Biomass demand is rising, and so are raw
material costs. Here’s why…
There are many challenges that we face in our industry, machinery costs, seasonality of sales, dealing with a natural product, and raw material costs.
The price of wood has risen steadily over the past few years. In fact since we started in 2005, the price of our raw material has risen by about 300%! There are a few factors that have been driving these prices.
The biomass market
over the last 15 years, burning wood to create heat and/or electricity has become much more popular especially with some Government backed schemes to incentivise renewable energy. This has led to the increased demand for low grade softwood and more recently, hardwood. This is usually chipped into small pieces about the size of a £2 coin, and then burnt. With the installation of several large scale power stations consuming up to 250,000 tonnes each per year, this biomass shortage has put upwards pressure on the timber prices across the board.
According to the SIA (Stove Industry Alliance) around 175,000 wood burning stoves are installed each year. If these stoves are consuming around 3m 3 of firewood per year, then this is an extra 525,000m 3 of firewood required per annum.
Although the majority of firewood is produced domestically in the UK, an increasing amount is being imported from the Baltic states. We source all our wood from local woodlands and estates, and have never imported wood, however it does have a bearing on domestic cordwood prices. When the pound is weak, it makes the imported wood more expensive, and thus encourages domestic production. This increased production can cause a short supply, and then prices in turn rise.
We are a member of Grown in Britain, and they have gathered some hardwood pricing data. This shows that mixed species cordwood is up 10% – 15% and ash cordwood has risen by as much as 30% over the past 12 months. In November 2018 at the annual hardwood auction, one lot was sold for almost 50% more than a comparable lot from the year before.
This is not all bad news however. Due to the increased prices, this will incentivise land owners to bring woodland into management that may not have previously been
economically viable to do so. When we started firewood production in 2005, the land owner would have been losing money on the wood that we purchased. This is because the prices that were being paid, would not have covered the felling costs and haulage costs. Now that the prices have risen, there is a financial incentive to bring many thousands of acres of woodland into management across the UK.
We will continue to work with our suppliers to bring you the best quality wood, at the most reasonable price possible