# Converting 10% homes to Pellet Boilers!?



## mainemac (May 9, 2008)

Thought you would interested in this article about Les Otten plans to 
import Pellet Boilers from Europe and install in Mainers homes.


Tom

http://pressherald.mainetoday.com/story.php?id=186520&ac=PHnws


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## Turbozcs2003 (May 9, 2008)

Interesting.

I wonder if he has the smarts to offer pellets for sale throughout his service area, other than to people who buy his expensive imported boilers. He would proably make more money selling pellets than they will off the boilers.

No way would I invest 12K$ in a pellet boiler and rip my oil boiler out.

THe have 2 flaws in their plan, removing the peoples current oil boiler and using an expensive german boiler.  Plus it seems they use the term local contractor a little too often, ie you depend on the local contractor, not Maine Energ Systems to maintain and install you pellet system and boiler.  

Good luck to them though. I do hope they dont drive the price of local pellets up.


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## kilarney (May 9, 2008)

Interesting indeed.  This quote sums up my concerns:

"Another question is whether buyers will balk at spending $12,000 for pellet heating systems, an expenditure that's nearly twice as high as a typical oil boiler.

The initial cost also raises questions for Patrick McGowan, Maine's conservation commissioner. He wonders if Mainers instead will choose less-costly pellet-burning stoves over new central heating systems, for supplemental heat."

I'm also concerned about the market effect on pellet prices.  I'd be really worried if I were a European.  As the market for pellets grows in the United States, a lot of pellets that would have been bound for Europe may stay close to home.

An increase in demand, if it's met with an increase in production, may actually be a good thing.  I'd like to see mills come on-line that make pellets from pulp.  This will get us away from having to depend entirely on the sawdust market.


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## richg (May 10, 2008)

Harman makes a pellet boiler. Costs a lot less than $12,000, provides American jobs, and is serviced and supported by a local dealer. Europe eagerly takes our pellets, and now wants to send us their boilers? No thanks.


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## mainemac (May 10, 2008)

1) I think this is great news as it shows that an entrepeneur is willing to put up big bucks to achieve on a meaningful scale what everyone on this forum has done is trying to do on their own. That is not be beholden to fossil fuel from away. Especially in the NE we need ALTERNATIVES to gas and oil to keep warm, I thinkg this is huge step in the right direction.

2) The details of course can be nitpicked, why buy European Boilers? I agree we all would  rather have a domestic maker . Perhaps they would not be able to crank up the numbers quickly enough?? Also shipping is cheap compared to trucking long distances, I would wager it costs less to ship across the Atlantic than to truck across America.

3) I like the idea of Pellet Trucks rumbling through the neighborhood filling customers up  with several months worth of pellets, though I imagine it would take up my entire basement !



Tom


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## MainePellethead (May 10, 2008)

mainemac said:
			
		

> Thought you would interested in this article about Les Otten plans to
> import Pellet Boilers from Europe and install in Mainers homes.
> 
> 
> ...



I think the plan is the beginning....of course they'll be doubts etc......but Les Otten has the finances to start this off the ground. And his plan is for all of New England, not just Maine. As for if people will pay the price for the boilers...were people against paying 700 for the first VCR's? How pricey was Hybrids when they were first introduced? All things are $$ when they are relatively new and introduced.  I think its a great idea he has....time will tell on the results.


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## MoeB (May 10, 2008)

http://www.maineenergysystems.com/

Maybe this link has been posted here already.  If so, I apologize.  I'm interested in the silos.

Moe


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## begreen (May 10, 2008)

It certainly is an ambitious plan. To start from scratch is going to require not only staffing up for qualified installers and repair people, but he has to create infrastructure from scratch. That goes from logging, to processing, to storage, to bulk delivery. It is a big investment and risk, but will be very interesting to watch. Our neck of the woods also has potential for bulk pellet boilers. I could see it working here if it succeeds in Maine. The Swedish systems systems have impressed me since I first read about them about 5 years ago. 

https://www.hearth.com/econtent/index.php/forums/viewthread/16/


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## webbie (May 10, 2008)

I hope the poor homeowners don't get taken for a ride. People who are desperate for solutions are sometimes too easy to sell to - and this entire scheme may rely on one foreign manufacturer who may be here today, gone tomorrow. Maybe the state should get involved and have some sort of bond or guarantee about parts and service for "x" years (10-15) just to make sure the consumers are protected. Those of us in the HVAC field have seen some European equipment come and go and the parts/service situation dry up quickly. With a wood stove you can usually make do, but these electronic pellet boilers are not going to be able to be easily repaired except with original parts. 

Personally, I'd rather take the independent route - fill one side of the equation (the boilers, etc.) and then get Pelletsales.com, etc. to fill another part, etc.


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## Richardin52 (May 11, 2008)

If fuel prices stay high people in the Northeast will have to change to something other than oil to heat their homes.  That should be abundantly clear to everyone by now.

Given that fact we need to look at alternatives to oil.  Some people will opt for the tried and true firewood option.  Some people just can't or won't go that rout.  

Many people will turn to wood pellets just because it is the next cheapest way to heat their home.  Some people will turn to LP gas which will be cheaper to install but not so cheap to heat with. Some will go for geo thermal, solar, heat pumps or electric but the way it looks right now wood pellets are a very good bet in many ways.  It's clean, it's renewable, it will help drive the US economy and it's cheaper than most alternatives.

Boilers from Europe will not be a hot item or a long term solution because manufacturers in the US and China will be able to produce them cheaper.  We are in transition right now.  There may be a few bumps along the way but pellet fuels are here to stay if oil stays high and all indications point toward high oil prices.


