© Copyright 2015 AIEL Country Report: Italy

© Copyright 2015 AIEL About AIEL? The Italian Market from a Global Point of View The Figures of the Italian Pellet Market Contents

© Copyright 2015 AIEL ABOUT US The Italian Biomass Industry Association

© Copyright 2015 AIEL Plant designers AIEL: Structure and Organisation Biomass Industry Association (300 members) Representing the entire supply chain “From Forest to Chimney”

© Copyright 2015 AIEL THE ITALIAN PELLET MARKET FIGURES The Biggest European Market for Domestic Pellets

© Copyright 2015 AIEL Gross Energy Consumption in Italy Electricity Heating Transportion Source: GSE –2014 Mtoe Thermal Energy consumption for the residential and commercial sectors Gross Thermal Energy Consumption 59 Mtoe

© Copyright 2015 AIEL The Italian Market Wood Pellet Market (fuel): Large Scale (power plants) Medium Scale (district heating) Small Scale:  In room  Central heating

© Copyright 2015 AIEL Pellet Consumption in Italy % is consumed in the residential sector ~2,9 Mln tons Big boilers use mainly woodchips

© Copyright 2015 AIEL Pellet stoves – the most frequently used technology 81% Of pellets is consumed in pellet stoves Picture: Propellets Austria

© Copyright 2015 AIEL 15% of pellets is consumed in residential pellet boilers Pellet boilers – the most frequently used technology Picture: Propellets Austria

© Copyright 2015 AIEL Expected Pellets Consumption by 2017 Due to a drop in demand in 2013, the consumption was roughly the same as in 2012 Main causes: mild winter (-30% of heating energy demand) and cheaper oil The prediction is to reach 3 Million tons in 2015

© Copyright 2015 AIEL Sales peak in 2006 and 2013, ~275,000 new stoves Over 2.2 million stoves Strong competition on the market with low margins for the stove manufacturers Pellet Stoves - The Main Market Segment 2013 Source: REF-e 2014

© Copyright 2015 AIEL Source: AIEL – GAD Results of over 170 companies European Pellet Stove Market – An Italian Record Picture: Palazzetti European Market 470,000 pcs/year Italy: more than 50% More than 90% of stoves are produced by Italian companies Share of sales in EU

© Copyright 2015 AIEL Pellet Boilers -The Main Market Segment Sales peak in 2013, ~13,000 new boilers Pellet is the market leader for boilers up to 100 kW In 2014 more firewood boilers installed than pellets 2013 Source: REF-e 2014

© Copyright 2015 AIEL Pellet Consumption and Imports Italy is strongly dependent on imports The dependence is predicted to grow further The import patterns are changing Source: Eurostat, AIEL,2014

© Copyright 2015 AIEL Italian Pellet Import Suppliers Western Europe is still the main supplier ~680 kt in 2014 North America is growing Other suppliers like South America are more and more present The pie itself is growing Source: Eurostat | AIEL Million tons Million tons 11%

© Copyright 2015 AIEL Italy Imports. Top 5 Origins in 2014 Austria, still #1 origin Canada, 2 nd place in the last 2 years USA, marginal in 2012, 3 rd in 2014 taking the place of some East EU countries Lithuania is growing Germany. Same level as 2012

© Copyright 2015 AIEL Cost of Pellets vs Other Heating Fuels Pellets is still competitive when compared to other fuels July 2015 VAT and taxes included, delivery excluded

© Copyright 2015 AIEL Main concerns of market operators Mild Winter and VAT are the main concerns Substantial amounts of pellet in warehouses April In progress 0- to 5 Scale

© Copyright 2015 AIEL CONCLUSION

© Copyright 2015 AIEL We predict a constant growth of the Italian domestic pellet market Huge potential for existing systems replacement Further attention to be paid for the increase of user awareness as well as best practice and correct installation Conclusion

© Copyright 2015 AIEL THANK-YOU FOR YOUR ATTENTION