Renewables

Hrvatske Šume terminates contracts for wood chips delivery for cogeneration facilities

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Published

February 1, 2019

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Published:

February 1, 2019

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Public forest management utility Hrvatske Šume has terminated contracts with 20 companies on the sale of wood chips and firewood for cogeneration plants, leaving 265,000 tons of wood chips available for a public call, which the company plans to launch in about ten days.

Hrvatske Šume informed buyers that 20 contracts on the sale of wood chips and firewood for the production of electricity and/or heat were considered terminated because the companies did not provide operational licences for their cogeneration plants by the deadline envisaged under the contracts, the company said in a press release.

These were all multi-year contracts signed by the former management of Hrvatske Šume over the period 2010-2016, and their value in the total contracted period amounted to HRK 1.16 billion (EUR 160 million).

The contracts did not stipulate the buyers had to provide proof that they had met the reported energy efficiency of the cogeneration plants, which is why a large part of the heat was wasted, instead of being used for drying in sawmills, in greenhouses or for the heating of residential buildings, Mario Klobučar, coordinator for forest biomass at Hrvatske Šume, said.

The contracts were unfavorable also due to the guaranteed fixed price of goods over the entire contract period (14 years), while at the same time for all other buyers the prices are changed on an annual basis.

Eurostat data shows that the price of wood chips in 2015 was 75% higher compared to 2005, and it continued to increase.

Therefore, the new public call will determine the total annual efficiency of the plant, the index of development of the area in which the plant operates, the number of newly employed people, the way of using heat, as well as the bills for the delivered electricity in order to know who produces and how many goods.

According to Hrvatske Šume, the market demand for wood biomass is growing and it biomass is becoming a strategic energy source among renewable energy sources (RES). Therefore, the company made a powerful shift in the management of this raw material through a series of new investments in forestry equipment and technology, the company said.

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