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## compressedwoodsupplier (May 12, 2008)

I spoke with the gentleman doing this prodject and it seems like he has no intention of bagging or selling bagged product but just bulk. So that being said you would have to buy a silo and have the pellets blown into your silo. $$$$$$$$$ no the real question is how much for a silo??????


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## MoeB (May 12, 2008)

If you click on this link and go to the bottom of the web page, you will see the different sizes and price for the silos.  I want one.

http://www.maineenergysystems.com/Bulk_Pellet_Purchases.htm

Moe


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## wahsega (May 13, 2008)

Having meet him years ago hes out for one thing cornering the market in his favor and making big bucks. He tried to do the same with the Northeast ski industry. Watch out and approach with caution.


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## Richardin52 (May 13, 2008)

He's doing just what should be should be done by anyone that wants to cash in on the coming oil crises years.

He can see a need and he is trying to fill it and make some $$$ doing it.  If any of us had the money we'd be doing the same thing.  He is going to make a bundle just wait and see.  

The only way he will make money selling the pellets however is to sell lower then someone else, or offer something no one else is offering.  With bulk delivery and silo sales he is out in front of the curve right now for sure.  

The Bosh boiler he is offering is a very good boiler and no one I know is selling them in the US right now.  I'd be interested to see what he is selling them for.

The way I see it, even if we never buy anything from him he's gong to help us.  The more people burning pellets the more pellets plants there will be.  The more pellet plants the more compitition there will be in the market.  If the guy in Strong making pellets trys to mark them up too high then we can go someplace else and thats a good thing.  One thing to look out for will be price fixing however.

Rich


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## nchezy (May 18, 2008)

Man you guys are a tough crowd...I have reviewed the Maine Energy Systems web site and spoken to the admittedly green sales associate on the phone - I am ready to send my $500 deposit tomorrow.  The actual cost of the burner/boiler combo is $8100  and 8,800 for the larger unit.  I think he said the units are rated for 100k Btu/hr and 130k btu/hr, respectively.  I haven't researched pellet stoves much, but someone else told me they are generally $2,500 or more, so I don't think these prices for boilers are out of line.  The cheapest pellet  boilers I have seen are at least 6,500 or $7,000 so I really don't think these prices are bad at all.  The other european pellet boilers I have researched are all priced higher:  Tarm - $11k,  Verner - $10.5k,  Orlan - $9.5k (and the Verner and Orlan are essentially not available, with extremely limited track record).  They said the bulk storage equipment (essentially a 6'x6'x6' box connected to a fill  pipe and a 10' long screw auger is supposed to cost $800-$1,000.  The quoted "price" of $12,500 is an estimated installed cost - every system will be a little differnent (They are NOT suggesting replacing oil boilers).  They also said they are offering a capped pellet price of $250/ton delivered (bulk delivery) for the 2008/09 season.  So my response to the various previous posts on this subject...
 - Price is too high?  Their proposed boiler system price is far less than the installed cost of other exotic european boiler options.  The boiler unit cost does not seem that high when you consider what an average pellet stove costs.
 - Unproven technology  - the manufacturer and Maine Energy Systems might not be around in 15 years to fix the units?  Aside from Harmon and possible Tarm, none of the available pellet boiler options have practically any experience or US  presence.  I am quite sure the others all have less than 100 units installed at this point (they discuss lots of 5 or 25 coming over from europe at a time).  The Maine Energy Systems equipment mates a Janfire AB pellet burner and Bosch Boiler.  Janfire seems to have been doing pellet burners for 10 years or more with pretty good success in Europe.  Half of us have Bosch plugs in our cars and wish we could afford the quality tools and appliances they make - so I feel pretty comfortable that this manufacturering team will be around for the long haul.  Even if these units don't turn out well, if the Maine Energy Systems venture initially succeeds, there will be hundreds or even thousands of these units installed and I feel comfortable that some industrious souls will figure out how to keep these things going for us.  

Sorry to be so reactionary, but I was surprised to read the negativity of your thoughts on this venture.  The  plan is radical but it is also everything I want in a pellet heat option.  My calcs tell me that replacing 1350 gallons of #2 with pellets will save me $2500 a year - a 5  year return on investment is fine by me.  Personally, I like the idea of a bunch of local plumbers and contractors being trained and  mobilized to install and maintain the systems.  This forum has been a godsend for me and has allowed me to independantly become relatively well versed on the topic of solid fuel heating, but on a cold night in January, when my boiler won't start, I'd rather see a yellow pages listing for my Janfire/Bosch repair man than have to wait for responses to my post on this site.


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## ugenetoo (May 18, 2008)

exciting times are ahead for the pellet fuels industry. 
there will come a time when pellets will be thought of as being as easy to use as fuel oil. when you think about it, pellets can be transported and stored just as easily as fuel. its only a matter of using a different "pump". pellet infrastructure is at the point where range oil was when our great grandparents first switched from wood fired cooking appliances. they also had to transport and store the product in small quantities. then came along the oil distribution companies to do it for them.


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## compressedwoodsupplier (May 19, 2008)

Well i find it very interesting that bulk pellets are going to be $250 a ton and my bag pellets are the same price...  Shouldnt bulk be less expensive? I always have been giving prices and the comment is that bulk is cheaper so please tell me how is it a deal to get bulk pellets for$250 a ton????? I know that the prices of boilers are going to cost you between 8,000 and 12,000 dollars but I know as a working man i cant afford a boiler but i could afford a stove costing around 2,000 dollars. Just a thought


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## JustWood (May 19, 2008)

compressedwoodsupplier said:
			
		

> Well i find it very interesting that bulk pellets are going to be $250 a ton and my bag pellets are the same price...  Shouldnt bulk be less expensive? I always have been giving prices and the comment is that bulk is cheaper so please tell me how is it a deal to get bulk pellets for$250 a ton????? I know that the prices of boilers are going to cost you between 8,000 and 12,000 dollars but I know as a working man i cant afford a boiler but i could afford a stove costing around 2,000 dollars. Just a thought



Anthracite coal is pretty much the same way bulk vs. bagged and I honestly can't tell you why.

