SeptOct 2016 PMM Final

SEPTEMBER/OCTOBER 2016
Where the
RUBBER
Meets the
ROAD
Retailers Key in Domestic
Pellet Distribution
Page 16
Plus:
Pivotal
Offshore Port
Developments
Page 22
AND:
Pellet Outlook
Post-UK
Referendum
Page 26
www.biomassmagazine.com/pellets
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Contents
Pellet Mill Magazine
Advertiser Index
SEPTEMBER/OCTOBER 2016 | VOLUME 6 | ISSUE 5
24 Andritz Feed & Biofuel A/S

32 Astec, Inc.
30 Biomass Magazine Webinar Series
31 BBI Project Development
20 Biomass Industry Directory
19 Bliss Industries, Inc.
5 BRUKS Rockwood
29 CPM Global Biomass Group
13 EBM Manufacturing
21 Evergreen Manufacturing
15 GreCon, Inc.
18 IMALPAL Group
11 Industrial Bulk Lubricants (a Dansons company)
9 International Biomass Conference & Expo 2017
25 NDC Technologies Ltd
2 ProcessBarron
10 PRODESA
27 Tramco, Inc.
12 Trinity Packaging Corporation
14 Uzelac Industries
28 Vecoplan LLC
PHOTO: DRISCOLL PHOTOGRAPHY
FEATURES
16 PROFILE
Riding the Wave
Retailers connect wood pellets to their end user, and having the right amount in stock
at the right time is more of an art than a science in this variable products marketplace.
By Ron Kotrba
22 PORTS
Doubling Down
Wood pellets have generated multimillion-dollar investments at ports, including

notable infrastructure at the Port of Tyne to service Drax and new capacity for the
Lynemouth Power Station.
By Tim Portz
DEPARTMENT
26 UNITED KINGDOM
Business as Usual
Although the votes been cast, the U.K.s exit wont be final for a few years, and
even with a government overhaul, climate change remains its focus.
By Katie Fletcher
04 EDITORS NOTE
The Business End of the Supply Chain

By Tim Portz
05 INDUSTRY EVENTS
06 INDUSTRY GUIDANCE
What Next for the Atlantic Pellet Market?

By Hannes Lechner
07 TESTING GROUNDS
Private Labeling Provisions

By Chris Wiberg
ON THE COVER
CUSTOMER CATERERS: Kevin Haley

co-owns Squier Lumber & Hardware
Inc. in Monson, Massachusetts, with
his brother Chris, and for more than 20
years, they have taken the time to learn
the dynamics of their customers wood
pellet demands.
08 MARKET OUTLOOK
Distribution Model Cost Savings

By Michele Rebiere
10 BUSINESS BRIEFS
12 NEWS
30 MARKETPLACE
SEPTEMBER/OCTOBER 2016 | PELLET MILL MAGAZINE 3
Editor's Note
The Business End

of the Supply Chain
For nearly three years, the team at Pellet
Mill Magazine has been looking for the right
story about a business that relies on wood pellet revenues to make its operation go around.
Im happy to report that weve finally succeeded, and Ron Kotrbas page-16 feature on
Monson, Massachusetts-based Squier Lumber
tells the story.
While Pellet Mill Magazine has historically
trained the vast majority of its editorial gaze on
Tim Portz
the manufacturing and global distribution of
VICE PRESIDENT OF CONTENT &
wood pellets, were well aware that a significant
EXECUTIVE EDITOR
tportz@bbiinternational.com
share of the wood pellets produced in North
America each year are purchased by individuals
to heat their homes, from places like Squier Lumber.
I reached out to Chris Haley, a co-owner of Squier Lumber, to introduce our
title and Kotrba, who would be conducting the interview. Haley warned me that
hed tell Kotrba exactly how things were, which was exactly what I had hoped for. I
did wonder what Haley was thinking about when he offered his warning. Kotrbas
piece offers no clear land mines. Instead, it shares the story of a business that was
formed a decade after the Civil War that is now working to stay relevant. Haley told
Kotrba that selling pellets to his customers was an experiment with the intent of
keeping customers and cash flowing in the months when home projects reached
their lowest ebb. The experiment paid off and now Haleys biggest concern is
whether his business is too reliant on pellet and pellet stove revenues.
Kotrbas story puts a face on the challenges and uncertainty of selling a heating product in an era of mild winters and rock bottom heating oil prices, challenges
that Haley works to manage the best he can but must ultimately, simply accept as
a reality of his operation. The real gems within the story, however are the details
Kotrba uncovered while talking with Haley. Weve rarely talked with producers
about branding, but Haley brought it to Kotrbas attention, calling it an underappreciated facet of the business.
Finally, the story does a superb job of outlining the challenges pellet retailers
face after a lackluster heating season. Haley wonders aloud if it is worse to have
too much product or too little. Ultimately, he decides that both are equally bad and
will go forward into this years heating season playing the vital role of connecting
producers to consumers.
Editorial
PRESIDENT & EDITOR IN CHIEF

Tom Bryan tbryan@bbiinternational.com
VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR
Tim Portz tportz@bbiinternational.com
SENIOR EDITOR
Ron Kotrba rkotrba@bbiinternational.com
ASSOCIATE EDITOR
Katie Fletcher kfletcher@bbiinternational.com
CONTRIBUTING EDITOR
Anna Simet asimet@bbiinternational.com
NEWS EDITOR
Erin Voegele evoegele@bbiinternational.com
COPY EDITOR
Jan Tellmann jtellmann@bbiinternational.com
Art
ART DIRECTOR
Jaci Satterlund jsatterlund@bbiinternational.com
GRAPHIC DESIGNER
Lindsey Noble lnoble@bbiinternational.com
Publishing & Sales
CHAIRMAN
Mike Bryan mbryan@bbiinternational.com
CEO
Joe Bryan jbryan@bbiinternational.com
VICE PRESIDENT OF OPERATIONS
Matthew Spoor mspoor@bbiinternational.com
SALES & MARKETING DIRECTOR
John Nelson jnelson@bbiinternational.com
BUSINESS DEVELOPMENT DIRECTOR
Howard Brockhouse hbrockhouse@bbiinternational.com
SENIOR ACCOUNT MANAGER
Chip Shereck cshereck@bbiinternational.com
ACCOUNT MANAGER
Jeff Hogan jhogan@bbiinternational.com
CIRCULATION MANAGER
Jessica Tiller jtiller@bbiinternational.com
MARKETING & ADVERTISING MANAGER
Marla DeFoe mdefoe@bbiinternational.com
Editorial Board Members
T.J. Morice, Marth Companies

Stan Elliot, Pacific Coast Pellets
Thomas Plaugher, Appalachian Wood Pellets
Chad Schumacher, Superior Pellet Fuels
Lori Hamer, Hamer Pellet Fuel
Kelli Curran, Curran Renewable Energy
Derek Nelson, Forest Business Network
Subscriptions to Pellet Mill Magazine are free of chargedistributed
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Please recycle this magazine and remove

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TM
COPYRIGHT 2016 by BBI International
4 PELLET MILL MAGAZINE | SEPTEMBER/OCTOBER 2016
Industry Events
Heating the Midwest
October 11-13, 2016

Island Resort and Casino
Harris, Michigan
This regionally focused event has become an

important annual gathering for biomass heating
professionals in the upper Midwest. This years
conference begins with a tour of two biomass
heating installations and Messersmith Manufacturing
Inc., a biomass boiler production facility. This years
event will also feature a two-part technical workshop
offered in conjunction with the conference.
www.heatingthemidwest.org
Christianson & Associates

Biofuels Financial
Conference
October 17-18, 2016

Hyatt Regency Minneapolis
Minneapolis, Minnesota
Produced by Christianson & Associates and

organized by BBI International, this years Biofuels
Financial Conference is focused on the best ways to
explore new options in todays changing ethanol and
biodiesel industries. By understanding risks associated
with various technology and marketing initiatives, and
by exploring various options for making the best use
of capital and resources, well learn how to create
a well-managed plan for growth and changea
plan that maximizes profitability while ensuring
future stability and meeting the expectations of all
stakeholders.
866-746-8385 | www.biofuelsfinancialconference.com
6th Annual Exporting

Pellets Conference
November 6-8, 2016
Fontainebleau Miami Beach Hotel

Miami, Florida
Join us in Miami for USIPAs 6th Annual Exporting

Pellets Conference. This is the only U.S. conference
sponsored by the industrial wood pellet industry for
the industrial wood pellet industry. The conference
provides the opportunity to network with executives
and professionals from across the industry. Scheduled
speakers and panelists include all major European
utilities, major U.S. producers, and experts in all areas
of the supply chain.
804-775-5894 | www.theusipa.org/conference
2017 International Biomass

Conference & Expo
April 10-12, 2017
Minneapolis Convention Center

Minneapolis, Minnesota
Organized by BBI International and produced

by Biomass Magazine, this event brings current
and future producers of bioenergy and biobased
products together with waste generators, energy
crop growers, municipal leaders, utility executives,
technology providers, equipment manufacturers,
project developers, investors and policy makers. Its a
true one-stop shopthe worlds premier educational
and networking junction for all biomass industries.
866-746-8385 | www.biomassconference.com
Industry Guidance
What Next for the Atlantic Pellet Market?

