1. Austrian experiences with the introduction of pellets as a fuel Cirat Consorzio Industriale per la Ricerca le Alte Tecnologie

2. Energy in Austria

3. Renewable energy without Hydropower

4. Wood heated dwellings in Austria

5. Sales of domestic pellet boilers in Austria Quelle: Pelletsverband, 2000 Prognose

6. General factors that have supported diffusion kick off ç Rapid advances in technology and design ç Consumer interest - the first comfortable wood heating systems ç Generally positive attitude towards wood as domestic fuel

7. Characteristics of the Austrian market for pellets ç It is very young: emergence of pellets 1994 ç significant start up problems (as with any new market) ç expansion despite relatively poor economic frame conditions ç pellets created high enthusiasm among public and businesses ç two markets: boilers for single family houses boilers for blocks of flats

8. Main problems for market introduction ç 1) Pellet supply ç 2) Pellet delivery ç 3) Pellet storage at the customer ç 4) Pellet boiler ç 5) Installation and service

9. 1) Pellet supply ç Supply security: major concern of potential customers! ç Quality of pellets: low dust content and mechanical stability is fundamental for small boilers high dust content decreases boiler efficiency and causes operation failure pellets from waste wood had disastrous effects: slagging of boilers, discontinued operation

10. 2) Pellet delivery ç Delivery vehicles must evacuate the dust simultaneously by blowing in pellets ç must have adequate pumping force ç should be able to weigh the pellets delivered ç standardised connections to the house inlet necessary ç drivers must be trained (e.g. to inspect the storage room)

11. 3) Adequate pellet storage room necessary ç dry ç no electrical installations (danger of dust explosion) ç solid walls ç dustproof door

12. 4) The pellet boiler ç Many companies jumped on the pellets train too fast ç unreliable devices were introduced into the market (“testing in the market”) ç frequent operational problems - negative impact on the image of heating with pellets ç Since 1998 major Austrian equipment producers offer fully reliable boilers

13. Typical technical problems: ç Overheating of the boiler: slagging of ashes ç High temperature corrosion ç ash deposition in poorly designed heat exchangers: up to 50% efficiency loss ç ash deposition in the burning zone ç serious back-burn problems ç unreliable pellet delivery from the storage room to the boiler

14. 5) Installation and service ç Installers have no experience with pellets ç consequently they prefer to sell oil boilers ç frequent mistakes in installations lead to operation problems ç efficient and fast service is still missing (Service network is expensive) ç new strategy of most advanced producers: service contract is sold with the boiler, 1 full service every year

15. 6) Education of other related professionals ç Architects: design of pellet storage and boiler room, convenient delivery of pellets ç Planners of heating systems ç Chimney cleaners: these could provide service of boilers - new business opportunity! Chimney cleaners could be a strategic partner: they know the old boilers that need to be replaced and can promote pellet boilers

16. Economic situation ç Pellet price: approx. 150 EURO/t incl. delivery and VAT (30 EURO/MWh) ç Pellet boiler: approx. 10.000.- EURO incl. automatic storage retrieval and VAT ç Subsidies: approx. 2000 - 3000 EURO depending on region ç Reference cost for extra light fuel oil: approx 30 EURO/MWh; oil boiler: 4400 EURO incl. tank

17. How to introduce pellets successfully I ç Create public awareness for pellets ç Demonstrate reliable pellet delivery ç Establish strict quality standards for pellets ç Establish strict quality criteria for pellet boilers (high efficiency, low emissions and reliable operation) ç poor boilers are a greater problem for long term market development than expensive boilers!

18. How to introduce pellets successfully II ç Establish investment subsidies for boilers to kick start market development ç Keep poor pellet boilers out of the market (e.g. by excluding equipment that does not meet standards from subsidies) ç In DK level of subsidy was directly linked to emission standard - rapid improvements ç Subsidies for education of professionals, measures to ensure quality, public relations

19. How to introduce pellets successfully III ç Establish and test logistics for pellet delivery - ensure there is an immediate impression that supply is no problem ç Educate and prepare professionals - especially installers before advertising ç Establish a few demonstration plants that represent the state of the art for educational purposes (preferably by experienced technical experts)

20. Which market should be addressed first I ? ç Large scale heating plants +/- not sensitive to pellet quality - very low prices of competing wet biofuels ç blocks of flats + lower specific costs of the boiler + fewer actors that can be addressed directly + less resources for fuel logistics and service network + can become a niche for developing the structures to support diffusion in the domestic sector

21. Which market should be addressed first II ? ç individual housing + have higher conventional fuel costs than larger users + large market + option: pellet stoves as “low barrier system” - high marketing costs - high initial requirements for fuel supply and service logistics - high requirements for education of professionals

22. The Austrian choice ç Individual houses: this choice was made by industry, that was used to deliver to this market. Mainly central heating systems, less stoves ç Selected attempts to introduce pellets into the large buildings segment were rather successful locally ç Barrier: construction companies do not know qualified planners that realise pellet system

23. Summary I ç The introduction of pellets into the heat market requires a comprehensive and complex approach ç problems that are not managed promptly can seriously affect the diffusion process ç It needs a dedicated actor (institution) that co-ordinates and manages pellet introduction - “system building” is necessary

24. Summary II ç One company alone cannot finance system building as all others will take advantage of this ç in Austria two organisations have been created for this purpose: Bioenergy Austria and Austrian Pellet Association ç public co-financing is very important for such initiatives ç investment subsidies for pellet boilers is necessary to overcome high transaction costs and perceived risks of new technology

25. Contacts ç Austrian Energy Agency, Christian Rakos rakos@eva.wsr.ac.at ç www.eva.wsr.ac.at ç Bioenergy Austria (Industrial association of bioenergy companies): www.bioenergy.at ç Pelletverband Austria: Mr Auerbach pva@magnet.at