Though the prices of wood and woodchips is rising, it is still the cheapest local heating resource in Latvia, Latvian Radio reported February 14.

The director of the Ministry of Agriculture (ZM) Forest Department Arvīds Ozols estimated – in Latvia, the woodchips would be used in Latvia permanently because it is a local renewable natural resource and also a major export good of Latvia.

“It is a normal by-product of wood which cannot be used otherwise and which goes to energy. If we are talking about exports, it has grown in recent years. In 2019, 1,800,000 tonnes per year were exported, 1,740,000 tonnes in 2020, and 1,700,000 tonnes in November last year. Chip is a rather low-density product, so it is not taken far, mostly to Scandinavia and Germany. [..] Latvia can provide virtually the entire [local] thermal consumption with these chips and granules,” sai Ozols.

Wood chips are also imported into Latvia. In 2019 and 2020, Latvia imported around 800,000 tonnes, but there were only 320,000 tonnes of chips imported last year.

Kristaps Klauss, executive director of the Latvian Forest Industry Federation (LKF), said that last year there was a significant reduction in imports of chips from Belarus, which was widely used for municipal heating. If last year 1 megawatt-hour (MWh) of heat cost EUR 14, the price is currently EUR 25.

“Belarus is a pretty large country for wood processing, but it still has not developed the recycling of byproducts, and they, in my view, mostly get their heat through Russian gas rather than their local renewable resource. If we’re talking about 2021, then in the first half of the year we continued to buy chips at the usual levels. But in the second half of the year, thanks to many factors, like geopolitics, like the unwillingness of banks to serve money transfers to Belarus, Latvia’s tougher criteria for the quality of chips, it could actually be said that in December chip import stopped.

“From the beginning of this year, Belarusians have also implemented an additional economic brake on exports of wood products, including the export of chips amounting to EUR 5 per MWh for wood fuels. For this reason, there is no hope that the Belarusian chip will still be a cheap raw material, cheap fuel,” said Klauss.

Wood chips are a local resource, and even though prices are rising, it will anyway be cheaper than natural gas or electricity.

“Very many have started to use this wood fuel more intensively and there is no reason to think that it should continue to cost, for example, EUR 14 per MWh if the price of natural gas exceeds EUR 80 or, for example, electricity exceeds EUR 150 per MWh. Wood heating are still the most cost-effective. Unfortunately, the levels we were accustomed to and believed were right, were inadequately low from the producer’s point of view. This does not mean that the old agreements have all become so expensive, the weighted average price is, of course, still below 20 MWh on the market,” said Klaus.

At present, in Latvia’s centralized heating, half of the fuel used is gas, the other half is wood chips and granules.

lsm