Market Snapshot: Rising Wood-Pellet Boiler Capacity in the NWT Highlights Biomass Adoption as Heating Fuel

Release date: 2015-09-02

The climate, geography, dispersed population and limited infrastructure of remote Canadian communities contribute to a unique pattern of energy use. These communities rely heavily on imported refined petroleum products (RPPs), mostly diesel, for their fuel needs. This results in an expensive and emissions-intense energy mix. There are options that remote communities can pursue for both economic and environmental reasons. Examples include batch deliveries of liquefied natural gas (LNG), and wind, solar, and biomass resources. The Northwest Territories' (NWT) adoption of biomass in the form of wood pellets for heating fuel exemplifies the potential that remote communities have to exploit energy alternatives.

Figure Source and Data

Source: Arctic Energy Alliance

Description: The chart above aggregates registered wood-pellet boiler installation data in the NWT stacked according to the year of registration (or 'vintage'). The chart illustrates the increase from about 2 MW to more than 20 MW of registered wood-pellet boilers in the NWT since 2006. Note that this chart omits wood stoves, wood-pellet boilers that have not been registered, and any boiler that was registered prior to 2006.

Since 2006, registered wood-pellet boiler capacity in the NWT has increased at an annual compound rate of 34.6 per cent. Such growth is indicative of an established trend, rather than an emerging one. As of May 2015, 88 wood-pellet boilers have been installed in 33 NWT communities. Approximately 10 per cent of commercial buildings and nearly all government buildings in the NWT are using biomass boilers. The Wood Pellet Association of Canada recently reported that wood pellets are currently being consumed in the NWT at rate of 30 000 tonnes (579 TJ) per year.

These boilers burn pellets that are mainly manufactured from both logging and sawmill residue to supply space and water heat. Wood pellets are fed into the boiler using an auger that is connected to a wood-pellet storage container. The use of wood-pellet boilers often requires that the oil boiler remain as a back-up for two reasons: firstly, pellet heat is only efficient when burned continuously and secondly, pellet boilers generally lack the capacity to meet peak heating requirements on the coldest winter days. Because of this, pellets will typically be used for 90 per cent of heating requirements and heating oil is used for the remaining 10 per cent.

The majority of the movement towards biomass in the NWT is price-driven. The figure below illustrates the price of wood pellets versus heating oil in three NWT communities and shows that pellets have remained competitive even in the current low oil price environment. This price advantage, combined with the fact that the NWT has high heating requirements, creates a large fuel-saving opportunity for each potential adopter. Furthermore, wood-pellet prices do not face the same volatility that affect oil and natural gas-based fuel prices.

Figure Source and Data

Source: Arctic Energy Alliance Fuel Library, June 2015

Description: This chart compares the price of wood pellets to the price of heating oil for three communities in the NWT on a dollar per gigajoule basis as of June 2015. In all three communities, the price of wood pellets is less than the price of heating oil, illustrating the competitiveness of the fuel. In Yellowknife the price of heating oil is 26.42$/GJ and wood pellets is 16.84$/GJ. In Fort McPherson the price of heating oil is 43.85$/GJ and the price of wood pellets is 38.86$/GJ and in Fort Smith the price of heating oil is 23.97$/GJ and the price of wood pellets is 13.89$/GJ.

Several Canadian provinces and territories are working together to reduce the reliance on imported RPPs in remote communities. An example of this is the Pan-Canadian Task Force to reduce the use of diesel fuel for electricity generation in remote communities. The success of wood pellets in the NWT might serve as an implementation roadmap for other remote communities for reducing RPP usage and a shifting towards a less costly, less emission-intensive energy mix.

Date modified: