FUEL PEAT INDUSTRY in EU Country Reports Finland Ireland Sweden Estonia Latvia Lithuania
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PROJECT REPORT PRO2/P2079/05 30.12.2005 FUEL PEAT INDUSTRY IN EU Country reports Finland Ireland Sweden Estonia Latvia Lithuania Authors Teuvo Paappanen & Arvo Leinonen (editors) Publicity: Confidential VTT PROCESSES PREFACE This work was ordered and funded by European Peat and Growing Media Association (EPAGMA), with Kati Kaskeala as a contact person. The work was coordinated by VTT in Finland and the person in charge was Arvo Leinonen. The authors of the country reports were: Biosystem Engineering, NovaUCD from Ireland, Matti Parikka from Sweden, Sulev Soosaar from Estonia, Ansis Šnore from Latvia, Albinas Cerniauskas and Juozas Daukantas from Lithuania and Teuvo Paappanen, Arvo Leinonen, Martti Flyktman and Kari Hillebrand from Finland. The separate summary report has been made by VTT according to results of the country reports. The summary report is published under the title “Fuel peat industry in EU, summary report 2006”. Editors 3 04.01.2006 FUEL PEAT INDUSTRY IN FINLAND Authors Teuvo Paappanen, Arvo Leinonen, Martti Flyktman and Kari Hillebrand SUMMARY The objective of the study is to give a clear picture of the overall socio-economic and energy impact of peat used for energy purposes in the European Union. This breafing is a country report of Finland. The breafing describes the peat industry related to production and use of fuel peat and shows the socio-economic and energy impacts on national, regional and local level. Finland has three major peat producers, Vapo Oy (total production area 50 500 hectares), Turveruukki Oy (6 900 hectares) and small-scale producers (about 250 producers, 7600 hectares). The typical annual production volume in 2000’s has been 11 – 25 TWh, and on average about 19 TWh, 1 630 ktoe. The share of milled peat has typically been 92 % and the rest is sod peat. The manufacturing of peat pellets started in 2004 and the volume is about 45 000 tons. Peat is mainly used in CHP-power plants. The total number of largest power plants is about 60, from which 20 are municipal, 27 industrial plants and 10 plants produce condensing power. The categorization of plants is not unambiguous, because many power plants serve both public and private sector and the production of condensing power is determined by energy markets and fuel prices. The boiler capacity of individual plants is 20 – 550 MWth being about 7 200 MWth in total. The annual peat use in municipal plants in 2000’s has been 690 – 1030 ktoe (8 – 12 TWh), in industry 515 – 600 ktoe (6 – 7 TWh) and on production of condensing power 260 – 860 ktoe (3 – 10 TWh). Industrial power plants are mainly on forest sector, where peat is used to compensate the poor heat value of own fuels, e.g. by-products like bark and sludges. The number of district heating plants is over 120 and the peat use about 170 ktoe. The use of energy peat on recent years has been 5 – 7 % from the total energy consumption, being 6,6 % in 2003. In 2003 about 8 % of all electricity was produced with peat. In municipal CHP-plants this share was about 16 %, in industry about 6 % and in condensing power generation about 8 %. Considering the households connected to district heating network and fuels used on heat production, it can be estimated that the calculatory number of people getting heat from peat is about 480 000. Similarly, the electricity which is produced with peat and delivered to network could heat about 310 000 average size detached houses. The peat use is lowest on southern parts of the country and it increases towards north- east. The highest share of peat use on county level was about 83 % from the total fuel use and the average share was about 40 %. The total employment effects of peat at present production level can be estimated to be about 7000 man-years, which include direct and indirect employment. The employment of production is 3300 man-years, transport 850, processing of peat 160, power plants 2500, consulting services and R&D 110 and covernmental activities 50 man-years. The total direct employment effects are 3400 and indirect effects 3600 man-years. The employment effects at regional level are emphasized, because production volume is 2 largest on the northern and eastern parts of the country. These parts have less living opportunities than on more populated southern parts of the country. Peat brings also extra income to farmers, whose living is limited by the small farm size and poor climate conditions. The value of domestic peat sales at present situation is about 200 million euros. At the moment the international trade of fuel peat is not significant. The basic idea of Finnish energy management is to emphasize the decentralized energy production, which forms of many fuels and delivery