I sell seasoned retail for  twice as much as green bulk  because of the extra handling and time I have to sit on my "money".


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## ugenetoo (May 19, 2008)

compressedwoodsupplier said:
			
		

> Well i find it very interesting that bulk pellets are going to be $250 a ton and my bag pellets are the same price...  Shouldnt bulk be less expensive? I always have been giving prices and the comment is that bulk is cheaper so please tell me how is it a deal to get bulk pellets for$250 a ton????? I know that the prices of boilers are going to cost you between 8,000 and 12,000 dollars but I know as a working man i cant afford a boiler but i could afford a stove costing around 2,000 dollars. Just a thought



how else do think les otten is going to make any money??


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## MCPO (May 19, 2008)

nchezy said:
			
		

> Man you guys are a tough crowd...I have reviewed the Maine Energy Systems web site and spoken to the admittedly green sales associate on the phone - I am ready to send my $500 deposit tomorrow.  The actual cost of the burner/boiler combo is $8100  and 8,800 for the larger unit.



 Great! You be the Beta tester then.
 Me? I`ll jump on that bandwagon if and when the pellet boiler business gets a better foothold here than it presently has.
 Til then I`ll be content using a pellet stove with simple proven technology , a substantially smaller cash layout , and most importantly knowing  that I (or my local dealer) can fix when something goes wrong.
 I do however wish you nothing but success and good fortune with your new pellet boiler from Europe.
 John


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## Willman (May 20, 2008)

> Well i find it very interesting that bulk pellets are going to be $250 a ton



I talked to the company and was told that the price of $250 would be the cap for this year. No telling what the price will be. They are having the trucks built right now. A large local oil company will be the first  installer. Talk about irony. No sales to self installers though. Maybe in the future if they don't get enough sales.


Will


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## nchezy (May 20, 2008)

I share your concerns about pellet boilers lacking a track record.  My problem is that my house does not lay out well for pellet stove (I would need 2 or 3 minimum to warm entire house), and switching to pellets will save me $2,500 a year or more at today's prices, so I feel some urgency to make the change sooner than later.  We'll see how it turns out...


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## ugenetoo (May 20, 2008)

nchezy said:
			
		

> I share your concerns about pellet boilers lacking a track record.  My problem is that my house does not lay out well for pellet stove (I would need 2 or 3 minimum to warm entire house), and switching to pellets will save me $2,500 a year or more at today's prices, so I feel some urgency to make the change sooner than later.  We'll see how it turns out...


 there are quite a few pellet boilers being produced domestically. im not familiar with the harmon boiler, but their other products are extremely good quality, and service is good also.
  i would prefer to deal with a us company with a small track record here than with a foreign company with none. your urgency may lead you down the harder path.


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## mainemac (May 20, 2008)

Nchezy


Good luck I hope you do great!
Keep us posted


Tom


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## nchezy (May 20, 2008)

Now I'm going to sound kind of like a heat snob because the other reason I want to go the boiler route rather than a stove is that I have quite a bit of radiant floor heat in the house that I would like to continue to use.  I'm getting older and softer - I need warm toes to get through 6 months of winter.


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## ugenetoo (May 20, 2008)

nchezy said:
			
		

> Now I'm going to sound kind of like a heat snob because the other reason I want to go the boiler route rather than a stove is that I have quite a bit of radiant floor heat in the house that I would like to continue to use.  I'm getting older and softer - I need warm toes to get through 6 months of winter.



nuthun snobbish about that! we all will become eldery sooner or later.HE!HE! :lol:


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## cogger (May 25, 2008)

12k? They won't last long when these are going for $6,900 in my area http://www.maximheat.com/index.html and $800 off so $6,100.


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## cogger (May 26, 2008)

mainemac said:
			
		

> 3) I like the idea of Pellet Trucks rumbling through the neighborhood filling customers up  with several months worth of pellets, though I imagine it would take up my entire basement !
> 
> 
> 
> Tom



There are outdoor silos poping up also, pellet fuel delivery service will reflect the old days of coal delivery.

www.woodpelletfuel.org


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## webbie (May 26, 2008)

RingOfFire said:
			
		

> 12k? They won't last long when these are going for $6,900 in my area http://www.maximheat.com/index.html and $800 off so $6,100.



Probably not apples to apples.
These are non-pressurized and have to be tied into the existing system from a distance. We don't know the real efficiency of them, but I highly doubt they are anywhere near a Euro model which must meet some very high standards there.

An indoor unit often is fed from a bin or silo - where it looks like you'd have to pour bags into this one? Or have a truck come around regularly and fill it up.

I can see some advantage to an outdoor wood boiler due to fueling (and even that is debatable), but I see none at all when it comes to Pellets.

Either way, I think that money saved in the initial purchase of a central heating system does not mean a lot. The efficiency, longevity and other factors will end up making more difference. 

Folks tend to use real high (75-80) total efficiencies when calculating the potential savings of pellets.....but what if the entire system ends up at 60 or 65 or less? That takes a lot of savings out of the deal.


