Wood Pellets Market Size, Share & Trends Analysis Report By Application (Heating, Power Generation, CHP), By End-use (Residential, Commercial, Industrial), By Region, And Segment Forecasts, 2022 - 2030

Report Overview

The global wood pellets market size was estimated at USD 8.23 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 5.5% from 2022 to 2030. 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 impact of the COVID-19 pandemic was relatively small on the demand as prices, exports, and production remained stable, but some negative impacts were observed such as access to transportation services and labor availability. The quick recovery of lumber production helped to reduce the impact on wood pellet producers and ensured a stable feedstock supply.

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.

Application Insights

Heating application is expected to grow at a CAGR of 5.9% over the forecast period. Many countries have developed rules and programs relating to wood pellets for heating applications. As a result, the growing demand for wood pellets in the commercial and domestic heating sectors is forcing producers to produce them in massive amounts, which is one of the primary factors influencing the unavoidable increase in the growth rate.

Power generation application accounted for 28.6% of the market share in 2021. Governments around the world are attempting to convert to biomass power generation as demand rises as a result of factors such as urbanization, industrialization, and population growth. Biomass gasifiers are in increasing demand as rural electrification enables for decentralized electricity generation which is expected to drive the market during the forecasting period.

Combined heat and power (CHP), commonly known as cogeneration is expected to witness significant growth during the forecast period. Biomass CHP currently qualifies for both heat and power subsidies. This makes them a potentially appealing investment option in areas where there is a continuous and persistent need for heat, provided the electrical power generated can be used on-site or exported to the grid.

End-use Insights

The residential segment accounted for a revenue of USD 3.71 billion in 2021 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.

The commercial segment is expected to witness a fair amount of growth during the forecast period. Wood pellets are an environmentally friendly alternative to gas, oil, and power. Currently, the most often used fuels for commercial greenhouses are fossil fuels which result in greater heating costs and significant environmental consequences.

With the international drive to minimize CO2 emissions, wood pellets are becoming a more attractive fuel for power generation. Consider the Drax power station, the largest in the U.K. and Western Europe that has converted to run on wood pellets. As a result of the growing demand for CO2 carbon dioxide emissions reductions, the market for wood pellets is predicted to rise during the forecast period.

Regional Insights

North America accounted for the revenue of USD 0.19 billion in 2021 owing to the increasing residential demand from the U.S. The major factors driving the demand for wood pellets in North America include the regional price competitiveness with propane and residential heating oil along with the increasing replacement of traditional burners for improving automatic feed-in & comfort.

In Canada, the wood pellets industry has witnessed remarkable growth in recent years, driven by increasing application majorly in the residential heating and power plants segments. The major markets for wood pellets manufactured in Canada include countries in Europe and Asia. In addition, these pellets have applications in residential heating in the U.S.

Europe accounted for 82.7% of the market share in 2021. Europe is the leading region for the consumption of wood pellets for power generation. The demand for wood pellets is anticipated to increase during the forecast period owing to the subsidies provided by the government for the usage of renewable sources of energy.

The demand for wood pellets in fueling the power plants for electricity generation is projected to witness significant growth owing to the rising number of power plants in the country. China has banned the use of coal-fired boilers in the east and Guangdong province. In addition, the low cost of pellets in the aforementioned regions is anticipated to drive market growth.

Key Companies & Market Share Insights

The global wood pellets industry has continuously witnessed mergers and acquisitions by the major players to ensure competitiveness and profitability and establish a strong foothold in the market. The key players operating in the global wood pellets market include Drax Biomass, Georgia Biomass, LLC, and Pinnacle Renewable Energy, Inc.

The wood pellets players have developed a huge customer base through high-quality packaging for brand recognition as well as the development of a broader brand portfolio. In addition, these players have a wider base of retailers as well as distributors and are also associated with industry OEMs and law enforcement agencies. Some prominent players in the global wood pellets market include:

• 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

Wood Pellets Market Report Scope

Global Wood Pellets Market Segmentation

This report forecasts revenue and volume growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2021 to 2030. For this study, Grand View Research has segmented the global wood pellets market report based on application, end-use, and region:

• Application Outlook (Volume, Kilotons; Revenue, USD Million, 2021 - 2030)

  • Heating

  • Power Generation

  • CHP

• End-use Outlook (Volume, Kilotons; Revenue, USD Million, 2021 - 2030)

  • Residential

  • Commercial

  • Industrial

• Regional Outlook (Volume, Kilotons; Revenue, USD Million, 2021 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • U.K.

    • France

  • Asia Pacific

    • China

    • India

    • Japan

  • Central & South America

    • Brazil

  • Middle East & Africa

    • South Africa