BY HANNES LECHNER
Following expectations of optimistic growth in the

European industrial pellet market in recent years, the industry mood has since cooled. Many independent pellet project developers have been left disappointed and
have abandoned projects as a result, while some existing
smaller producers are starting to feel the pressure. Demand development largely stalled in 2015 and 2016, with
investment decisions being delayed. On the other hand,
new pellet mill capacity continued and continues to come
online, such as the two 450,000-metric-ton mills operated
by Drax Power and the 450,000-metric-ton mill operated
by The Navigator Company group.
The result is a long market with a current overcapacity of about 3 million metric tons in the Atlantic market,
which is expected to clear up slowly. Premium pellet markets in North America and Europe were also not strong
enough to absorb significant volumes, providing little relief for industrial pellet producers. In addition, Russian
producers are increasingly supplying into the European
premium pellet market due to favorable exchange rate
developments and potentially low input feedstock costs.
Pellets from this region are reportedly also of very good
quality.
The insolvency of the two U.S. subsidiaries of German Pellets is the starkest sign of the challenging market
situation, even though other factors may have contributed to these insolvencies. Other, mostly smaller, producers are also feeling the pressure from the current market
situation, and we would not be surprised to see further
consolidation in the market over the course of this year.
Its not all doom and gloom. There is some light on
the horizon with the conversion of Lynemouth Power
Station in Great Britain (1.6 million metric tons per
annum starting in 2019), which is now under way, and
MGT Power (1.3 million metric tons per annum starting
in 2019) reportedly being close to securing the required
third-party financing. The announced conversion of the
Langerlo power station in Belgium could bring additional
demand of 1.7 million metric tons per year, but timelines
for this project are unclear and demand is not likely to
come into the market until the end of 2018.
Whilst these three projects would help to bring the

market back into balance again and remove the existing
overcapacity, it is our understanding that the majority
of these volumes are already fully contracted out to established market leaders in the wood pellet sector, some
of whom have further expansion plans, limiting the opportunities for smaller producers or independent project
developers.
The only real game changer for the European market would be an unlocking of demand from the Dutch
cofiring market, which is expected to add up to 3.2 million metric tons of demand per year. In the last SDE+
auction round, RWE and ENGIE were awarded subsidy
contracts for their Amer 9 and Maasvlakte 4 plants, respectively. Whether they will actually implement their cofiring plans, however, depends on outstanding decisions
regarding the general future of coal stations in the Netherlands. The Dutch government announced that they are
considering plans to close all coal stations by 2020, with a
decision on this topic expected before the next elections
in March.
The big question for U.S. suppliers is if they will be
successful in increasing their market share further or if
producers from other regions will be able to compete
more successfully. Project developers in Russia and Brazil have the advantage of good availability to sustainable
biomass resources and attractive exchange rates that allow them to offer competitive price levels. It is yet to
be seen if investors will be quick to capitalize on this
advantage, or if the exchange rate and other businessrelated risks are perceived as too high, deterring any future investments. In this case, U.S. suppliers and project
developers may still have a good chance to successfully
establish themselves in this growing industry sector.
Author: Dr. Hannes Lechner
Senior Principal, Pyry Management Consulting
+44 7876 348 262
hannes.lechner@poyry.com
Testing Grounds
Private Labeling Provisions

BY CHRIS WIBERG
As part of the Pellet Fuels Institutes Standards Program, a registration number is issued to each qualifying pellet
fuel manufacturer. The registration number, along with the
production facility information, is published on the PFI website, which provides a complete list of all production facilities qualified under the program. It was originally intended
that only one registration number would be issued to each
manufacturing facility; however, it was not anticipated that
this would result in issues for retailers or distributors who sell
wood pellets under their own private label. PFIs Standards
Program has recently made provisions for issuing additional
registration numbers to qualified producers who are selling
wood pellets to retailers or distributors who require anonymity on behalf of the producer. I will explain.
But first, lets be clear as to what we are referring to as
private labeling. Private labeling is the practice of selling your
own brand of wood pellets without actually manufacturing
wood pellets yourself. Essentially, the retailer or distributor
purchases wood pellets from a manufacturer and has the
producer package the product in the retailers or distributors own privately labeled bags. Private labeling is quite common in commerce. For example, if you purchased a Maytag
clothes dryer in recent years, it may have actually been manufactured by Frigidaire. Another example is a whisky distillery
in Kentucky whose product is sold by dozens of distributors
under their own brands. The label simply says Bottled by
and then the label lists the company that bottled the whisky
rather than the actual distiller of the whisky. Like numerous
other industries, private labeling regularly occurs with the
wood pellet industry.
The problem we have encountered is that if the bag
of wood pellets includes the manufacturers PFI Standards
Program quality mark, then the producers registration number will appear on the bag, which discloses to the customer
which manufacturer actually produced the product. While in
many cases this is considered acceptable and may even be
preferred, in others, it is clear the retailer or distributor would
prefer the producer to remain anonymous, citing issues with
customers calling the production facility directly for questions or concerns regarding the product they sell. This issue
was reviewed by PFI as well as by the PFI Standards Program
accreditation bodythe American Lumber Standards Committeeand, as a result, new provisions have been made to
assure private labeling can still be private if desired by the
retailer or distributor.
PFIs new private labeling provisions are as follows. If a

qualified pellet fuel manufacturer is working with a retailer or
distributor who wishes to use privately labeled bags that keep
the wood pellet manufacturer anonymous, then the wood
pellet producer will need to contact their inspection agency to
request an additional registration number to be used specifically for private labeling purposes. The inspection agency will
review the request to assure that the additional registration
number is used only for the designated production facility
and that the pellet fuel manufacturer will maintain control of
all bag printing. Once approved, the inspection agency will
issue a new quality mark with the additional registration number to be used only on privately labeled bags.
To assure that consumers can still have the ability to
investigate the validity of private label registration numbers,
PFIs website now includes a list of all registration numbers
issued by inspection agencies for private labeling purposes.
These can be found on the same web page as the full list
of PFI Standards Program qualified producers. If consumers do have questions or concerns regarding privately labeled
product, they are encouraged to contact the retailer or distributor of the product or make use of contact information
printed on the bag for the purpose of asking questions. If
this is not successful in resolving problems and consumers
wish to take their concern to the next level, then PFI can be
contacted and the concern will be relayed to the inspection
agency that issued the associated registration number.
The new PFI Standards Program private labeling provisions are intended to allow for pellet commerce as it has
historically been conducted, while maintaining the integrity
of the program by ensuring that the audit trail is fully upheld.
These new provisions also assure that privately labeled product is covered by the PFI Standards Program without requiring retailers and distributors to become qualified themselves.
Essentially, qualified pellet fuel producers are held accountable for the complete trade of their product whether quality
marked under their original registration number or under a
registration number issued for private labeling purposes. To
view a list of registration numbers currently issued for private
labeling purposes, please visit the PFI website at www.pelletheat.org/qualified-production-facilities.
Author: Chris Wiberg
Lab Director, Timber Products
Inspection/Biomass Energy Lab
218-428-3583
cwiberg@tpinspection.com
Market Outlook
Distribution Model Cost Savings

BY MICHELE REBIERE
Over the past year, pellet producers in Europe and

North America were hit by a one-two punch that few saw
coming. First, an unseasonably warm winter in the major
North American markets, and second, an oversupply of pellets in Europe. In the latter case, the surplus in the residential
market was also weather related. However, in the industrial
sector, despite warnings of a drop in forecast demand by the
European power market, new production continued to come
on-stream. At the end of it all, it points to an industry with significant volatility, despite the relative stability that had started
to emerge.
With the Argus Wood Pellet Index down over 25 percent in less than a year, export producers who are active in the
spot market are faced with the daunting challenge of reducing
operational costs to avoid shut downs. Yet, the largest cost
componentslabor, fiber and processing costshave been
carefully combed over and are unlikely to yield any substantial
savings. With little to gain on the manufacturing side, attention
turns to the markets in order to generate higher revenue per
ton. Identifying new customers takes time, however, and will
not improve a producers income statement in the short term.
One often overlooked area of potential savings is in distribution costs, which can represent up to 20 percent of total
cost. On a delivered-to-customer basis, this increases to over
35 percent. In 2015, the shipment of North American wood
pellets across the ocean represented over $100 million in cost
alone.
Distribution costs, although strictly defined as costs associated with delivering from the production unit to end user,
can include more than just shipping and storage. Particularly
if we examine the various distribution models, and there are
potential savings in all areas that need to be considered.
In broad terms, there are three major distribution models
in the pellet industry today:
Direct Export: The majority of the worlds largest producers relies almost exclusively on this distribution model and
is highly sensitive to freight rate fluctuations. Yet, with todays
low ocean freight costs, the unexpected demurrage, dead
freight, sampling and overtime costs on loading can have an
even greater relative impact on expenses. These costs need to
be budgeted, negotiated and carefully managed.
Domestic Direct: In North America, there is a limited number of companies in the residential market, such
as Woodpellets.com LLC., that distribute direct to the consumer. However, this distribution model also encompasses
the commercial sector, where some producers have built a
healthy business around the sale of pellets directly to hospitals, schools and churches. Bulk delivery in trucks is becoming
more common, as it is in Europe today, and by limiting the
number of loadings and handlings, unexpected costs can be
reduced.
Domestic-Tiered Distribution: The least developed

