Pinnacle Renewable Energy – Meeting the demand for low-carbon fuel

Posted on Nov 24, 2014
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Pinnacle Renewable Energy – Meeting the Demand for Low-Carbon Fuel

PR Associates met with Vaughan Bassett, Senior Vice President Sales & Logistics at Pinnacle Renewable Energy. The discussion focused on biomass fuel in the form of wood pellets that has been quietly growing into a major export for British Columbia over the past 20 years. Bassett has an extensive background in commercial trading and logistics and is responsible for managing customer relationships and product movement across the globe.

Pinnacle Renewable Energy operates six wood pellet plants across B.C., including the Burns Lake  facility shown left. Photo courtesy of Pinnacle Renewable Energy

Producing Wood Pellets for the World

Bassett says, “When Pinnacle Renewable Energy began producing wood pellets in the early-1990s, they were made from dry shavings. Over time, Pinnacle learned to incorporate all saw milling residuals (shavings, sawdust and bark) and all of the harvesting residuals (thinnings, trimmings, tops and branches) into their pellets. At certain plants today, Pinnacle can process round-wood too, which sets us up to receive timber killed either by fire or beetle and which has little or no value elsewhere in the greater forest products industry.”

Export Markets

Europe is the largest export market for Pinnacle pellets, where most of their customers are electrical power plants looking to burn a lower carbon alternative to coal. Bassett estimates that of the approximately twenty million tonnes of wood pellets going to Europe, 11 million tonnes are used for electricity generation while 9 million tonnes are used for commercial and residential heating. This latter category is highly fragmented and supplied mainly in 15kg bags versus the full vessel loads servicing the power plants.

One of the largest buyers of wood pellet fuel is the United Kingdom. The biomass fuel initiative gained momentum in 2009 when the UK began its Low Carbon Transition Plan that has enabled thermal coal-fired power plants to make the switch to renewable energy sources, including wood pellets. The move to using lower-carbon fuel sources for power generation has been a key driver that has allowed Pinnacle to increase its exports over the past five years. These actions also resulted in Pinnacle being awarded the BC Exporter of the Year for 2013.

In the UK, the electricity provider, Drax Group, is on track to become one of the largest biomass-fueled energy providers in Europe. Bassett explains the conversion to wood pellets from coal began with a co-firing process where up to ten percent wood pellets were mixed with coal. Over time, the percentage of wood pellets was increased to over 80 percent and now, Drax have made the switch to 100 percent biomass fuel in 2 out of their 6 generating units, with plans to convert a further unit in 2015 and possibly one more in the next couple of years.  Other generating companies in Europe are similarly advancing plans to convert coal burning units to biomass, to be fueled principally with wood pellets.

The Pinnacle Advantage

Pinnacle operates six plants across British Columbia including its original plant in Quesnel. The other facilities are in Williams Lake, Armstrong, Burns Lake, Houston and Meadowbank. With six operating plants and another on its way next year, Bassett explains, “there is a consistent and steady flow of product from multiple sources that significantly diminishes the risk of interruption. Power plants that rely on any 100% dedicated fuel are very sensitive to fuel supply risk, so we have set about reducing this for our wood pellet fuel in a number of important ways.”

The Westview terminal in Prince Rupert is Pinnacle’sstate-of-the-art facility capable of loading Panamax classvessels in record time. Photo courtesy of Pinnacle Renewable Energy

According to Bassett, “Having multiple plants is the obvious first step. Each of these plants also enjoy the benefit of belonging to the most experienced wood pellet producer in the world. Furthermore, each of these run on residuals supplied by the most senior and significant saw milling companies in BC. Another huge risk reducer is our wholly owned Westview Terminal in Prince Rupert. This is a state-of-the-art dedicated wood pellet terminal, capable of loading up to Panamax class vessels in world beating times. In addition, it means that we can load ships both out of Vancouver and Prince Rupert, because all of our plants connected by rail to both ports.” Bassett further contends, “this makes Pinnacle a unique multi-plant, dual port operation located in one of the richest and most sustainable fibre baskets in the world. In addition, the company leases 500 covered hopper railcars that each contains up to 100 tonnes of wood pellets in bulk form. These are cycling faster now with the availability of additional dumping capacity and additional storage at Westview.”

Bassett adds, “Albeit on a far lower scale, the company also ships 40-pound bags of pellets used for residential heating or animal bedding. This product goes mainly to service the domestic market and sells through a network of retail stores that includes Home Hardware.”

Market Security

With the European’s increasing their percentage of power generated by renewable energy, the need for secure sources of wood pellets is what drives the market. Typically, contracts are signed for 5 to 10-year periods and these are hedged in all sorts of ways due the risk-averse nature of the buyers in Europe. Bassett points out, “The European power producers are investing large sums of money into converting their coal-fired plants to biomass, so they prefer secure fuel sources such as wood pellets from Canada. With our residual fibre based approach, sourced from vast Crown-owned lands with the highest percentage of certified forests in the world, we offer a unique product that our foreign competitors are simply unable to match.”

South Korea Continues to Import more Biomass Fuel

Over the past few years, South Korea has been converting to low-carbon fuel and is now in the process of converting or adding a number of biomass power plants that will come online over the next few years. As a result of a recent government regulation, where power generation must come from at least 10 percent renewable energy by 2022, the South Korean market has begun to increase its need for wood pellet fuel. However, unlike Europe, Bassett says the South Koreans are buying wood pellets on a short term, price driven tender basis. This does not suit the style of Canadian producers such as Pinnacle, who do not see themselves as spot suppliers. “It’s impractical anyway,” says Bassett, “because we are not set up to indefinitely hold stock against the possibility of being awarded a tender that then needs to ship immediately.” Bassett suspects that as the South Korean renewable energy market matures; the move to European style long-term contracts will become more common.

Edward Munro is a Communications & Sustainability Consultant with PR Associates, a Vancouver-based public relations and communication firm.

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