Pellet and Coal Industries Surging Forward

By Susan Bush
12:00AM / Friday, August 11, 2006

Pellet stoves are displayed at a Bennington, Vt. Home Depot store. The pellet industry has ramped up stove and pellet fuel production to avoid shortages similar to the 2005-06 heating season product shortfalls.

Pre-pay and "lock-in" heating fuel costs stunned many local homeowners earlier this summer, with some folks pre-paying upwards of $3,000 for 2006-07 heating season fuel oil supplies and others signing on to pay $200 or more in monthly budget plans involving natural or LP gas.

Wood pellet and coal-burning stoves are currently a lower cost alternative but last year, a shortage of pellets and a backlog of pellet stove orders impacted consumers.

Pellet fuel is considered a biomass product created from renewable sources; wood pellets are made from wood waste, such as sawdust. Pellets are graded as standard and premium.

Millions Being Spent To Meet Pellet Demand

The industry is investing millions of dollars to meet wood pellet product demand, according to New England region pellet manufacturers, East Coast stove producers, and the Pellet Fuels Institute Executive Director Don Kaiser.

Speaking during an Aug. 10 interview, Kaiser said that the wood pellet industry is facing a 35 percent increase in fuel demand.

"Because of that supply and demand, many of our manufacturers are increasing production," Kaiser said, and added that new pellet manufacturing firms are opening. "Some of them will be up and producing for this heating season. Some will not."

Pellet stove owners with the financial ability and storage capacity should purchase pellets in bulk now, Kaiser advised. Prices range from $230 to $270 a ton and an average of three tons of pellets can heat many homes from October to April, according to industry officials.

Comprehensive Strategy For One New England Firm

The New England Wood Pellet LLC is among the companies that supply pellets to local stores and is investing millions of dollars in new pellet producing and pellet bagging facilities and other industry improvements.

Charles Niebling of NEWP said that the company's Jaffrey, N.H. facility has already increased production from 50,000 tons annually to 80,000 tons and by the fall, will have ramped up production to 100,000 tons of pellets yearly.

Among the firm's local retail stores is the Hoosac Valley Coal and Grain in Adams, Mass. and Whitman's Feed Store in Bennington, Vt..

The firm is spending about $1.5 million to erect a pellet bagging and distribution facility in Palmer, Mass., and expects the mill will be up and running in September.

Complementing the new project is a five-year deal with the Houston Pellet Inc. firm, based in British Columbia, to import about 82,500 tons of premium pellets yearly. The deal is expected to import enough pellets to heat 27,000 homes, according to information provided by the NEWP. The cargo will arrive in three 100-ton rail cars per day, Niebling said.

The company is also building a new manufacturing plant in Schuyler, N.Y., with a ground-breaking expected in September and facility completion expected in May 2007, he said. Construction costs are at about $10 million, he noted.

And the company has launched a BioFuel Energy Systems research, development and machinery fabrication division. The purpose of the new division is to design, test, refine and fabricate proprietary equipment and machinery, and is believed to be the first of its kind built in the United States. The Jaffrey-based BES project generated about $1.5 million in costs, Niebling said.

"The company is taking many steps and is spending a great deal of money" to improve product and meet the growing demand, he said.

"A Pretty Smart Little Stove"

North Adams resident Tim Kaiser, who is not related to Don Kaiser, purchased a Harman brand wood pellet stove in 2005. He is pleased with the stove, its' heating capabilities, and its' ease of use, he said during an Aug. 10 interview. While the stove requires a weekly cleaning, so far it has proven a dollar-saver, he said.

"In straight dollars, it's less expensive than heating oil," Kaiser said.

The stove he purchased lights automatically, feeds itself pellets from a hopper filled by Kaiser, and achieves a desired temperature via a thermostat.

"My experience is that it held [temperature] to within 1 degree," he said. "It's a pretty smart little stove."

Kaiser said that he was able to heat his self-described "larger than average " home at a higher comfort level than heating oil costs would allow.

"I don't regret buying my pellet stove and I prefer it over oil," he said.

Supply, Demand, And Production Needs

But Kaiser noted that the cost of pellets is higher this year than last. He wondered if the fuel will continue to be readily available and whether the fuel will remain an affordable option.

