Wood Pellets Market Size Forecast to Reach $11.1 Billion by 2026

Increasing Adoption of Recyclable and Eco-friendly Energy Sources for Generating Power Are Some of the Major Factors Which Is Driving the Wood Pellets Market.

Wood Pellets Market size is forecast to reach $11.1 billion by 2026, after growing at a CAGR of 9% during 2021-2026. Wood pellets are available at small cylindrical pieces and log in diameter. With the rise in residential constructions in winter regions, the wood pellets industry is expected to grow. In addition, the energy efficiency of the wood pellet production system must be improved to reduce their greenhouse gas (GHG) emission for expanding the use of wood pellets as a major energy source. Additionally, wood pellets crushing is done by wood hammer mill and wood crusher. However, adoption and increasing deployment of alternative renewable energy sources such as solar photovoltaic, wind energy, and geothermal in various parts of the world is likely to hinder the market growth during the forecast period.The rapid spread of coronavirus has had a major impact on global markets as, major economies of the world were in completely lockdown. Owing to this pandemic the construction works of various projects were either halted or cancelled due to which the demand for wood pellets or stoves have gone lower down.

Wood Pellets Market Segment Analysis – By Application

Residential heating has been the primary market for wood pellets in the year 2020 and is expected to grow at a CAGR of 9.2% during the forecast period. Generally during the winter season, in residential houses, people prefer to use wood pellets-burning appliance. According to US census bureau, in the month of December 2020, the monthly new residential construction (housing completed) was recorded about 1.4 million. Whereas in India, according to the IBEF (Indian Brand Equity Foundation), by 2040 real estate market will grow to Rs. 65,000 crore (US$ 9.30 billion) from Rs. 12,000 crore (US$ 1.72 billion) in 2019. So, with the increase in new residential houses the demand for wood pellets is expected to grow during the forecast period.

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Wood Pellets Market Segment Analysis – By Geography

Europe has a significant growth in the wood pellets market in the year 2020 and is expected to grow at a CAGR of 9.1% during the forecast period. The demand for wood pellets in Europe majorly comes for the residential heating facilities, commercial heating facilities, and CHP plants. With a decrease in atmospheric temperature, woods pellets consumption, especially in residential and commercial spaces increases. According to the office for national statistics, In U.K, construction output grew by 1.9% in the month-on-month all work series in November 2020, because of a 3.5% increase in new work that more than offset the 0.6% fall in repair and maintenance. So, with the increasing residential construction works in Europe region, the demand for the wood pellets will drive.

Wood Pellets Market Drivers


Wood pellets will always have an economic advantage over fossil oil or natural gas, as it can save almost half of the expenses of fuel. One of the most important factor for the cost-effectiveness of wood pellet heating is that it is highly efficient heating device that were developed for the solid fuel. Wood pellet central heating boilers, as well as wood pellet stoves, transform more than 90 % of the energy contained in the fuel into usable heat. Hence the cost-effective of wood pellets is driving the market demand.

Recyclable nature of wood pellets

Wood Pellets can be recycled and reused to the largest extent. Depending on their material type, wood pallets can be broken down and recycled alongside wood, plastic, paper or metal. The most common type, wooden pellets, are usually considered clean wood and can be dismantled for scrap wood, chipped, composted, turned into yard mulch, or used as boiler fuel. According to the European Union, the EU28 have produced nearly 18 million tonnes of wood pellets in the year 2019, this represents about 5 percent growth compared to that of 2018.

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Wood Pellets Market Challenges

Wood dust during manufacturing process

During the manufacturing process of wood pellets, the direct exposure to wood dust can cause severe health issues including allergic reactions, dermatitis, mucosal and nonallergic respiratory effects, cancer, skin irritations and other health problems. This works as a key factor to hamper growth for wood pellets market. In addition, the respiratory health effects of wood dust exposure include asthma, hypersensitivity pneumonitis, and chronic bronchitis. So, with the increase in health issues regarding wood dust, the wood pellets is expected to decline.

Wood Pellets Market Landscape

Technology launches, acquisitions and R&D activities are key strategies adopted by players in the Wood Pellets market. Major players in the Wood Pellets Market are Biomass, LLC, Drax Group Plc, Energex, Enviva LP, Groupe Savoie Inc., I.C.S. Lumber Inc., INGPELLET Pte. Ltd., Lauzon Recycled Wood Energy, Pacific BioEnergy, Pinnacle Renewable Energy Inc., Premium Pellet Ltd., among others.

Acquisitions/Technology Launches

In August 2020, Enviva Partners, LP (“Enviva” or the “Partnership”), a leading global energy company specializing in sustainable wood bioenergy, has completed its previously announced acquisition of a world-class, industrial-scale wood pellet production plant in Waycross, Georgia, and associated contracted terminal capacity in Savannah, Georgia.

In January 2019, Drax Group plc has completed the acquisition of Scottish Power’s portfolio of pumped storage, hydro and gas-fired generation, which comprises Scottish Power Generation Group and its wholly-owned subsidiary, SMW.

Key Takeaways

Europe has a significant growth in the wood pellets market owing to increasing demand from applications such as residential heating, power plants and others.

Increasing adoption of recyclable and eco-friendly energy sources for generating power are some of the major factors which is driving the market for wood pellets.

As compared with other fossil fuels, cost effective and the easy availability of wood pellets will increase the market demand for wood pellets in the near future.

Alternative options of energy or heat-producing such as solar energy, wind energy and others will create hurdles for the wood pellets market.

Related Reports :

A. Wood Pellet Fuel Market

B. Biomass Briquette Market

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