Wood Pellets Market

Market Overview:

The global wood pellet market size reached US$ 12.4 Billion in 2022. Looking forward, IMARC Group expects the market to reach US$ 18.5 Billion by 2028, exhibiting a growth rate (CAGR) of 6.53% during 2023-2028. The increasing inclination towards cost effective alternatives, rising number of commercial establishments, and the growing public awareness about the benefits of adopting cleaner fuel options are some of the major factors propelling the market.

A wood pellet is a biofuel made from compressed organic matter, usually derived from sawdust and other waste wood products. It is a small, cylindrical piece used as a fuel source and offers easy storage, transport, and use. It is a renewable energy source that is environment friendly when compared to fossil fuels like coal or natural gas. It can be produced by grinding wood into a fine powder, drying it, and then compressing it into small, dense pellets under high pressure.

The increasing inclination of people towards cost effective alternatives like wood pellets as they offer a relatively inexpensive source of energy due to the escalating cost of conventional fuels like oil and gas is strengthening the growth of the market around the world. Moreover, the rising number of commercial establishments, such as hotels, restaurants, and cafes, is driving the use of wood pellets for heating and cooking purposes. In addition, the growing public awareness about the benefits of adopting renewable energy sources and cleaner fuel options, including wood pellets, is influencing the market positively. Apart from this, increasing concerns about global warming and climate changes worldwide on account of the rising heat trapping greenhouse gas levels in the atmosphere are contributing to the market growth. Furthermore, the growing use of wood pellets in the agricultural sector for soil amendment and as a clean burning fuel for machinery is creating a positive outlook for the market.

Wood Pellet Market Trends/Drivers:

Increase in environmental concerns

One of the primary factors driving the demand for wood pellets is the growing awareness about environmental sustainability. As nations worldwide aim to reduce carbon emissions, wood pellets offer a renewable alternative to fossil fuels for generating heat and power. Made from compressed organic matter, they have a lower carbon footprint and release fewer harmful emissions when burned. This makes them highly attractive to both residential consumers and industries looking to mitigate their environmental impact. Governments are also supporting the use of sustainable fuels through subsidies and regulations, further propelling the demand for wood pellets.

Rise in energy efficiency

Another factor contributing to the increasing demand for wood pellets is their energy efficiency. Wood pellets have a high energy content and burn more cleanly compared to traditional wood logs or coal. This allows for higher heat output with fewer resources, making them an efficient option for heating homes and powering industrial operations. The uniform size and moisture content of wood pellets make them easier to manage, store, and transport, which adds to their appeal as an efficient energy source. As energy costs continue to rise, the efficient nature of wood pellets makes them an increasingly attractive option for consumers.

Growing versatility and convenience

Wood pellets are versatile and can be used in a variety of applications, such as residential heating systems and large-scale industrial boilers. They are easy to store and handle, as they come in compact sizes and have a longer shelf life as compared to other forms of biomass. The convenience factor extends to their usage as well; modern pellet stoves and boilers come with automated feeding systems, making it easier for the end-user to maintain a consistent energy supply. This convenience, combined with their effectiveness as a heating source, makes wood pellets increasingly popular for a range of applications.

Wood Pellet Industry Segmentation:

IMARC Group provides an analysis of the key trends in each segment of the global wood pellet market report, along with forecasts at the global, regional, and country levels for 2023-2028. Our report has categorized the market based on feedstock type and application.

Breakup by Feedstock Type:

• Forest Wood and Waste
• Agriculture Residue
• Others
   

Forest wood and waste dominate the market

The report has provided a detailed breakup and analysis of the market based on the feedstock type. This includes forest wood and waste, agriculture residue, and others. According to the report, forest wood and waste represented the largest segment. Forest wood and waste come from the lumber industry, forest thinning projects, and other woodland management activities. This category includes sawdust, wood chips, bark, and other types of wood waste that are often considered by-products. Using these materials to produce wood pellets can be considered an efficient way to recycle waste, which makes this feedstock option environmentally sustainable. Forest wood-based pellets are generally of high quality and are suitable for various applications, including residential heating and power generation.

