Cato Kjølstad, Managing DirectorNorwegian Bioenergy Association

The Norwegian bioenergy sector – plans, policies and market opportunities

The Norwegian Bioenergy Association - facts• Approx 350 members along the complete chain of values:

– Forest owners – Forest Industry– Producers of wood chips and wood pellets– Equipment manufacturers– Foreign companies selling bioenergy solutions (through agents, representatives)– Producers and distributors of thermal energy (both large scale and small scale

companies)– Consultants– Biofuel companies (import, production and distribution)– Other (industrial) companies taking position in the bioenergy market

Nordic cooperation with Svebio, Danbio and FinbioMember of AEBIOM with office in Brüssels

How we work:• Influencing (lobby activities) Governmental Policy on relevant issues• Information (communication) to members, the public and other stakeholders

(www.nobio.no)• Cooperation through sector network, arranging relevant seminars etc.

Main goal: Profitable production and distribution of bioenergy based on a significantly increased share of the energy market

Global warming requires renewables

• Bioenergy is a part of the solution

Use of energy in Norway – 228 TWh

2008 © Statistisk sentralbyråThe use of bioenergy today is approx 14,5 TWh

Total end use of different types of energy in 2008 [%]

coal6% bioenergy

5%

oil35%

gas3%

electricity50%

district heating1%

5

Production of energy in Norway - 2008 TWh

Source: Statistics Norway 2009

100%225.32,668.6Total

49%111.5165.3Hydropower

44%100.02,488.9Fossil fuels

6%13.814.4Bioenergy

PercentDomestic usePrimary energy production

Energy source

The production of energy in Norway

Source: www.ssb.no

Total energy production: 2,550 TWh

electricity; 135 bioenergy; 15

coal; 31

oil and gas; 2369

Stationary energy supply in Norway

• Historically, Hydro Power was available in abundance at low prices for many decades (120 TWh) up to 2003

– and a dominating part of the heating market is based on electricity (hydro power)– approx. 30 TWh electricity used for heating & hot water in houses– The total market for heating solutions represent approx. 55 TWh (when we include industry, public sector etc.)–The rest of the heating market is fulfilled with oil, gas and bioenergy

• To day: Almost full stop in the development of remaining major waterfalls due to preservation of nature – significantly increased prices for electricity after 2003 - further development of renewable energy

• Establishing Enova SF represents a shift in the Norwegian energy approach

Use of bioenergySweden compared with Norway

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NO-bio

• The Norwegian Government released a document in April in 2008 :

– A strategic plan for Bioenergy in Norway– Main goal: 14 new TWh within 2020– The level of bioenergy production and use in 2007 was 14,5 TWh

• NoBio : – Realistic or not ?!

• At least It requires an action plan !• It has to be a part of the agreement between Enova and OED

A strategic plan for Bioenergy in Norway (I)

• The Norwegian Government :

– It is realistic to reach the goal and hereby double the domestic production and use of bioenergy (April 2008)

• NoBio : – We expect that Norway will be a visible player in the bioenergy

market

A strategic plan for Bioenergy in Norway (II)

To lift the level up with 14 new TWh within 2020………………

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To days financial situation …requires actionNoBio:

• The financial situation requires both private capital and financial solutions from Enova, Innovation Norway in the short term etc

• R & D – in the long term

• Invest in climate solutions and renewables

• Increase the investments in Bioenergysolutions

The market opportunities for bioenergy (I)

• The market consists of production of wood chips and –pellets, bioheat, biopower (CHP), biogas and biofuel (for vehicles)

• The traditional paper & wood industry has utilized bioenergy for quite a number of years, and obviously represents a market for manufacturers

• Wood resources utilized today is approx. 8 mill m3– realistic potential is 16 -20 mill m3– technical potential is approx 25 mill m3

Several market opportunities along the complete chain of values; the typical project

will be small – investments 5 – 20 mill NOK

The market opportunities for bioenergy (II)

• The Norwegian bioenergy market for general energy supply is still in its early phases - in particular for market development

• The bioenergy market is part of the market for – district heating systems– but also consist of single industrial users– as well as households– small scale Local Energy Suppliers (L E S)

Several market opportunities along the complete chain of values; the typical project

will be small – investments 5 – 20 mill NOK

Examples:The market opportunities for bioenergy (III)

•Traditional large energy suppliers (based on various energy solutions) is playing a more dominating role in the bioenergy market for district heating. Their plans for investing in new bioenergy production is estimated up to approx 6 TWh within the next 2 - 4 years

• A Norwegian consulting firm, X-rgia, has estimated that there will be established a new production of approx 7 TWhbased on ”local” bioheat within 2020

• An example; A new CHP will be able to produce power for approx 10,000 households and will be combined with pellet production on a level of 450,000 tones per year

- (the Norwegian production to day is on a level of 60,000 tones and 50% is exported)

Barriers in the market ?

Wood resources (and waste)

Biomass production

Production of thermal energy

Distribution of hot water

Barriers in the market of bioheat

1: Lack of market(Lack of bioheat-systems in buildings)

2: Lack of profit (a high cost level)….caused by

- low price on electricity

- High level of cost (investments) when establishing new bioheat

- a special solution in Norway that gives companies lower electricity

price (net-connection) if they have a stand alone energy back-upavailable

3. In some parts of Norway the value chain for utilizing the biomass for the bioheat producers

is not fully developed !

Source: ”Barrierestudiet 2007”

Customer groups

• Companies related to the forest owners

• The wood and paper industry

• The producers and distributors of thermal energy

• The retailers for households

•The agriculture sector (small scale L E S)

Limited production of hardware in Norway –significant share is imported, mainly

from Nordic countries, Austria & Germany

Summary

• Good timing for a significant lift in activity for renewable energy

• Potential for further business development –both for the Norwegian and the international industry

• The mix of the market and the level of governmental action decides whether we will reach 14 new TWh