Limited Market Size and Declining Demand Growth
Definition
Plant managers operate in a shrinking total addressable market. Biomass accounts for only 2.16% of US renewable electricity generation and 1.5% of total electricity. Growth forecasts are modest (5.87% CAGR for North America) compared to solar/wind expansion (both 20%+ CAGR). Biomass electricity production is projected to fall slightly in 2025-2026, while total US electricity demand grows due to data center expansion and electrification. Utilities and energy retailers are prioritizing wind, solar, and battery storage over biomass for expansion because of lower costs and lower perceived regulatory risk. Plant managers face: (1) limited customer base (regional utilities, industrial facilities, merchants), (2) difficulty securing long-term power purchase agreements (PPAs) as utilities reduce biomass procurement, (3) increasing need to compete on price against cheaper renewable alternatives, (4) difficulty with merchant sales in volatile wholesale markets. Grid operators are cautious about adding intermittency, but biomass is being crowded out by dispatchable natural gas for peaking and battery storage for reliability.
Key Findings
- Financial Impact: $500K - $2M in forgone revenue from inability to secure baseload contracts
- Frequency: annual (contract renewal); episodic (customer loss)
Why This Matters
PPA origination/trading platforms, electricity merchant portfolio management software, customer diversification strategies (industrial heat/power, grid services), power marketing representation/aggregation services
Affected Stakeholders
Plant Manager/General Manager
Deep Analysis (Premium)
Financial Impact
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Current Workarounds
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Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Evidence Sources:
Related Business Risks
High Operating Costs Driving Plant Closures
Substantial Capital Requirements for New Equipment/Plants
Volatile and Competing Feedstock Prices and Supply
Declining Direct-Fired System Viability and Obsolescence
Stringent Environmental Regulations and Compliance Costs
Aging Workforce and Technical Labor Shortage
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