National Wood Pellet Shortage | Forever Fuels

You may be aware that high-quality wood pellets are in short supply this winter ( I have set out some of the reasons below. But the purpose of this email is to let you know that we have identified a supplementary source of ENplus-A1 wood pellets, from which we can contract additional supplies for this winter.

In this tight market, competition is intense for any pellets that are still available. The price will be high, and anything that we do not commit to now will go quickly. We will allocate however much we can get on a first-come-first-serve basis. If we are unable to secure supplies for you from this source, there is a risk that pellets may be hard to come by when you need them.

If you think you will need further deliveries this winter, please place your orders ASAP and/or speak to our sales team.

Why the wood pellet market is so short this winter
Under the Renewable Heat Incentive, the wood pellet market has grown to exceed UK production, so that it takes a mixture of British and imported pellets to meet demand. Unfortunately, there have been interruptions to the supply of both native and foreign pellets.

UK pellets

  • Verdo Renewables' two factories at Grangemouth and Andover produce around one-quarter of the ENplus-A1 pellets in the UK, or around one-third of GB production (i.e. leaving Ireland out of the equation, which is largely a separate market). Verdo suffered severe losses over several years, and eventually mothballed the factories this summer, as they looked for a buyer. They were sold to Arensis, who have brought them back in to production, but (a) in the meantime, several months of output were lost, and (b) the factories are still not remotely up to their full output capacity. Arensis consume a substantial proportion of the pellets from the factories for their own purposes (mainly producing the energy to run the factories), so this has in effect taken most of this production out of the UK market (particularly while they are running below capacity).
  • Land Energy in Girvan produce around one-quarter of the pellets in GB, but struggled to keep up with demand, to the extent that they put out a notice before Christmas that they had to limit their supplies to core customers.
  • Blazers in Ruthin also struggled to meet core demand, to the extent that they were trying to buy pellets to meet their demand.
  • Intervate, a small producer in Cradley Heath, went into administration and ceased production in December.
  • Balcas is the largest producer in the UK, with factories in Enniskillen and Invergordon. The latter alone is responsible for around one-third of the production capacity in GB. Before Christmas, they were the only producer able to meet demand comfortably. Unfortunately, they have experienced severe restrictions on their output since mid-December, so that they are no longer able to prop up the market. There are multiple causes for these restrictions, but the main factors are (a) the weather in Scotland, which has inhibited harvesting, and (b) radically-increased demand from uses such as board production ( and recursively-subsidised wood-chip drying, which have deprived the sawmills of the logs they need, and therefore restricted the sawmills' by-product, which is a key ingredient in Invergordon's pellets.
  • The net effect of these factors is that British producers have probably contributed around 75-80% of what the market was expecting in the past 6 months. As British pellets make up the majority of pellets sold in the UK, that is a big dent in overall supplies.

Imported pellets

The majority of pellets imported into the UK come from the Baltics, Russia and their neighbours. Harvesting in their boggy forests depends on the ground freezing. Unfortunately, this year, they had an unusually warm and wet autumn. There was a shortage of logs for the sawmills, who therefore had highly restricted production of timber and limited by-product for pelletisation. The situation was so extreme that many producers had to invoke force majeure on their supply contracts. Latvia declared a state of emergency (

The next most common source of imports for the UK is Iberia (Spain and Portugal). The wildfires of last summer destroyed two pellet plants, including one belonging to our partner Enerpellets. It also impacted the availability of fibre for pelletising, although the effect is complex.


  • Although this is mainly a supply crunch, there has been some strengthening of demand, which exacerbates the problem.
  • The number of pellet-heating installations in the UK is not growing much, thanks to changes to the RHI tariffs, but there was a surge in installation of pellet-fired CHP units last year, under a different set of RHI tariffs.
  • On a Europe-wide basis, there has been some continued growth in pellet-heating installations, particularly in Italy, Spain, Portugal, France, Germany, Poland and Finland.
  • On a European average, temperatures this winter have been more normal than the abnormally-warm winters of the previous 3 years. Demand for heating fuel varies much more according to the weather than demand for electricity. The swing in demand from a warm year to a cold year can be over 20% (annually, implying a larger swing in winter when most of the difference occurs) even if there is no change in the number of installations.
  • On an annual basis, there is enough production to meet demand across Europe. But most of the demand in the UK falls in the few winter months. At that time, the factories cannot keep up. The simple answer to this is that wood pellets need to be put into storage in summer, but British consumers have been willing neither to pay for the cost of their suppliers doing that, nor to put in stores that allow them to take a good proportion of their requirements in summer. Until this winter, they got away with it, because excess production capacity disguised the need. This winter, reality has caught up.
  • Drax power station in the UK is comfortably the largest single consumer of wood pellets. We are told that they decided to source a larger proportion of their pellets from Europe this year. Many pellet producers can easily switch between producing industrial pellets for power generation and premium pellets for heating appliances. Although the price is generally lower, there are a number of attractions for producers in producing industrial pellets rather than premium pellets. Some European production was diverted from the heat market in this way.
  • Some new biomass generating stations in northern Europe went into production last year, and further increased the demand for industrial pellets.

After years of over-supply and prices below the level necessary to make a return, there is no rush to expand production capacity to meet this increasing industrial demand. And production of heating pellets is unlikely to increase significantly in the UK. Although there are still one or two optimists coming into the market, it would be the triumph of hope over experience to trust government policy enough to invest in producing wood pellets for the British heat market.

Drax announced recently that they will convert a fourth unit to biomass this summer ( To put that into perspective, the demand for industrial pellets for that unit alone may be double the total British demand for heating pellets. Other biomass generating stations are expected to go into operation in Europe by next winter. This winter's stresses may be just the start, but we will cross that bridge later. For now, the focus should be on securing enough fuel to stay warm this winter.

Sustainable wood pellets, authorised by the Biomass Suppliers List (ID:BSL0037716-*) ENplus A1 accredited wood pellet trader (ID:UK302) Operating to ISO 9001 standard, audited by ACS Operating to ISO 14001 standard, audited by ACS Wood Heat Association member UK Pellet Council member REA Awards Winner 2015: Company of the Year