Biomass for Power Generation Market Outlook

The global biomass for power generation market was valued at approximately USD 68 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 8.5% from 2025 to 2035. This growth is largely attributed to the increased awareness regarding renewable energy sources and their benefits in reducing greenhouse gas emissions. Additionally, government incentives and regulatory frameworks are being established across various nations to promote the adoption of biomass energy. The continuous rise in energy demand, coupled with the fluctuating prices of fossil fuels, is expected to further bolster biomass energy investments. Innovations in biomass technologies and processes are creating new opportunities for efficient power generation, thereby enhancing the biomass sector's growth prospects. Furthermore, the circular economy concept, where waste materials are repurposed as energy sources, is gaining traction, supporting the market's upward trajectory.

Growth Factor of the Market

The biomass for power generation market is experiencing significant growth, primarily driven by an increasing global emphasis on sustainable energy solutions. The urgent need to mitigate climate change effects has led many countries to diversify their energy portfolios, reducing reliance on fossil fuels. The technological advancements in biomass conversion processes, such as improved gasification and anaerobic digestion methods, have enhanced efficiency and made biomass power generation more feasible. Furthermore, favorable government policies and financial incentives aimed at promoting renewable energy sources are catalyzing investments in biomass projects across various regions. Public awareness regarding the environmental benefits of biomass energy also plays a crucial role in fostering market growth. Additionally, rising energy prices have encouraged the exploration and utilization of alternative energy sources like biomass, leading to further market expansion.

Key Highlights of the Market

• The market is projected to reach USD 120 billion by 2035, reflecting robust growth driven by renewable energy trends.
• Technological advancements in biomass power generation methods are leading to increased efficiency and lower operational costs.
• Government incentives and supportive policies are encouraging investments in biomass energy projects globally.
• Rising energy security concerns are prompting nations to explore biomass as a reliable alternative to fossil fuels.
• Significant investments in research and development are aimed at enhancing biomass conversion technologies and feedstock utilization.

By Feedstock Type

Woody Biomass:

Woody biomass, derived primarily from trees and woody plants, is the most commonly utilized feedstock for biomass power generation. It includes forest residues, wood chips, and sawdust, which are rich in energy content. This type of feedstock is highly favored due to its abundance and the fact that it is often a byproduct of timber and lumber industries. The efficient conversion of woody biomass into energy through combustion and gasification technologies contributes significantly to its popularity. Furthermore, sustainable forest management practices ensure a continuous supply of woody biomass, supporting long-term energy generation. The increasing emphasis on reforestation and afforestation projects is expected to enhance the availability of this feedstock, further solidifying its position in the biomass for power generation market.

Agricultural Residues:

Agricultural residues, including crop leftovers such as stalks, husks, and straw, represent another crucial feedstock type in the biomass market. This feedstock is abundant and often considered waste, making its utilization for power generation both economically viable and environmentally beneficial. The conversion of agricultural residues into energy not only provides an additional revenue stream for farmers but also aids in reducing waste and promoting sustainable agricultural practices. Technologies such as anaerobic digestion and combustion are commonly employed to convert these residues into usable energy. The growing global population and the resulting increase in agricultural production will likely lead to a corresponding rise in agricultural residues, presenting a significant opportunity for biomass energy generation in the coming years.

Urban Residues:

Urban residues, which encompass municipal solid waste, food waste, and other organic materials from urban areas, are increasingly being harnessed for biomass power generation. This feedstock type presents a dual benefit: it aids in waste management while simultaneously providing a renewable energy source. The implementation of waste-to-energy technologies, such as anaerobic digestion and incineration, allows for the efficient conversion of urban residues into energy, reducing landfill use and decreasing methane emissions associated with waste degradation. With urbanization on the rise globally, the potential for utilizing urban residues as an energy source is immense, making it a vital segment within the biomass for power generation market.

Biogas:

Biogas, primarily produced through anaerobic digestion of organic matter, represents a significant segment within the biomass feedstock category. This renewable gas consists mainly of methane and carbon dioxide and can be utilized for electricity generation or as a fuel for heating and transportation. The increasing focus on reducing greenhouse gas emissions and the quest for cleaner energy sources are driving the growth of biogas production facilities. Biogas plants not only provide a renewable energy source but also contribute to waste management by processing organic waste, thereby reducing environmental impact. The development of technologies to enhance biogas production efficiency is expected to further boost its adoption within the biomass power generation market.