logistically, and yet the most widely-used distribution model
in North America, domestic-tiered distribution has the most
potential cost savings. As the supply chain participants expand, as it does in this model, the downward pressure on margins increases. Broadly speaking, there are multiple transport
methods (e.g. rail and truck in each delivery), discounts, commissions and even some advertising costs to be considered
in this producer-to-retail-to-end-user model. One identifiable
savings is the reduction of commonly used retail discounts.
Discounts for pick up by customers or volume discounts can
be removed for top-selling brands, for instance, and over time,
can be phased out altogether. These are methods used in early
stage distribution models and once eliminated, can yield savings for the retailer, which ultimately frees up some margin
upstream in the supply chain.
In Europe, distribution challenges come in different
forms, as there is a series of smaller plants with closer proximity to customers. Yet, there are more tiers in the supply
chain, including a well-developed trading network. Currently,
there are over 100 ENPlus-certified traders in Europe. Some
large, with a couple of examples handling over 700,000 tons
per year, but many are small, regionalized players which, depending on aggregation and storage, could mean reduced distribution costs. For example, the Port of Rotterdam, which
handles pellets for Germany, Italy, Belgium, Austria and other
regions product is distributed via ship-to-ship and intermodal
transfers.
There are ways to emulate the European model, in time,
for North America. One interesting consideration is utilizing
the U.S. inland waterway system as an alternative to rail. Inland
barges are already accustomed to handling weather-sensitive
commodities, and according to Mid-Ship Group, a ton of pellets could travel 500 miles by barge (compared to 200 by rail
or 60 by truck) per gallon of fuel. Ultimately, this could result
in substantial savings for producers. And although the inland
waterways are currently used primarily for export shipment
of wood pellets, domestic distribution is not far away. Just as
today, one of the major criteria for the selection of a pellet
plant location is closeness to a port or rail siding, proximity
to the inland waterway system could prove to be a major consideration.
Rome was not built in a day, and just like its mature industry counterparts, the pellet industry supply chain needs to take
a long-term view in building efficiencies, while seeking to find
short-term cost savings in distribution.
Author: Michele Rebiere
CFO, Viridis Energy Inc.
Former President, Wood Pellet Association of Canada
604-669-7831
mrebiere@viridisenergy.ca
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Business Briefs
PEOPLE, PRODUCTS & PARTNERSHIPS
Evergreen Engineering celebrated the grand

opening of its Atlanta office July 1.
PHOTO: EVERGREEN ENGINEERING
Evergreen Engineering
opens new location
Eugene, Oregon-based Evergreen Engineering Inc. has opened a branch office in
Atlanta, Georgia, to pursue opportunities in
the southeastern U.S. The office celebrated
its grand opening July 1.
Energy Trust of Oregon names
executive director
Energy Trust
of Oregon has announced its board of
directors appointed
Michael Colgrove
as its new executive
director, effective Aug.
15. Colgrove will lead
Colgrove
the organization in
continuing to deliver
the cleanest, lowestcost energy available
for 1.5 million utility
customers in Oregon
and southwest Washington. Colgrove sucHarris
ceeds Margie Harris,
who is retiring after leading the organization
since its inception in 2001. Colgrove joins
Energy Trust after 15 years with the New
York State Energy Research and Development Authority, where he was both the
director of the New York City office and
director of multifamily programs.
Fecon announces mobile
balancing systems
Fecon has announced new mobile balancing systems, the FMB-100 and FMB-200.
The mobile balancing systems can work on
any make or model of forestry mulcher.
NDC Technologies introduces

PrediktIR gauge
NDC Technologies, a global provider
of precision measurement and control
solutions, has introduced its new PrediktIR
gauge for the on-line moisture measurement of wood-sourced biofuel products
such as woodchips, pellets and sawdust.
The PrediktIR gauge meets the demands of
biofuel processors looking for a basic online moisture measurement solution that is
dependable, stable and accurate. The gauge
is based on NDCs optical filter technology. It delivers continuous biofuel moisture
content information in real time, enabling
operators to adjust the airflow to the furnace
to optimize combustion and automatically
control the drying process, without having
to wait for lab sample results. PrediktIR offers long-term instrument stability and basic
yet accurate moisture measurements independent of changes in ambient conditions
such as lighting, temperature or humidity.
This moisture gauge also provides tolerance
to physical process changes, such as pass
height.
Biomass Systems Supply named
Twinheat distributor
Chico, California-based Biomass Systems
Supply announced it has been named the
exclusive distributor for Twinheat Biomass
Boilers in the U.S. For more than 35 years,
Twinheat, a Danish manufacturing company,
has been developing and manufacturing biofuel burner systems and fully automatic silo
systems for both industrial plants and private
customers. Twinheat has more than 13,000
installations across the globe, offering systems
that range from 10 to 250 kW.
PFI qualifies NWP's plants into
standards program
The Pellet Fuels Institute recently
announced the qualification of two new
pellet fuels manufacturing facilities owned
by Northeast Wood Products into the Pellet
Fuels Institute Standards Program. The two
facilities, located in Ligonier, Indiana, and
Peebles, Ohio, are the 25th and 26th facilities
qualified by the program; NWPs facility in
Jasper, Tennessee, was previously qualified.
Drax Biomass facilities

earn SBP certifications
The first Sustainable Biomass Partnership certificates issued by SCS Global
Services, a global third-party certifier, were
recently presented to Drax Biomass Inc.
for its Morehouse BioEnergy pellet plant, located near Bastrop, Louisiana, and its Amite
BioEnergy wood pellet manufacturing
facility, located in Gloster, Mississippi. Each
facility is equipped to produce up to 450,000
metric tons of wood pellets each year. The
wood is Southern Yellow Pine sourced
primarily from nearby privately owned working forests that have supported the regions
forest-based economies for many decades.
Thinnings, low-value roundwood, and
harvesting residues are gathered and stored,
then debarked and chipped. Woodchips are
screened for size consistency, then dried and
further processed into compressed pellets of
uniform moisture, ash content and calorific
value. The assessment by SCS included a
comprehensive evaluation of each stage of
the sourcing and manufacturing process, as
well as an audit of Drax Biomasss Baton
Rouge Transit storage and shipping facility.
US Endowment for Forestry
updates database, mapping tool
The U.S. Endowment for Forestry and
Communities recently launched a revitalized wood bioenergy facility database and
mapping tool. The site, www.wood2energy.
org, is the most comprehensive database
of its kind in North America. The site
aggregates facility-level data to deliver a
unique perspective of the wood bioenergy
industry. With separate, clickable layers and
simple symbology organizing data by facility
type, size, operational status, and additional
detailed information for each data point,
users have the ability to plot and contextualize data from the macrolevel down to the
site-level. The endowment engaged Ecostrat
Inc. to develop and manage data delivery
using GIS mapping technology to render
the very large, complex dataset in a simple,
user-friendly way. The data itself, which has
been aggregated from the public domain
(existing databases, industry publications, re-
ports, press releases, newsletters, etc.), will be

updated on an ongoing basis by the Ecostrat
data management team. Given the scale
of this project and the dynamic nature of
the market segments covered, anyone with
information to fill gaps or fix errors is asked
to support the overall effort by contacting
Ecostrat with information.
Government app to aid
renewable energy exports
The U.S. Departments of State, Commerce and Energy are inviting U.S.-based
suppliers and providers of clean energy,
smart grid and energy efficiency solutions
to participate in an interactive directory of
renewable energy and energy efficiency solutions. An interagency team representing the
three departments has developed a beta version of an interactive app to serve as a mobile business directory for U.S. clean energy
exports. The app highlights deployments of
sustainable technologies and systems at U.S.
diplomatic missions and provides potential
business partners around the world with a
searchable interface to find information on
potential U.S. technology and service providers. The app is expected to be available in
mobile app stores around Oct. 1. Target
users of the app include foreign service
officers and foreign commercial service officers and their energy sector stakeholders in
international markets.
Georgia Biomass earns
qualifications
Georgia Biomass, a subsidiary of RWE,
has achieved qualification under the Pellet
Fuels Institute Standards Program for its
750,000-metric-ton-per-year pellet plant
in Waycross, Georgia. In parallel, Georgia
Biomass has also successfully completed its
ENplus A1 recertification audit. This makes
Georgia Biomass the first industrial-scale
producer in North America with both ENplus A1 and PFI quality certifications.
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Briefs, send information (including photos and logos, if available) to
Business Briefs, Pellet Mill Magazine, 308 Second Ave. N., Suite 304,
Grand Forks, ND 58203.You may also email information to evoegele@
bbiinternational.com. Please include your name and telephone
number in all correspondence.
Pellet News
Research finds likely
solution for pellet-derived
carbon monoxide
1 BILLION DRY TONS OF
Clarkson University researchers believe

