- The global wood pellet market is projected to grow from USD 10.52 billion in 2020 to USD 16.75 billion by 2027, with a CAGR of 7.28% during 2022-2027.
- The market is primarily segmented by application (power generation and heating) and geography (North America, Europe, Asia-Pacific, South America, and the Middle East and Africa).
- Europe is the largest market for wood pellets and is expected to maintain this position due to significant wood pellet production in 2021.
The world is witnessing a significant increase in the demand for wood pellets, a renewable energy source with remarkable potential. The global wood pellet market, which was valued at USD 10.52 billion in 2020, is projected to reach USD 16.75 billion by 2027. The market is expanding at a CAGR of 7.28% during the forecast period of 2022-2027.
This surge in demand is attributable to various factors, including their use for power generation and heating, and the geographical spread of their utilization.
Geographical Distribution
The wood pellet market extends across North America, Europe, Asia-Pacific, South America, and the Middle East and Africa. Europe, the current largest market for wood pellets, is set to continue its dominance due to substantial wood pellet production in 2021. Demand for wood pellets in Europe is expected to rise by 30-40% between 2021 and 2026. Europe alone accounts for more than 50% of the global pellet demand. The use of pellets in European nations includes residential heating (40%), power plants (36%), commercial heating (14%), and combined heat and power plants (10%).
In contrast, Asia-Pacific is the fastest-growing market for wood pellets. With the highest number of coal power plants globally, the region presents a tremendous opportunity for market growth in the near future.
Technological Advancements
Wood pellets, traditionally used for heating, have evolved into a potential replacement for coal in power generation facilities. This is thanks to technological advancements that have enabled thermal enhancement processes like torrefaction, hydrothermal carbonization, and steam explosion. These processes equip wood pellets with coal-like properties, creating a cleaner, more sustainable fuel source.
Applications
Wood pellets have gained substantial market share in heating applications. They offer standardized properties, high energy content, and high density, making them a cost-effective choice for residential and commercial sectors. Their applications span cooking, grilling, and heating homes.
Moreover, the governments of many countries have launched or updated policies related to wood pellets for heating applications. For instance, in the United States, the Investment Tax Credit (ITC) for wood and pellet heaters came into effect in January 2021. Under this policy, consumers purchasing high-efficiency wood or pellet stoves or larger residential biomass heating systems can claim a 26% tax credit.
In conclusion, the wood pellet market is set to experience considerable growth in the coming years. Its potential as a renewable energy source, coupled with increasing demand in diverse applications and various geographical regions, is driving this expansion. It's safe to say that wood pellets are paving the way for a cleaner, more sustainable future.
Please note that all images are for illustrative purposes only.
Sources:
- [Global Wood Pellet Market Analysis](https://www.mordorintelligence.com/es/industry-reports/wood-pellet-market)