Others:

The "Others" category encompasses a range of feedstocks, including energy crops like switchgrass, miscanthus, and other dedicated biomass crops that can be cultivated specifically for energy production. These crops have been engineered for high yield and energy content, making them an attractive option for biomass power generation. Additionally, feedstocks such as algae are gaining attention due to their rapid growth rates and potential for biofuel production. The diversification of feedstock options allows for greater flexibility and resilience within the biomass sector, catering to regional availability and agricultural practices. As research continues to expand the viability of alternative biomass sources, the market is likely to see increased innovation and investment in the "Others" category.

By Technology

Combustion:

Combustion is one of the most widely used technologies in biomass power generation, involving the direct burning of biomass feedstocks to produce heat, which is then converted into electricity. This method is characterized by its simplicity and established infrastructure, making it a popular choice across various regions. Combustion technology can efficiently convert a variety of biomass types, including woody biomass and agricultural residues, into energy. However, advancements in combustion technology have focused on improving efficiency and reducing emissions, thus enhancing the overall sustainability of this method. The increased adoption of combined heat and power (CHP) systems that utilize combustion technology further demonstrates its relevance in the biomass market.

Gasification:

Gasification is an innovative biomass conversion technology that transforms solid biomass into a synthesis gas (syngas) through high-temperature processes in the presence of limited oxygen. The resulting syngas can then be used to generate electricity or as a feedstock for producing biofuels and chemicals. This technology is favored for its ability to convert a diverse range of feedstocks while producing minimal waste. Moreover, gasification offers the potential for higher efficiencies compared to traditional combustion methods, making it an attractive option for large-scale biomass energy projects. Ongoing research and development efforts are focused on improving the economic feasibility and scalability of gasification technologies, further propelling their adoption in the biomass for power generation market.

Cogeneration:

Cogeneration, or combined heat and power (CHP), is a technology that captures and utilizes the heat generated from biomass combustion to produce both electricity and useful heat simultaneously. This dual-output capability enhances overall energy efficiency and reduces fuel consumption, making cogeneration systems a sustainable choice for biomass energy production. Industries, commercial establishments, and even residential settings are increasingly adopting cogeneration systems to optimize energy usage and reduce operational costs. The versatility of cogeneration systems allows them to be integrated with various biomass feedstocks, contributing to the overall growth of the biomass market. As businesses and industries focus on sustainability and energy efficiency, the demand for cogeneration technologies is expected to rise significantly.

Anaerobic Digestion:

Anaerobic digestion is a biological process that breaks down organic matter, such as agricultural residues and food waste, in the absence of oxygen, leading to the production of biogas. This technology is gaining traction in the biomass for power generation market due to its ability to process a wide range of feedstocks while providing renewable energy. The biogas produced can be utilized for electricity generation or upgraded to biomethane for injection into the gas grid. Additionally, anaerobic digestion contributes to waste management by reducing landfill volumes and minimizing greenhouse gas emissions. The increasing recognition of anaerobic digestion as a sustainable waste-to-energy solution is expected to drive its growth and adoption across various sectors.

Landfill Gas (LFG):

Landfill Gas (LFG) refers to the biogas generated from the decomposition of organic waste in landfills. This gas primarily consists of methane and carbon dioxide and can be captured and utilized for energy production, either through combustion for electricity generation or as a renewable natural gas. The recovery of landfill gas not only provides a valuable energy source but also mitigates the environmental impact of landfills by reducing greenhouse gas emissions. With the rising global focus on waste management and resource recovery, LFG projects are becoming increasingly prevalent. Governments and organizations are recognizing the potential of LFG as a sustainable energy source, leading to the establishment of policies and incentives that promote its utilization in biomass power generation.

By User

Residential:

The residential segment represents a significant portion of the biomass for power generation market as households seek alternative sources of energy for heating and electricity. Biomass energy systems, including pellet stoves and biomass boilers, are becoming increasingly popular among homeowners due to their environmental benefits and potential cost savings. The use of locally sourced biomass feedstocks, such as wood pellets or agricultural residues, allows residents to reduce their carbon footprint while enhancing energy independence. Moreover, government incentives and subsidies aimed at promoting residential biomass systems further drive their adoption. As more households embrace renewable energy solutions, the residential sector is expected to play a pivotal role in shaping the biomass market landscape.

Commercial:

The commercial segment encompasses a wide range of businesses and institutions that are increasingly turning to biomass for power generation as part of their sustainability initiatives. Commercial facilities, such as hotels, schools, and hospitals, are adopting biomass heating systems and combined heat and power (CHP) technologies to meet their energy needs while reducing operational costs. The ability to use locally sourced biomass feedstocks not only lowers energy expenses but also supports local economies. Furthermore, growing awareness about corporate social responsibility and environmental stewardship is encouraging commercial users to pursue renewable energy solutions like biomass. As the search for sustainable energy sources continues, the commercial sector is likely to see substantial growth in biomass adoption.

