Wood-pellet furnace market heats up

When the Sandri Companies won a $3.2 million federal stimulus grant as part of a push by Gov. Deval Patrick’s administration to encourage the renewable energy sector, it was touted not only as a way to get high-efficiency wood pellet boilers into use at Greenfield Community College, the Greenfield Fire Station and businesses around the region, but to give the third-generation petroleum-based business a foothold in an emerging alternative energy sector.

Since then, Sandri, which has also moved to diversify its energy-businesses to include propane, solar power, as well as geothermal and pellet stoves, has installed more than 50 of the Austrian-designed wood-pellet boilers, which unlike regular pellet stoves are sophisticated central heating systems that automatically feed themselves, clean themselves and — most importantly — modulate temperatures according to outdoor temperature and the temperature of heated water returning through the system.

Through the federal stimulus program, the 82-year-old Greenfield company arranged 100 percent funding for installation of low-emission wood pellet boilers at eight institutional or commercial sites, offered dramatic discounts on the boilers to homeowners in Franklin and Hampshire counties; and purchased three $215,000 bulk pellet delivery trucks.

On the lower end of the spectrum is a 68,000 BTU boiler installed by Barry Elbaum at his six-apartment Montague building on Route 63.

By replacing the oil-fired boiler and then weatherizing the building and installing a solar water-heating system between the time he bought it 25 years ago and last year, Elbaum had already cut annual fuel consumption from 5,000 gallons to 1,200 gallons. With the cost of a gallon of oil at nearly $4, he said, “I was looking for a way to control the cost of running a building. I was looking for alternatives, because I was just petrified of oil.”

With natural gas not available and propane seeming “still tied to being exploited,” he’d dismissed pellet boilers as being too exorbitant in cost. And then the stimulus funding underwrote the system’s $40,000 cost down to just $10,000, he said.

“It’s a wonderful thing,” said Elbaum, who figures his payback on this system will be five years. “This wouldn’t be possible without a subsidy. Without a subsidy, I don’t know how anyone could afford to do this. The subsidy’s created an infrastructure for there to be an industry for other than selling wood pellets by the bag.”

He figures that in addition to 300 gallons of oil to back up his water heater, he will burn about six tons of pellets this year, the equivalent of about 720 gallons of oil, at $240 per ton.

“It’s all economics,” he says.

On the other end of the spectrum is Full Bloom Market Garden in Whately, where owner Dewitt Thompson estimates the four boilers he installed to heat more than two acres of greenhouse space is displacing 60,000 gallons of fossil fuel a year for about $125,000 savings.

“It wouldn’t have happened if it hadn’t been for the grant,” said Thompson, adding that his 3.2 million BTU system would have cost $300,000 for the three boilers alone. The boilers’ cost was entirely underwritten by the grant, leaving Thompson with $100,000 in costs for related improvements to accommodate it. “Projects like this will help the boiler companies get things together and hopefully bring down their cost,” he added. “I think they’re expensive for the amount of heat they’re actually producing, as with any kind of newer burning technologies. These are gasification boilers, very efficient, very clean burning, and they produce very little ash or fly ash. This could be the future.”

 That’s the hope of Sandri, where the bulk of its energy business is still in gasoline and diesel fuel sold at 105 stations in four states, but where renewable heating technologies now account for about 7 percent of the business in its heating-air condition-ventilation sector. That’s been beefed up with the company’s purchase of Pioneer Valley Cooling and Heating and of New England Pellet LLC’s Propell Energy subsidiary, and this year, it’s on target for its pellet sales to equal 1 million gallons of heating oil, said company spokeswoman Kristin Wedegartner.

“Our bulk wood pellet customer base is growing,” she said, adding that that growth is coming in southeastern Vermont and southwestern New Hampshire, as well as Franklin and Hampshire counties.

Jake Goodyear, Sandri’s vice president of renewable energy, said the stimulus funding helped anchor what may be one of the nation’s largest concentrations of wood-pellet boilers here with the subsidized sale of 20 Austrian-designed boilers at seven or eight commercial sites and half a dozen or so homes from the fall of 2010 through last spring. The business has also been helped by a New Hampshire boiler rebate program that provides homeowners with 30 percent of the total costs of their wood-pellet systems.

Goodyear said the OkoFEN and ACT Bioenergy systems — are about 87 percent efficient, and the cost of delivered wood pellets now is about half that of heating oil, so it makes sense for larger users, even without the federal subsidy.