they have figured out the cause of wood
pellet-derived carbon monoxide (CO), and a
potential solution.
Research performed by Philip Hopke,
director of the Center for Air Resources Engineering and Science at Clarkson University,
and coauthor Mohammad Arifur Rahman,
found that hydroxyl radicals, neutral forms of
the hydroxide ion that are highly reactive, are
formed as a byproduct of the autoxidation
of unsaturated compounds in the wood pellets fiberfatty acids and terpenes (organic
compounds produced by plants). When these
radicals react with hemicellulose, the research
found, it results in CO generation at potentially dangerous levels when pellets are stored
in confined spaces.
The research concluded that if autoxidation initiation can be eliminated, CO offgassing from pellets would be substantially reduced. According to the paper, destruction
of the reactive compounds with ozone led to
a suppression of CO formation, suggesting
an approach to process the wood fiber that
would result in low or no CO emission wood
pellets.
1.1
SUSTAINABLE BIOMASS
has the potential to produce
MILLION
direct jobs
85 BILLION
kWh of
electricity and
1,050
TRILLION
50
BILLION
gallons of
biofuels
Btu of thermal
energy
50
400
pounds of
biobased
chemicals and
bioproducts
tons of CO2e
reductions
annually
BILLION
MILLION
DOE releases update of billion-ton study

The U.S. Department of Energy
and Oak Ridge National Laboratory
have released the 2016 Billion-Ton
Report, finding the U.S. has the potential to sustainably produce at least
1 billion dry tons of nonfood biomass
resources annually by 2040.
These renewable resources include agricultural, forestry and algal
biomass, as well as waste. They encompass the current and future potential of biomass, from currently
available logging and crop residues
to future available algae and dedicat-
ed energy cropsall useable for the

production of biofuel, biopower and
bioproducts.
New to the 2016 report are novel
assessments of potential biomass
supplies from algae; from new energy crops, such as miscanthus, energy
cane, eucalyptus; and from municipal
solid waste. For the first time, the report also considers how the cost of
preprocessing and transporting biomass to the biorefinery may impact
feedstock availability.
Pellet News
AURI publishes feasibility guide on biomass cooling

The Agricultural Utilization Research Institute has announced the
availability of a new feasibility study
that shows biomass cooling can be a viable option for small-to-medium sized
commercial, industrial and residential
units.
The study explains that increasing
temperaturesparticularly in the Midwestare expected to lead to large energy cost increases due to expenditures
associated with switching from heating
demand to cooling demand over the
next five to 25 years. While biomass
cooling technologies currently exist,
the study indicates they are currently
deployed only on a large commercial
scale. However, biomass cooling may
be an attractive option for smaller-scale
installations. The study notes current
economic data substantiates biomass
cooling is a viable option and worth
consideration, particularly if constructing a new building or retrofitting a current system where piping is in place.
The report concludes that biomass
offers a competitive, and often lower-
Estimated capital costs

of 30-ton cooling system
Biomass boiler
$68,378
Absorption chiller
$65,000
Control system
$14,000
Cooling tower
$5,040
TOTAL
$152,418
Pipelining and installation costs
$17,3391
GRAND TOTAL
$325,890
SOURCE: AURI
cost alternative to traditional energy

sources. When compared to conventional electricity, the use of wood pellets
was found to result in a cost savings of
$63.22 per month, with a cost savings
of $64.12 per month when compared
to propane. Other agricultural biomass
sources, such as corn cobs, could provide similar cost savings.
UK eliminates
Department of Energy
and Climate Change,
establishes Department
of Business, Energy and
Industrial Strategy
Newly appointed U.K. Prime Minister Theresa May has abolished the
U.K. Department of Energy and Climate Change. The functions of the
department will be transferred to other
government departments, including the
newly formed Department of Business, Energy and Industrial Strategy, for
which Greg Clark has been appointed
secretary.
The abolishment of the DECC
is part of a larger ministerial overhaul
implemented by May shortly after she
was appointed to replace former Prime
Minister David Cameron. Cameron officially announced his resignation July
11 and was replaced by May on July 13.
He first indicated he would leave his
post as prime minister immediately after
the June 23 Brexit referendum, in which
the U.K. voted 51.9 percent to 48.1 percent to leave the European Union.
Pellet News
ESTIMATED GLOBAL WOOD PELLET PRODUTION
Report highlights
Russian pellet potential
(in million tons)

30
25
20
15
10
5
0
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
WBA report shows importance of bioenergy to Europe

A recent study published by the
World Bioenergy Association addresses
the challenges European cities are facing
within global climate mitigation policy and
explains the contributions biomass can offer to reduce the use of fossil fuels.
Within the report, WBA discusses
natural gas consumption and imports, noting natural gas was shown to have 19,600
metric tons more in CO2 emissions compared to wood pellets, both measured in
the quantity of 100,000 gigawatt-hours
(GWh) of primary energy.
Although natural gas production is
shrinking in Europe, European forests
are growing. According to WBA, 290

million cubic meters of wood could be
harvested annually from forest for wood
supply without decreasing the live wood
volume below its replacement. With forest
growth, pellet production has also grown
steadily. From 2004 to 2014, global pellet
production grew 21 percent annually from
4 million metric tons to 27.1 million metric
tons. Main producing regions in Europe
accounted for 16.2 million metric tons in
2014 and North America 8 million metric tons. In the next 15 years, global pellet
production is forecast to surpass 50 million metric tons.
The Right Choice In Drying

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A report recently filed with the USDA

Foreign Agricultural Services Global Agricultural Information Network provided an
overview of the Russian federations biofuels
industry, including data on likely growth with
wood pellet production and exports.
In 2016 and 2017, Russian production
of wood pellets is forecast to increase about
5 to 7 percent. In the mid-term, domestic demand is forecast to increase at 10 to 12 percent annually. In addition, EUs growing interest in biofuels is increasing demand for wood
pellets. According to the GAIN report, this
will continue to be a major incentive for Russia to increase production of wood pellets.
Currently, Russia is the third largest exporter of wood pellets to the EU, following
the U.S. and Canada. According to Russian
Customs Service, export of wood pellets
from Russia in 2015 was 934,000 metric tons,
an increase of more than 6 percent from
2014. The leading destination was Denmark,
followed by Sweden, Germany and South
Korea. Russia accounts for a 6 percent share
of world wood pellet exports. Russia ranks
eighth in the world for total wood pellet production, with 3 percent of total wood pellet
production.
Years.
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DAF Solids
Poultry Manure
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Pellet News
REA: UK incentive cuts put

CHP investment at risk
The U.K. Department for Business, Energy
and Industrial Strategy laid an amendment in Parliament to the Renewable Heat Incentive on July
7 to reduce support for biomass combined-heatand-power (CHP) systems.
The changes in support are specifically targeted at biomass CHP plants that use less than 20
percent of their fuel for electricity production, with
the other 80 percent being used for renewable heat.
This change affects all plants applying on or after
Aug. 1, which gave industry only 21 days notice.
Neither former U.K. Department of Energy and
Climate Change or the new DBEIS had formally
consulted with relevant trade associations or directly with industry on this specific change prior to
laying the new amendment in Parliament, surprising many in the industry and putting a number of
projects at risk.
The U.K. Renewable Energy Association said
it surveyed 36 companies that are developing biomass CHP projects in the U.K. Of those companies, 34 had already made major equipment orders
for the construction of their facilities or put down
nonrefundable deposits; 25 companies have reported that the changes laid before Parliament will
have a very negative impact on their project, with
an additional eight reporting it will have a negative impact.
Estimated EU pellet production,

supply and demand (1,000 MT)
2015
Production
2016
2017
13,500
14,000
14,500
Imports
7,172
7,500
8,000
Exports
138
180
200
Consumption
20,500
21,500
22,500
Production capacity
19,000
19,500
20,000
71%
72%
73%
Capacity use
SOURCE: USDA FAS GAIN
Report features EU pellet data

A report recently filed with the
USDA Foreign Agriculture Services Global Agricultural Information Network provides an overview
of the European Unions biofuel
market, including data on wood
pellets.
The report explains that the
EU is the worlds largest wood
pellet market, with approximately
20.5 million metric tons of pellets
consumed in 2015. Approximately
65 percent of that volume is used
for heat and 35 percent for power.
Demand is expected to increase to

