Buy Wood Pellets or PKS (Palm Kernel Shell)?

The need for biomass fuel as a decarbonization effort because it is a renewable fuel that is carbon neutral is increasing. Two biomass fuels that are popular in the world and compete fiercely are wood pellets and palm kernel shell (PKS). Under normal conditions or without a spike in demand, the price of wood pellets is usually more expensive than PKS. This is understandable because wood pellet production requires more effort than PKS. Wood pellet production requires a number of equipment with an expensive investment, while PKS only requires minimal equipment, namely just a screening/sieving machine.

But what if the prices of wood pellets and PKS are almost the same or even PKS is even more expensive? This can happen due to several factors, namely first, the influence of market demand. High market demand, especially PKS from Indonesia and Malaysia, means supply is reduced or inadequate. PKS production in Indonesia and Malaysia is indeed much greater than wood pellet production from these two countries. Apart from the larger production volume, factors such as availability and continuity (long-term security of supply) can be guaranteed more than wood pellets. This is because it is estimated that there are 1500 palm oil mills in Indonesia and Malaysia that produce PKS which is a by-product or waste of palm oil mills. This allows for long contracts between sellers or suppliers (exporters) and buyers who are usually not end users but trading companies in Japan and Korea.

Loading PKS for export with transhipment (ship to ship)

The second factor is levy and tax. PKS exports in Indonesia are subject to levy and tax whose value is correlated with the price of crude palm oil (CPO). This is because PKS in Indonesia is included in the palm oil derivative product category, whereas in Malaysia it is not subject to these levy and tax, because PKS in Malaysia is included in the palm oil waste category. When levy and tax are high, the price of PKS will automatically become expensive. This levy and tax factor is something that PKS exporters cannot control. Through the APCASI organization (Indonesian Palm Kernel Shell Entrepreneurs Association) they are fighting for levy and tax to be more measurable or cheaper, even if they can be eliminated like in Malaysia.

Basically buyers will buy the best possible goods at the cheapest possible prices, or better quality goods but cheaper prices. The quality of wood pellets is better than PKS, namely in terms of calorific value, ash content, shape uniformity and moisture content. However, due to volume factor and continuity (long-term security of supply) which are often or still widely in doubt, the choice to go to PKS is still being made. To overcome this, wood pellets production must meet production capacity with a reliable source of raw material supply. Production of wood pellets from energy plantations is the solution.

With wood raw materials from energy plantations, the supply of raw materials will be more stable, unlike those that rely on collecting wood waste from sawmills or wood processing industries. With Indonesia's production forest area reaching tens of millions of hectares, of course land is not a problem in wood pellet production. Wood pellet production centers can be created on these production forest lands, for more details, you can read here.
 

Container Still Become the Main Choice of Wood Pellet Export in Indonesia?

Buyers' satisfaction for getting goods on demand, undamaged and defective, is an important factor in the sustainability of a business so buyers continue to repurchase and repeat orders, by making or renewing existing contracts, even by increasing their purchasing capacity. This also applies to the wood pellets business. Attempts to get goods that order for the buyer one of them by keeping the goods along the journey from various damage is important one by choosing the packaging or the appropriate wood pellet delivery or the type of delivery. Almost all Indonesian wood pellet exports today use containers with wood pellets in jumbo bags and then arranged inside the container. Some use sack packs then place them in containers as well. There is also a way of bulk or not packed in jumbo bag or sack but still in containers. The use of containers is chosen because, firstly the export wood pellet volume is not large yet, second are not yet available adequate supporting facilities for large quantity wood pellets export with bulk shipment.

Wood pellets is a very sensitive product with water, so protection or keeping it out of water should be done to maintain the quality of the wood pellet. By placing the wood pellet in a container then protection from water such as rain water can be done, so it is still used as the main choice. Then how to export wood pellets in large quantity routinely done every month? Need extra effort at this time if want to use bulk shipment, especially for protection from water. Especially in the rainy season. Rainfall intensity in Indonesia is quite high compared to other countries in general, namely, an average of 2700 mm / year or three times higher than the world average of only 900 mm / year. Indonesia's rainfall is higher than India (1,080 mm), America (715 mm), China (645 mm), Brazil (1,750 mm), Argentina (591 mm) and even Thailand (1,625 mm). Only two of our neighbors are able to surpass the Indonesian rainfall of Malaysia (2,875 mm) and Papua New Guinea (3,140). While countries in the Middle East in general have only a small rainfall such as Jordan (111 mm), Qatar (74 mm), Saudi Arabia (59 mm) and Egypt who only get 51 mm rainfall per year. So if bulk shipment of wood pellets will be done then in the dry season will be easier because water protection is easier to do. In comparison we will see shipping of palm kernel shell (pks) which is also biomass fuel has been exported abroad especially with bulk shipment.

Palm kernel shells are not as sensitive as wood pellets or pellets fuel to water, so the handling is also not as difficult as wood pellets. There are three main things that become the main parameters of palm kernel shells that is water content, calorific value and impurity. Related to the moisture content because the palm kernel shells is not damaged by water but only keep it from getting too wet, while wood pellet which is an industrial product of woody biomass compaction (biomass densification) will be damaged and even destroyed by the presence of water in certain quantities. Mechanical interlocking that occurs during the compaction will decompose and loose due to the presence of a lot of water so the wood pellets destroyed. In shipment of palm kernel shells from stockpile locations to export ports, the use of trucks or barges is common and sometimes only sealed with less dense plastic. In wood pellet closure with plastic when heading to the carrier vessel can also be done but if not tight enough will be prone to water especially in the rainy season, plus if loading to the ship is done in the middle of the sea (transhipment) because the ship can not lean on the port like usually done in Kalimantan.

The difference in the tolerance level of water avaibility between the palm kernel shell and wood pellets, has implications for handling and even the equipment used. Weather factors (such as storms) and density loading traffic port add to the difficulty of loading wood pellets onto the vessel. This makes shipping large quantities of wood pellets with bulk shipment still difficult to be done, so shipping with containers are still the main choice in Indonesia. 

Wood pellet terminal in Canada

Wood pellet loading from silos into the ship

Cement terminal at seaport

Cement loading from silos into the ship

Another reference that we can refer to is the bulk cement shipments. Cement is a product that is also very sensitive to water, in the presence of water then the cement will clot so it becomes unusable, so protection against water is absolutely necessary. Cement distribution lines to their bulk shipment are all protected from the entry of water. In the highways we can easily find large trucks carrying bulk cement pass through, then in a number of ports are also built cement terminals in the form of silos or bin like high towers. When wood pellets production reach massive scale, the infrastructure or supporting equipment is also almost the same as cement and it is now also we can see in wood pellets producing countries like America and Canada. On the receiving port side or port of destination the shipment of adequate equipment is also required to handle the unloading of the wood pellets. For comparison, large quantities of feed pellets will also require almost the same equipment for bulk shipment. So whether the biomass fuel such as wood pellets become waterproof (hydrophobic) like coal? The answer can be with torrefaction technology so the product become torrefied wood pellet. Torrefaction will be discussed in more detail next writing. Insha Allah.