Analysis and projections of biomass fuel prices

In association with the Technical University of Denmark, Ea Energy Analyses carried out a study for the Danish Energy Agency (DEA), which is part of the DEA’s periodic publishing of long-term projections of fuel prices for socio-economic analyses.

The key output of the study was price projections for solid biomass fuels (wood pellets, wood chips and straw) for the period of 2013 – 2050, with particular focus on the period until 2035.

The price estimation approach deployed in this study was comprised of the following primary elements

1. Global long-term biomass supply and demand dynamics were modelled using the Global Change Assessment Model (GCAM). The model derives a global energy biomass price for the modelled years, in principle by finding an equilibrium price between global long-term supply and demand for biomass.
2. Thereafter the scenario yielding a global biomass energy demand that most closely resembles that from the World Energy Outlook 2012, New Energy Policies pathway was selected. The scenario output is in the form of a price path development for a simulated global market for an unrefined biomass resource, a price that should be interpreted as ‘at forest’.
3. This price was then further adjusted and processed to emulate a CIF Denmark price under the assumption that Denmark is a biomass importing country. This adjustment incorporates costs associated with the treatment, processing and local and international transport of the biomass, and reflects assumptions related to those regions that are expected to export to Denmark in the future.

The primary deliverables were a tailor-made excel-based model, and a report describing the analysis findings.