22.5 million metric tons in 2017.
The EU currently accounts for
approximately 75 percent of the
global market for wood pellets. The
EU is also the worlds biggest producer of pellets, featuring approximately 50 percent of global production. When compared to North
American pellet plants, however,
EU plants are primarily small- or
medium-sized.
Profile
HOMETOWN PROUD: Squier Lumber, the

oldest continuously operating business in Monson,
Massachusetts, has been operating at the same location
for nearly 150 years and prides itself in its customer
service.
EARLY ADOPTERS: Brothers Chris (left) and Kevin Haley, co-owners of the nearly 150-year-old Squier
Lumber & Hardware Inc. in Monson, Massachusetts, started retailing wood pellets more than 20 years ago.
Riding the
WAVE
L
ong before smartphones, the internet, television, or even motion pictures, before an airplane ever took
flight or the worlds first automobile sputtered down an unpaved road, Squier
Lumber & Hardware Inc. thrived in the small
manufacturing town of Monson, Massachusetts. Established in 1874 on the heels of the
Industrial Revolution, the business is a fixture
in the southcentral Massachusetts town of
8,500 residents, proudly boasting the designation of Monsons oldest continuously operating business.
Just two families, three generations each,
have owned and operated Squier Lumber in its
nearly century-and-a-half-long history. In 1942,
third-generation owner Robert Squier sold the
business to Frank Haley. Today, the sprawling
lumber and hardware store is still being run by
the third generation of Haleys, co-owned by
brothers Kevin and Chris.
Squier Lumber & Hardware Inc., a longtime staple

in Monson, Massachusetts, and surrounding
communities, more recently has evolved into one
of the premier independent pellet retailers in the
U.S. Northeast.
BY RON KOTRBA
In its early days, Squier Lumber made a

name for itself selling coal, grain and hay. The
business has evolved over the years, moving
into building materials, lumber, fuel oil and,
more recently, wood pellets and pellet stoves.
With a company as old as Squier Lumber, recent is a relative word though, considering
it started retailing wood pellets more than 20
years ago.
Back in the day, in 1994-95, we were basically a lumber yard, and they tend to not be as
busy in the winter, spring or fall, Chris Haley
tells Pellet Mill Magazine. So we asked ourselves,
What can we sell in the winter that we can
stay busy with to keep productivity as high as
possible? We had sold stoves. My father sold
them in the 70s during the oil embargo73
I thinkand he did real well with them. But
when the mid-80s rolled around, he got out of
the stove business. But the need to be as productive as possible still existed.
The companys introduction to retailing

pellets began with taking a chance, as Haley recounts, by ordering a single load of Energex
product retailing at $150 a ton. I didnt know
if itd work, Haley says. I remember asking
my dad in 94 what he thought of ordering
wood pellets. He said, You never know until
you try. Thank God we tried. To everyones
surprise, it sold. We werent making a lot of
margins, but we wanted to see how this new
thing called wood pellets would sell. We sold
fuel oil and coal. We sold coal for 100 years.
But pellets fit with what we were doingand
people started buying.
The load of Energex worked as Squier
Lumber had hoped. At that time, we were a
lumber yard that also sold pellets, Haley says.
Andits funnyin the ensuing 20 years, the
pellet thing grew uninterrupted since then. So
now, we are more of a pellet supplier that also
sells lumber.
Profile
Today, wood pellets and pellet stoves sales

represent 60 to 70 percent of Squier Lumbers
business, depending on the year. Theyre absolutely vital to our business, Haley says. Its
ironic. The reason we got into pellet sales was
to be diversified. Here we are, 20 years later,
and we are less diversified. You take opportunities as they are presented to you. Theres only
so much you can make happen. If a wave is appearing beneath you, you better ride it. I thank
God for that wave. It was much bigger than us,
but we caught it at the right time.
Haley says in its best years the store sells
more than 10,000 tons of pellets out of its
single retail location in what town administrator Evan Brassarda Squier Lumber wood
pellet and lumber customercalls the bedroom community of Monson. The town lies
on the Connecticut border just 15 miles east
of Springfield, 34 miles west-southwest of
Worcester and 75 miles west of Boston.
Squier Lumbers customer base expands
far beyond the town of Monson. It delivers
upwards of 70 percent of its pellet sales, and
the store owns three delivery trucks with forklifts. Our wood pellet and pellet stove customers come from as far as Worcester in the center
of the state, to almost the western edge of the
state, down into Connecticutalmost to Hartfordand then north almost to the VermontNew Hampshire border, Haley says. We run
a hardware store and a lumber yard, and for
that stuff our market is smaller. But for stoves
and pellets, we can attract people from farther
away. Even so, Squier Lumber is putting pellets in peoples trucks every weekend, Haley
says. We sell bags or trailer loads at a time, and
everything in between.
The store carries eight to 10 brands of
wood pellets, and one brand of wood pellet
APPLIANCE-LOYAL: While Squier Lumber sells various cordwood and coal stoves, the only brand of
pellet stoves it sells is Harman.
stoves. We only sell Harman pellet stoves,

Haley says. Its the best pellet stove out there.
We had the opportunity to get in early and establish a knowledge base with that product, and
we never saw the need to move on to a different brand. He says a big Harman dealer can
sell 300 pellet stoves a year while smaller ones
may sell less than 20. It all depends on strategy, he says. Were a very large Harman stove
dealer, not the largest by far, but sizable. The
store also sells cordwood stoves, Hitzer and
Blaze King, but Haley says Squier Lumber only
moves 5 to 10 percent the volume of cordwood stoves compared to pellet appliances.
To get the best pricing to pass savings onto
its customers, Haley says Squier Lumber buys
directly from the mills when possible. Our
biggest supplier is New England Wood Pelletit probably has been for 15 years, he says.
Pellets is more so getting to be a low-margin
commodity business. In most cases, theres not
a lot of room in the middle, and theres really
no value to be added. Fortunately, we have
some experience in the lumber business, and
theres no place in the middle for people to be
taking their piece of the action. In certain cases,
however, the mill makes arrangements with
people to do marketing and sales, and they get
an exclusive. So, if I want to buy a particular
brand, thats how they distribute it and I have
no choice but to buy through a distributor. But
if they add value and the mill is happy, then its
all good.
Squier Lumbers per-ton pricing of wood
pellets ranges from $219 to $359. The interesting thing is that, before two or three years ago,
we never sold a ton for more than $300, Haley

says. We didnt think itd be possible. We didnt
think customers would buy pellets that expensive. Our customer base is not extravagant,
theyre not wealthy. Theyre middle-income
people who want to save money. We took some
chances and convinced some customers to try
higher-end product that performed really well.
Honestly, the super-premium end has grown
much more than the premium. It has less than
half-a-percent ash. People just dont want the
hassle of cleaning their stove all the time. Weve
been successful in that end of the market.
While town administrator Brassard says
no big box stores are located in Monson,
some of Squier Lumbers pellet customers are
from cities where big box stores are prevalent.
Honestly, I feel we do a good job relative to
our competition, Haley says. We are diversified and that allows us to be more competitive.
We actually care about the business. With big
box stores, its hard to talk with people. Its hard
to get people to pick up the phone. The stove
business is a bit technical and sometimes theres
a fair amount of money to invest, so people
want to talk with peopleat least in this business. Even about the pellets themselves. We
carry eight to 10 brands of pellets and people
want to know, Hey, what do you think? So I
say, Whatever you want in a pellet, we have it.
He makes the analogy of supermarkets,
which sell multiple brands of soft drinks: Coke,
Pepsi, Royal Crown and others. They sell
them all because theyre not in the business of
telling people what cola to drink, Haley says.
Some want the cheapest, say RC, while some
Profile
like Coke and others like Pepsi. If a customer

says, Im on a fixed income and I need to save
money, they need the cheapest pellet possible
so we say, Here you go. Maybe they will need
to clean their stove more often though. Others may want the cleanest pellet possible, so we
say, Okay, here you go, but theyre $100 more
a ton, but if its good for you, then its good for
me. He says pellet customers are very brandloyal. When someone finally gets a pellet they
like, they stay loyal for whatever reason, he
says. Branding by the manufacturerits an
unappreciated facet of the business. Its very
important.
Brassard says he buys 4 tons of pellets from Squier Lumber every winter. I buy
New England Wood Pellet brand pellets, he
says. Thats my steady brand. I picked them
up from the store once, but ever since, I just
have them delivered. Brassard says he first
got into pellets five years ago after he and his
PALGroup_PelletMill_Set-Oct.pdf
17/08/2016
wife bought a1house
with07:42:06
a large fireplace, into
which they installed a Harman pellet insert. He
says he buys his pellets exclusively from Squier
Lumber.
Theyre a great community partner
to have, Brassard says. Theyre generous,

and they help support the town, whether
its through Boy Scouts projects or supplying
building materials for other community endeavors. And when I need to buy lumber, I go
to them, Brassard says. The quality of lumber is better, and they do a great job of steering
you toward the best material to buy for the application. Thats the difference between them
and a big box store. They take you out into
the lumberyard to help you pick the best piece
out of the pile, not just whats on top. Theyre
good, hometown people.
Uncertainty Ahead
Despite sustained low oil prices and mild

