Saudi Arabia Wood Pellets Market: Renewable Energy Shift, Biomass Demand & Growth Outlook

Saudi Arabia's wood pellets sector is quietly gaining ground, supported by an ambitious national push to diversify the energy mix, cut carbon emissions, and reduce industrial dependence on fossil fuels. From power plants co-firing biomass to commercial heating facilities shifting away from conventional fuels, wood pellets are finding their footing as a practical, scalable renewable option. According to IMARC Group's latest data, the Saudi Arabia wood pellets market size was valued at USD 0.13 Billion in 2024. Looking forward, IMARC Group estimates the market to reach USD 0.21 Billion by 2033, exhibiting a CAGR of 5.70% from 2025-2033.

Growth is being driven by Vision 2030's renewable energy mandates, rising industrial energy costs, and a regulatory environment increasingly favoring low-emission fuel alternatives. Saudi Arabia currently generates only around 3% of its electricity from renewables — against a stated 50% target — creating a large and structurally driven gap that biomass technologies, including wood pellets, are well-positioned to help fill. Saudi Arabia is also the leading contributor to the MEA wood pellets market, which is projected to reach USD 2.5 billion by 2031, underscoring the Kingdom's outsized regional role in biomass adoption.

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Saudi Arabia Wood Pellets Market Growth Drivers:

Vision 2030 Renewable Energy Mandates

Saudi Arabia's national transformation agenda sets a clear directive: 50% of electricity from renewables by 2030, with net-zero emissions targeted by 2060. The Kingdom aims to cut 278 million tonnes of CO2 annually as part of the Saudi Green Initiative. The Public Investment Fund has committed USD 19.4 billion to eligible green projects, with USD 5.2 billion already disbursed by mid-2024. Wood pellets, as a dispatchable biomass fuel for power generation and combined heat and power systems, fit squarely into this energy transition roadmap — particularly in applications where solar and wind face intermittency limitations.

Industrial Shift Away from Fossil Fuel Dependency

Rising energy costs and growing regulatory pressure are pushing Saudi industrial operators to explore cleaner, more cost-stable alternatives. Wood pellets offer high energy density, consistent combustion quality, and measurable emissions advantages over conventional fuels. Saudi Arabia's crude production reached 8.94 million barrels per day in late 2023, yet fuel price volatility continues to affect industrial operating margins. Manufacturing and processing facilities using wood pellets in boilers and industrial furnaces report meaningful reductions in both costs and carbon output — making the economic and environmental case increasingly hard to ignore for facilities under corporate sustainability mandates.

Biomass Integration into Power and CHP Systems

Combined heat and power systems using biomass are gaining traction globally, with the industrial end-use segment accounting for 45.8% of global wood pellet demand. In Saudi Arabia, this trend is being accelerated by government incentives and private sector interest in sustainable energy infrastructure. The National Energy Services Company (Tarshid) achieved over 6 TWh of energy savings in the government sector by 2024, equating to SAR 2.1 billion in monetary value. As CHP adoption grows and grid-scale biomass co-firing becomes viable, wood pellets are positioned to serve as a reliable transition fuel across power and industrial applications throughout the Kingdom.

Saudi Arabia Wood Pellets Market Trends:

Renewable Energy Localization Creating Biomass Supply Chain Momentum

Saudi Arabia is actively building a domestic renewable energy manufacturing base. PIF's Renewable Energy Localization Company (RELC) signed three new joint ventures in 2024 to localize solar and wind component manufacturing, with the broader strategy targeting 75% local content across renewable projects by 2030. In July 2024, Envision Energy and Jinko Solar partnered with Vision Industries and PIF to manufacture wind turbines and photovoltaic cells domestically. This infrastructure buildout is creating parallel demand for complementary biomass solutions, as industrial zones and energy parks seek diversified fuel inputs to support consistent power delivery alongside intermittent renewable sources.

Saudi Green Initiative Driving Biomass and Waste-to-Energy Interest

The Saudi Green Initiative's pledge of USD 187 billion in environmental investments is opening doors for a broader range of sustainable energy technologies, including biomass. Research indicates that up to 22.5% of GCC electricity could be generated from bioenergy using indigenous biomass resources, including the 19.35 million tonnes of municipal waste currently sent to landfill annually across the GCC. Saudi Arabia's landfill diversion rate is expected to reach 82% by 2035, and PIF has identified waste management as a priority sector. This creates a clear policy pathway for agricultural residue and forestry waste — two primary wood pellet feedstocks — to be captured and processed as part of a circular biomass economy.

Industrial and Commercial Heating Applications Expanding

Wood pellets are gaining meaningful traction in industrial heating beyond power generation. Globally, the heating segment accounts for 58.3% of wood pellet applications, and Saudi Arabia's commercial and manufacturing sectors are beginning to follow this pattern. Industries operating boilers, dryers, and thermal processing equipment are trialling biomass as a fuel substitute, particularly in facilities subject to evolving environmental compliance standards. Saudi Arabia's USD 32 billion renewable energy investment pipeline includes dedicated funding for energy efficiency and sustainable industrial practices. As awareness of wood pellets' operational benefits grows — consistent quality, lower ash content, and reliable supply chains — commercial and industrial adoption is expected to broaden materially in the coming years.

Recent News and Developments in Saudi Arabia Wood Pellets Market

• February 2026: Industrial grade wood pellet fuel innovations gain traction with softwood and hardwood variants for power generation and heating, driven by investments in sustainable biomass under national green initiatives.
• November 2025: SERVODAY deploys turnkey 1-12 TPH wood biomass pellet plants across Saudi Arabia, featuring cutting-edge automation for efficient, high-quality pellet production and supporting Vision 2030's renewable energy diversification.
• October 2025: Saudi Arabia introduces AI-powered quality control systems in wood pellet production facilities, improving consistency and reducing waste by 18% through automated monitoring and defect detection technologies.
• September 2025: Government launches a $50 million green energy fund dedicated to supporting biomass pellet projects, accelerating adoption of sustainable fuels in industrial and heating applications aligned with Vision 2030 renewable goals.
• July 2025: Local manufacturers boost wood pellet output by 25% via advanced automation and optimized supply chains, enhancing domestic production capacity to meet rising demand for renewable biomass energy sources.

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