Biomass Power Market

Overview

The global Biomass Power Market was valued at USD 149.0 billion in 2025 and is projected to reach USD 249.6 billion by 2034, growing at a CAGR of 5.9% during the forecast period (2026–2034). The market growth is driven by the need for firm, dispatchable renewable electricity that can balance variable solar and wind output, and by the growing use of agricultural, forestry and municipal waste as power fuels. The market is shifting from coal-to-biomass conversions and subsidy-backed baseload generation toward flexible, dispatch-based and carbon-removal-ready plants. Operators are adding carbon capture to biomass CHP units, designing plants that ramp up when the grid needs power, and moving toward waste-based and residue-based fuels to meet stricter sustainability rules. Government initiatives such as the European Union's revised Renewable Energy Directive, which sets a binding 42.5% renewable energy target for 2030 and stronger bioenergy sustainability rules, and India's Ministry of Power co-firing policy, which requires coal plants to use 5% biomass pellets from FY 2025–26, are supporting demand. By region, Europe held the largest share of the market in 2025, at 38%, supported by a large base of biomass CHP plants, district heating networks and strong renewable policy in the UK, Germany, Sweden, Finland and Denmark. Asia-Pacific is expected to be the fastest-growing region during the forecast period, driven by new large plants in Japan, co-firing mandates in India and biomass power programs in China.

Market Size & Share

Market Dynamics

KEY MARKET TREND

Bioenergy with Carbon Capture and Storage (BECCS) Emerging as a Transformational Trend

• Power and heat producers with existing biomass boilers are adding carbon capture units so that biogenic carbon dioxide can be captured, transported and stored underground, turning biomass plants into a source of carbon removals as well as dispatchable electricity.
• Solvent-based capture systems are being designed to use plant waste heat, and shared CO2 transport and storage networks, such as offshore storage in the North Sea, are being built so that several plants can use the same infrastructure. Public funding schemes, including the EU Innovation Fund, are helping the first projects reach investment decisions.
• Corporate buyers of carbon removals are signing long-term purchase contracts, which gives plant owners a second revenue stream. Operators with existing biomass fleets, access to sustainable fuel and CO2 storage are likely to gain an advantage over plants that cannot add capture, and boiler makers and capture technology providers are forming partnerships to win projects.
• Stockholm Exergi took a final investment decision on 27 March 2025 to build a BECCS facility at its Värtaverket biomass CHP plant in Stockholm, with a total investment of about SEK 13 billion and a target to capture up to 800,000 tonnes of biogenic CO2 a year from 2028, supported by a EUR 260 million European Investment Bank loan.

KEY MARKET DRIVER

Policy Support for Dispatchable Renewable Power and Coal-to-Biomass Co-Firing is Driving Market Growth

• Biomass plants can run when needed and store fuel on site, which helps grid operators balance variable solar and wind output. Solar and wind made up 96.8% of net renewable capacity additions in 2025, so firm renewable capacity from biomass, hydro and storage is becoming more valuable to system planners.
• Co-firing and fuel conversion let coal plant owners cut emissions at a lower cost than building new plants, because boilers, fuel handling and grid connections can be reused. This approach is spreading in India, Japan and Poland, where coal-based plants are being converted to run partly or fully on biomass.
• Using crop residues, forest thinnings and municipal waste as fuel also supports waste management, air quality and rural income goals, which gives governments additional reasons to back biomass projects. In the EU, the revised Renewable Energy Directive sets a binding 42.5% renewable target for 2030 and stronger sustainability criteria for bioenergy, with a transposition deadline of 21 May 2025.
• In November 2025, India's Ministry of Power notified a comprehensive policy requiring all coal-based thermal power plants to co-fire 5% biomass pellets from FY 2025–26, with plants in the National Capital Region required to add 2% torrefied municipal solid waste charcoal, taking the total blend to 7%.

KEY MARKET OPPORTUNITY

Growth of Agricultural-Residue Power and Decentralised Biomass Plants Creating New Revenue Streams in Emerging Markets

• Large volumes of crop residues, such as paddy straw, rice husk and sugarcane bagasse, are still burned in fields or left unused in India, Southeast Asia, Africa and Latin America. Converting them into power gives developers a low-cost fuel base and a chance to build long-term fuel supply contracts with farmers and aggregators.
• New business models include fuel aggregation services, captive power for industrial parks and data centres, and the sale of carbon-removal credits and co-products such as biochar and ash. Modular gasification and small CHP packages allow projects at sites with limited grid access.
• Investment interest is rising because biomass plants can earn stable revenue under power purchase agreements and Contract for Difference (CfD) type contracts, and because corporate buyers are willing to pay for carbon removals from biomass-based projects. Development banks such as the European Investment Bank have shown willingness to finance first-of-a-kind projects.
• In May 2026, Indian renewable energy company SAEL said it plans to scale its biomass power capacity to 1 GW over the next five years, using paddy stubble as the main fuel. The company currently operates 11 plants with a combined capacity of 165 MW across Punjab, Haryana and Rajasthan, and is looking at Chhattisgarh, Andhra Pradesh, Madhya Pradesh and Uttar Pradesh for expansion.

