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George Soffron, CEO of Corinth Wood Pellets, is driving home from the airport after a wood pellet heating conference in Mississippi, of all places. He’s scheduled a meeting with a safety consultant at his company’s pellet plant; it’s a precautionary measure after an explosion at the Geneva Wood Fuels pellet plant in Strong this summer.
“I want him to go over our plant from stem to stern,” Soffron says. “We’re making fuel—the stuff is flammable.”
Just a few years ago, there were no pellet manufacturers in the state; now, new companies break ground every year. The rise of Maine’s pellet industry has been fueled by increased domestic demand. While pellet heat has been common in northern Europe for years, its popularity has surged in Maine only recently.
Jim Rockett, a partner with EverGreen Home Solutions in Ellsworth, says he now sells roughly one pellet stove for every traditional woodstove. Many veteran woodstove users now burn pellets because they require less work, Rockett says. Mark Higgins, another partner at EverGreen, says he switched to a pellet stove at home because it keeps the house warm while he’s at work.
“I don’t have to be there every five, six, seven hours,” Higgins says. “I can fill the hopper for 24 hours or more.”
Increasingly, Maine homeowners are turning to pellets to wean themselves from oil. When heating oil prices spiked to more than $4.50 a gallon last year, consumers rushed out to buy pellets and stoves. Rockett says the pellet industry was caught off-guard.
“When [customers] found pellets, they hoarded them,” Rockett says. “The manufacturers had trouble keeping up.”
The run impressed investors and helped pellet manufacturers step up production. The price of oil is now half of what it was at its peak, but stove sales have remained steady despite the global recession. “[Mainers] have no faith in the price of oil remaining low,” Rockett says.
Energy analysts predict a steady increase in oil prices, thanks to increased demand from developing countries and a predicted drop-off in production. According to a 2008 report on pellet fuel by the Maine Pellet Fuels Association, it’s cheaper to heat with pellets than oil, and the difference is only going to get more pronounced.
“Either heating oil would have to fall to $1.85 a gallon or wood pellets would have to rise to $540 a ton for the cost of the two fuels to be equal,” says William Bell, the executive director for the Maine Pellet Fuels Association. (A ton of pellets currently runs about $275.)
The Baldacci administration is painfully aware of the economic hazards of the state’s vulnerability to oil prices. Maine is more dependent on heating oil than any other state, with about 80% of households using it as their prime heating source; exacerbating the economic drag is the fact that more than 75 cents of every dollar spent on heating oil leaves the state. Another sustained spike in heating oil prices could spell economic disaster.
Last year, Governor Baldacci appointed a wood-to-energy task force to come up with a set of recommendations to move Maine away from heating oil and toward wood-based heat. They came to the conclusion that Maine forests could easily fuel 10% more Maine wood-heated homes in the next five to seven years.
A Bethel-based company, Maine Energy Systems, is positioned to meet the demand. The company, founded by former skiing mogul and current gubernatorial candidate Les Otten, sells wood pellet boilers that are designed to act just like oil boilers, complete with a similar-looking delivery truck.
“The homeowner wouldn’t even know the difference between the old boiler and the new boiler” in how they operate, says William Strauss, an economist and the director of Maine Energy Systems.
But the differences are impressively positive. The company estimates it can save the average Maine household $1,000 a year in heating costs. Pellet burners are also efficient enough to be exempt from the Environmental Protection Agency’s smoke-emission testing requirements and a 2007 study found that a pellet-heated home emits some 26,000 pounds less CO2 a year than a home heated with oil.
Such figures have been enough for environmental groups like the Sierra Club to endorse pellet heat as a green enterprise, but with the caveat that wood for pellets must be sustainably harvested.
If this renewable energy source takes off, pellet manufacturers could become an economic engine for the state. But switching to pellets isn’t going to come cheap. A pellet stove costs $600 more than the average woodstove, and a new pellet boiler costs $5,000 to $6,000 more than the price of a new oil boiler. Innovators like Maine Energy Systems must also solve the financial chicken-or-the-egg scenario that all alternative fuels face: How do you create a customer base without infrastructure and how do you create infrastructure without a customer base? Les Otten has already poured $10 million into creating pellet depots and pellet delivery trucks for the company.
“It’s a challenging shift, creating a new way of heating for people,” Strauss says.
European governments solved the problem with incentives to help establish the pellet industry, and now the U.S. government seems to be inching in the same direction. The Obama economic stimulus bill includes a tax credit toward the purchase of a wood-burning appliance with a 75% efficiency or higher. New pellet stove or boiler buyers can get a credit of 30% toward the purchase price, up to $1,500.
But even with government incentives and rising popularity, pellet manufacturers still face some bumps in the road, as evidenced by the explosion in Strong and a fire earlier in the year in Ashland. Such incidents are not uncommon.
Critics also wonder if fire and building inspectors are being too lenient or aren’t looking for the right dangers. “There is a long learning curve,” Soffron says. “It isn’t like you can have engineering experts that are going to come with all the answers.”
But despite the challenges and despite the economy, Corinth Wood Pellets plans to add another shift of workers and produce tons more pellets this season. The move would provide a ripple of economic good news in the wood harvesting industry in the midst of a troubling recession. Not bad for a sapling of an industry.
