A lot more wood is about to pass through Prince Rupert — as pellets.
On Friday, the company that owns Westview pellet terminal, Pinnacle Renewable Energy Group, announced they have finalised a contract to sell 70,000 metric tonnes of wood pellets annually to a Japanese conglomerate, Ube Industries Ltd., by the end of 2019.
“Japan has made a strong commitment to decarbonization, and biomass is posed to become an increasingly important part of the country’s energy mix,” said Robert McCurdy, Pinnacle’s CEO.
The long-term take-or-pay contract guarantees Pinnacle Renewable Energy Group will receive payment for its pellets — even if future demand decreases in Japan.
Biomass fuels, including wood pellets, are in high demand in Japan. The demand for wood pellets is buoyed by a feed-in tariff, which is a system where independent producers are paid for their contributions to the national grid. This is already established as part of Japan’s carbon-reduction program, as a result independent biomass power plants have proliferated across the country.
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As of September 2017, more than 800 independent projects had received government approval with a total proposed power generation capacity of more than 12.4 gigawatts — equivalent to the power generated by 12 nuclear reactors. At least 10 of those plants are in the late-phase development.
As more plants come on-line, Japan’s demand for biomass —including Canadian wood pellets — is projected to increase by more than 350 per cent. Yet in Japan, questions remain by analysts about the feasibility of so many biomass projects. Japan’s energy grid is not equipped to handle so many independent power plants and many of the proposed plants don’t have a guaranteed long-term fuel source.
There are also concerns among climate change analysts about the overall reductions in carbon emission gained by biomass-based electricity generation.
Pinnacle, regardless, has a guarenteed deal with Ube Industries and continues to grow its business.