Due to the export orientation of the Ukraine pellets to the EU countries, expanding domestic demand is very important to develop Ukraine biofuel pellets.
The Ukraine biofuel pellet market begins in 2005. Since then, the biofuel pellet is developing rapidly in Ukraine. However, the export-oriented Ukraine biofuel market isn’t riskless. In order to reduce the investment risk, we did the Ukraine wood pellet market analysis for the investor in Ukraine.
Ukraine Biofuel Pellets Production
The first specified pellet plant in Ukraine started to operate approximately in 2005. Since then the number of pellet and briquette plants is growing rapidly. 2010 there were about 71 briquettes producers, as well as 71 wood pellet plant in Ukraine.In 2009,the total biomass pellet production was more than 235, 000 tones and in 2010 was 640,000 tones.Among the pellets, the share of wood pellets constitutes only 30-35% of total production; the rest is occupied by Ukraine sunflower husk pellets and other Ukraine agro-waste pellets.
The raw materials for pellets in Ukraine consists of wood timber,wood waste,forestry residues and agricultural waste.The Ukraine territory is covered by forest with an amount of 9.4 million hectares.Annual harvesting of merchantable wood comprises about 15 million m³.In general, utilization of forest growth in Ukraine is substantially lower than in other European countries.The utilization rate of annual forest net growth in Ukraine is about 40‐50%.Ukraine has vast area of underutilized agricultural land.According to Fuel Alternative every year in Ukraine forming more than 20 million tons straw resource for biofuel pellets production, however half of it is burned at the fields.
Ukraine Biofuel Pellets Consumption
The consumption of the biofuel pellets in Ukraine can be divided into two parts–Domestic demand and export. Domestic consumption is around 15% for agro‐ pellets and around 10% for wood pellets.The main wood pellet consumers are small factories,wood processing companies, food processing plants, agro‐product processing companies and private buildings. Regardless of low domestic demand, the rapid development of alternative energy in the EU has created the preconditions for development of Ukrainian pellet market.
Ukrainian pellet market is export oriented.90% of the outlet pellets are exported to EU countries.The major importer of Ukrainian wood and agro‐pellets is Poland.According to Fuel Alternative data the major importer of Ukrainian wood and agro‐pellets is Poland. In 2010 there are 22000tons of wood and agro‐pellets is exported to Poland and Accounting for 25.3% of total exports.The solid biofuel export in Ukraine keeps increasing since 2009.The wood pellets export growth rate from 2009 to 2009 is 134.6% from 64600tons in 2009 to 87000tons in 2010.
Due to the export oriented of the Ukraine pellet market, it is easily affected by the consumer market of the pellets import countries from Ukraine.So we suggest the investors to make consumption market survey assessment before starting production of biofuel pellets in Ukraine to reduce the risk of investment.As for in Ukraine,the Ukrainian government should encourage people to use fuel pellets to increase the pellets domestic demand and reduce the dependence on foreign markets.