Transporting pellets from manufacturing plants to retailers is costly, said Don Kaiser, who added that pellets are usually manufactured and shipped within geographic regions. Niebling said that pellet manufacturing plants require significant supplies of wood and situating competing manufacturing facilities in close proximity would not benefit the industry. For example, the planned Schuyler facility will "pull wood from 120 miles around," Niebling said.

During 2005, pellet stoves and stove insert demand rose by 78 percent over 2004, according to information provided by the Hearth, Patio and Barbecue Association. About 118,400 pellet stoves were shipped during 2005 and over 60 percent of those who purchased free-standing stoves for heating purposes cited oil and gas costs as the reason for the purchase.

Stove Production Up

Todd Hudson of England's Stove Works, a Virginia-based pellet, wood, and corn stove manufacturer, said that the company boosted stove production this year. The company is a supplier for retailers including Home Depot and earlier this week, the Home Depot in Bennington Vt. had placed numerous boxed England pellet stoves on sales floor.

The company predicts it will build 40,000 stoves, most of then pellet models, in 2006, Hudson said.

Pellet stove purchase prices range from $700 to about $3000, and the cost depends on factors such as size and features such as automated hoppers.

"We have done business with the Home Depot since 1990 and fully expect to keep them and our other customers stocked this season," Hudson said in a written statement. "From what we are hearing, other pellet stove manufacturers have also been building ahead, since this season has high [stove] sales possibilities due to high oil prices and the unstable Middle East environment."

Coal Interest Increases

Coal also continues to draw consumer interest as an alternative to heating oil and gas. Keith Hayden of Hoosac Valley Coal and Grain said during an Aug. 10 interview that supplies of coal held through the 2005-06 heating season and he anticipates no coal shortages for the upcoming 2006-07 heating season.

"We get weekly shipments of coal and I don't anticipate any problems," he said. "What we sell is anthracite coal, which is clean-burning and low-sulfur."

Hayden sells coal-burning stoves and also sells pellets used in pellet-burning stoves.

Bob Lilla of Schenectady, N.Y. sells Enviro wood and wood pellet stoves at his Adirondack Stoves business. He is also a Keystone coal stove and residential and commercial coal furnace and boiler dealer.

"These new generations of coal stoves are unbelievable," he said. "You can direct vent them, they have thermostats, you don't even need a chimney."

Lilla plans to bring a large supply of bagged rice coal to his business premises in October and those who purchase a coal stove from the business will be placed on a priority coal customer list, Lilla said.

Folks who live in the Southern Vermont or Northern Berkshire areas will have to make a trip to Schenectady to pick up coal supplies from his business, Lilla said.

"When people buy a [coal] stove from me, they'll go on a list to buy coal," Lilla said. "People will know that I am not just selling stoves and leaving them high and dry; I'll have coal, too. People from the Bennington area are welcome to come over, or people can call and I'm happy to send them information about coal and coal stoves."

Coal is priced at $250-$300 per ton, Lilla said and he added that most people find that three tons of coal provide home heat from October to April.

Grass Pellet Development; Pellet Delivery A "Clean Sweep"

Those who aren't interested in wood pellets or coal as a heating source may find another area of research more to their liking; a Grass Energy Collaborative was formed in December 2005 and earlier this year conducted a day-long burn that used grass pellets in a furnace at the Shelburne Farms in Vermont.

And as the pellet industry becomes more mainstream, so do delivery methods; some large companies are able to deliver pellets using trucks and devices that "blow" the pellets into large storage spaces, said Don Kaiser.

"Instead of a nozzle delivering oil, it's blowing pellets into a hopper," said Kaiser. "And if a truck overturns, you are not cleaning up an oil spill, you are sweeping up pellets."

Additional information about the pellet industry is available at the non-profit Pellet Fuels Institute www.pelletheat.org Internet web site and a New England Wood Pellet LLC www.pelletheat.com Internet web site.

Information about the Hoosac Valley Coal and Grain company can be acquired by calling the store at 413-743-0163.

Information about Adirondack Stoves can be acquired by calling 518-374-4723.

Susan Bush may be reached via e-mail at suebush@iberkshires.com or at 802-823-9367.