The wood pellets market is projected to be valued at USD 10,037.6 Million in 2023 and is expected to rise to USD 24,345.6 Million by 2033. The sales of wood pellets are expected to register a significant CAGR of 10.2% during the forecast period.
Wood pellets form a clean, environmentally beneficial, sustainable, and renewable biomass. The increasing global demand for renewable energy is driving the need for wood pellets to reduce the usage of fossil fuels that contribute to global warming. This is expected to contribute to the growth of the industry over the forecast period.
In terms of growth, the European region is projected to be the dominant wood pellets market during the forecast period, owing to the widespread adoption in power boilers and residential heating segments.
The Asia Pacific region is expected to be lucrative owing to the rapid construction of power plants and the emergence of the renewable energy sector. Other regions are expected to witness decent growth levels in the wood pellets market during the forecast period.
Attributes | Details |
---|---|
Market Estimated Size (2023) | USD 10,037.6 million |
Market CAGR (2023 to 2033) | 10.2% |
Market Forecasted Size (2033) | USD 24,345.6 million |
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The global demand for wood pellets is projected to increase at a CAGR of 10.2% during the forecast period between 2023 and 2033, reaching a total of USD 24,245.5 million in 2032, according to a report from Future Market Insights (FMI). From 2018 to 2022, sales witnessed significant growth, registering a CAGR of 8.9%.
The market is buckling due to grave environmental concerns and rising government incentives towards sustainability. The wood pellets market has surpassed revenues and is poised for spectacular growth through the forecast period.
The prodigious demand in the commercial & residential heating segment is compelling manufacturers to churn out wood pellets extensively. Moreover, the consumption of wood pellets in co-firing continues to witness prolific growth. Agricultural residue and wood waste remain the prominent sources of wood pellets in view of easy availability and lower production cost.
The increase in pellet plants is heavily dependent on the use of sawmill residues as feedstock. Hence, stakeholders are sourcing additional and alternative sorts of woody feedstock involving forest industrial round wood, bark, and wood chips from sawmills, among others, to boost the production of residential and industrial-grade pellets.
Rising Demand for Carbon Neutral and Sustainable Fuel Continues to Bolster Wood Pellets Market
According to FMI analysis, the pellet-based power plant is gaining traction as a preferred alternative to coal-based power plants, accentuating the need for wood pellets in the industrial sector. Moreover, governments worldwide are keen on driving the adoption of renewable energy in the residential, transportation, and industrial sectors.
Consumers in developed regions such as Europe have greater environmental sentience, which continues to account for their increasing reliance on renewable sources. Bio-based energy sources are gathering impetus in developing countries for electricity generation. The reason is attributed to rising energy consumption and favorable government policies.
A significant reduction in the emission of greenhouse gasses is increasing the consumption of wood pellets in the industrial sector. Continued innovations in combustion technology are to be accredited for the impressive growth of the wood pellets market.
Increased Support from Biomass Boiler Grants Presenting Lucrative Opportunities for Wood Pellets
In recent years, innovations in wood pellet boilers have acted as key drivers for stakeholders in the wood pellets market. The manufacturers are increasing the availability of self-cleaning systems in wood pellet boilers that require minimal user input. Even though these boilers are gaining popularity, they require frequent maintenance in order to have the highest working proficiency.
Therefore, companies in the global market are increasing awareness about the environment-friendly advantages of biomass boilers and the cost-effectiveness of wood pellets to boost boiler sales. Not just this, but the top companies are also focusing on driving the consumers' attention and making them aware of biomass boiler grants to help support the customers' investment.
For instance, in August 2020, Enviva Partners, LP, a leading global energy company specializing in sustainable wood bioenergy, announced the acquisition of a world-class wood pellet production plant in Waycross, Georgia.
Enviva now has nine wood pellet production plants and five deep-water export terminals across Virginia, North Carolina, South Carolina, Georgia, Alabama, Mississippi, and Florida. The Waycross plant has a production capacity of nearly 800,000 metric tons per year.
After this acquisition, Enviva's total annual wood pellet production capacity may touch around USD 4.9 million metric tons, and the Waycross plant is now called ‘Enviva Pellets Waycross.’
Low Awareness Levels and Availability of Alternatives of Wood Pellets Hindering Growth
Even though many factors lead to the growth of cell line development, there are some restraining points, such as a lack of knowledge about wood pellets, the availability of alternatives, and the implementation of compliances.
The increasing adoption and deployment of alternative renewable energy sources such as solar photovoltaic, wind energy, and geothermal in various parts of the world are expected to hinder the market growth during the forecast period. Furthermore, the mandatory compliance and operational challenges associated with wood pellets are projected to challenge the growth rate over the forecast period increasingly.
Residential Demand from the United States to Drive the Adoption of Wood Pellets
North America is expected to account for a revenue of USD 200 million in 2022 with regard to wood pellets, owing to the increasing residential demand from the United States. People in cold regions are gravitating toward wood pellet stoves, as the cost of natural gas is relatively higher than wood pellets.