sources and has sufficient domestic content. Due to this, the production and use of domestic fuels has been developed. Large investments have been made to peat-fired plants and to the integrated use of peat and wood in recent years. The use of peat and wood is strongly tied together. Existing power plants use wood fuels as much as availability and technical restrictions of boilers allow. Peat is either main fuel or it supports and supplements the use of wood, when problems arise on availability and quality of wood. The volumes of reserve supply of peat in 1990’s has correspond to 9 – 17 months use which, together with stable price of peat makes peat a good fuel for power plants. The predicted weakening position of peat on energy market and the substitution peat has been studied. Wood (forest chips and by-products) and agro-biomasses are the domestic alternatives to peat. By-products can be divided to saw dust and bark. The replaceability of peat depends on the power plant’s fuel handling system, boiler technique and the properties of a fuel. On fluidized bed boilers by-products can be used as an only fuel, but in practice the low energy content limits the use. The increase of by-products is possible only if production capacity of forest sector or production increases, if the starting point is to secure the upgrading of by-products with present volumes. The availability of forest chips varies between regions. The main restricting factor of forest chips use is the boiler technique. The combustion of chips produces slag layers to superheaters, which weakens the heat transfer. The difficulty on agro-biomass use is the low energy density of fuel. The replaceability of peat with imported fuels like coal, oil and natural gas depends on the individual boiler. Some power plants can theoretically replace all peat with coal. In practice, the quality and availability of coal and transport of coal can become a problem. Bubbling bed boilers are the most common type of fluidized bed boilers and in these boilers the use of coal is limited. The use of natural gas is limited by the distribution network, which covers only minor part of southern Finland. 3 PREFACE This breafing describes the effects and importance the fuel peat industry in Finland. The work was ordered and funded by EPAGMA (European Peat and Growing Media Association). This report was made in VTT Processes, which is one research unit of Technical Research Centre of Finland. The person in charge of this work was Arvo Leinonen from VTT Processes. Teuvo Paappanen, Kari Hillebrand and Martti Flyktman from VTT participated also to the preparation of the report. The breafing is based on research results and clearings made by VTT, ElectroWatt-Ekono, Ministry of Trade and Industry, Thule Institute and peat producers and users, to mention the most important ones. 4 CONTENTS SUMMARY ......................................................................................................................2 PREFACE..........................................................................................................................4 1 BACKGROUND AND TARGET...............................................................................6 2 INDUSTRY AND PEAT.............................................................................................6 2.1 PEAT PRODUCERS.........................................................................................6 2.2 PEAT USERS.....................................................................................................7 2.3 MACHINE MANUFACTURERS .....................................................................8 2.4 CONTRACTORS...............................................................................................9 2.5 SERVICE COMPANIES...................................................................................9 3 IMPORTANCE OF PEAT ..........................................................................................9 3.1 IMPORTANCE OF PEAT IN NATIONAL LEVEL ........................................9 3.2 IMPORTANCE OF PEAT IN REGIONAL LEVEL.......................................10 3.3 IMPORTANCE OF PEAT IN LOCAL LEVEL..............................................12 3.4 ECONOMIC ASSESMENT............................................................................14 3.5 PEAT SALES...................................................................................................15 3.6 INTERNATIONAL TRADE ...........................................................................16 4 THE ROLE OF PEAT IN SECURITY OF ENERGY SUPPLY ..............................16 5 STAKEHOLDERS ....................................................................................................17 5 1 BACKGROUND AND TARGET The objective of the study is to give a clear picture of the overall socio-economic