As opposite in Portugal, the wood pellets market is booming in Europe. In this work, possible reasons for this market behavior are foreseen according to the key indicators of biomass availability, costs and legal framework. Two major constrains are found in the Portuguese pellets market: the first one is the lack of an internal consumption, being the market based on exportations. The second one is the shortage of raw material mainly due to the competition with the biomass power plants. Therefore, the combination of the biomass power plants with pellet production plants seems to be the best option for the pellets production in the actual Portuguese scenario. The main constrains for pellets market has been to convince small-scale customers that pellets are a good alternative fuel, mainly due to the investment needed and the strong competition with natural gas. Besides some benefits in the acquisition of new equipment for renewable energy, they are insufficient to cover the huge discrepancy of the investment in pellets heating. However, pellets are already economic interesting for large utilizations. In order cover a large amount of households, additional public support is needed to cover the supplementary costs of the pellets heating systems. (C) 2011 Elsevier Ltd. All rights reserved.