Growth of German Pellet Market Is the same possible for Canada? Vancouver, September 19th

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1 Growth of German Pellet Market Is the same possible for Canada? Vancouver, September 19th Martin Bentele German Wood Fuel and Pellet Association

2 CANADA AND GERMANY ARE VERY DIFFERENT COUTRIES

3 AND NOT SO DIFFERENT Structure of German heating market District heat Oil Gas

4 FEBRUARY 23TH 2018: THE DAY AS A BLIND SQUIRREL FOUND A NUT semi final hockey olympics 2018

5 USING WOOD TODAY EFFICIENT AND AESTHETIC

6 AGENDA Germany knows wood and pellets! Preconditions for wood fuel in a densely populated country Structure of heating systems in Germany High economic efficiency High-grade automatic combustion technology Wide range of application Consumer satisfaction and perspective Quality assurement through the whole system High Quality in Technology and Fuel

7 WOOD GROWTH, STOCK AND USE IN GERMANY Wood Stocks in Central Europe Stock, growth and use of wood in Germany stock growth forest area 11,4 Mio. ha use Factors of success: naturel conditions like soils and weather high forestry expertise sustainable management & wood legislation since almost 300 years Wood and Forestry in Germany Less use than growth Growth of wood: total 122 Mio. m 3 /a or 11,2 m 3 /a/ha 81 % used, 6 % deadwood, 13 % increase of stock (15 Mio. m³/a)

8 HIGH POTENTIAL OF RAW MATERIAL FOR PELLETPRODUCTION Mio. tons/a Pellet consumption stemwood not suitable for sawing Sawmill residues

9 HIGH PRODUCTION AND AVAILABILITY Pellet production since 2007 bigger than use: positive balance of trade No. 3 worldwide behind USA and Canada

10 GERMAN WOOD PRODUCTION 2017 Total: 2,250 Mio. tons Types of quality: Share ENplus pellets = 98,5% ENplus A1 pellets = 99,8 % Industrial pellets = 0,2% Forms of trading: Bulk pellets = 77,3% Bagged pellets = 22,7% Raw material: Saw mill residues = 94,8% Stem wood = 5,2% Place of production: In and outside of sawmills both 50% Export/Import: / t Balance: t

11 HIGH PRODUCTION AND AVAILABILITY - HIGH CONSUMPTION Evolution of wood pellet production in the top 10 european countries (in tonnes) Evolution of wood pellet consumption in for heat production in Europe (in tonnes)

12 STRUCTURE OF HEATING SYSTEMS IN GERMANY TODAY in residential buidings Only one third of German heating systems are state-of-the-art 1,7% Heatpomps Oil District heating Accomodation units Gaz 1 Mio. heating systems based on wood oil Oil old: 5,1 Mio. gaz 21 Mio. Heating systems at all Without stoves Sources: (left) BDEW 2016, (right) BDH 2015

13 AND TODAY Preconditions for wood fuels using in Germany Secured, sustainable availability and part of a cascade system Important contribution to climate protection High economic efficiency High-grade automatic combustion technology Wide range of application Quality assurance for the whole system especially standardardised (DIN EN ISO 17225) and/or certified fuels provided by certified traders High efficiency, low emissions Convenient and safe use Implications of modern wood fuels Social acceptance of wood fuels in a high congested country

14 ECONOMICAL LIFETIME Low fuel costs: < 5 Ct/kWh (7,6 Ct. CAD) and lower VAT (7%): longtime financial advantage pellets oil: 30 % - But high invest: EUR! Stable support by Germany s state policy: Market Incentive Program (MAP): < 100 kw: investement grant up to 30 % of boiler invest; > 100 kw: Loans with reduced interest; Additional incentives by countries & communes like for example Stuttgart: investement grant for boiler (+accumulator tank): EUR (MAP) EUR (Stuttgart) = EUR ( CAD)

15 AND TODAY Preconditions for wood fuels using in Germany Secured, sustainable availability and part of a cascade system Important contribution to climate protection high economic efficiency High-grade automatic combustion technology Wide range of application Quality assurance for the whole system especially standardardised (DIN EN ISO 17225) and/or certified fuels provided by certified traders High efficiency, low emissions Convenient and safe use Implications of modern wood fuels Social acceptance of wood fuels in a high congested country

16 HIGH GRADE AUTOMATIC COMBUSTION TECHNOLOGY Members in DEPV of the sector manufacturers of boilers and stoves

17 PELLET HEATING SYSTEMS: WIDE RANGE OF APPLICATION 1. Lower Power Range (below 50 kw) Newly built and already existing buildings Pellet-fired stoves (partial with direct support of central heating), in Germany mostly used in addition to a central heating system Pellet boilers: Central heating systems (up from 6 kw) o Suitable for the existiting stock of singlefamily- and apartment houses: replacement of old oil boilers