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## MCPO (May 26, 2008)

The big hangup with this new conversion idea is the fact that it makes you dependant upon the lone dealer / installer / serviceman and an unknown foreign supplier in the event something goes wrong and at some point, it definitely will. 
 Way too much money for the marginal benefit.
 John


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## drizler (May 26, 2008)

Seems pretty iffy to me too.   Maine has the wood sure enough but unless you are already in line for tossing your old boiler / furnace it seems like its going to be one very long payback.   Could be a good bid for old folks who can't haul their own wood but otherwise that's still a lot of cabbage.   I don't see these stoves being rated multifuel so if pellets go sky high what then.   A lot of us were doin this 4 or 5 years back when they got real scarce and stupidly priced to boot.   What will something like that do to your payback.     Personally I think its time for some folks with these sprawling homes to do like they did in 1975.  Start plowing in the insulation and closing off certain sections of the place where its workable.     With the Euro positively killing the US Dollar you aren't going to get anything cheap from over there.  Sounds to me like the old saying about how to make a million dollars in the airline industry.   Start by bringing 2 million.........................


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## Willman (May 27, 2008)

> I don’t see these stoves being rated multi fuel


Froeling has a pellet boiler that can be converted to round wood.
Will


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## thomcoastal (May 27, 2008)

I need to make a choice soon as the backup for installation of pellet stoves in the Bangor area is now over 60 days.  I have looked at the Harman pb105 and the weight (over 900lbs) is an issue for my limited access space.

I have not gotten any good info from the Maine Energy Sysytems as to availablity in Bangor - The website says yes but no one has contacted me yet to provide any info on the pricing or availablity.  If the boilers are as good as they are portrayed to be I’m in.  I can get bulk delivery for $235 from a local supplier in either 1 ton bags or 40 lb bags.  I am also looking into several boiler stoves from Europe (Ecotherm H2O 34, Artel 14, Etc) so I can avoid the needed tear-out to make entry into my limited access basement.  

But if they are not able to work on 60Hz (rather than 50Hz - European power standard) I am willing to hand a pile of money to Mr. Otten to ensure my pre-buy (this week is $4.59/gallon) doesn’t put me in the poor house or worse the street. 

I use 1600 gallons per year (last three years average) converting oil BTU's to pellets has some ambiguity but the savings are real and substantial.  My boiler runs at about 78-80% efficiency.  If the pellet boiler is approximately the same (rated at 83.5-88.7%) I win in  avery short time.  Last year I pre-bought at $1.79/gallon and this year my cost for the average gallons is $7344.  At $235/ton that equates to 31 tons - The math works out to be about a 2-3 year payback if prices don't go up another penney for #2 oil....


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## webbie (May 27, 2008)

My opinion only, but I (and many others) think you are seeing a bubble and heating oil will be well LESS even this winter, let alone in the future. Obviously you take your chances, but at $4.50 it is about the price of electricity, which would seem to put a serious dent in the tendency of people to use it!


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## thomcoastal (May 27, 2008)

Webmaster said:
			
		

> My opinion only, but I (and many others) think you are seeing a bubble and heating oil will be well LESS even this winter, let alone in the future. Obviously you take your chances, but at $4.50 it is about the price of electricity, which would seem to put a serious dent in the tendency of people to use it!



Are you implying the cost of heating oil will fall to a point that moving to the pellet boiler or pellet boiler stove will not make economical sense?  The futures markets for energy have tripled in incoming money value in the past 60 days.  I don't see millionares/billionares deciding they don't want to drive the prices of the futures contracts up further so they can continue to make more money.  The price per barrel excluding the run made by futures investing should be around 85-95 US dollars/barrel factoring in the weakened dollar and if the dollar was as strong as it had been even 12 months ago it would be nearer to $68-75/barrel.  Wall Street has a 245 Billion dollar interest (oil futures contracts as of May 15) in keeping the prices up near these levels for the foreseeable future.  I have made a moral choice to not invest in the energy futures market due to cost be paid by the world's poorest, don't bet the average trader feels any moral pull against making money on the misery of others.  They don't see the cost it is making on every product and service they consume, they only see the 401K or their investment potfolio continue to GROW!

I rambled....Sorry!


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## Wet1 (May 27, 2008)

Webmaster said:
			
		

> ...but at $4.50 it is about the price of electricity, which would seem to put a serious dent in the tendency of people to use it!



What amazes me is that so many households leave the heat set at 70+* F all winter long.  Granted, prices weren't as high over the past winter as they are today, but I'm still surprised the general population didn't turn the thermostat down much last winter given the elevated oil prices.  Even if oil is $5 a gallon next winter, a substantial number of households will still have the heat cranked up (and groan about oil prices).  The ones that can't afford it might even "rough it" and turn it down to 67* F.  Does the entire house need to be this warm?  Does any of the house need to be this warm?   When burning oil only, we leave our house set at 60* all winter long.  Yes, it's a little chilly when you get out of bed or the shower, but once you throw some cloths on it's not bad at all.

So while I feel for the people that can't afford $4.50 oil, I don't have any sympathy for the folks who use 1500+ gallons a year to keep their home 70+* all winter long...  Can't afford the oil?  Buy a sweatshirt!


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## webbie (May 27, 2008)

No one can guess whether a pellet boilers makes economic sense. To do so you'd have to know the price of pellets well into the future, as well as the price of LP (an alternative fuel) as well as oil...for years ahead.

You''d also have to know the installation cost as well as the service, etc. for the Pellet boiler. 

In a general sense, it is not financially prudent to react to ANY short term situation by spending 10K+ on a aux. heating system. Just because the power goes out for a couple days does not mean I will buy a 20K backup generator, etc.

I would not sell the pickup (I don't have one anyway) just because of a bubble in gas prices.

There are always early adopters and that is fine, but they are often left holding the bag. If the payback is so great and so fast, it would be just as well to wait a year or two and then change. Example: I called about getting PV Solar installed. The people never showed up. I emailed and they said they were busy meeting demand........translation: I'll get a much better deal by waiting!