late-year temperatures, 2015 was a good year
for Squier Lumber, Haley says, even though
toward the end it got soft, he adds. All that
stuffwarm temperatures, oil pricesits all
coming to roost this year. But you gotta ride the
wave when you can. Well see whatll happen,
its hard for us to say. The way we tend to do
things is we order a fair amount of product in
the spring, and we work to promote it by trying
to give a break in the spring through early-buy
pricing. The company sends out 5,000 postcards to its big customers in the spring, in addition to two mass mailing circulars to 25,000
people. And then, usually in the fall, we do the
same thing, Haley says. And even though the
company is nearly 150 years old, it has leveraged modern sales and marketing techniques
through its website and social media, such as
Facebook, where Squier Lumber reaches out to
its pellet customers. We also do some online
business, Haley says. Its not a big part of our
business, but we have that availability. Theres
no sales channel we dont do. We do mills direct
where we are the middle man. Were here to
sell stuff, so as long as we can dictate the terms,
well sell anything.
Even though Haley says 2016 is not
shaping up to be a great year for pellet sales,
the company still purchased a fair amount
of product this past spring, as Haley puts it.
Our customers come to expect that, and it
helps even out the flow of business throughout the year, he says. We cant deliver all our
pellets in October, so we have to incentivize in
the spring.
Haley says the store would typically rely
Profile
able doing now. The range of possible outcomes is not the same. I
remember saying in the pellet yard
just a couple of years ago, We
wont have enough for the season,
and I cant get any more. We had
years like that. This year, were in
August now, and while I cant say
whatll happen in the fall, theres
nothing to indicate so far this year
that August will be busy.
August is one of four to five
busy months for pellet sales at
Squier Lumber, along with April,
May, September and October. I
CUSTOMER SERVICE: Co-owner Chris Haley (right) says whatever
a customer desires in a pellet, Squier Lumber delivers. He says when
keep looking at 15 years of sales
a customer finds a brand of pellets they like, they stick with it.
history on the computer, looking
for patterns, and August is not going to be a busy month unless its
on arbitrage of pricing spring to fall, and if it
toward the end, he says. I just dont see it at
bought 50 to 70 percent of last years sales in
the moment. I say that with the idea that Septhe spring, he would be fairly confident there
tember could be crazy busy. Even if I felt that,
was not a huge risk involved. But in the past
theres nothing I can do about it because Im
year to 18 months, the confidence level in this
afraid to make a big purchase for fear I would
industryour confidencehas been basically
be wrong. As a retailer I have that luxury, but
shattered, he says. What we were comfortmills dont have that. The problem is the same,
able doing in the past, were not so comfort-
its just at a higher level for themtheir exposure is a lot greater than mine. Traditionally August is a very good month. I dont think so this
year. September might be. Usually of those five
months, theres two very good months, either
April or May, and in a rare year, both are good.
And one of the three fall months is usually
good, but I dont know which.
With heightened uncertainty, Haley says
sales could be down 50 percent this winter, or
there could be massive shortages. Nobody
knows, he says. When youre faced with that
level of uncertainty, you have to be careful of
making existential bets on where the market
will be in December. Even though theres a
good chance therell be a shortage in the fall,
it could also be down 50 percent. But we dont
want them to go bad and be in that position if
theres declining sales. But the bigger problem
is a lack of enthusiasm and confidence in what
you thought you knew.
Thats the dilemma: does the company order hard in hopes of a good season or order
soft in fear of a bad one? Which is worse, having too much product or not enough? Both
are equally bad, Haley says. A couple of years
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%/&LQGG
$0
Profile
ago, we made the biggest mistake of not preordering pellets. The mills want to deal with
people who support them all year long. If we
said two years ago we were not going to buy
in the spring but people wanted product in the
fall, it would not work out so well for us. We
did a ton of business because we had access to
pellets. If we didnt do that, there would have
been a big opportunity cost because we would
not have enough pellets to sell. We are here to
sell stuff, we need to have product. If we dont,
thats a major problem.
On the other hand, having tons of product in stock that doesnt sell costs beaucoup
dollars. Pellets go bad, Haley says. Youve six
months of plastic, then it starts breaking down
under the ultraviolet light, and then the pellets
get damaged. We get snow, and then it melts
and turns to ice, it breaks the plastic and water
leaks into the pellets. It cost us $200 and when
it gets wet, now it is 2 tons of wet sawdust that
we have to call and get into a dumpster. That
ton that went bad ends up costing us $500. So
if we have too many pellets and we cant sell
them all, they go bad and then its really hard to
sell that product to people who feel they dont
need it. You can discount steakspeople love
a 10-percent discount on T-bonesbut pellets
dont have a high response to discounts. You
have to give them away to get rid of them, if
youre lucky. If youre not lucky, you have to pay
to get rid of them. He says the company built
a large three-sided building last year to protect
pellet stock from the elements.
NEW SPACE: Squier Lumber erected a new three-sided storage building just last year to house pellet
stock and to keep them out of the weather, since sunlight, moisture and ice are detrimental to their longevity.
Haley says retailing pellets has turned

into more of an art than science. We used to
know how many people were bringing pellets
into the Northeast, and how much, and what it
means for our business, he says. Now pellets
is such a big business, its impossible to know
50 percent of whats going on. We make the
best decisions on the best information we have.
More and more though, the ability to make accurate decisions is more difficult because of the
volatility, and we dont have all the information
we used to. Its become too big with too many
data points. Some mills are now teetering on
the edge, and no one cares. It means others are
less overstocked than they would have been
otherwise. You cant know anything with any
certainty. No one can. Anyone who represents
that they do doesnt know what theyre talking
about, or theyre trying to manipulate you. But

its valuable to know that you dont know. The
natural reaction is to not do anythingor not
do anything thats going to put us in jeopardy.
The uncertainty retailers like Squier Lumber face cannot be minimized, Haley says. Its
a big challenge because were part of an international energy system, he laments. So, if the
price of oil fluctuates for whatever reasona
hurricane in the Gulf, insurrection in the Middle East, a weak or strong dollarwere a tiny
flea on the tail of that dog, so we get whipped
around on the price of oil. Beyond that, as with
any business, whether its pellets or burgers, it
used to be that you had 200 things to do, and
if you did 100 of them right, youd be successful. Now, theres 2,000 things to do and you
have to do 1,700 of them right to be success-
directory.biomassmagazine.com
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Company
Profile
ROOM TO GROW: In the early 1990s, the company purchased additional land that is now used to store
wood pellets on.
ful. Whatever business youre in, its a lot more

complicated now, theres a lot more to be cognizant of, and you just cant screw up as much
as you used to be able to. Its so consequential
to what happens to you. Those things are part
and parcel of whatever business youre in. It
doesnt get easier or simpler. Its just the nature
of the beast.
Prior to five years ago, big box stores
were not that invested in pellets, Haley says.
They would put high prices on their products and they didnt know, or care, what they
were selling, he says. They werent good
with their customers. Then they got religion
five years ago and now theyre focused on it
and theyre pretty good at it. And they have
the luxury of selling stuff below cost. Like
they say about the stock market, it can stay irrational long after going bankrupt. The same
is true with the big box stores. Thats the biggest thing over the past five years. The market
has gotten bigger, but so has the competition.
Its not an equal playing field really. Its rare for
me to get a price concession from the mill,
and were big. And if I do get one, I have to
perform. I have to take and pay for it. When
I take it in the spring, my deal is I might sell
it, but I cant say that, even though thats what
big box stores say. My deal is, when can I start
shipping your 5,000 tons of product? Its not
a level playing field. If I start suggesting I can
sell 50,000 tons, like them, then maybe they
would treat us differently.
Haley says he would feel bad for anyone
seeking to delve into the pellet retail business

