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Today Sweden is the second largest producer of pellets after USA, and the largest pellet producer and user in Europe. The production of wood pellets in Sweden reached approximately 550 000 tonnes in 1999. The annual production of briquettes is approximately 300 000 tonnes. Today more than 25 large production plants is in operation. The production facilities are widely spread all over the country and the maximum capacity of today is over 1 200 000 tonnes/ year which corresponds to 5,6 TWh/year. Swedish companies has or is currently investing in production facilities in the Baltic states, Finland and Russia corresponding to an annual production of 200 000 tonnes.
Figure 1: Pellet market actors in Sweden - dealers and agents of stoves, burners etc1 to the left and pellet producers to the right.
The maximum production capacity of today is more than the double of actual production. Today Swedish actors are also importing pellets from the Baltic States and Canada. This import is keeping the prices at a relatively low level. The demand could increase without the need of further investments in production and without a dramatic increase of the prises.
The Swedish market for refined biomass i. e. wood pellets and briquettes was developed after the oil crises in the 1970's and 1980's to decrease the dependency on oil and to use by-products from the wood industry. During the 1990's the technology for production, transportation and combustion has developed rapidly. Now several large-scale users as district heating and CHP plants are using refined biomass for thermal and electricity production, often as an replacement of coal. The market for wood pellets has also been developed in the small-scale sector, as housing, public and commercial buildings and in smaller district heating systems.
The total theoretical market potential for heating installations in small houses is today almost 2 million installations with an energy demand of 50 TWh, see table below.
| Wood log | Oil | Electricity radiators | Electricity boiler | District heating | Fossil gas | Total | |
| Number of installations | 400 000 | 562 000 | 514 000 | 241 000 | 144 000 | 20 000 | 1 881 000 |
| TWh | 12 | 14 | 14 | 7 | 3,6 | 0 | 50,6 |
Today there are available resources for approximately another 2 TWh/year of raw material for pellet production. Further development and use of pellets can be supplied with dry chips and forest residues etc. if the producers are willing to buy this at a market price (which today is 12-14 Euro/MWh). There is also a possibility of using bark as raw material in new production processes. The saw mill industries internal use of sawdust as fuel can be decreased through energy efficiency measures. There is large potential of energy savings in many sawmills. This gives additional raw material for pellet production.