Biomass Power Market Size, 2025-2034 (USD Billion)

Segmentation Analysis

Analysis by Technology

Combustion held the largest market share in 2025 because direct-fired boilers connected to steam turbines are a proven and bankable way to turn wood chips, pellets, straw and other residues into power. The technology works at sizes from a few megawatts to over 100 MW and supports coal-to-biomass conversions and co-firing, which let owners reuse boilers, fuel handling and grid connections.

Gasification is projected to grow at the fastest CAGR during the forecast period because it turns biomass into a gas that can run engines or turbines at high electrical efficiency in small and mid-size plants. It suits distributed projects that use rice husk, wood waste and crop residues in India, Southeast Asia and Africa, where grid access is limited.

Technology categories include

• Combustion (Dominating Segment)
• Gasification (Highest CAGR Segment)
• Anaerobic Digestion
• Pyrolysis
• Others

Analysis by Feedstock

Solid biomass held the largest market share in 2025 because wood chips, wood pellets, forest residues, straw and sugarcane bagasse are widely available, easy to store and compatible with existing boilers. A mature supply chain supports large users: Drax's North American pellet mills produced 1.9 million tonnes of wood pellets in the first half of 2026, while Japan's new plants rely on pellets and chips from thinning timber and mill residues.

Municipal solid waste is projected to grow at the fastest CAGR during the forecast period because cities in Asia and elsewhere need to cut landfill use and are building waste-to-energy plants that also generate power. In India, the Ministry of Power's November 2025 policy brought torrefied charcoal made from municipal solid waste into the coal co-firing framework, creating a new fuel market for power plants.

Feedstock categories include

• Solid Biomass (Dominating Segment)
• Municipal Solid Waste (Highest CAGR Segment)
• Biogas
• Liquid Biofuels
• Others

Analysis by Capacity

The 10–50 MW segment held the largest market share in 2025 because this size range fits the typical fuel supply area of forestry, farming and industrial residues, and is common for CHP units and dedicated plants. SAEL's 11 paddy-straw plants average about 15 MW each (165 MW in total), and Hydro-Québec's 25-year power purchase agreement with a 22 MW forest-residue plant, effective 2026, shows that mid-size plants continue to secure long-term contracts.

Plants above 50 MW are projected to grow at the fastest CAGR during the forecast period, led by large dedicated plants in Japan and utility-scale conversions in Europe and India. Japan added 1.1 GW of bioenergy capacity in 2025, more than double its 2024 additions, and the 112 MW Sendai Port plant started commercial operations in November 2025. Large units also provide the scale needed for carbon capture, as shown by Stockholm Exergi's BECCS project at its Värtaverket plant.

Capacity categories include

• 10–50 MW (Dominating Segment)
• Above 50 MW (Highest CAGR Segment)
• Below 10 MW

Analysis by End User

Industrial users held the largest market share in 2025 because pulp and paper mills, sawmills, sugar and ethanol plants and food processors generate large amounts of wood waste, bagasse and other residues that can be burned on site to produce steam and electricity. Using their own residues lowers fuel and disposal costs, and CHP systems raise overall energy efficiency. In Brazil, sugarcane groups such as Raízen generate power from bagasse, with 755 GWh of biomass cogeneration reported in the second quarter of the 2025/26 crop year.

Utilities are projected to grow at the fastest CAGR during the forecast period because coal-to-biomass conversions, co-firing mandates and capacity contracts are driving large purchases by power companies. In the UK, a new low-carbon Contract for Difference for Drax's biomass units will run from April 2027 to March 2031, and the government has proposed a similar four-year contract for Lynemouth.

End User categories include

• Industrial (Dominating Segment)
• Utilities (Highest CAGR Segment)
• Commercial
• Residential

By Region

Biomass Power Market Share 2025, (CAGR)

North America

xx%

South America

xx%

Europe

38%

Middle East Africa

xx%

Asia Pacific

31%

Europe held the largest market share in 2025, accounting for 38% of the global market share, supported by a large base of biomass CHP plants, district heating networks and long-standing renewable policies. Germany, the UK, Sweden, Finland and Denmark are the major country markets. The revised Renewable Energy Directive sets a binding 42.5% renewable target for 2030 and tighter bioenergy sustainability rules, while the UK has agreed transitional support for large biomass generators from April 2027 to March 2031. Drax Power Station generated about 6% of UK electricity between April 2025 and March 2026, and Ørsted operates large biomass-fired CHP plants in Denmark. Technology adoption is focused on carbon capture, with Stockholm Exergi's BECCS project due to start in 2028, and on coal-to-biomass conversions such as Fortum's plants in Poland. Competition includes Drax, Ørsted, Fortum, Stockholm Exergi and EPH, with Valmet and ANDRITZ supplying boilers.

