Sunday, April 15, 2007
Staff photo by John Patriquin
Matt Boucher, store manager at Yerxa's Lawn and Garden in South Portland, shows pellets used in a pellet stove. The company was charging $250 a ton for pellets this year, up from $190 the previous winter. The company also sells stoves. One for $2,695 is thermostatically controlled and can keep an average house warm for 24 hours with 40 pounds of pellets.
Staff photo by John Patriquin
Matt Boucher, of Yerxa's Lawn and Garden in South Portland, says more domestic supply of wood pellets could drive prices back into the $200-a-ton range, and that would make pellets more competitive with oil heat.
typically are made by screening, compacting and drying sawdust and other wood waste. More than 60 mills across North America produce more than 680,000 tons a year, according to the Pellet Fuels Institute.
MUCH OF IT is burned in stoves and fireplace inserts from two dozen manufacturers. Roughly 800,000 U.S. homes burn pellets, the trade group estimates.
PELLETS ARE manufactured to a uniform size, roughly 1/4-inch in diameter, so they can be automatically fed into stoves and boilers. They are dried to a very low moisture content and leave behind little ash when burned. Combustion with quality hardwood pellets is in the 98 percent range, so the stoves can be directly vented without a chimney.
A 40-POUND BAG of pellets can heat an average home for 24 hours. Some retailers sell wood pellets by the ton and deliver them on a 50-bag pallet. Stoves and pellets are available at many stove shops, hardware and home improvement stores.
TO LEARN MORE about wood pellets, including a list of stove makers and pellet mills, visit www.pelletheat.org.
A North American wood pellet race has begun, and Maine is trying to get out of the starting gate.
Developers are planning or building manufacturing plants that together could produce 1 million tons or more of wood pellets a year. Maine mills in Corinth and Athens are part of the rush.
The pellets are made by compressing sawdust and other dried wood waste into a dense, high-combustion fuel source. Mainers may be familiar with stoves that burn these wood pellets for home heating.
But a larger market is evolving in Europe, where regulations designed to combat global climate change have created incentives for power companies to boost their use of renewable resources. Europe already consumes nearly 8 million tons of wood pellets a year, to run factories and power plants, and to heat entire neighborhoods. The expected growth is leading entrepreneurs in timber-growing regions from Florida to Maine and Canada to build or expand pellet mills.
Heavily forested and located close to Europe, Maine could become a player in the overseas wood pellet market. State officials see pellets as a way to generate new jobs and create export opportunities for a forest-products industry that's been losing its traditional manufacturing base.
"It's just a perfect marriage," said John Richardson, the state's new economic development commissioner.
As papermaking shrinks in Maine, officials are encouraging investment in innovative, niche enterprises, such as wood pellets. Three weeks ago, Richardson and Gov. John Baldacci attended the grand opening of the Corinth mill, which is located in an area that qualifies for state tax subsidies.
But like other energy and trade ventures, wood pellets are a risky business.
A warm winter in Europe this year hurt sales for existing producers. And it's still too early to say whether Maine plants can make and transport the pellets economically, and who will develop the port-side storage and loading systems needed for export.
The larger Maine plant is Corinth Wood Pellets LLC. The venture represents $4 million in private investment. A dozen or so workers were ironing out some equipment kinks last week, to ramp up production.
Corinth Wood Pellets has ambitious plans to become one of the nation's largest pellet makers, producing over 300,000 tons a year. Half the production will be sold domestically, the other half in Europe, according to Ken Eldredge, the company's president and co-owner.
Eldredge declined to discuss efforts to secure deals in Europe, but said he's working with Sprague Energy, which has cargo piers at Portland and Searsport.
Corinth Wood Pellets will benefit by being located in a Pine Tree Development Zone. That makes it eligible for sales tax exemptions and refunds that lower the cost of business, in exchange for creating jobs in a rural area.
Another mill, Maine Wood Pellets Co., has been proposed at the site of former biomass power generator in Athens. It's a partnership between Linkletter & Sons, a local logging firm, and Maine Biomass Fuels of Belmont. The plant would process some of the waste wood generated by Linkletter & Sons.