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## PelletOwner (May 27, 2008)

The installation, boiler, burner, hopper, etc costs, including the cost for removing a preexisting oil heat system, should run in the 12.5-13k range.  However, installation costs are reduced dramatically when you use your oil system and boiler in series (~$10k).  This also has the added benefit of REALLY, REALLY, REALLY long showers, as well as a heating backup in case one or the other fuel is used up.  Also, when your relatively unreliable oil burner breaks, you have a heating solution that can keep you warm for months instead of hours.

The price of pellets will be stable for several years.  MEsys has a relatively large amount of money, and I'm sure they have a contract for their entire projected winter fuel needs.  Also, I heard that someone was purchasing multiple pellet mills at the Hearth, Patio, and Barbecue Expo, so I wouldn't worry too much about the stability of pellet prices.  Europe has plenty of pellet production, it's just cheaper over here due to the difference between the dollar and the euro.  Maine's forest industry is doing terribly right now, and a chance to let them run their machines and actually turn a profit will drive an increase in production capacity.  

From what I hear, half a year (4 ton delivery) of fuel is going to cost about a grand, meaning a 2k (plus or minus $100) total cost for your winter's fuel.


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## thomcoastal (May 27, 2008)

The cost of pellets in Maine has risen at a 8-10% range over the past three years and three new mills have opened or will open within the next two weeks.  The cost for oil, LP and Propane will continue to increase due to the costs of transportation (mainly from the Middle East or Africa) and the increased influx of cash into the commodities market.  The price may moderate somewhat but the concensus is that prices will never reach $2/gallon again for heating fuel.  This means the cost for heating your home with pellets or wood will ALWAYS be cheaper than that of oil from now on.

Also with the strength of the dollar falling, the correct time to purchase a "replacement system" is as soon as you can financially afford it.  I do not agree with the analogy of a $20k backup generator system when the power goes out but when it will cost over $1000/tank for a fill up of oil and it may only cost me $2400-2800 for the heating season for pellets, I'd be a fool to not try to protect my family from the short term and long term consequences of not preparing when I could.

I don't hsve a crystal ball to tell the exact future but the likelyhood of increases in pricing for oil with the worldwide demand going up nearly 1% per week is nearly certain.  Worldwide production of oil has actually not kept up with the increase in demand for the first quarter of the year (1st time in history) falling to 99.87% of demand.  Stockpiles of oil in the oil producing nations made up the difference but won't last forever.  Preparing when there is not a crisis is nearly always less expensive (and usually is possible) while after the actual shoe drops "a man can be sure of nothing".


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## MCPO (May 27, 2008)

PelletOwner said:
			
		

> Also, when your relatively unreliable oil burner breaks, you have a heating solution that can keep you warm for months instead of hours.
> 
> The price of pellets will be stable for several years.  MEsys has a relatively large amount of money, and I'm sure they have a contract for their entire projected winter fuel needs.  Also, I heard that someone was purchasing multiple pellet mills at the Hearth, Patio, and Barbecue Expo, so I wouldn't worry too much about the stability of pellet prices.  Europe has plenty of pellet production, it's just cheaper over here due to the difference between the dollar and the euro.  Maine's forest industry is doing terribly right now, and a chance to let them run their machines and actually turn a profit will drive an increase in production capacity.
> 
> From what I hear, half a year (4 ton delivery) of fuel is going to cost about a grand, meaning a 2k (plus or minus $100) total cost for your winter's fuel.



Relatively unreliable oil burner?  What makes you think a pellet furnace is going to be reliable ?
 And what crystal ball are you viewing that makes you not think the price of pellets are stable?
 John


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## webbie (May 27, 2008)

PelletOwner said:
			
		

> The price of pellets will be stable for several years. .



That is a total guess....but thanks for your opinion!

As to unreliability of oil burners, I would put ANY money on the fact that Pellet appliances are vastly.....VASTLY less reliable. I have seen many oil furnaces and boilers 30-50 years old and older, while even Pellet stove dealers here have used 10-12 years as their guess on Pellet stove life. Sure, they may last longer, but certainly it will be a long time before they reach the reliability and yearly service cost (low) of oil equipment.

It never fails - during any energy crisis (I have seen this since 1972), people will come out of the wood work and be willing to make ANY claims so they can make money. But make no mistake about it, the profit motive does not always offer the customer (end user) a fair shake.

Again, I am not positioning myself against pellet boilers, but only looking at recent history. A lot of people bought corn stoves and furnaces in the last 3 years and now are stuck with corn at twice the price or more. We saw $320+ pellets just 18 months ago. We 100% KNOW that if Pellet makers get a better price by shipping them to Europe and elsewhere...they will.

So my advice is simply for folks to sit back and study all the issues and trends. The exception, obviously, is the early adopters and those with plenty of cash where it really does not matter as much.


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## PelletOwner (May 27, 2008)

Giovanni said:
			
		

> PelletOwner said:
> 
> 
> 
> ...



If your pellet burning system is automated, then yes, it's much more reliable than oil heat.  If you have a cheap $3k pellet burner/boiler that you have to refill with 40lb bags, then no, you'll have to clean it, scrape it, remove the ashes, and lug around your pellets, and it will only be as reliable as you are.

Maine and the surrounding area has a flagging timber business that's just waiting for some demand. Multiple pellet mills have been purchased in the area, and pre-existing domestic pellet production is so high they have to export it anyway.  With several pellet mills coming online that will dramatically increase pellet production in the area (think 2x or 3x the pellet production capacity we have now) and flat pellet demand the price of pellets should either plummet or stabilize (in a perfect free market  )

Now, if Germany, Norway, Austria, and Sweden suddenly found themselves without any trees, we might see a spike in pellet prices. As it stands, they're importing from the US because the dollar sucks, not because they can't make them over there.