Breakup by Application:

• Power Plants
• Residential Heating
• Commercial Heating
• Combined Heat and Power (CHP)
• Others
   

Residential heating holds the largest share in the market

A detailed breakup and analysis of the market based on the application has also been provided in the report. This includes power plants, residential heating, commercial heating, combined heat and power (CHP), and others. According to the report, residential heating accounted for the largest market share. One of the most common uses of wood pellets is for residential heating through pellet stoves or boilers. These are specially designed systems that feed wood pellets from a storage container into a burning chamber, which provides a steady and controlled heat. Wood pellets are popular in residential settings for their ease of use, high energy efficiency, and low emissions compared to traditional wood-burning stoves.

Wood pellets are increasingly used in power plants as a substitute for coal or as a supplement to traditional fossil fuels. They offer a renewable and cleaner-burning option that helps reduce greenhouse gas emissions. Power plants that utilize wood pellets usually have systems designed to handle the specific combustion characteristics of this biofuel. They can be used in co-firing systems, where they are burned alongside coal, or in dedicated biomass plants.

Breakup by Region:

• North America
  • United States
  • Canada
• Asia-Pacific
  • China
  • Japan
  • India
  • South Korea
  • Australia
  • Indonesia
  • Others
• Europe
  • Germany
  • France
  • United Kingdom
  • Italy
  • Spain
  • Russia
  • Others
• Latin America
  • Brazil
  • Mexico
  • Others
• Middle East and Africa
   

Europe exhibits a clear dominance, accounting for the largest wood pellet market share

The market research report has also provided a comprehensive analysis of all the major regional markets, which include North America (the United States and Canada); Asia Pacific (China, Japan, India, South Korea, Australia, Indonesia, and others); Europe (Germany, France, the United Kingdom, Italy, Spain, Russia, and others); Latin America (Brazil, Mexico, and others); and the Middle East and Africa. According to the report, Europe accounted for the largest market share.

The increasing adoption of sustainable fuels like wood pellets represents one of the primary factors driving the demand for wood pellets in Europe. Moreover, the establishment of commercial spaces, such as offices and educational institutions, is favoring the growth of the market in the region. Besides this, the growing adoption of wood pellets as a renewable energy source is influencing the market positively.

North America is estimated to witness stable growth, owing to the increasing investments in research and development (R&D) activities, rising mergers and collaborations, government initiatives, etc.

Competitive Landscape:

The leading companies are using automated technology in pellet mills, which allows for a more efficient and consistent production process and manages everything from material feeding to cooling. They are also incorporating the use of sensors and the internet of things (IoT) devices to monitor various parameters like temperature, moisture level, and pressure in real time and enables quick adjustments to the production process and ensures that the pellets meet quality standards. Moreover, key players are developing small mobile pellet plants to bring pellet production closer to the source of raw materials, which reduces transportation costs and emissions. These portable systems can be used to process local biomass resources, which makes pellet production more accessible and decentralized.

The report has provided a comprehensive analysis of the competitive landscape in the market. Detailed profiles of all major companies have also been provided. Some of the key players in the market include:

• Andritz AG
• Asia Biomass Public Company Limited
• Drax Group PLC
• Energex
• Enviva LP
• Fram Renewable Fuels LLC
• Land Energy Limited
• Lignetics Inc.
• Mallard Creek Inc.
• Pacific BioEnergy Corporation
• Stora Enso Oyj
• Svenska Cellulosa Aktiebolaget
• Tanac S.A.

Recent Developments:

• In 2021, Drax Group PLC acquired Pinnacle Renewable Energy Inc. to lead a sustainable biomass generation and supply business.
• In 2021, Enviva LP collaborated with Mitsui OSK Lines (MOL), which is a leading international marine transport group and signed an MoU agreement to develop and deploy an environment friendly bulk carrier.

Wood Pellet Market Report Scope:

Key Benefits for Stakeholders:

• IMARC’s industry report offers a comprehensive quantitative analysis of various market segments, historical and current market trends, market forecasts, and dynamics of the wood pellet market from 2017-2028.
• The research report provides the latest information on the market drivers, challenges, and opportunities in the global wood pellet market.
• The study maps the leading, as well as the fastest-growing, regional markets. It further enables stakeholders to identify the key country-level markets within each region.
• Porter's five forces analysis assist stakeholders in assessing the impact of new entrants, competitive rivalry, supplier power, buyer power, and the threat of substitution. It helps stakeholders to analyze the level of competition within the wood pellet industry and its attractiveness.
• Competitive landscape allows stakeholders to understand their competitive environment and provides an insight into the current positions of key players in the market.