Main market: domestic heating Pellet prices in Germany increased strongly starting from July 2006 until January 2007. The reason for this was selling several hundred thousand pellet stoves for residential heating. It is noteworthy that the prices in Germany and Austria were strongly influenced by the peak in demand in Italy during the winter of 2006 - 2007.

During the period 2005 and 2007 the general increase in wood pellets production in Germany is evaluated about 400 percent. There are 40 wood pellets producers in Germany with the production capacity of 1,800,000 tons with expected growth to 2,300,000 tons in 2008. There are 85,000 heating units that use wood pellets but no large solid biofuel power plants and this hampers the market development.

German wood pellet market has so far expanded primarily in the small-scale sector. With the growing wood pellet market, the interest in wood pellet production has increased rapidly in the last few years. At present there are 14 wood pellet production plants in operation and 7 more are planned. By the end of 2003, pellet production will amount to 90,000 tonnes and the maximum production capacity could even reach 140,000 tonnes.

According to the statistics there are about 85,000 pellets heating systems installed in Germany - two thirds of them in southern Germany.

From the year 2000 until the end of August 2008, the Federal Office of Economics and Export Control (BAFA) approved funding for a total of 84,624 wood pellets boilers and stoves - of which there were 11,667 pellets heating systems in 2008 alone. The actual number of pellets-fired systems installed may even be much higher, as home owners have up to six months after installation to apply for a grant due to changes made to the application procedure in 2007. Bavaria leads the state rankings with almost 37,500 pellets heating systems, followed by Baden-Württemberg with around 16,000 installations, Nordrhein-Westfalen with 9,000 and Hessen with around 6,700 pellets heating systems. Two thirds of all pellets heating systems in Germany are installed in Baden-Württemberg and Bavaria.