Europe Wood Pellets Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

Europe Wood Pellet Market Analysis

The Europe Wood Pellet Market size is estimated at USD 16.36 billion in 2025, and is expected to reach USD 20.44 billion by 2030, at a CAGR of 4.55% during the forecast period (2025-2030).

The European wood pellet industry has witnessed substantial infrastructure development and capacity expansion in recent years, reflecting the growing importance of wood biomass in the region's energy transition. As of 2023, the total production capacity reached 27.2 million metric tons, supported by approximately 774 wood pellet plants across Europe. This robust infrastructure development demonstrates the industry's maturity and readiness to meet increasing demand. The sector has also seen significant technological advancements in pellet production and combustion efficiency, leading to improved product quality and reduced environmental impact.

The industry is experiencing a notable shift in power generation applications, particularly in Northwest Europe. Since January 2024, the combined wood pellet-fired power output has dramatically increased to 2.9 GW from 150 MW, indicating growing adoption in the power generation sector. This transformation is further supported by various government initiatives and policy frameworks designed to promote renewable energy sources. For instance, in April 2024, the European Commission approved a EUR 900 million French scheme to support companies investing in sustainable biomass and renewable hydrogen energy production, demonstrating strong institutional backing for the industry.

The market is witnessing significant developments in industrial-scale conversions and infrastructure upgrades. A notable example is France's announcement in October 2023 to convert two coal-fired power plants with a combined capacity of 1.8 GW to biomass pellet by 2027. This type of large-scale conversion project represents a growing trend across Europe as countries seek to reduce their reliance on fossil fuels while maintaining existing power generation infrastructure. The industry is also seeing innovations in pellet manufacturing processes, storage solutions, and transportation systems to improve efficiency and reduce costs.

The European wood pellet market is experiencing a transformation in its supply chain dynamics and quality standards. The industry has developed sophisticated certification systems and quality control measures to ensure consistent product quality and sustainability. This evolution has led to improved standardization across the industry, with manufacturers increasingly adhering to stringent quality parameters for both industrial and residential applications. The market has also adapted to changing supply patterns, particularly following the EU's import ban on Russian industrial wood pellet in summer 2022, which has created new opportunities for transatlantic trade and prompted the development of alternative supply routes.

Europe Wood Pellet Market Trends

Clean Energy Generation to Drive Wood Pellets Market

The transition towards cleaner energy sources has positioned wood pellets as a viable alternative for power generation, particularly in replacing coal-fired plants. When combusted, wood pellets produce 80-85% less CO2 emissions than coal, while also releasing lower levels of sulfur, chlorine, and nitrogen, making them an environmentally responsible choice for power generation. The conversion of existing coal-fired plants to pellet fuel provides a significantly higher CO2 reduction at a lower net monetary cost per avoided metric ton compared to other renewable technologies, with studies showing a 26.3% lower cost per avoided metric ton of CO2 for modern pulverized coal power station conversions to sustainably sourced wood fuel pellets.

Recent governmental support and initiatives have further strengthened the position of wood pellets in clean energy generation. In December 2023, the UK government announced the extension of its Contract for Difference (CfD) program to support bioenergy with carbon capture and storage (BECCS), aiming to develop a competitive market in carbon capture, usage, and storage by 2035. Additionally, in April 2024, the European Commission approved a EUR 900 million French scheme to support companies investing in biomass and renewable hydrogen for energy production, aligning with the Green Deal Industrial Plan. These developments, coupled with the fact that biomass-fueled power stations accounted for 11% of total UK electricity generation in 2022 (up from 8% in 2010), demonstrate the growing role of wood pellets in clean energy generation.

Heat-Supply Applications to Drive Wood Pellets Market

The residential and commercial heating sector has emerged as a significant driver for the wood pellet market, driven by the increasing adoption of wood pellet heating systems and their cost-effectiveness compared to traditional heating methods. According to the Stove Industry Alliance, wood-based heating fuels are proving to be substantially more economical, costing households 74% less per kWh than electric heating and 21% less than gas heating. The superior burning characteristics of heating pellets, including high density, low moisture content (below 10%), and minimal ash content (less than 2%), make them more efficient than conventional firewood and traditional open-wood fireplaces, while also producing cleaner combustion with reduced smoke and soot emissions.

The market has witnessed substantial growth in heating system installations, particularly in countries with prolonged winter seasons. In Germany alone, the number of wood pellet heating systems has increased by approximately 60% since 2021, reaching almost 800,000 installations by 2024. This growth is supported by innovative service models, such as heat supply contracts offered by companies like Balcas Energy, where consumers only pay for the kilowatt-hours of heat they use while the company manages the biomass heating infrastructure. The expansion of district heating networks, especially in urban areas, has created additional opportunities for wood energy consumption. For instance, Poland, which has the most extensive district heating infrastructure in Europe, aims to achieve 28% renewable-generated heat by 2030, indicating significant potential for wood energy adoption in district heating applications.

