The wood chips being sent into a boiler. Photo: RNZ/ Niva Chittock
The bioenergy sector is hopeful that growing demand for greener energy sources from large users like factories will help fire up the "constrained" wood-to-power supply chain.
Woody biomass from forestry or wood processing could be turned into bioenergy, as alternatives to LPG gas or coal, for example.
Bioenergy made up 12 percent of New Zealand's energy supply, according to the Bioenergy Association.
Wood pellets helped power large facilities including Christchurch's Burwood Hospital and some of Fonterra's processing plants.
Genesis Energy said in December it was committed to using biomass at the Huntly Power Station and was working on building a domestic supply chain with key stakeholders.
Dairy co-operative Fonterra's North Island sites were now coal-free and it used wood pellets for energy production at Hautapu, Te Awamutu and Waitoa in the North Island, and Stirling and Clandeboye in the South.
But it imported FSC-certified wood pellets from Vietnam to power two of its five boilers at Clandeboye in South Canterbury, due to limited supply.
Bioenergy Association executive officer Brian Cox told a recent industry webinar that there was demand for the biomass material in some areas where they were struggling to get supply, which would be aided by greater investment.
"The biggest issue is that the market is constrained because of lack of investment in new bioenergy systems, not the availability of supply of biomass," he told the webinar.
"So an increased demand for bioenergy use, wood fuel particularly, will encourage supply to expand."
Cox said commercial users looking to an energy transition could secure wood residues from forestry firms, particularly in the South Island, amid limited natural gas and rising electricity costs.
Biomass energy could be cheaper than some electricity options available, which he believed would change the dynamics, he said.
"We've recently had a number of them going to electrode boilers and looking at the electricity as a solution," he said.
Wood processing leftovers are a good resource, Cox says. Photo: 123rf
Cox said up to 20 percent of a tree could go to biomass, and wood processing leftovers were also a good resource.
"I think that the reality is that biomass is a much cheaper solution and a much easier, manageable solution, particularly when we can't even supply electricity to our residential customers today."
Energy and climate general manager Linda Mulvihill said Fonterra was working to build a more reliable and diverse wood pellet supply chain by increasing demand for it.
"Fonterra is committed to establishing diverse and reliable supply chains in New Zealand for wood pellets, which will increase resilience and fuel diversity," she said.
"To support this, we are currently in commercial negotiations with domestic suppliers."
Mulvihill said it anticipated it would be able to secure local supply of wood pellets by next season.
"The investment in wood pellet use at Clandeboye sends a strong signal to the industry, supporting fuel diversity in the South Island by creating demand that helps establish wood pellet supply chains in New Zealand."
Last month, the Ministry of Business, Innovation and Employment said natural gas supplies may be falling faster than previously expected.
Meanwhile, the Australian government has approved a $1 billion fund to boost domestic production of low-carbon liquid fuels like renewable diesel and sustainable aviation fuel.
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