Industrial Wood Pellets Market is expected to grow at a CAGR of 11.48% By 2029

Biomass as a Clean Energy Source and Increased Demand from Power Plants are factors driving the Global Industrial Wood Pellets Market in the forecast period 2025-2029.

According to TechSci Research report, “Industrial Wood Pellets Market - Global Industry Size, Share, Trends, Opportunity, and Forecast 2019-2029”, the Global Industrial Wood Pellets Market is expected to register robust growth during the forecast period. Since wood pellets form a clean, environmentally beneficial, sustainable, and renewable biomass, the rising global demand for renewable energy is driving the demand for wood pellets to reduce the usage of fossil fuels that contributes to global warming. This is expected to contribute to the growth of the industry over the forecast period. The key driving factor for increasing production of wood pellets in the U.S. includes rising demand from the global market.

Since some countries are not able of covering their own wood pellets demand with their own forest biomass for energy production, and their own industry infrastructure and they are importing wood pellets from the U.S. Manufacturers of wood pellets can buy wood biomass either from wood dealers or directly from private landowners through loggers. Wood pellets producers can also procure wood fiber from mill residuals, which are leftovers from other forestry sectors like paper and sawmills. Transportation costs are typically the primary cost component for mill residuals in this supply model as they can be purchased at lower costs than pulpwood and roundwood.

The market for different shipping firms, brokers, and traders is extremely complicated and fragmented in nature. Additionally, the transportation of wood pellets has unique characteristics that limit the number of ports and routes that are both affordable and able to handle huge quantities of wood pellets

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Based on Application, The Heating segment emerged as the dominating segment in 2023. Pellets are a solid biomass fuel, primarily produced from wood residues and agricultural by-products like straw. Specific advantages of pellets as compared to unprocessed biomass include standardized properties, high energy content, and high density. Industrial Wood Pellets for heating applications are primarily used in residential and commercial sectors for food, cooking and grilling, and supplying heat to homes. Since the cost of pellets remained cheaper than that of other fuels for a long time, it has become a more economical option, addressing the primary concern of the residential and commercial sectors. In addition to this, in 2020, the Industrial Wood Pellets, due to oversupply, experienced a sharp decline in their prices.

As a renewable energy source, Industrial Wood Pellets have received subsidies and incentives from the governments in many countries, and many countries either launched or updated their policies and schemes related to Industrial Wood Pellets for heating applications in recent years. For instance, 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.

On a similar note, from April 2021, 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. In addition, the participants whose heating system was commissioned on or after March 1, 2019, became eligible to apply for the Domestic RHI until the scheme closes to the new applications on March 31, 2022. Therefore, owing to the above points, the heating application is expected to dominate the wood pellet during the forecast period.

Based on Region, Europe is projected to dominate the market throughout the forecast period. In Europe, the demand for Industrial Wood Pellets is expected to increase by 30-40% between 2024 and 2029. Europe represents more than 50% of global pellet demand. 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.

Most of the co-firing power stations have either closed or converted since these early projects, with several making a move to 100% Industrial Wood Pellets for fuel. The largest of these is Drax Power Station in North Yorkshire, which has converted four of its six 65 MWe generating units to run exclusively on biomass and is currently evaluating options for its remaining two coal-fired units.

Key market players in the Global Industrial Wood Pellets Market are: -

Enviva Partners LP

AS Graanul Invest

Drax Group PLC

Fram Renewable Fuels LLC

Segezha Group JSC

Lignetics Inc.

Biopower Sustainable Energy Corp.

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“The industrial wood pellets market is driven by several key factors. Government initiatives and renewable energy policies play a pivotal role, fostering a transition towards cleaner energy sources. As countries worldwide commit to reducing carbon emissions, the carbon-neutral nature of wood pellets aligns with sustainability goals. Additionally, the rising awareness of climate change has prompted a shift towards eco-friendly alternatives, boosting the demand for wood pellets. Technological advancements have enhanced the efficiency of pellet production, making it more economically viable. The use of wood pellets contributes to energy security by diversifying energy sources and reducing dependence on imported fossil fuels.

Power plants increasingly adopt wood pellets, either exclusively or through co-firing with coal, as an effective strategy to lower carbon emissions. Financial incentives and subsidies provided by governments further encourage businesses to invest in biomass energy, propelling market growth. Global trade in wood pellets, coupled with increased investments in renewable energy infrastructure, fosters a dynamic and expanding market. The industrial wood pellets sector not only addresses environmental concerns but also reflects a global commitment to sustainable practices, making it a crucial player in the ongoing transition to a cleaner and more resilient energy landscape.” said Mr. Karan Chechi, Research Director with TechSci Research, a research-based global management consulting firm.

“Industrial Wood Pellets Market - Global Industry Size, Share, Trends, Opportunity, and Forecast Segmented by Application (Heating and Power Generation), By End User (Power Generation, Food Processing, Waste Management & Recycling, Others), By Region, and By Competition 2019-2029” provides statistics & information on market size, structure, and future market growth. The report intends to provide cutting-edge market intelligence and help decision makers take sound investment decisions. Besides the report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities in Global Industrial Wood Pellets Market.

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