The war in Ukraine, sanctions against Russia, high energy and production costs, relatively short heating periods and a slump in sales of biomass heating systems – given these framework conditions, it is not surprising that both European pellet production and demand saw a year-on-year decrease in 2023. Production output fell by 4%, from 25.5 million tonnes in 2022 to 24.4 million tonnes last year, while demand decreased by 6%, from 31.8 million tonnes to 29.9 million tonnes. This is according to the Pellet Report 2024 published by Bioenergy Europe.
Premium-quality pellets dominate the market
Germany remains Europe’s largest pellet producer with an output of 3.7 million tonnes (+4% compared to 2022). France and Poland follow in second and third place with around 2.2 million tonnes each (+10%). Differences can be seen in the number of pellet mills. In Germany, 66 production sites were operative in 2023, compared to 73 in France. Poland operated twice as many plants as the Grande Nation, to be precise 140 mills, which have the same production output as France, though.
Sweden (1.7 million t), Spain (800,000 t) and Portugal (600,000 t) struggled with the raw material supply. On the Iberian Peninsula, capacity was twice as high as pellet production output in 2023. Similar to Sweden, the domestic markets of the Baltic states saw a negative development last year, and pellet prices fell at a faster rate than raw material prices. As a result, production quantities did not increase despite lower electricity costs, and in the case of Sweden, even a slight decrease was reported.
For the time being, no pellet deliveries to Europe can be expected from Russia, which used to be an important supplier for Europe for a long time, with a trade volume of around 3 million tonnes a year. The majority of Russia’s production output of 1.5 million tonnes is shipped to South Korea. Belgium has curtailed its production output by almost a third to 600,000 tonnes. The Balkan countries, especially Romania, Croatia and Bosnia, on the other hand, increased their production output from 1 million tonnes in 2012 to almost 3 million tonnes last year.
Electricity generation on the decrease
With a demand of 2.7 million tonnes, Germany is the new number one in the private heating sector, followed by Italy. Sources: EPC survey 2024, FAO, ENplus, EIA, Bioenergy International © Timber-Online.net
Pellet consumption in the 27 EU countries fell by 3.7%, from 22.7 million tonnes in 2022 to 21.9 million tonnes last year. The rest of Europe even recorded a decrease of around 11% to 8 million tonnes. Demand in the heating sector accounted for 59% (17.7 million t) of pellet consumption, while 41% (12.3 million t) of the produced pellets were used in the electricity sector. Demand in the private European heating sector amounted to 14.1 million tonnes (47%) in 2023, and to 3.6 million tonnes (12%) in the commercial sector. 3.8 million tonnes (13%) of wood pellets were used in combined heat and power plants and 8.4 million tonnes (28%) were used for electricity generation. Thus, the gap in pellet demand between the heating and electricity sectors keeps getting bigger. In 2022, 44% of the produced pellets were used for electricity generation and 56% in the heating sector. In 2021, industrial pellet consumption was still at 17 million tonnes (-28%) in Europe, and total demand reached a record quantity of 34.6 million tonnes.
Demand for industrial pellets in Great Britain (6.3 million t), the Netherlands and Denmark (1.8 million t each) continued to weaken in 2023. In the case of Great Britain, so-called contracts for difference (CfD) led to a reduction in production output by energy suppliers such as Drax. In the Benelux countries, sluggish demand was mainly the result of the shutdown of entire biomass heating and power plants. Great Britain covered three quarters (4.7 million t) of its pellet demand with imports from the US. Meanwhile, an increase in pellet consumption for electricity generation (CHP plants) was recorded in France (+63% to 636,000 t) and Sweden (+6% to 1.2 million t).
Germany had a pellet demand of 3.4 million tonnes last year, of which 2.7 million tonnes were used in the private heating sector (<50 kW) and 650,000 tonnes in the commercial heating sector (>50 kW). In both cases, Germany was the largest consumer in the EU. At 80,000 tonnes, pellets played a minor role in combined heat and power (CHP) plants. With consumption of 2.6 million tonnes (-15%), Italy’s private heating sector was at the same level as in 2016.
