Biomass prices – mapping of methods and models

The Danish Energy Agency (DEA) utilise biomass price projections for a range of their own analyses, for instance for long-term analyses of the development of the energy system. In addition, the DEA publish projections of biomass prices.

The current price projection is based on, among other things, a model developed by Ea Energy Analyses in 2013. This model was mainly based on a projection of global commodity prices for biomass as well as a calculation of the costs of transporting biomass to Denmark. In recent years, the DEA has adjusted the method, so current prices of biomass are a part of the long-term price projection to a greater extent. The DEA has carried out a task of updating the knowledge and model basis of biomass price projections, focusing on wood chips, wood pellets, and straw.

In relation to this task, the DEA asked Ea Energy Analyses for support to expand the knowledge base, including studies of the factors driving the prices and biomass price projection models used by other actors. Based on the analysis, Ea made recommendations for further development of the DEA’s method for biomass price projection and for the development of their biomass price model.

The current price projections used by the DEA concern the solid biofuels straw, wood chips, and wood pellets, which are the types of biomass that are prevalently used for energy purposes in Denmark. It was also price projections for these three types of biomass that were the focus in the analysis. Additionally, the price projections had a particular focus on the development of the prices over a 10-30 years horizon, and therefore the long-term clearing prices in the markets were a focus point instead of the short-term price fluctuations.

The project ran from November 2023 to February 2024.