18 VERSATILE USE OF PELLET HEATING SYSTEMS 2. Higher Power Range (up from 50 kw) municipalities (nurseries, public pools, hospitals) large residential and non-residential buildings local heat networks, district heating, CHP food production (breweries, bakeries, ice cream ) process heat (laundries, pharmaceutical industry ) Hot-air stoves (mainly for mobile application)

19 WOOD ENERGY WITHIN RENEWABLE ENERGY IN GERMANY

20 AND TODAY Preconditions for wood fuels using in Germany Secured, sustainable availability and part of a cascade system Important contribution to climate protection high economic efficiency High-grade automatic combustion technology Wide range of application Quality assurance through the whole system especially standardardized (DIN EN ISO 17225) and/or certified fuels provided by certified traders High efficiency, low emissions Convenient and safe use Implications of modern wood fuels Social acceptance of wood fuels in a high congested country

21 WHY QUALITY? High share of fine fractions Foreign bodies Humidity or low ash melting point Lower comfort Higher service costs High Emissions Slagging

22 HIGH QUALITY IN TECHNOLOGY AND FUEL Control of the entire supply chain for bulk pellets from production to consumer delivery

23 ENplus REQUIREMENTS - PRODUCTION Property Unit ENplus A1 ENplus A2 ENplus B Moisture Content w-% 1) 10 Ash Content w-% 2) 0,7 1,2 2,0 Mechanical Durability w-% 1) 98,0 97,5 97,5 Fines w-% 1) 1,0 3) ( 0,5 4) ) Ash Deformation Temperature 5) C ) As received 2) absolute dry 3) bulk pellets: at factory gate 4) bagged pellets: when bagged 5) ash is produced at 815 C Deviation from ISO : Mechanical Durability in class A1: 98 w-% Reduced share of fines for bagged pellets

24 FUEL PROPERTIES ENplus pellets: high-quality fuel, but they could be even better! Increase of the mechanical durability (from currently 98 %) Minimization of abrasion during blowing process Average durability of A1-pellets prod. in Germany: 99,2 % (A1 quality) Implementation of a limit for the particle density Avoidance of problems when igniting the pellets International test method available (ISO 18847) Additional parameter: length distribution Current A1 pellets: length between 3,15 and 45 mm A high share of short pellets higher amount of fines after blowing process can cause combustion problems (lack of combustion air) nominal length and maximum lenght can be adjusted very precisely considerable more homogeneous lenght distribution

25 ENplus REQUIREMENTS TRADE (1) Share of fines 1,0 % for bulk pellets (at the time of loading) 0,5 % for bagged pellets (at the time of bagging) Temperature at the time of loading for bulk delivery Maximum 40 C (deviation from ISO ) Minimization of outgasing (CO) Complaint management Appointment of a complaint manager Preconditions for acceptance of complaints: regarding amount of fines (amount of fines in the store exceeds 4 w-% - consumer store has to be built according to ENplus storage Guidelines, )

26 ENplus REQUIREMENTS TRADE (2) Mandatory quality trainings For quality managers and truck drivers with contact to consumers in the first year and then once every certification period, organised by DEPI Annual in-house trainings for the entire staff Documentation Maintenance and cleaning measures Delivery notes including prior freight of delivery trucks Quality control (durability&fines): testing procedures and results, defects and corrective measures, management of non-conforming pellets Complaints and corrective measures Quality trainings

27 HIGH QUALITY IN TECHNOLOGY AND FUEL 50 ENplus certified pellet plants in Germany More than 120 ENplus certified pellet traders in Germany Nr. 50, since july

28 HIGH QUALITY IN TECHNOLOGY AND FUEL Campaign Qualified Pellet Installer for companies installing pellet boilers and storages Heating with wood and pellets is much more complex than heating with fossile fuels Qualified Pellet installers need special skills regarding: origin and quality of wood fuels; emissions and efficiency; heating technology; interaction between boiler and fuel storage; public financiel incentives and funding schemes.

29 MARKETING CAMPAIGN 2018: WAS IT WORTH IT? SURE, IT WAS! Satisfied pellet customer as testimonials Credible and reliable Easy to identify with Online survey (January May 2018) questionnaires completed 94 % are satisfied with their pellet furnace 86 % would buy a pellet furnace again 85% would recommand their pellet furnace to neighbours Public relations 2018: News for local newspapers Social Media content Pellet families for PR and online marketing Press release: detailed results

30 STRUCTURE OF HEATING SYSTEMS IN GERMANY 2018 AND ,7% Heatpomps 13,6% district heating today Electric systems like heat poms or air heating Study Heating Market 2015 Principal: Zukunft Erdgas 15 % district heating

31 Thank you for your attention! Martin Bentele Managing Director Deutscher Energieholz- und Pellet-Verband e. V. (DEPV) German Wood Fuel and Pellet Association Deutsches Pelletinstitut GmbH (DEPI) German Pellet Institute Neustädtische Kirchstraße Berlin, Germany Tel.: 0049 (0) Fax: 0049 (0) info@depv.de / info@depi.de /