today. When we made our investments, pellets were growing by leaps and bounds, he
says. We were optimistic and growing, and
pellets were ready to take over the world. It
was easy to buy a $250,000 truck and forklift
in that scenario. Now, its a lot more difficult
because a lot of the growth in the industry has
already happened. It may be a while, if we ever
see that again. I am privileged to have seen this
business grow from nothing into something.
So the stuff we benefited from doesnt necessarily apply today. I would tell that guy to care
about the business, invest in the business, but
not so much that it causes him to go broke.
Capital is a wonderful thing. And I would say
be different than the big box stores. Being
good to customers is important, he says, but
its also imperative to be good to suppliers. It
works in your favor, he says. They remember that.
Though in its best years Squier Lumber
sells well over 10,000 tons of pellets, it sells
substantially less than that in the bad years,
Haley says. As far as last season goes, he says
the business had some left over, but not a
whole lot, he explains. It wasnt crippling,
so we can deal with it without too much of a
problem. What happens going forward is concerning though. But if you got a wave, ride it.
Author: Ron Kotrba
Senior Editor, Pellet Mill Magazine
218-745-8347
rkotrba@bbiinternational.com
PORTS
STATE-OF-THE-ART STORAGE: This storage shed built at Hull, a port in the Associated British Ports family, employs a wide array of the latest fire and
spark detection technologies, as well as robust carbon monoxide monitoring systems and fire suppression systems. This new 4 million ($5.3 million) facility
complements the massive investments ABP has already made in pellet receiving, handling and storage infrastructure. Pictured is Craig Barbour, general
manager, Humber Terminal, Associated British Ports.
PHOTO: ASSOCIATED BRITISH PORTS
PORTS
Doubling
DOWN
As Drax Power Stations biomass
metamorphosis comes of age and
new conversions come online,
investment and innovation in
Britains ports maintain momentum.
BY TIM PORTZ
n 2010, the United Kingdom imported just over a half million metric tons
of wood pellets. Drax Power Station, the kingdoms largest coal-fired power
plant, had just begun burning wood pellets in one of the worlds largest
decarbonization efforts ever undertaken. With virtually no domestic wood
pellet industry to speak of, the countrys vast network of ports would be called
upon to receive imports of wood pellets to keep an uninterrupted flow headed
for Drax.
Among the first ports to invest in pellet handling infrastructure was the Port
of Tyne. We spent most of 2010 getting ourselves up and running and were able
to receive our first pellets in September of that year, says Steven Harrison, chief
operating officer at Port of Tyne. Those volumes were the first that stemmed
from the ports agreement with Drax, signed in November of 2009, to handle up
to 1.4 million tons of wood pellets per year. Once the contract was signed, the
port began work on the necessary infrastructure to receive, store and efficiently
load wood pellets into waiting trains. That September, the port was ready, using
existing cranes to offload pellets from a vessel into custom hoppers designed to
control dust at the quay and finally into flat storage inside a covered warehouse.
The system was relatively simple but effective and established the port as the
countrys first real player in industrial wood pellet receiving and handling. Other
ports werent far behind.
By 2012 and 2013, ports on the countrys eastern seaboard were making their
own investments as Drax sought to diversify its supply chain partners. About 150
miles south of the Port of Tyne, pellet infrastructure investments were happening at several of the ports along the Humber estuary including Hull, Immingham
and Grimsby. In April of 2013, Graham Construction was awarded a contract
to build the Immingham Renewable Fuels Terminal, while just inland, Spencer
Group was at work building silos and a rail loading terminal that would allow Hull
to handle nearly 1 million tons of pellets per year.
The year of 2014 saw pellet imports to the United Kingdom swell to nearly
PORTS
MAKING ROOM: Concrete piles were driven into the Tyne riverbed to allow for a 125-meter
suspended quay extension (visible in the left-hand portion of the photo). This extension allowed for the
port to have four vessels berth at the quay simultaneously.
PHOTO: PORT OF TYNE
5 million and in 2015 that number rose to

6.5 million tons. The continued growth in
imported pellet volumes is almost certain
to continue as a conversion project at 420
MW Lynemouth Power and MGT Teeside
Ltd.s 299 MW combined-heat-and-power
project have both been approved for Contract for Difference contracts from the
British government. Together, the growth
of existing demand at Drax and the promise of these new volumes has catalyzed
another wave of investment within the
countrys port complex. These most recent
projects make it clear that both contractors
and port operators have learned a great
deal since receiving their first shiploads of
pellets and are driving those discoveries
into new project designs.
Infrastructure Investment 2.0
In May, during its annual general

meeting, the Port of Tyne announced that
it had secured a contract with Lynemouth
Power Ltd. to handle up to 1.8 million tons
of pellets annually. This new contract was
partially responsible for 25 million ($33
million) worth of infrastructure invest24 PELLET MILL MAGAZINE | SEPTEMBER/OCTOBER 2016
ment the port has made recently. The bulk

of this investment was an extension of the
Riverside Quay by 125 meters. This is the
single, biggest investment we have made
since we built Europe's first purpose-built
wood pellet facilities back in 2010, and it
will significantly increase the port's capacity to handle increased volumes of cargoes.
Extending the length of the quay will increase the berthing capacity by almost 20
percent, enabling up to four large cargo
ships to berth simultaneously, states Andrew Moffat, CEO of the Port of Tyne in
a statement issued by the port earlier this
year.
In addition to the quay extension,
75,000 tons of storage capacity in three
concrete silos, enclosed conveyors and a
rail loading silo are also being built. The
Port of Tyne is contributing 13 million to
this portion of the project with the remainder being contributed by LPL.
The silos, Harrison notes, tie into the
ports need to distinguish one load of pellets from another. Once the material gets
to a power station, they are less concerned
with segregating individual cargoes, so they
PORTS
7(&+12/2*,(6
can afford to put the pellets into one homogenous pile, Harrison says. Whereas,
we are very much trying to segregate shipments because we need to be able to trace
pellets, not only back to the pellet mill that
produced them, but also to the forests
where the fiber came from. This approach
allows for better segregation of cargoes.
At Hull and Immingham, Associated
British Ports has already invested 130 million in wood pellet handling infrastructure.
Late last year, an additional 4 million was
invested in a state-of-the-art bulk storage
warehouse. The facility, designed to handle
and store dry bulk cargo, is loaded with design features to minimize the risk of fire
and explosion, including an incipient aspirating fire detection system, internal LED
lighting, an expanding foam fire suppression system, a smoke extraction system,
and an internal and external mist/air system to control fugitive dust.
Most recently, a new player has
emerged within Britains port complex,
with Peel Ports announcing that it had dispatched its 400th rail shipment of wood
pellets to Drax. The milestone was reached
just seven months after opening the first

phase of a biomass terminal that earlier releases from the port valued at 100 million.
Graham Construction was awarded the contract to construct the facility,
making the company arguably the largest
constructor of wood pellet handling and
storage facilities worldwide. This project
builds on the experience we have gained
from building similar facilities on the east
coast of England, states Leo Martin, executive director at Graham Construction in a
release. We will be designing and building
a state-of-the-art plant which will employ
industry-leading technologies to ensure
that the facility can be safely operated and
maintained.
There can be no doubt that pellet
volumes are a boon to the countrys busy
ports. Harrison offers that pellets have
grown to represent a significant percentage of the ports dry bulk business and
this year pellets will represent over 50 percent of Tynes dry bulk volume. There is
another side to that same coin, however.
Long before wood pellets were identified
as a practical means to meet the countrys
decarbonization goals, these same ports
handled coal imports.
With the U.K.s energy policy shifting
away from the reliance upon fossil fuels, we
predicted that coal volumes would be gradually replaced by wood pellets," Harrison
says. "Accordingly, coal reduced from 3.6
million metric tons in 2012 to 1.4 million
metric tons in 2015.
Viewed in that way, the innovation and
investment in pellet handling infrastructure
within Britain was vital if the ports were
to continue to meet their financial goals, as
the countrys intention to turn away from
coal-derived power was clear. For Harrison
and his colleagues at Port of Tyne, the transition was abrupt. The rate of the reduction in coal volumes has happened faster
than anyone anticipated, and we might yet
see more coal handled as the U.K.s energy
supply continues to move toward alternative sources of power generation.
Author: Tim Portz
Executive Editor, Pellet Mill Magazine
701-738-4969
tportz@bbiinternational.com
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UNITED KINGDOM
Business as Usual
Big U.K. government alterations ensued the vote to leave the EU, but for
some area biomass suppliers and end users little has changed.
BY KATIE FLETCHER
he only thing certain in the

United Kingdoms post-EU
reality is uncertainty. Implications that the June 23 referendumin which the U.K. voted 51.9 percent to 48.1 percent to leave the European
Unioncould have on wood pellet trade
and environmental policy remain largely
unknown. Even so, there are those with ties
to the U.K. biomass industry that maintain
a business-as-usual mentality. Drax Group
plc CEO, Dorothy Thompson, shared in the
companys half-year results that the vote by
the U.K. electorate to leave the EU presents
no immediate risk to Drax. However, the
impact a prolonged period of uncertainty
may have on the regulatory framework in

which Drax operates raises concern. U.K.
government changes have also sparked apprehension amongst some, but Drax looks
forward to remaking its case to the new
U.K. government on the importance of
biomass to serve Britains need for affordable decarbonization.
Still, some have expressed worry that
recently elected Prime Minister Theresa
Mays abolishment of the Department of
Energy and Climate Change will sway investor confidence in the U.K. energy sector.
Much of DECCs functions are now handled within the newly established Department of Business, Energy and Industrial
Strategy, which, by doing so, actually puts

it in a far more important category, according to Neil Harrison, vice chairman of the
U.K.-based Wood Heat Association. Before, DECC was a little, standalone department that had a relatively small budget90
percent of which was gobbled up with
nuclear decommissioning costs from power
plants that have been built since the 1950s,
Harrison says. Now, its actually gone into
a much larger department with a much larger overall budget and a higher profileits
overall importance as a topic has probably
grown greater.
Historically, the treasury called the
shots for DECC and in the preceding lead-
UNITED KINGDOM
ership was very much in the pockets of the