Segment Analysis: Application

Heating Segment in Europe Wood Pellet Market

The heating segment dominates the Europe wood pellet market, commanding approximately 65% market share in 2024, while also exhibiting the strongest growth trajectory with a projected growth rate of around 6% from 2024-2029. The residential and commercial sectors primarily drive this segment's dominance, using heating pellets for home heating applications through heat stoves and furnaces. Due to the prolonged winter season, heating applications are extensively utilized in European countries such as Iceland, Poland, the Netherlands, Germany, Finland, the Czech Republic, Austria, and France. The growth in wood pellet heat supply contracts, particularly in cold countries, continues to establish a robust market presence. Companies like Balcas Energy provide tailored heat contracts to end consumers, bearing the responsibility of setting up biomass heating infrastructure at consumer premises, where consumers pay only for the kilowatt-hour of heat they use. Additionally, the number of consumers using district heating systems driven by biomass fuels such as wood pellets is gaining momentum, supported by the European Union's mandate to reduce fossil fuel incorporation in heating applications.

Power Generation Segment in Europe Wood Pellet Market

The power generation segment represents a significant portion of the Europe wood pellet market, accounting for approximately 35% of the market share in 2024. This segment utilizes pellet fuel as a renewable alternative to coal in power plants, offering a more environmentally sustainable solution for electricity generation. Several methods are employed for power generation, including direct firing, where wood fuel pellets are directly fed into boilers powering steam turbines, co-firing with coal in existing power plants, cogeneration for both electricity and heat production, and gasification processes. The segment's growth is particularly driven by government initiatives and policies promoting clean energy generation, such as the European Union's mandate to reduce carbon emissions. For instance, in October 2023, the French government announced plans to convert two coal-fired power plants with a combined capacity of 1.8 GW to wood biomass by 2027, demonstrating the ongoing transition toward more sustainable power generation methods.

Europe Wood Pellet Market Geography Segment Analysis

Wood Pellet Market in the United Kingdom

The United Kingdom represents the largest wood pellet market in Europe, commanding approximately 21% of the total market share in 2024. The country's wood pellet industry is primarily driven by power generation, with the Drax power station in North Yorkshire being a cornerstone facility. This facility, which has converted four of its six 65 MWe generating units to run exclusively on wood pellets, produces around 5% of the United Kingdom's total electricity. The UK's commitment to clean energy transition is evident through its Contract for Difference (CFD) program, which was extended in December 2023 to support bioenergy with carbon capture and storage (BECCS). The government's plan to develop a competitive market in Carbon Capture, Usage, and Storage (CCUS) by 2035 is expected to boost the economy by EUR 5 billion annually by 2050. The residential construction sector's growth, driven by population growth, urbanization, and government initiatives addressing housing shortages, is creating additional demand for wood pellets in heating applications.

Wood Pellet Market in France

France's wood pellet market is projected to demonstrate remarkable growth, with an expected CAGR of approximately 9% from 2024 to 2029. The country has positioned itself as a rapidly evolving market in the European biogas plant sector, supported by progressive government policies and abundant feedstock availability. The collective pellet heating method has shown significant expansion, with around 2,500 collective, tertiary, and industrial boiler rooms utilizing wood pellets by the end of 2023. The residential sector has been a major contributor to the industry's development, with more than 80% of the country's consumption directed towards residential applications. The Heat Fund, established by the French government and managed by ADEME, has been instrumental in supporting renewable heat systems, having aided over 7,100 projects between 2009 and 2022. The country's commitment to carbon neutrality by 2050 has created a favorable environment for wood pellet market growth, with biomass pellets playing a crucial role in achieving this target.

Wood Pellet Market in Germany

Germany has established itself as a significant player in the European wood pellet market, with its strategic approach to renewable energy transition. The country's market benefits from government programs that indirectly support wood pellet consumption for newly erected buildings and retrofitting heating systems with biomass boilers in existing buildings. As of 2023, Germany operated 50 production facilities for wood pellet manufacturing with a total annual production capacity of 3.9 million metric tons. The German law mandates that all buildings erected after 2009 must use a certain share of renewable energy for heating and cooling requirements, which has been a significant driver for increasing wood pellet consumption in residential and commercial sectors. The country's commitment to phasing out coal-fired power plants and its position as a frontrunner in renewable energy adoption has created a favorable environment for wood pellet market growth.

Wood Pellet Market in the Netherlands

The Netherlands has developed a robust wood pellet market infrastructure, primarily focused on power generation through co-firing processes. The country's transition towards cleaner energy sources is guided by the Dutch Climate Law, which aims for significant emissions reduction and carbon neutrality by 2050. The Dutch cabinet recognizes biomass as an essential energy source in achieving a climate-neutral and circular economy. The market has benefited from the Dutch Energy Accord, which emphasized reducing CO2 emissions by around 80% by 2050. The country's strategic location and well-developed port infrastructure have facilitated efficient import and distribution networks. Despite having domestic production capabilities, the Netherlands maintains a significant import volume to meet its demand, primarily sourcing from countries like the United States, Portugal, and the Baltics. The focus on wood energy and solid biofuel is integral to the country's energy strategy.

Wood Pellet Market in Other Countries

The wood pellet market in other European countries, including Belgium, Spain, and Russia, demonstrates varying degrees of market maturity and growth potential. Belgium, despite being a relatively young market, has established itself in the power generation sector through co-firing applications. Spain has positioned itself as a major producer and net exporter of wood pellets, with significant forest resources providing a strong foundation for industry growth. Russia, despite recent geopolitical challenges, maintains its production capabilities and has diversified its export destinations. These countries are implementing various support schemes and incentives to promote wood pellet adoption, particularly in the residential heating sector. The market dynamics in these regions are influenced by factors such as government policies, infrastructure development, and the increasing emphasis on renewable energy sources.