Enviva delivers record 1.5 million metric tons of pellets in Q4

Enviva Inc. released fourth quarter financial results on March 1, reporting that the company delivered a record 1.5 million metric tons of wood pellets during the three-month period at higher-than expected sale prices. Volumes delivered were up 35 percent when compared to the previous quarter and up 10 percent when compared to the fourth quarter of 2021. The company also announced three new industrial contracts and provided an update regarding its ongoing capacity expansion projects.

During the fourth quarter, Enviva said it had three separate customers request not to take shipments due to various operational challenges they were experiencing. Enviva, in turn, had shipments available to sell at a premium compared to deliveries in the originally scheduled contracts. The incremental cash collected above the take-or-pay obligation for the shipments sold at elevated market prices was approximately $32 million.

As part of its fourth-quarter release, Enviva announced a new 10-year, take-or-pay off-take contract related to the production of biofuels, whereby Enviva’s wood pellets are expected to be refined into feedstock for the production of sustainable aviation fuel (SAF) and other renewable fuels. The contract is with an existing global customer, and is related to providing feedstock to a U.S.-based bioenergy facility, with deliveries of approximately 60,000 metric tons per year expected to begin in 2025.

Within the past year and a half, Enviva said it has signed three SAF-related contracts that represent approximately 1.9 million metric tons per year of biomass supply at peak run rates. In addition, the company has delivered test deliveries to two major oil companies in Europe that are constructing biorefineries and coprocessing biobased feedstock in their existing refineries. Enviva said it expects that meaningful SAF volumes will materialize in Europe slightly later than in the U.S. In addition, the company said it is also in discussions with interested biofuel producers in Asia. “The global addressable market for SAF and other biofuels is immense, and with the incremental opportunities that Enviva is currently pursuing, there is a visible path forward for significant future capacity additions and expansions driven by this use case alone,” Enviva said in a statement.

Enviva also announced two take-or-pay contracts with new European industrial customers that are converting from coal to wood pellet usage in their manufacturing processes. One of these contracts is for a 10 to 15 year tenor, with annual deliveries expected to ramp up to 500,000 metric tons per year with initially deliveries expected to begin in 2024. The other is for a 10-year tenor with annual deliveries expected to be approximately 60,000 metric tons per year beginning in 2025.

Regarding the development of new wood pellet production capacity, Enviva reported that it currently expects its 1.1 million metric ton per year facility in Epes, Alabama, to begin operations during the first half of 2024, and be operating at capacity near the beginning of 2025. That facility will be the second wood pellet plant located in Enviva’s Pascagoula cluster. A third plant in the Pascagoula cluster is under development near Bond, Mississippi. Construction on that facility, with an expected capacity of more than 1 million metric tons per year, is expected to begin during the second half of this year, with a projected in-service date in the first half of 2025. Enviva is also evaluating the timing of a fourth wood pellet plant in the Pascagoula cluster and expects to announce a decision on that project near the end of this year. In addition, Enviva is in the process of securing sites in both Georgia and South Carolina for the potential development of a new greenfield project in the company’s Savannah cluster.

A full copy of Enviva’s fourth quarter financial release is available on the company’s website.