Friday, July 1, 2011

Sweating the Heat

Pellet salesman's advice: Plan ahead for winter

By Ray Duckler / Monitor staff

June 20, 2011

Charles Niebling, general manager for marketing at New England Wood Pellet, wants you to look ahead, long and short term.

Short term as in heating your home this winter. Long term as in changing the way America thinks about doing it.

So far, though, no one seems to care about the rebate available to those who switch to a wood pellet heating system.

"We thought this thing will sell like hotcakes because people are so sick and tired of paying through the nose for heating and oil and propane," Niebling said. "We thought it would be a very successful program, oversubscribed, in fact."

Instead, the rebate offered by the U.S. Department of Energy, which allocated $500,000 of the $26 million from the federal stimulus package earmarked for the state's energy programs, has not gained traction.

The rebate is 30 percent of the system cost and installation, up to a maximum of $6,000, whichever figure is less

Price for the system: at least $20,000. Cost including rebate: about $14,000. Number of households in the state using heating oil: 250,000. Number of wood pellet systems sold thus far: fewer than 100.

And the clock is ticking. If at least half of the $500,000 isn't spent in the coming months, the Department of Energy will take what's left and scrap the program. New Hampshire is the lone state using stimulus money for such an idea.

Meanwhile, the idea is mainstream in Europe and far less expensive to install.

"(State government ) went to the mat to get the Department of Energy to approve it," Niebling said. "The fear they have is if they do take the money back, it will be seen as a failure. Even though the system works beautifully and represents advanced engineering and technology, it will set back our efforts to promote and encourage adoption of this idea."

That's why Niebling is pushing to get the word out. Use his company or another to build your wood pellet furnace or boiler, he says, but hurry.

This rebate won't last forever.

Why are sales lagging?

There are so few of them, and it's primarily European technology, and it's yet to be manufactured in the U.S., so it's just outrageously expensive. Even with this rebate, we're having a hard time enticing homeowners.

And a more important factor is people just don't know about it yet. The Public Utilities Commission, which administers this rebate program, has no money to do any kind of promotion or marketing, plus undercapitalized companies have just come out of a couple years of recession and also don't have any money.

Do all wood pellet heating systems qualify for the rebate?

The state set a very high bar, and that's okay. It has to have a minimum 3-ton bulk storage, and the

system has to be fully automated. We're sort of at the very early stages of this concept, but we know what the potential is because it's happening on an incredible scale in Europe.

Why are wood pellets so efficient?

Pellets are the only systems that can meet the minimum efficiency requirement, and they're also the only way you can use wood in a fully automated central heating system because pellets store and flow like grain. They can be stored in a silo and metered directly into the boiler.

Why a rebate in the first place?

The whole premise was to catalyze the marketplace, to get systems out there, to create a modest incentive to get homeowners to bite and get systems out there and show people that they work.

What is an edge to wood pellet burning many people would not think of?

The pellets are produced here, so when you spend the buck on pellets, your dollar circulates in your neighbor's pocket. When you spend a buck on oil or propane, it's leaving the state, and most of that dollar is actually leaving the country

Which businesses and organizations in the area use this technology?

In Concord, the New Hampshire Audubon Society has a pellet boiler that heats their complex. DRED's forestry warehouse in Bear Brook State Park has a pellet boiler. It's slow to be adopted, and part of that is we're just coming out of three years of recession.

If you have a wood pellet system that doesn't qualify for a rebate, can you receive money to modify it?

That's a good question. If you have a boiler but you're just dumping bags into the fuel container and then they invest in the silo and automated fuel feed, can they get some assistance from the state? I don't know the answer to that.

Any prediction about the future of this type of heating?

In New Hampshire we have 450,000 primary residences, of which 245,000 are heated with oil. We feel over the next 15 years we could replace 20 to 25 percent of that sustainability.

Can you compare pricing between wood pellets and oil?

Pellets are less than 50 percent of the cost of heating oil or propane, so on an operating basis you're saving a lot, but the capital costs to install the systems is very high.

It's that capital hurdle that is the challenge, and that's true with virtually every renewable, like electric cars or solar panels on your rooftop or a little wind turbine in your backyard. All of that costs a lot.

Why is has solar power taken off faster than wood pellet burning?

The solar panels that make electricity, the rebate has been way over prescribed, and those are even more expensive, and the payback on those is like 30 years. People are jumping all over that. I don't know if they're sexier. A boiler is something in your basement, while a panel is something that goes on your roof and your neighbor asks what it's all about and it makes you feel warm and fuzzy. It's hard to make a boiler warm and fuzzy. Heat is something where people like to just flip the thermostat on the living room wall.

How long before a wood pellet boiler pays for itself?

At $20,000, if you qualify for the $6,000 rebate, that's $14,000. That will take in the four- to six-year range for a return on your investment. After that is cash flow positive, given the propane and heating oil prices and pellet prices.

(Ray Duckler can be reached at 369-3304 or rduckler@cmonitor.com.)

Which would you choose?