Updated biomass prices

Denmark | September 2016 - November 2016

Ea Energy Analyses has twice previously provided the Danish Energy Agency (Energistyrelsen) with long-term price forecasts for biomass (wood pellets, wood chips and straw), with the most recent being in 2013, where the methodology was described in a report entitled “Analysis of biomass prices, future Danish prices for straw, wood chips and wood pellets”. These prices were CIF prices, i.e. forecasted prices for biomass delivered to a Danish harbour.

In order to convert these CIF biomass prices to prices delivered at central and decentral power plants, Ea developed a methodology in 2014 to take into account the interaction between domestically produced wood chips and straw, and imported wood chips. This methodology was described in “Biomassepriser an forbrugssted”.

The current work is based on the methodology outlined in the two above-mentioned reports, and comprises an updated biomass model that incorporates improvements/updates to: 

  • Methodology – now undertaking a convergence approach, which combines long-term equilibrium prices with short-term forward indicators.
  • Data – a new ‘level’ of oil prices, as oil prices affect biomass prices, from the acquisition and production of both the raw biomass and final product, to the various links in the transport chain. In addition, raw biomass prices have also been updated.
  • Modelling – In addition to incorporating a new convergence approach, more detailed modelling has been undertaken for the shipping of biomass, and the effects of changes in oil prices and USD/Euro rates shall also be refined.

The results were presented in the form of a custom made excel model, and a report that describes the major additions and alterations to the biomass model, as well as how to use the input/out functions for the convergence approach. In addition, a separate report describing various forward prices and their application in the convergence methodology was delivered.