23 Dec 2010

On wood pellet prices

Info from Nottingham Energy Partnerships

Wood pellets prices
Nov 2007 17p/kg
Nov 2010 25.2p/kg
Increase = 48%
Current price per kWh inc allowance for boiler efficiency: 6p

Standard heating oil:
Nov 2007 43p/lt
Nov 2010 47p/lt
Increase = 9%
Current price per kWh inc allowance for boiler efficiency: 5.3p

Mains gas:
Nov 2007 2.72p/kWh
Nov 2010 3.58p/kWh
Increase = 32%
Current price per kWh inc allowance for boiler efficiency: 3.9p

Nov 2007 8.87p/kWh
Nov 2010 10.92p/kWh
Increase = 23%
Price per kWh: 10.92p


  1. Tangentially related is the tightening of regulations in Germany to control particulate pollution caused by the increasing number of wood-fired heating systems. For more information see:



  2. European restrictions about ecology are sometimes getting ridiculus. Bureaucracy thats coming out of this is also contributing to those rising prices...

  3. Rubbish. Heating-oil suppliers were quoting 60-70p/litre (i.e. 5.5-6.5p/kWh) in December 2010 (when this article was published), and telling old customers they might have to wait a month and new customers they might not get supplied at all.

    Conversely, my company, Forever Fuels, which is comfortably the largest supplier of high-grade wood pellets in Notts. (and the rest of the UK) did not increase our prices at all in the cold weather, and maintained a lead-time of less than a week from our Retford depot for any customer whose need was urgent. We offer complete transparency of pricing if you go to our pricing pages, including our wood-pellet Price Calculator to see what a delivery would cost to your location. Try getting that sort of transparency from an oil supplier.

    Our base price is £185/tonne plus delivery, where delivery is calculated at £4.25/mile from our nearest depot. In Notts. our nearest depot is Retford, so delivery will not be over £100. So even if you only ever order one 3-tonne delivery and never get any of our reductions (an extreme and rare scenario), the price per tonne including delivery will be under £250/tonne (i.e. 5.2p/kWh) and nearer £220/tonne (4.6p/kWh) for most customers in Notts.

    Most customers will take at least 10 tonnes over time, in which case they will qualify for our first accumulative volume discount: they get the tenth tonne free. This knocks their average price down by another £18.50/tonne (0.39p/kWh), so three deliveries to a site in Notts. taking 10 tonnes between them (over however long a period) would cost on average in the region of £200-230/tonne (4.2-4.8p/kWh).

    Larger customers get bigger volume discounts that can pull the average price down to below 3.5p/kWh.

    And this is all unsubsidised, before the introduction of the RHI this summer, which will make the savings much greater.

  4. Sorry, typo. I meant delivery would not be over £200 in Notts. All other figures are correct and based on the correct delivery-cost assumption.

  5. Bruno,

    It's fair enough to point out the current spike in heating oil prices - still hovering around 60p/lt today - but you aren't really disputing the pellet prices from Nottingham Energy Partnership, at around 25p/kg or £250/tonne.

    The question I am really posing is "what was your price three years ago?"

  6. Mark,

    I am disputing your claim that pellets cost £250/tonne at the moment. That would take an extraordinary set of circumstances. If you want to take those circumstances, you will need to compare pellets with buying oil by the canister or something equally extraordinary and inefficient. Almost none of our customers would pay that as an average price for bulk supplies. A typical average cost in Notts. for a smaller customer who ordered (say) 10 tonnes over 2 years would be around £195/tonne (4.1p/kWh) delivered. It's a big difference with your number.

    Forever Fuels began trading in early 2008. We (the current management) took full ownership and management control of the business in August 2008. So I cannot give you prices for Nov 2007 that are strictly comparable with our current prices.

    However, we are an effective descendant (but with completely different culture and ethos) from the Energy Crops Company, who were trading in Notts. in Nov 2007. Their prices would be the most comparable, although one of the differences in culture is that they came from an oil background and were therefore much less transparent about pricing. There were also significant issues with quality in the area, not just from ECC but from the various local suppliers, so you would be comparing a price for a lower-grade product compared with the very high-grade pellets we now supply.

    That said, I see that (for example) a price quoted by one of ECC's managers at the end of October 2007 for small-scale supply from Retford was £152/tonne delivered. £195/tonne is around a 28% increase.

    60p/litre is a 40% increase on 43p/litre. In any case, it's the absolute value, not the relative increase that is most relevant. An increase of 32% in the gas price still leaves it relatively cheap compared to other fuels (before the RHI). People wouldn't be switching to oil from gas even if the oil price had only increased by 9% compared to the 32% increase for gas, because oil is still the third most-expensive mainstream way of heating your property (after electricity and LPG).

    What was really going on was that pellet-suppliers like ECC were under-pricing in order to try to gain any business at all, in the absence of equitable treatment with renewable electricity and transport (still absent). They then tried to find the cheapest sources of pellets to minimise their losses at these prices, but (a) the sales prices were still not enough to justify the conversion costs in most cases so it didn't deliver much volume of demand for pellets (volume is essential for spreading fixed costs), (b) the purchase prices were still too high to avoid substantial gross losses, and (c) the compromises that had to be made on quality in order to achieve those low-but-still-too-high prices were not satisfactory. To be fair to ECC, they were operating on promises about quality from producers which failed to materialise, so it wasn't that they didn't try, just that people (e.g. producers) are bound to push the limits when they are operating below cost.

    When we took control of the business, one of the first things we did was to carry out a proper critical analysis of the quality, dispose of most of the stock at a significant hit because it was all unsatisfactory, and started applying rigorous specifications and quality controls to all new supplies. That is why we ended up importing from Sweden as none of the British suppliers could satisfy our requirements at the time. Some of them have improved since then, but they have also had to price accordingly. Quality isn't free, but it is essential.

    In short, you are not comparing apples with apples if you compare pellet prices in Nov 2007 and Nov 2010, and the percentage increase is not the most useful comparison to make, but for what it's worth the real comparison is more flattering than your figures suggest.