Price trends in the Swedish wood-fuel market

Abstract

The state of the market for wood fuel, mainly used in district heating, in Sweden has been surveyed, enabling trends in market prices to be established. This market has grown significantly during the past 15 years to around 36–43 PJ (10–12 TW h) per annum. During 1984–1994, the current price was stable at Swedish Krona (SEK) 28/GJ (SEK 100/MW h, $US 4/GJ). This is equivalent to a price drop of almost 50% in real terms. Short-term prices continue to fall, reflecting the fact that high energy taxes on fossil fuels cause wood fuels to be highly competitive in the district heating market. The increase in the use of wood fuels during recent years has not increased the market price as supplies have increased. Significant quantities of sawdust and other by-products from the wood-processing industry, as well as smaller amounts of imported wood, have reached the market at a low price, resulting in additional price drops. In the future, the use of wood fuels is expected to continue to grow to include the use of short-rotation energy forests. At the same time there has been a significant increase in the use of wood fuels which have been mechanically processed to improve their quality. These include briquettes, pellets and powders which command higher prices in new markets. This increasing use of wood as fuel has not increased market prices, which are expected to remain stable in real terms, reflecting the ample supply of wood fuels and a forecasted stability in the competing prices of fossil fuels.