Analysis of public procurement of pellets and briquettes

21/03/2023

Pellets and briquettes produced from biomass are a high-quality fuel successfully used in heating boilers for the budgetary and communal spheres or the facilities of state-owned institutions and organizations. Wood pellets, sunflower husk pellets, and various types of briquettes are in the most significant demand. Biomass pellets have a sufficiently high heating value that is 14-17.5 MJ/kg. Other advantages are a convenience for transportation and storage and the automatic process of supplying fuel to the boiler, which reduces the amount of manual labour and staff.

In general, in the period 2020-2023(February), contracts for the supply of about 50,000 tons of fuel pellets and briquettes from biomass, which is equivalent to 70,000 GJ of energy, were concluded only through the public procurement system.

Pellets and briquettes public procurement | 2020-2023

The procurement of pellets and briquettes is carried out in all regions of Ukraine. The total is 280 settlements. About 250 supply contracts from 1 to 10,000 tons are concluded annually. In recent years, there has been a significant increase in the volume of fuel purchases and the number of signed contracts. In particular, purchases increased from 12 thousand tons in 2020 to 16 thousand tons in 2022, and the corresponding volume of contracts increased from UAH 33 million/year to UAH 117 million/year. Over 300 unique suppliers won auctions for the supply of pellets and briquettes during the specified period. Individual entrepreneurs are the leading biofuel suppliers, and only 50% of them have concluded more than 1supply contract. Only 11 suppliers concluded more than 10 contracts, which provided more than 25% of the total procurement volume.

In the period from 2020 to 2023(February), the average price of biofuel in Ukraine increased by 2.8 times:

2021 – 4,488 UAH/t (+52%);
2022 – 8,371 UAH/t (+87%);
2023 – 9,114 UAH/t (+6%).

The highest prices in 2022 (10-13.8 thousand UAH/t) were recorded in Chernihiv, Chernivtsi, Khmelnytskyi, Kyiv, and Zakarpattia regions. The lowest price level of up to UAH 7,000/t was maintained in Ternopil, Kirovohrad, and Mykolaiv regions. In general, in 2022, contracts were concluded for supplying 560 tons of pellets at 15,000-20,000 UAH/t, about 34% of the total annual volume.

The highest prices in 2022 (10-13.8 thousand UAH/t) were recorded in Chernihiv, Chernivtsi, Khmelnytskyi, Kyiv, and Zakarpattia regions. The lowest price level of up to UAH 7,000/t was maintained in Ternopil, Kirovohrad, and Mykolaiv regions. In general, in 2022, contracts were concluded for the supply of 560 tons of pellets at a price of UAH 15,000-20,000/t, which is about 34% of the total annual volume.

In 2023, a decrease in purchase prices for solid biofuel is already observed, particularly in the regions with the highest level of prices.

Informative diagrams are available at the link (in Ukrainian).


The analysis was prepared by Yevhen Oliinyk, an expert of the Bioenergy Association of Ukraine, for the SAF Ukraine.