Wood pellet supply, demand on the rise

By Jerry W. Kram
These days, the markets for fuel pellets are very vigorous, said John Crouch, director of public affairs for the Fuel Pellet Institute. Homeowners and businesses alike are seeking lower-cost options to fuel oil and natural gas for residential heating and industrial fuel.

"The institutional portion of the market (e.g., colleges and businesses) is growing very quickly, almost in real time," Crouch said. "Any number I could give you today might be out of date tomorrow." The residential market is also booming. This growth is reflected in the intense demand for wood pellet stoves, which Crouch said retailers witnessed in April. "Consumers realized early on that this could be another expensive year to heat their homes," he said. "Home heating stoves had an exceptional May and June, and started moving into backorder status. If you walked into your local hearth store [today], it would be happy to set you up with a residential pellet stove, but it wouldn't schedule delivery because the stove wouldn't arrive until next April or maybe May."

Even with the rapid growth of the domestic market, most North American wood pellets are exported to Europe. "The bulk export market was set up for long-term contracts to Western Europe," Crouch said. "That is where countries have moved more aggressively to low-carbon fuel incentives." The bulk delivery of pellets to U.S. customers is an emerging market. Most recently, for example, a pellet-fired heating facility was installed in graduate student housing at Dartmouth College in New Hampshire.

On the production side, Indeck Energy Services Inc. and Midwest Forest Products Co. recently broke ground on Indeck Ladysmith LLC, a 90,000-ton-per-year wood pellet plant in
Ladysmith, Wis. The facility, which is scheduled to be operational in July, will take wood waste from sawmills, paper mills and furniture manufacturers to form wood pellets for both residential and industrial applications.

The rapid growth in the U.S. pellet market has spawned marketing solutions that bring buyers and sellers together. PelletSales.com LLC, a national distributor of biomass specializing in wood pellets, has developed proprietary software that gauges biomass demand and locates supply throughout the United States. It can then coordinate the transportation of biomass in order to meet demand. The company currently focuses on serving residential consumers, but it's also working to move into the bulk market, where it will be able to provide pellets to consumers along with systems designed to move the pellets from storage into the appliances.