The partners want the Athens plant to be operating this summer, according to recent media reports, but say they need state and local grants to get going. It's not clear how many tons the plant would produce or the status of the project. One of the partners, George Rybarczyk, did not return repeated phone calls last week; the Linkletter family was vacationing and not available.
One way to consider the challenges facing Maine's nascent pellet industry is to look at some of its competition.
Energex Pellet Fuel Inc. currently bills itself as North America's largest pellet fuel maker, producing 200,000 tons a year from plants in Quebec and Pennsylvania.
That output will easily be exceeded by a $100 million plant in Jackson County, Fla. Green Circle Bio Energy, owned by a Swedish company, is building what it calls the largest wood pellet plant in the world, capable of producing 560,000 tons a year. Much of it will be sent to Europe.
Another venture that's also calling itself the world's largest pellet plant, Dixie Pellets LLC, is under way near Selma, Ala. European-bound pellets will be barged down the Alabama River and shipped out of Mobile.
Near Baxley, Ga., Fram Renewable Fuels is building a 145,000-ton- a-year pellet plant, called Appling County Pellets LLC. It's all headed to Europe, shipping through Savannah and Brunswick, Ga.
"There aren't too many of us exporting wood pellets successfully, but a lot of us are trying," said John Colquitt, Fram's president.
Colquitt made European contacts while operating a pellet mill outside Halifax, N.S. The overseas market is poised to grow because of a directive in the European Union linked to the Kyoto Protocol, which requires participating countries to cut carbon dioxide and other greenhouse gas emissions. One strategy is to mix in wood pellets at coal-burning power plants.
But the market can be fickle. A warm winter in Europe cut demand for all heating fuels, which hurt sales.
"There has been a real shaking out this spring," he said. "Some companies couldn't weather the storm."
Europeans are paying roughly $150 a ton wholesale for pellets landed there, Colquitt said. That's attractive, but exporters need to factor in the cost of wood supply, ocean freight, exchange rates and storage.
Those issues are being studied carefully by Armand Demers, the forest products director at Sprague Energy. He's been working with Ken Eldredge at Corinth Wood Pellets.
Corinth isn't near a rail line, so pellets would have to be trucked to Portland or Searsport. Pellets must stay bone dry, so they need special storage. And they degrade with heavy handling, so a conveyor system must be installed. Moving and storing wood pellets will require a multimillion-dollar investment, Demers said.
"The challenge is going to be how to get them from the mill to Europe and not make it uncompetitive," he said.
Charles Niebling hasn't been able to make the numbers add up.
Niebling is the procurement and sales manager at New England Wood Pellets LLC in Jaffrey, N.H., which currently calls itself the nation's largest pellet maker. The nine-year old mill turns out 75,000 tons a year. The company also bags 80,000 tons a year of pellets shipped by rail from British Columbia, and is building a 100,000-ton plant in Schuyler, N.Y.
Niebling has been selling bagged pellets for home heating in Europe, but saw sales drop this winter. And he hasn't been able to figure out an economic way to send bulk shipments to Europe, noting that American pellet makers also are competing with established companies in Scandinavia, Germany and Russia.
Niebling laments that Americans don't burn more wood pellets. The only sizable commercial burner he's aware of in New England is a new manufacturing and office building in Hinesburg, Vt., owned by wind energy equipment maker NRG Systems. That pellet boiler burns roughly 30 tons a year, he said.
Increased demand for pellets in American homes and businesses might boost supply and cut prices, said Matt Boucher, store manager at Yerxa's Lawn & Garden in South Portland.
The company has a subsidiary that sells the Harman Stove Co. pellet stoves. One popular model, which is thermostatically controlled and can keep an average house warm for 24 hours with 40 pounds of pellets, sells from $2,695.
Boucher was charging $250 a ton for pellets this year, up from $190 the previous winter. More domestic supply could drive prices back into the $200-a-ton range, he said, and that would make pellets more competitive with oil heat.
By Niebling's estimate, if only 5 percent of the oil-fired boilers in New England were replaced by pellet burners, a 300,000-ton-a-year plant could sell all its output at home. But in the absence of aggressive policies to displace oil in the United States, it's not surprising that wood pellet developers see opportunity in Europe.
"We're becoming a Third World nation, exporting our renewable resources," Niebling said.
Staff writer Tux Turkel can be contacted at 791-6462 or