Industrial:

The industrial sector is one of the largest consumers of biomass for power generation, utilizing biomass energy to meet high thermal and electrical energy demands. Industries such as pulp and paper, food processing, and chemical manufacturing are increasingly adopting biomass as a sustainable energy alternative to fossil fuels. Biomass provides a reliable and renewable energy source that can enhance energy security while reducing greenhouse gas emissions. Many industrial facilities are investing in biomass boilers and specialized energy systems to optimize their energy usage and achieve sustainability targets. The continuous improvements in biomass conversion technologies are further driving the industrial sector's adoption of biomass energy, making it a key contributor to the overall market growth.

Others:

The "Others" category includes various end-users that may not fall under the primary segments of residential, commercial, or industrial. This encompasses sectors like agriculture, municipalities, and non-profit organizations that utilize biomass energy for specific applications. For instance, farms may utilize biomass for heating purposes or to power machinery, while municipalities might invest in biomass energy systems to manage waste and generate power for community use. The flexibility of biomass allows for diverse applications across different sectors, demonstrating its potential to cater to unique energy needs. As the importance of renewable energy continues to rise, this category is expected to expand, contributing to the overall growth of the biomass for power generation market.

By Application

Electricity Generation:

Electricity generation represents one of the primary applications of biomass for power generation, utilizing various technologies to convert biomass feedstocks into electrical energy. Biomass power plants primarily use combustion, gasification, or anaerobic digestion methods to produce electricity from organic materials. This application is particularly significant in regions with abundant biomass resources, where it can serve as a reliable and renewable energy source. The ability to generate baseload power from biomass contributes to energy stability and security, particularly as countries transition toward cleaner energy systems. Moreover, the increasing demand for electricity globally, combined with the push for renewable energy solutions, is driving the growth of biomass electricity generation.

Heat Generation:

Heat generation through biomass is another important application, particularly in residential, commercial, and industrial sectors. Biomass heating systems, such as biomass boilers and stoves, provide a sustainable alternative to conventional heating fuels. The conversion of biomass into thermal energy can significantly reduce heating costs, making it an economically attractive option for consumers. Additionally, these systems are particularly appealing in regions with high heating demands and strong biomass availability. The development of modern biomass heating technologies, which improve efficiency and emissions performance, is further enhancing the attractiveness of biomass for heat generation. As the focus on energy efficiency and sustainability grows, this application is expected to gain traction in both urban and rural settings.

Combined Heat & Power (CHP):

The combined heat and power (CHP) application is gaining prominence in the biomass for power generation market due to its ability to provide both electricity and useful heat from a single energy source. CHP systems are particularly advantageous in industrial settings where both thermal and electrical energy are in high demand. By capturing the heat that would otherwise be wasted in conventional electricity generation, CHP systems can achieve overall efficiency rates of 80% or higher. This dual-output capability makes biomass CHP systems a sustainable and economically viable option for various sectors. The growing emphasis on energy efficiency and the reduction of carbon footprints is expected to drive the adoption of biomass CHP technologies in the coming years.

Others:

The "Others" category under biomass applications includes various niche applications such as biofuels production, district heating, and specialized industrial processes. For example, certain biomass feedstocks can be converted into biofuels for transportation, contributing to energy diversification. Additionally, district heating systems, which supply heating to multiple buildings from a centralized biomass facility, are gaining traction in urban areas. These applications highlight the versatility of biomass energy, allowing for its use in ways that support sustainability goals across different sectors. As innovations continue to emerge in biomass conversion technologies, new applications and market opportunities are likely to develop.

By Region

The biomass for power generation market is characterized by distinct regional dynamics, with North America holding a significant share of the market, primarily due to its established biomass infrastructure and robust government support for renewable energy initiatives. In 2023, North America accounted for approximately 45% of the global biomass energy generation capacity, with a market value estimated at USD 30 billion. The United States leads in biomass power generation, driven by federal and state incentives, along with an abundant supply of biomass resources, including agricultural residues and woody biomass. The region is expected to witness a CAGR of 7.5% over the forecast period, as investments in biomass technology and infrastructure continue to grow.

Europe is another key region in the biomass for power generation market, with a strong commitment to renewable energy and sustainability. In 2023, the European biomass market was valued at around USD 25 billion, accounting for roughly 37% of the global market share. Countries like Germany, Sweden, and Finland are at the forefront of biomass adoption, utilizing it as a significant source of energy to meet their renewable energy targets. The European market is projected to grow at a CAGR of 8% from 2025 to 2035, driven by stringent environmental policies and increased investments in biomass technologies. The focus on reducing greenhouse gas emissions and fostering a circular economy is further propelling the growth of biomass energy in Europe.