Slump in boiler sales
One in four European households used renewable energies for heating. Croatia (53%), Estonia (48%) and Romania (45%) are in the lead when it comes to the use of biomass in the private heating sector. However, pellets only played a small part there. Pellet stoves were mainly used in Italy (1.7 million units), followed by France (1.6 million units). In France, sales of new stoves tripled in eight years, but fell from 210,000 to 78,000 units (-63%) in 2023. In Germany, sales rose from 24,000 to 46,000 stoves in 2022, only to fall back to 21,000 units last year. Sales of new pellet boilers in Germany also halved, totaling only 34,100 units in 2023. In France, sales were down by as many as 71% to 11,500 units following the expiration of subsidy programs. In Austria, a 67% decrease to 7,000 units was reported. Only in Poland were sales mostly stable at 40,000 boilers thanks to a constant subsidy policy.
Table below: In 2023, sales of pellet stoves and boilers saw a massive slump in Europe. Germany, Spain and Greece were the main markets for commercially used pellet boilers.
| Number of units, ranked according to boilers with <50 kW | ||||||
| Country | Stoves | Boilers for residential buildings (<50 kW) | Commercial boilers (>50 kW) | |||
|---|---|---|---|---|---|---|
| 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | |
| Poland | 1,000 | 1,000 | 40,000 | 40,000 | 500 | 400 |
| Germany | 46,000 | 21,000 | 76,000 | 34,100 | 1,400 | 900 |
| France | 210,000 | 78,000 | 40,200 | 11,500 | 800 | 800 |
| Austria | 2,200 | 1,800 | 21,600 | 7,000 | 103 | 30 |
| Spain* | 46,626 | 35,000 | 9,194 | 6,000 | 1,590 | 1,400 |
| Czech Republic | 1,600 | 1,600 | 3,800 | 3,350 | 0 | 0 |
| Serbia | 7,228 | 3,635 | 5,628 | 2,602 | 571 | 268 |
| Latvia | 2,800 | 600 | 5,000 | 2,500 | 600 | 500 |
| Italy | 142,508 | 62,263 | 9,814 | 1,784 | 174 | 93 |
| Greece | 2,000 | n/s | 3,950 | n/s | 1,000 | n/s |
| Slovakia | 100 | n/s | 850 | n/s | 40 | n/s |
Exports within Europe
Despite a 48% decrease within two years, Latvia remained the largest pellet supplier in Europe with an export share of 1.3 million tonnes. Estonia followed in second place with exports of 1.1 million tonnes and a decline of 26% compared to 2022. Latvia’s main foreign market was Great Britain, followed by Denmark. In the case of Estonia, it was Denmark and the Netherlands. Germany and Austria were almost on a par with 770,000 tonnes each. Italy remained Austria’s main buyer with 663,000 tonnes, but Germany also delivered a considerable quantity of wood pellets to Italy (220,000 t). Germany’s other main foreign markets were Austria (144,000 t) and France (137,000 t). Due to lower domestic demand, Belgium increased its pellet exports in 2023: 740,000 tonnes correspond to 110% of the country’s production output (672,000 t), the main foreign markets being France (389,000 t), the Netherlands (202,000 t) and Great Britain (94,000 t). Imports from the Netherlands and Denmark were at a very similar level (2.3 million t). The Netherlands received around 1.5 million tonnes of industrial pellets from the US, while Denmark only purchased 528,000 tonnes.
In 2023, Italy’s three most important pellet suppliers were Austria (530,000 t), Brazil (288,000 t), and Germany (247,000 t). In the case of Italy, the differences between import and export figures are due to the different methods of data collection and processing. At the end of last year, the bankruptcy of Enviva, the world’s largest pellet manufacturer, was not yet reflected in the import volumes of Great Britain, Denmark or the Netherlands. At the moment, it is still unclear how imports will be impacted the implementation of the EU Regulation on Deforestation-Free Products (EUDR).