Edit:
As to your corn comparison, corn is something that is not only being used for fuel, food, feed, and furniture, but is also something that must be produced in a field.  You have to water it, tend it, fertilize it, keep it safe from pests, and harvest it.  Corn does not occur naturally in thousands and thousands of hectares across North America.  Trees are much easier to maintain than corn.  Corn prices spiked because there is much less unused market capacity, whereas the timber industry is not doing as well as it could and there is plenty of out-of-work labor in foresting towns.


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## Wet1 (May 27, 2008)

PelletOwner said:
			
		

> Giovanni said:
> 
> 
> 
> ...



I too am going to have to call BS on any pellet burner being more reliable than an oil burner.  Just look at the moving parts of the pellet burner, the byproduct buildup, and the complexity of the unit itself (and associated storage/feed system)... it doesn't take a rocket scientist to see the oil burner should be more reliable.

Regarding pellet prices, I don't think anyone can accurately say what oil prices or pellet prices will be a year or more from now.  My guess is both will be volatile in the come years.  You have to keep in mind, pellet prices still rely on petroleum in manufacturing, packaging, and transportation, so if oil goes up, pellets will also to some degree.


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## thomcoastal (May 28, 2008)

The overall impact of oil prices on pellet prices will be far smaller than the price impact on oil prices....The percentage of increase directly related to the price of oil is far less of an impact on the user of oil in production than for a user of oil (as the end user).

The price of pellets in the State of Maine appears to be headed in the right direction currently (stable or possible decreases due to competion) and that has the largest impact on my family.  With a resource that is locally produced, I feel far more comfortable than the thought of relying on oil extracted around the world maintaining a constant (yet extremely high) price.  I am not removing my current oil boiler, just putting it in a state of suspended animation for the near future.

The winter will come and I will have heat for my family as long as I have a small amount of electricity to circulate the water from the boiler and maintain the feed supply.  I need a total of 300watts more for my pellet boiler than for my oil heat...a fair trade for the cost of the BTU's produced.


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## webbie (May 28, 2008)

Sorry, Pellet Owner, having been in the HVAC business including the design and importation of equipment from Europe, Canada and elsewhere.....you are entitled to your opinion, but to say that ANY pellet boiler is more reliable than an oil burner is misleading. Very misleading. When you show me MILLIONS of automated pellet boilers in the field over a couple decades, then you will have a leg to stand on. Until then, you have your opinion.

As to Pellet pricing....same deal. You and I have no idea if there will all of a sudden be a world demand for US Paper (due to cheap dollar), or wood for building materials, furniture, etc.

Being as we have seen the price of pellets range fro $150 a ton to $375 a ton in the last 24 months, it is very hard to even guess what the future price will be. I certainly hope they stay low and stable. But I would not bet on it!

And that is just the point. If my mother lived in Maine and had to go borrow money to spend 13K on a Pellet boiler so that she could save $1200 a year, I would go a lot of research before telling her to do so. Would 13K spent in new insulation, windows and other systems save her as much or more? Would a low cost switch to LP (which is cheaper than oil now in most places) save her something? Any capital purchase of that size requires more than the "fear factor" in my opinion.

I applaud the fact that more and more biomass boilers and furnaces will be available soon. However, those entering this market from the sales or importing end should have a long term plan for making market penetration (and money) and sometimes the WORST thing that can happen is a bunch of people jumping into things before the entire situation ( service, parts, fuel supplies, reliability, etc.) is worked out.


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## nchezy (May 28, 2008)

Craig,

You create this wonderful blog devoted to wood burning, expand it to include pellets and  presumably all things biomass, and then predict future pricing of pellets is likely to rise faster than oil (which you predict will decline after this bubble is over), and recommend that people convert to LP rather than biomass systems?  You've got me very confused about your intentions.  

Your pellet angst seems primarily directed towards the Maine Energy Systems (MeSys) attempt to do boilers in Maine in a big way.  Is it simply the size of this venture that has you apprehensive?  There has been much discussion about the  price tag being $12,000 or more.  MeSys chose to advertise what they feel to be a relatively conservative INSTALLED cost and now everyone says their system is way overpriced.  Well, as I stated earlier in this thread the boiler equipment cost is just over $8,000 and a few people have pointed out a couple of other pellet boiler units priced under $7,000 - so can we agree that the cost of the MeSys equipment is not out of line with other pellet boiler options? 

Your next biggest concern seems to be new foreign (european) equipment and no one to stand behind it - you say you would prefer the independant route.  However, you seem to have a  preference for the european boilers - just not the Bosch/Janfire unit from MeSys - so that leaves you with Tarm as the one proven commodity with a track record (and it costs $11k for the equipment).  Or you can look at other "independent" european units that are coming to America in lots of 5 on ships every couple months and you have to buy it from the one dealer in "your region" that happens to be 500 miles away.  MeSys wants/plans to install thousands of systems and will need a large number of local trained service and install technicians.  So  perhaps you being in the HVAC business will be fine tinkering with your independant unit when it goes on the fritz but I don't think other less skilled homeowners would benefit from that approach.

If you and your mother in Maine decide that a 10 year ROI is too long, that is fine by me - that is up to the individual.  If going to pellets will  only save her $1200/year, were you serious when you suggested her return on investment would be better if she invested in better insulation for her house?  I think that is a pretty misleading suggestion.

So I keep asking myself, why is he so opposed to pellet boilers (or at least the MeSys boiler plan)?  You start a blog presumably to educate people to biomass heating, Les Otten comes along with a visionary idea to try and open up this option to a much larger group of people and you oppose his idea.  I just don't understand??


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## webbie (May 28, 2008)

Uh, my intentions are always very clear. I work for the customer!

I hope everyone make a million bucks...in one day if possible.....but not at the expense of someone who cannot afford it!

No doubt there needs to be early adopters. I don't know who MeSysor or anyone else is....just speaking from experience and math. 