Asia-Pacific is projected to grow at the fastest CAGR during the forecast period. According to IRENA, Japan added 1.1 GW of bioenergy capacity in 2025 and China added 0.8 GW, while China's National Energy Administration reported 1.05 GW of new biomass power in the first three quarters of 2025. India's Ministry of Power requires all coal plants to co-fire biomass pellets, supporting fuel supply chains and new plants such as SAEL's planned 1 GW expansion. Major country markets include China, India, Japan, South Korea and Thailand. Technology adoption centres on circulating fluidised bed boilers for wood pellets and chips, supplied by companies such as Sumitomo Heavy Industries, ANDRITZ and Mitsubishi Heavy Industries, along with agricultural-residue boilers from Thermax. The competitive landscape includes Sumitomo Corporation, Renova, Tokyo Gas, Hokuriku Electric Power, SAEL and China Everbright Environment.

Countries and Regions Covered

Europe (Dominating Region)

• Germany (Largest Country Market)
• United Kingdom
• France
• Italy
• Rest of Europe

Asia-Pacific (Fastest Growing Region)

• China (Largest Country Market)
• India (Fastest-Growing Country Market)
• Japan
• South Korea
• Rest of Asia-Pacific

North America

• United States (Largest Country Market)
• Canada
• Mexico

Latin America

• Brazil (Largest Country Market)
• Chile
• Rest of Latin America

Middle East & Africa

• Saudi Arabia
• United Arab Emirates
• Rest of Middle East & Africa

Market Share

The market is fragmented as it includes large utilities such as Drax, Ørsted and Fortum, many independent power producers, industrial plant owners such as pulp mills and sugar mills, and a smaller group of boiler and equipment manufacturers, including Valmet, ANDRITZ, Sumitomo Heavy Industries, Babcock & Wilcox, Mitsubishi Heavy Industries, Kanadevia, Thermax, IHI, Doosan Enerbility, JFE Engineering, TAKUMA, Kawasaki Heavy Industries, John Cockerill, SUGIMAT and Toshiba, that supply projects across regions. Key success factors are secure access to sustainable fuel, long-term power or CfD contracts, high plant availability and low fuel cost. Leading companies are prioritising coal-to-biomass conversions, carbon capture readiness and flexible dispatch, while reviewing weaker assets, as seen in Drax's closure of its Williams Lake pellet plant. Innovation is focused on fluidised bed boilers, gasification, torrefied fuels and BECCS. Partnerships between utilities, trading houses, gas companies and equipment makers, as in Japan's Sendai Port plant, are common, while large acquisitions are less frequent.

Key Players

• Valmet Oyj (Finland)
• ANDRITZ AG (Austria)
• Sumitomo Heavy Industries, Ltd. (Japan)
• Babcock & Wilcox Enterprises, Inc. (United States)
• Mitsubishi Heavy Industries, Ltd. (Japan)
• Kanadevia Corporation (Japan)
• Thermax Limited (India)
• IHI Corporation (Japan)
• Doosan Enerbility Co., Ltd. (South Korea)
• JFE Engineering Corporation (Japan)
• TAKUMA CO., LTD. (Japan)
• Kawasaki Heavy Industries, Ltd. (Japan)
• John Cockerill (Belgium)
• SUGIMAT S.L. (Spain)
• Toshiba Corporation (Japan)

Recent Market Developments

• March 2025: Fortum signed contracts with Sumitomo SHI FW, Mostostal Warszawa and Bilfinger Tebodin for a project worth about EUR 100 million to convert its Czestochowa CHP plant in Poland from a mix of 70% coal and 30% biomass to 100% certified biomass, using about 350,000 tonnes of wood chips a year.
• November 2025: Sumitomo Corporation, Tokyo Gas, Hokuriku Electric Power and Sumitomo Corporation Tohoku began commercial operations at the 112 MW Sendai Port Biomass Power Plant in Miyagi Prefecture, Japan, which is expected to generate about 800,000 MWh a year from wood pellets and chips.
• December 2025: Valmet was selected to convert the circulating fluidised bed boiler at Fortum's Zabrze CHP plant in Poland from coal to certified forest biomass, as part of Fortum's EUR 85 million retrofit.
• April 2026: The UK Subsidy Advice Unit accepted a request from the Department for Energy Security and Net Zero for a report on a proposed four-year Contract for Difference for EP Lynemouth Power, covering 1 April 2027 to 31 March 2031 at a strike price of GBP 110 per MWh. 

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