Wood pellets are growing increasingly popular as a cost-efficient way for residential heating. Other key factors driving the demand for wood pellets in North America include the regional price competitiveness with propane and residential heating oil and the increasing replacement of traditional burners for improving automatic feed-in & comfort.
In January 2021, a new Wood and Pellet Heater Investment Tax Credit (ITC) came into effect in the United States, under which consumers buying highly efficient wood, pellet stoves, or larger residential biomass heating systems can claim a 26% tax credit that is uncapped and based on the full cost (purchase and installation) of the unit.
Increasing Adoption of Power Boilers in Europe is Spurring Demand for Wood Pellets Services
According to Future Market Insights, the European wood pellets market is projected to account for nearly 78% of the overall market share. Wood pellets have witnessed widespread adoption in power boilers and residential heating segments across Europe.
The regional wood pellets market is fueled by enhanced product penetration in countries such as France, Austria, Italy, and Germany. Moreover, the European Union's stringent regulations against carbon emissions are pushing the sales of wood pellets.
As of 2020, European nations’ use of pellets includes residential heating (40%), power plants (36%), commercial heating (14%), and combined heat and power plants (10%). Moreover, pellets have also made their way into coal conversion projects in local authority or public administration buildings such as schools and offices.
Along with this, European countries are taking measures to spread awareness pertaining to the adoption of wood pellets. The United Kingdom amended its Domestic Renewable Heat Incentive (Domestic RHI) of 2014 to aim at promoting the use of renewable heat at residential levels.
Within the amendment, the Department for Business, Energy & Industrial Strategy (BEIS) announced the relaxation of the requirement for accreditation applications to be submitted within twelve months of the eligible heating system’s commissioning date.
High Investments in the Coal Power Plants May Fuel Sales of Wood Pellets
As per the World Bioenergy Association, wood pellets have the potential to replace coal in power generation facilities. With the advent of technology, wood pellets have undergone some thermal upgrading through various processes like torrefaction, hydrothermal carbonization, and steam explosion. The thermal upgrading enables wood pellets to act as a fuel with coal properties.
As per statistics, the Asia Pacific region has several coal power plants in the world and is expected to be an opportunity for the market to grow in the near future. Considering the factors above, the market in Asia Pacific is projected to account for 11% of the market share.
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Growing Use of Forest and Wood Waste Resources May Bolster Growth
Apart from sawmill residues and shavings, manufacturers in the wood pellets market are diversifying their feedstock via fire-damaged trees, hence augmenting the popularity of forest and wood waste resources. Stakeholders in leading regions are gaining popularity for adopting these strategies to boost their production volumes.
They are tapping incremental opportunities in the ever-increasing energy industry, fueling the demand for wood pellets. These wood pellets are increasingly replacing fossil fuels in energy industries. As per FMI, the segment is expected to surge at a CAGR of 10.4% until 2032.
Demand for Wood Pellets in Residential Sector to Gain Traction
According to the analysis conducted by Future Market Insights, the residential segment accounts for a revenue of USD 3.5 billion and is expected to grow at a significant rate during the forecast period.
Wood pellets are becoming increasingly popular among household users due to attributes like green, cleansing, sustainability, etc. Wood pellets are commonly used for cooking and heating in households, but they can also be used as cat litter and horse bedding.
Enviva Partners LP, Pinnacle Renewable Energy Inc., Wood Pellet Energy LTD, Andritz AG, Energex, and Georgia Biomass, LLC are key players in the wood pellets market.
Attributes | Details |
---|---|
Growth Rate | CAGR of 10.2% from 2023 to 2033 |
Base Year of Estimation | 2023 |
Historical Data | 2018 to 2022 |
Forecast Period | 2023 to 2033 |
Quantitative Units | Revenue in USD billion and Volume in Units and F-CAGR from 2023 to 2033 |
Report Coverage | Revenue Forecast, Volume Forecast, Company Ranking, Competitive Landscape, growth factors, Trends, and Pricing Analysis |
Key Segments Covered | Feed Stock, End-user Industry, By Region |
Regions Covered | North America; Latin America; Europe; East Asia; South Asia; The Middle East & Africa; Oceania |
Key Countries Profiled | United States, Canada, Brazil, Mexico, Germany, Italy, France, United Kingdom, Spain, Russia, China, Japan, India, GCC Countries, Australia |
Key Companies Profiled | Energex; Enviva LP; Graanul Invest; Drax Biomass; Pinnacle; Sinclar Group Forest Products; Lauzon; Wood Pellet Energy (UK) Ltd.; United Company; Highland Pellets LLC; Groupe Savoie Inc.; I.C.S. (Lacroix) Lumber Inc.; Vermont Wood Pellet Company; AVPGroup; Farm Fuels |
Customization & Pricing | Available upon Request |
The market is valued at USD 10,037.6 million in 2023.
Energex, Enviva LP, Graanul Invest are key market players.
The market is forecast to register a CAGR of 10.2%through 2033.
The market will reach USD 24,345.6 million by 2033.
From 2018 to 2022, the market registered a CAGR of 8.9%.
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