Wood pellet production capacity in North America increased 170% over the past decade. Growing to meet European demand for renewable energy—and more recently demand from Asia—wood pellet manufacturing capacity has consolidated and shifted across regions. Today, Western Canada is the second largest wood pellet producing region in North America. With 3.3 million tons of capacity, the region accounts for 19% of North America’s wood pellet capacity (Figure). The region trails only the U.S. South, which accounts for 53% of North America’s wood pellet capacity. Western Canada’s production capacity has more than doubled since 2008, growing at a compound annual rate of 8.5%.
The nature and structure of wood pellet capacity within the region has changed as well. The shift to an export-oriented business has pushed the wood pellet industry to economically-efficient large-scale production facilities in an effort to lower per unit costs. Since 2008, the average capacity of wood pellet manufacturing facilities in Western Canada grew 64%, reaching 185 thousand tons in 2018.
Scale leverages technological advances in the forest products industry, and industry consolidation further leverages those benefits. Pinnacle Renewable Energy, which was the largest firm in the region in 2008, remains as such today and currently accounts for 64% of Western Canada’s wood pellet capacity and 12% of North America’s¹. In 2018, two new Pinnacle facilities are expected to come online, increasing capacity in Western Canada 21% year-over-year. Pinnacle’s 441 thousand ton Entwistle facility in Alberta began initial production in March, while their 138 thousand ton Smithers mill in British Columbia is expected to begin production by the end of the year.
This post contains an excerpt from Forisk’s Multi-Client Study: North American Forest Industry Capacity, a comprehensive analysis of wood-using capacity – current, historic and projected for 2008-2020 – by firm and sector across five North American regions. For more information, click, here.
¹This does not include Pinnacle’s recently announced agreement to acquire a 70% interest in Westervelt’s 287 thousand ton facility in Aliceville, Alabama. The $37.1 million (USD) investment represents Pinnacle’s first into the U.S. and is expected to close in October 2018.