What you may be surprised at is that I am not a pimp for the industry and manufacturers. I lived through the first pellet boom and saw tens of thousands of customers fork over hard earned money for stoves that were defective and not stood behind. What do you have to say about that?

In the end, I actually DO pimp for the industry and manufacturers since if they took the long term (and quality) view, it would benefit the entire market - makers, retailers and end users. I certainly applaud any efforts by business and government to further the use of clean biomass. But when folks start making statements about better reliability than oil, two year paybacks and stable prices for pellets (given the recent history), my BS meter goes up.

A ten year ROI is certainly a long time for most people. You will not replace 10% of boilers in Maine given such a scenario (my opinion, of course). With inflation and interest rates likely to rise, and the credit crunch, the cost for that 10-12K initial investment can be $800 to $1000 a year in interest alone.

In terms of the brand names, I love 'em all....well, except the idea of throwing pellets and coal into batch fed boilers! Harman are very well known.....but I think anyone who studies the field will see that Euro models have evolved further than most domestic brands and are also subject to more efficiency and "build" standards. That is a good thing. But if the demand is there, it will not take long for the Domestic makers to produce better units.

So, it is all good. I think products should be sold on their honest merits. We have had this discussion here many times before and even some industry insiders have agreed that pellet central heating is a tough ROI expect in those homes which use a LOT of heat. There are many other reasons to go biomass...of course. Local availability, renewable, etc.

In summary, I am certainly not saying that folks should not buy a biomass boiler! BUT, if a person is doing so for the savings of $$ as the primary reason, the purchase will take some research to assure that- without rose colored glasses - that the payback will be there.


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## thomcoastal (May 28, 2008)

Noticed that some of the advertisers at the bottom of the page are software used specifically in Oil Futures trading.....?? I also notice that the ads are balanced by sites used for purchasing pellets, stoves, etc.  

Futures trading is the one specific thing that has been responsible for the dramatic upswing in the per barrel price for oil.  More than production, more than problems in the Middle East more than any other factor.  I understand the desire to make money in the market but the individual trader in oil futures should understand they are a part of the oil price problem and should at least understand the rammifications of bidding up the prices by dumping their money into the market.

On the other side of the coin, I am really enjoying the lively banter of the other "posters" on this site freely supplying people such as myself with years of information gleaned from hands-on experience in the bio-mass heating scene.  I am going to be installing a pellet boiler (or boiler stove) in parallel with my current oil boiler to even out some of the spikes in the price of heating.  Based on the posts to this site, I have narrowed my search and learned a few of the possible pitfalls of pellets but now feel much more confident of my decision to buy an "alternative" heat source in these uncertain times.


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## webbie (May 28, 2008)

Most ads on the forum are placed there automatically by google. Our discussions have probably put the proper keywords in, so those ads show up....heck, they probably pay well. I get a % of the revenue from the ads (only when you click on them).

Oil is down almost $8 since we started this conversation. Just a blip? Maybe......but when everyone is crowing (and then betting) that oil is gonna get cheaper, people stop speculating as much. If Heating oil goes down to $3.00 (not likely, but possible), I'd certainly tell people to lock in and stock up.

Glad you learned something. I understand that we tend to play devils advocate, but that is a side of the equation that is good to consider.....and you are unlikely to hear it from sales folks. Good luck in your quest and let us know which unit you come up with. Hopefully, cheaper oil will be tagged along with a stronger dollar and Euro equipment may come down in price! It used to be that the imported stuff was the same price or less than the domestic brands.


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## MCPO (May 28, 2008)

Fuel oil delivery as of today is $4.399 per gal. here in western Ma. (Pittsfield) and that`s the lowest price available. The high is $4.68 per gal.
 Crude might be down $8 but we might not ever see it . 
 I`m actually thinking of another stove and chimney on the main floor to nearly eliminate the oil I buy. 
 And I can forsee the possibility of not heating the finished basement in the future and getting by with a pellet stove on the main floor. I could live with that if I have to.
 Maybe even restore some of the (former) electric heat in rooms that would need minimal or occasional heat.
 Only have to move my computer upstairs .
 Drastic times call for drastic measures. Heh, heh , heh.
 Really now, As a youngster  (1950s) I can recall having to cut firewood in the summer to burn in the coal furnace in the late fall before it got cold enough to burn coal safely and efficiently and never having much if any heat in the bedrooms all winter. Still that old coal furnace in the cellar was a luxury back then.
But I can go back even further to the 40s to our other home  and recall our weekly baths in front of the old kitchen cook stove, wood, coal , oil ?  Can`t remember what combination it was but it had a side heater of some sort in it.  We also had an kerosene stove (vented space heater) in the living room. I can recall the white kerosene cans placed upside down behind the stove
glug,glug,glugging periodically as it slowly fed into the pot burner that needed it`s dual wicks trimmed occasionally. There was a 50 gal oil/kerosene drum outside near the porch door setting atop a pair of cross bucks and I assume it was filled on a regular basis.  Let`s see now, 50 gals at maybe .10 per gal or less was possible because I do remember oil at .14 a gal in the mid to late 50s.
  There was no heat in the bedrooms for sure but I never remember being cold however I remember like it was yesterday having my fathers WWI  long woolen brown Army coat on top of me to keep me warm. How I loved that old coat.  How I loved my father. It had my fathers smell to it or at least I imagined it.
 It seems some of us might be destined to return to the old space heater scenario and maybe that`s not a bad thing either since we have become far too accustomed to the excesses and waste of the modern lives we live.
 John


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## ugenetoo (May 28, 2008)

Giovanni said:
			
		

> Fuel oil delivery as of today is $4.399 per gal. here in western Ma. (Pittsfield) and that`s the lowest price available.
> Crude might be down $8 but we probably won`t see it .
> I`m actually thinking of another stove and chimney on the main floor to nearly eliminate the oil I buy.
> And I can forsee the possibility of not heating the finished basement in the future and getting by with a pellet stove on the main floor. I could live with that if I have to.
> ...



well said!


