Europe Wood Pellet Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Europe Wood Pellet Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Europe wood pellet market is expected to grow at a CAGR of more than 6% during the forecast period of 2022 - 2027. The COVID-19 outbreak in Q1 of 2020 had reduced demand and shortages of raw materials and further delayed wood pellet production across the Europe region. Factors, such as increasing demand for wood pellets in clean energy generation are likely to drive the Europe wood pellet market during the forecast period. However, the 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.

Key Highlights

• The heating application is expected to dominate the market during the forecast period, owing to the increasing demand for wood pallets in the heating applications.
• As per the World Bioenergy Association, wood pellets have the potential to replace coal in power generation facilities. With technology development in recent years, wood pellets have undergone some thermal upgrading through various processes like torrefaction, hydrothermal carbonization, and steam explosion. This is expected to provide opportunity for the market to grow in the near future.
• With a significant production of wood pellets during 2021, United Kingdom is expected to the fastest growing market during the forecast period.

Key Market TrendsHeating Application Expected to Dominate the Market

• 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.
• 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 wood pellets, due to oversupply, experienced a sharp decline in their prices.
• As a renewable energy source, wood pellets have received subsidies and incentives from several governments. Also, many countries have either launched or updated their policies and schemes related to wood pellets for heating applications in recent years.
• For instance, 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.

United Kingdom Expected to be the Fastest Growing Market

• The United Kingdom uses pellets in numerous applications such as residential heating, power plants, commercial heating, and combined heat and power plants. Moreover, pellets have also made their way into coal conversion projects in local authority or public administration buildings such as schools and offices.
• As of 2020, most of the co-firing power stations have either closed or converted since these early projects, with several making a move to 100% wood pellets for fuel. The largest of these is Drax Power Station in North Yorkshire, United Kingdom, 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.
• As of 2020, sawmill residues make up 85% of the mix for wood pellet production, followed by Roundwood (13%) and recovered wood (2%). Although the wood residues are likely to remain an important feedstock, especially in northern and western Europe, they will not be sufficient to meet the future fiber demand from the growing wood pellet sector.
• Further, technological advancements in the market in the region are also likely to increase the demand for wood pellets during the studied period.
• Hence, owing to the above points, United Kingdom is expected to be the fastest growing market during the forecast period.

Competitive Landscape

The Europe wood pellet market is moderately consolidated. The key players in the market include Stora Enso Oyj, Enviva Partners LP, AS Graanul Invest, Drax Group, and Segezha Group PJSC, among others.

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• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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