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Pellet industry must become 'common and ordinary; embrace oil'

By Anna Simet | April 10, 2014

Though the biomass thermal industry is known for its progressive and forward-thinking nature, Les Otten, president of Maine Energy Systems, insists that in order to achieve its goals, the sector needs to embrace “disruptive thinking and technology.”

Otten, master of ceremonies at the Biomass Heating Expo being held in Portland, Maine, opened the conference by delivering an engaging and insightful speech on the current state of the pellet industry in Maine and Northeast, and the steps it must take to become “common and ordinary, to compete with oil.”

Otten painted a grim economic picture of homes in the Northeast using heating oil verses wood pellets, emphasizing that the majority of every dollar spent on oil is sent out of the country. That’s the case for approximately 11.5 million homes in the Northeast, where 80 percent of all No. 2 heating oil in the U.S. is consumed, whereas all money spent on pellets remains in the local economy. Maine uses more petroleum products per capita than any other place in the world, he added.

Discussing past political challenges Maine has faced—which, ironically, includes Republican support and Democratic opposition of using Regional Greenhouse Gas Initiative dollars to help heat homes through Efficiency Maine—Otten said he believes that when it comes to understanding and support of renewable and efficient home heating, Maine has “turned a corner” politically.

In order for the residential pellet market to succeed, it needs to “give a giant bear hug to the oil industry, the distributors of energy,” Otten remarked. “We need our energy to become common and ordinary, and distributed by existing distributors. They are the 500-pound gorilla in the back of the room that is moving energy around the Northeast. They’ve got the dollars, and if we can convince them to swap their trucks with our trucks, and deliver our fuel instead of their fuel, they’ll stay in business and find new customers.”

If that happens, those involved in production, distributing and manufacturing of pellets, boilers and related equipment can tie on, Otten added.

Piggybacking on his sentiment that pellet fuel must become common and ordinary, Otten said people are forgetting that oil is costing $4 per gallon. “It’s becoming ordinary, it’s familiar,” he said. “Short-term is comfortable; change is difficult. We need to teach them, cajole them, educate them, that what we’ve got is what they want.”

That not only goes for the consumer, but for fuel distributors, as well. Otten drew a comparison to when the oil industry came along 50 to 60 years ago when coal deliveries were commonplace, and most companies did not adapt to the new technology. “How many [coal providers] stayed in business? Very, very few,” Otten said. “If you stay in your box, your competitors are going to eat your lunch, and that’s what happened to coal…we need to throw out conventional wisdom and start over—conventional wisdom is inside the box; it’s familiar and feels safe, it’s common and ordinary. It’s what we want to be."

Otten drew another comparison to fossil fuel verses pellet heating scenario, this time outside of the energy industry: Kodak Camera Company, which achieved huge successes with film and disposable cameras. By not using forward-thinking tactics and sitting on its very own invention—the digital camera—the company saw its demise, Otten said. “I believe that will happen to the [heating] oil industry—they will be Kodak.”