fossil fuel industry, Harrison says. He adds
that now the biomass industry is buoyed up
by the ministers whove been given seats in
the department and are responsible for energy, as theyve generally voted in support of
renewable energy in Parliament. Although
there has been a shift away from renewables
toward fossil fuels and nuclear over the past
four or five years of government, Harrison
says, were now hopefulwith change in
leadership in the Tory partywell actually
see some positive changes back toward a
more environmentally conscious and supportive environment for renewables.
Brexit vote aftermath contains bright
spots for biomass, but the whole referendum has created an epic undertaking for
the country. Something Harrison says will
take 10 years to unpick, likening it to if
the United States decided it was no longer
going to be united and the states would
independently rule themselves. One of the
most immediate and direct effects since
Brexit has been the plunge of the pound
against the euro and U.S. dollar, creating
not only a possible economic challenge for
trade within the pellet industry, but also a
harder economic case for biomass within
the domestic heat market. The leave vote
has only managed to challenge the already
However we
choose to leave
the EU, let me be
clear: We remain
committed to
dealing with
climate change.
- Amber Rudd, U.K. home secretary
flat market low oil prices have brought

upon the bioenergy industry. When the
backbone of your installation sector is selling European-sourced equipment and that
then jumps in price because of the impact
of the exchange rate, you get a lot less for
your money now because youre buying euros and the exchange rate is significantly
different, Harrison explains. Youre making a difficult sell even more difficult as a
result of Brexit.
U.K.s domestic pellet heat market has
felt the drag down of the euro post-Brexit,
but, for big biomass suppliers and consumers like Drax, already contracted volumes
of pellets have largely left business as usual.
A Drax spokesperson emphasizes that a

secure supply chain is crucial and to help
with this security Drax sources its wood
pellets from a range of suppliers. The
spokesperson adds, We also have longterm hedging in place with our biomass
suppliers.
Its believed that for the foreseeable future the U.K. will remain the driving force
behind pellet demand for power generation.
The U.K. is going to continue to need to
import an enormous amount of fiber to
meet its energy needs, Harrison says.
There will be a need for baseload, and biomass is the best low-carbon way of doing
that, particularly, if you look at wider energy
policy in the U.K., where they actually have
aspirations to electrify heat production and
electrify the transport sector, so we need
more power production and biomass is a
good way to do that with existing assets.
Further, the U.K., remains part of the
EU for at least the next two years. The twoyear countdown doesnt begin until Prime
Minister May invokes Article 50 of the Lisbon Treaty, beginning the process of withdrawal, which, she says, isnt likely to happen until next year at the earliest. Until then,
commitments made to renewable energy as
part of the U.K.s standing EU obligations
will not change. Even once the U.K.s leave
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UNITED KINGDOM
is final, Harrison reminds us that the U.K. is

the only country in the world to have legally
binding climate change targets written into
its own law. The U.K. has legally commit0DJD]LQHted itself regardless if its a member of the
ODQG&EU or not to meet targets, he says.
The Climate Change Act in 2008 was
not imposed on the U.K. by the EU, it was
delivered with cross-party support by the
U.K. Parliament. Former Secretary of State
for Energy and Climate Change, Amber
Rudd, emphasized this point in a speech

to the Business and Climate Change Summit following the EU referendum. She says,
However we choose to leave the EU, let me
be clear: We remain committed to dealing
with climate change. Rudd was appointed
home secretary in Theresa Mays first ministry on July 13.
Another reinforcement comes with the
Committee on Carbon Changes release of
its fifth carbon budget, laying out a 57 per-
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cent reduction in carbon emissions from

1990 levels during 2027-32. Rudd calling
it an important building block of our
economys future. The confirmation of
the carbon budget gives the renewables
industry and investors more long-term
confidence, but will need to be backed
up by supportive policies that will unlock
investment in much needed new energy
infrastructure.
As a subsidized industry that depends
on government policy, this is especially
important for the industrial market for
pellets. Luckily, it appears pending state
aid approval regarding the awarding of a
contract for difference (CfD) for Draxs
third 645 MW coal-to-biomass conversion
will not be impacted, and Drax expects to
secure approval this fall. In fact, Harrison
says, the removal of governance under
state aid regulations could mean more
rapid decisions made for coal conversion
to biomass. Two other projects awarded
CfD subsidies from the European CommissionEPHs 420 MW Lynemouth
coal-to-biomass conversion and MGT
Powers 299 MW Teeside combined-heatand-power (CHP) plantare moving
forward. Last December, state aid was approved for the Lynemouth Power Station
and EPH intends to complete the conversion next year. Enviva Partners LP recently announced a 9.5-year contract to supply
800,000 metric tons of pellets per year to
Lynemouth, and just this August, Enviva
Wilmington Holdings LLC confirmed its
15-year take-or-pay offtake contract to
annually supply 1 million metric tons of
wood pellets to MGT Teeside Ltd.s CHP
plant, which just finalized financing agreements. During Envivas second quarter
financial earnings call, company chairman
and CEO, John Keppler, stated that he
believes capital markets were surprised
by the outcome of the recent referendum
of the U.K. on its EU membership, and it
certainly created some volatility in the financial market. Even so, within industry,
it seems to be largely business as usual
for the biomass power generators in the
U.K., he says. The ROCs (renewable
UNITED KINGDOM
There will be a
need for baseload,
and biomass is the
best low-carbon
way of doing that.
- Neil Harrison, WHA vice chairman
obligation certificates) and CfDsthe primary mechanisms received by our customers in the U.K.are entrained in U.K. law,
not based on EU regulation, and we do not
expect Brexit to impact our firm, long-term
offtake contracts.
Astec Inc. reported in its recent earnings call that it hasnt seen any impact, but is
keeping an eye on its pellet business, as the
U.K. is the biggest driver for that business
right now. Astec CEO, Ben Brock, says,
theyre talking with customers who are do-
ing business there, and they do not think

that will affect what they are doing.
Another consideration is the fate of the
Hinkley Point nuclear power stationone
of the most expensive endeavors to date in
the U.K., according to Harrison. The champagne was on ice, but with a change of leadership in the Tory and governing party, the
decision to move forward has been put on
hold for another few months. That would
mean, if that conversion didnt go ahead,
that some more coal conversion to biomass
might actually be a good way to deliver lowcarbon energy, he says.
For now, until Article 50 has been triggered and there is some clarity on the terms
of U.K.s exit, concerns and questions linger. Although the details have yet to be
sorted out, one thing is clear: U.K. remains
committed to climate change initiatives and
using wood pellets, amongst others, as a
means of reaching them. As the pellet market leader, Drax says, The U.K.s commit-
ment to renewables has been driven by U.K.

policy makers and we will continue to work
closely with the U.K. government on delivering cleaner energy.
While support for wood pellets industrial market hinges on upcoming coal conversion projects and pellet volumes secured
through long-term offtake contacts, pellets
for heat, like here in the U.S., need some
market momentum. Generally, the picture
for biomass is pretty positive, but I think we
all need oil prices to turn around to demonstrate biomass is cheaper, as oil is artificially
lower at the moment, Harrison says. We
need to go back to where its meant to be,
and then well be back to business as usual.
Author: Katie Fletcher
Associate Editor, Pellet Mill Magazine
701-738-4920
kfletcher@bbiinternational.com
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Pellet Mill Magazine

SEPTEMBER/OCTOBER 2016 | VOLUME 6 | ISSUE 5

24 Andritz Feed & Biofuel A/S

PHOTO: DRISCOLL PHOTOGRAPHY

Wood pellets have generated multimillion-dollar investments at ports, including

The Business End of the Supply Chain

What Next for the Atlantic Pellet Market?

Private Labeling Provisions

CUSTOMER CATERERS: Kevin Haley

Distribution Model Cost Savings

The Business End

PRESIDENT & EDITOR IN CHIEF

Publishing & Sales

Editorial Board Members

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COPYRIGHT 2016 by BBI International

4 PELLET MILL MAGAZINE | SEPTEMBER/OCTOBER 2016

October 11-13, 2016

This regionally focused event has become an

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Produced by Christianson & Associates and

6th Annual Exporting

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Join us in Miami for USIPAs 6th Annual Exporting

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What Next for the Atlantic Pellet Market?

Following expectations of optimistic growth in the

6 PELLET MILL MAGAZINE | SEPTEMBER/OCTOBER 2016

Whilst these three projects would help to bring the

Private Labeling Provisions

PFIs new private labeling provisions are as follows. If a

SEPTEMBER/OCTOBER 2016 | PELLET MILL MAGAZINE 7

Distribution Model Cost Savings

Over the past year, pellet producers in Europe and

Domestic-Tiered Distribution: The least developed

SEPTEMBER/OCTOBER 2016 | PELLET MILL MAGAZINE 9

PEOPLE, PRODUCTS & PARTNERSHIPS

Evergreen Engineering celebrated the grand

NDC Technologies introduces

Drax Biomass facilities

ports, press releases, newsletters, etc.), will be

SHARE YOUR INDUSTRY NEWS: To be included in the Business

SEPTEMBER/OCTOBER 2016 | PELLET MILL MAGAZINE 11

1 BILLION DRY TONS OF

Clarkson University researchers believe

DOE releases update of billion-ton study

ed energy cropsall useable for the

AURI publishes feasibility guide on biomass cooling

Estimated capital costs

Pipelining and installation costs

cost alternative to traditional energy

SEPTEMBER/OCTOBER 2016 | PELLET MILL MAGAZINE 13

ESTIMATED GLOBAL WOOD PELLET PRODUTION