Market Trends of Europe Wood Pellet Industry
This section covers the major market trends shaping the Europe Wood Pellet Market according to our research experts:
Heating 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.
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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.
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