Industry Challenges Lead to Change, Growth

There will be additional modifications in the wood pellet industry as ridiculously low oil prices continue. We are fortunate for our system in which stress creates change and then growth.
By Bill Bell | November 23, 2015

“There’s something happening here; what it is ain’t exactly clear…” (Buffalo Springfield, “For What It’s Worth,” 1967)

The low price of oil is clearly and severely impacting the sale of pellet heating equipment in our state. Efficiency Maine, which at one time was reporting installs of 30 incentivized pellet boiler systems per month, now reports 7 units installed in July, 3 in August, a bump up to 13 in September, but a leveling out thereafter. In addition, at least several of Maine’s four pellet manufacturers report cancelled orders for bagged pellets.

And yet…

Maine Energy Systems, founded and funded by well-known entrepreneur Les Otten, reports encouraging sales of its Okefen pellet boilers in other Northeastern states where state incentives are becoming better established. The firm also reports that the public is increasingly looking at the environmental impact of fossil fuels as reason for switching to wood. 

In the world of environmental concerns, in Maine, there has been little common cause between wind power and biomass advocates. If anything, there has been a lingering concern that thermal biomass might grab some of the renewable energy credits—too complicated to explain here—currently of potential benefit to wind power.

Then, suddenly, a major wind power firm, EDP Renewables, seeking regulatory approval for a huge project in northern Maine, put on the table $2 million in support of homeowner installation of pellet heating (and heat pumps). The regulatory proceedings involve lengthy negotiations, but proponents are optimistic. And we’re happy to be chosen as a major item (bait) in the “tangible benefits” section of the application. Efficiency Maine’s trustees have just voted to accept and administer the funds, if awarded.   

In the long run, we’ll be fine. Our website and Facebook page record a steadily increasing number of hits. We are no longer viewed as an exotic technology. Maine’s Common Ground Fair, which every fall attracts many thousands of back-to-the-landers from throughout New England, revealed ongoing and well-informed interest in our heating systems. Maine Energy System’s new product, a pellet-fueled furnace for hot-air-ducted homes, just received prompt Efficiency Maine approval for the same 30 percent incentive funding accorded pellet boilers. Mainers, living in what the U.S. census defines as the most rural state in the nation, are now realizing that natural gas won’t be available to everyone. And the natural gas firms are having growing problems of their own.

Also, in the long run, to politely paraphrase John Maynard Keynes, we won’t all be here. As previously reported in this magazine, Geneva Wood Fuels, the pellet plant in Strong, Maine, which successfully became a major supplier to the large-retail bagged market, has been acquired by Lignetics Inc. We welcome this sign of the national industry’s confidence in Maine. However, our Maine Pellet Fuels Association will miss the always challenging input from Geneva’s former owner, Jonathan Kahn, who served as our treasurer. 

As part of an interesting development, the Maine Woods Pellet Co. plant in Athens, Maine, will benefit from $556,000 in grant funds that USDA just awarded to its colocated firm, Athens Energy LLC, for construction of a wood-fueled electricity-generating facility. This facility is also receiving significant investment support from the state of Maine. Past spikes in the cost of grid-supplied electricity forced the pellet plant to severely cut production right in the middle of winter pellet demand. Logger Bob Linkletter, the owner of both facilities, is ensuring that this will not happen again.

The Athens linking of biomass thermal to biomass electric could well be a harbinger of more such synergies. National Bioenergy Day observances included a film clip featuring the cooperation between Northeast Pellets and the ReEnergy biomass electricity plant right next door in Ashland, Maine. ReEnergy is working with us to strengthen the Biomass Caucus and support for the BTU Act in Congress, and will be participating in our Maine Pellet Fuels Association’s upcoming annual meeting.

There will be additional modifications in our industry as ridiculously low oil prices continue. We are fortunate for our system in which stress creates change and then growth.

Author: Bill Bell
Executive Director, Maine Pellet Fuels Association