“The general trend is that the drop in the price of biomass has made it easier for residents in the winter,” said Vaidotas Jonutis, sales manager of Baltpool, while reviewing the changes in heating prices in the market on Thursday.
According to him, last year, when preparing for the heating season, biofuel sellers were optimistic, so they prepared a large amount of biomass raw material. According to V. Jonutis, this stabilized the entire biofuel market.
“It turned out that the amount of prepared biofuel was too high, and prices began to drop significantly. The furniture industry also contributed to this, which slowed down, and biofuel market participants did not have to compete for raw materials by increasing their prices,” V. Jonutis said.
According to him, heating in Lithuania has become cheaper, by 40 percent. this year due to the decrease in biofuel prices. According to Baltpool, during the recently ended heating season, the average price of biofuel was 23.58 euros per MWh, after rising to 38.9 euros per MWh in the 2022-2023 heating season. According to V. Jonutis, this year long-term transactions on the heat exchange should be formed at approximately the same price, 23.58 euros per MWh.
“Heat prices returned to pre-war levels last heating season. (…) A good example of how the market is able to recover after the experienced supply shock, when EU sanctions stopped the import of biofuels from third countries”, says Baltpool.
It is true that, according to Baltpool, downward trends in biofuel prices will be observed in all Baltic countries from 2022. According to the stock exchange, they decreased by 31 percent in Latvia. and as a result, heating became cheaper by 30%, when the price of biofuel in Estonia became 26%. lower, and the heating tariff decreased by 9 percent.
“The structure of fuel has a lot to do with it, last year it was especially influenced by the price of gas, which has its own influence in different countries. And you should not think that only biofuel led to the decrease in heating prices last year. But already this year, the influence of (biofuel and gas prices – ELTA) was less, the gas market was much more stable, and the biofuel market was also calmer. (…) Therefore, heat prices in Latvia and Estonia are very similar, in Lithuania they are lower,” said V. Jonutis.
Under normal market conditions, according to V. Jonutis, the price of biofuel is mostly determined by the price of firewood. According to Baltpool’s calculations, it decreased evenly in all three Baltic countries during the last heating season.
“Firewood is usually the most expensive range of raw materials that participates in the biofuel market. It forms that last megawatt hour price. (…) The drop in the price of biofuel is faster than that of firewood. This is probably related to the fact that state forests in all Baltic states have long-term contracts and biofuel producers must fulfill them. As a result, going from more expensive years to cheaper ones, that period is prolonged when the price of biofuel seems to be already falling, and the price of firewood remains quite high,” explained Baltpool’s representative.
According to him, firewood is the cheapest in Estonia, Latvia and Lithuania, it is a little more expensive.
“Baltpool” is an international biofuel exchange, which organizes wood and heat auctions in Lithuania, and administers public interest services in the electricity sector. Baltpool belongs to the state-owned energy group EPSO-G. The biofuel exchange is supervised and regulated by the State Energy Regulatory Office (VERT).
Tags: Baltpool Heat prices returned prewar levels heating season