Opportunities

The biomass for power generation market is ripe with opportunities as the global energy landscape shifts toward sustainability and renewable sources. One of the most significant opportunities lies in technological advancements that enhance the efficiency and economic viability of biomass conversion processes, such as gasification and anaerobic digestion. These innovations not only improve energy output but also reduce emissions, making biomass energy more appealing to regulators and consumers. Moreover, as the demand for energy continues to rise, the exploration of diverse feedstock options, including agricultural residues and urban waste, presents new avenues for biomass production. The increasing recognition of waste-to-energy solutions is also fostering collaborations between waste management entities and biomass energy producers, creating a synergistic approach to energy generation.

Additionally, global trends in sustainability and corporate social responsibility are encouraging industries to adopt renewable energy solutions, including biomass. As companies seek to lower their carbon footprints and enhance energy security, investments in biomass energy systems are expected to rise. Furthermore, government policies and incentives aimed at promoting renewable energy adoption are likely to create a favorable regulatory environment for biomass projects. This combination of market dynamics is fostering a burgeoning biomass sector, providing ample opportunities for investors, developers, and technology providers to capitalize on the growing demand for sustainable energy solutions.

Threats

Despite the promising growth prospects of the biomass for power generation market, several threats could impede its expansion. One of the most pressing concerns is the potential competition from other renewable energy sources, such as solar and wind. As technological advancements in these sectors continue to drive down costs, biomass may struggle to maintain its market share unless it can demonstrate clear advantages in terms of efficiency and sustainability. Furthermore, fluctuations in biomass feedstock prices due to supply chain disruptions or adverse weather conditions could pose challenges for biomass energy producers, impacting their profitability and long-term viability.

Another critical threat is the potential for regulatory changes that may affect biomass energy projects. As governments reassess their renewable energy policies in response to evolving environmental concerns and economic conditions, there could be shifts in subsidies or incentives that impact the biomass market. Additionally, public perception and acceptance of biomass as a sustainable energy source can vary, particularly concerning concerns about land use, deforestation, or emissions associated with biomass combustion. These factors could hinder the growth of the biomass for power generation sector, necessitating a proactive approach to address challenges and enhance public awareness.

Competitor Outlook

• Enviva Partners, LP
• Green Circle Bio Energy, Inc.
• RWE AG
• Fortum Oyj
• Veolia Environnement S.A.
• Abengoa Bioenergy
• Bioenergy Infrastructure Group
• Ameresco, Inc.
• Drax Group plc
• Siemens AG
• Platinum Equity LLC
• Biomass Energy Solutions, LLC
• Valmet Oyj
• Biomass Power Association
• Woods Hole Oceanographic Institution (WHOI)

The competitive landscape of the biomass for power generation market is characterized by a diverse range of players, including multinational corporations, regional companies, and specialized biomass energy firms. This sector's competitiveness is driven by technological innovation, strategic partnerships, and a focus on sustainability. Leading companies in the market are continuously investing in research and development to enhance their biomass conversion technologies and optimize feedstock utilization. Furthermore, collaboration among industry stakeholders, including feedstock suppliers, technology providers, and energy consumers, is becoming increasingly important in fostering growth and ensuring the long-term viability of biomass energy solutions.

Major companies such as Enviva Partners, LP, and Drax Group plc are at the forefront of the biomass market, leveraging their extensive expertise and resources to develop innovative biomass projects. Enviva Partners, LP is recognized as a leading wood pellet producer, supplying biomass fuel to power plants across Europe and North America. The company's strong commitment to sustainability and responsible sourcing practices has positioned it as a key player in the biomass energy sector. Drax Group plc, based in the UK, has transitioned from coal to biomass power generation, making substantial investments in biomass infrastructure and technology. The company's innovative approach to biomass utilization has made it a leader in renewable energy in the region.

Other notable players in the market, such as RWE AG and Fortum Oyj, are also making significant strides in biomass power generation. RWE AG is a major European utility company with a strong focus on renewable energy, including biomass. The company has invested in biomass co-firing projects to reduce emissions and enhance sustainability in its energy portfolio. Similarly, Fortum Oyj, a Finnish energy company, has embraced biomass as an integral part of its renewable energy strategy, focusing on efficient biomass conversion technologies. These companies' strategic initiatives and investments reflect the broader trend within the biomass sector towards innovation, sustainability, and energy diversification.