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## thomcoastal (May 29, 2008)

I am waiting on the details from the tech rep for 3 seperate models of boiler stoves to let me know the specifics on running in the US (60 Hz rather than 50Hz). The models are the ECOTHERM H2O 34 (34 Kw total 15% to room and 85% to the water - cost 7100 to get here but it is great to look at in our living room and would add more than my maximum heat load to my existing setup), the Artel 14 Boiler stove (14 Kw 5% to the room and 95% to the water but if I add storage it should supply nearly all my heating needs with the exception of the coldest days below Zero F), the last one is actually a series,  MCZ makes several models of Pellet boiler stoves which could meet my needs as well.

The Artel rep just responded, it will operate fine on 60Hz and the total cost of getting the stove here is $7094.60 - a lot of money but it vents through the wall, is located in living space and would meet my heat and hot water needs for 350 days per year.  I need to get a bit more info on the other stoves before I jump.


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## webbie (May 29, 2008)

Make sure you read he stickies at the top of the Pellet Room Forum - about the dangers of venting directly out through the wall.

You don't want to spend that much money and then still have problems.


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## Amaralluis (May 31, 2008)

My take on pellet pricing is that it wont be too far from other heating sources.

People need to rethink carefully if they think they will save thousands a year by switching to pellets.

I understand the benefits of switching to pellets if not for anything else let it be because you are buying a local product and thus helping the wood insustry that needs to be revitalized and this could be a big boost to the industry.

Nonetheless humans are greedy and pellets will not stay cheaper for very long especially if the the demand increases.

These pellet boilers are a great idea, especially if they can replace easily old oil/gas furnaces. The only drawback is the space needed for the fuel.

I just wish that pellet prices would remain stable and low, heck if necessary have the governement subsidize this heating source.
IMO pellet burning should be a priority for the government when you look at all the benefits of it.

Clean energy, renewable energy (environment), local industry/jobs (more taxes), easy maintenance, easy and safe to transport (imagine a tank full of oil/gas has an accident and the tank ruptures?), you get that wood heating feeling, and doesnt have to be expensive.
Its a win win situation for everybody... unfortunatly greed will settle in sooner or later.

Btw those trucks are a great idea, hopefully the idea will expand all over the place. 

In the end dont count on pellets stying cheap... it wont happen.


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## thomcoastal (May 31, 2008)

Amaralluis said:
			
		

> My take on pellet pricing is that it wont be too far from other heating sources.
> 
> People need to rethink carefully if they think they will save thousands a year by switching to pellets.
> 
> ...



To make the change in price needed for the price of pellets and oil comparable is over $500/ton.  The highest prices I have seen in Maine (prior to the opening of three new pellet mills in the past 6 months) is $260/ton.  The actual price in Maine has dropped to around $225/ton (many suppliers are expecting prices to remain the same or slightly increase during the heating season coming up).  Oil prices are not going to drop to $2.20/gallon to equal the price comparison to current pellet prices of $250/ton (New England Average).

There is no world futures market with nearly 280 Billion gambled on future prices of oil.  Oil futures trading has an average of over 25 Billion a month in increased influx for the past 6 months.  The price for oil will fluctuate in a range but will not likely drop unless the US/Europe/Asia finds a major source of oil which has gone undiscovered.  Don't look for an incredible increase in pellet prices either as the inventory of standing trees in the US has never been higher (even during Colonial days).  The new pellet mills are able to make quality pellets from wood that has little of no value for building material, pulp production or most other uses.  They can also utilize the excess wood production in areas of the country where the paper industry has dropped due to increased costs and re-cycling.

The speed of payback (which may flucuate slightly) is slightly variable but most homeowners (who choose to change to or suppliment with pellet heat) will have a very qucik return on investment (2-6 years).  The local pre-buy price of #2 oil this morning in the Bangor, Maine are is $4.67.9/Gallon - minimum purchase is 1000 gallons.  Lat year I pre-bought for $1.79.9/Gallon.  My payback period for my 1600 gallons ($43/million BTUs oil to $16/million BTUs pellet) will be fast when I replace them with pellets and a pellet boiler.


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## webbie (May 31, 2008)

One interesting thing about the Human condition is that we ALWAYS seem to forget quickly.......when it is convenient for our point of view.

Less than 2 years ago, Pellets were $300+ (and hard to get) and Heating oil was $2.50 a gallon. If we debated this EXACT point at that time, what would the calculations have been? It is JUST AS SILLY to use current pricing to do so......

We can always come up with "reasons", but having heard them since 1972-4 (first oil crisis) and then buying fuel oil at 69 cents a gallon ten years later, I would ask for a more compelling argument. 

Rather than outright say "it pays to switch", it might be best just to give the figures based on a range of prices for both fuels and include the financing, interest, maintenance, etc......

BTW, all the same reasons above (about why pellets would be cheap) were given to me in 1994 when we first started selling Pellet stoves. We were told there would be endless supplies at cheap prices in the years ahead.

The only REAL way to calculate payback is looking back after a number of years.


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## thomcoastal (May 31, 2008)

It would be difficult to say the "same reasons...were given" to you in 1994 would not be applicable as the new-style pellet making process was 1st used in the United States in 2001.  Prior to that time over 90% of the pellets manufactured in the US were from scrap wood or sawdust.  The new pellet mills are capable of usig every bit of a tree not just selected parts which had the appropriate moisture content and were the right size and shape.

I realize that figuring a payback period is best accomplished in hind-sight, it would be foolish to do nothing at this point in time.  If you believe the price of oil will be low enough to recommend to the readers of this website to do nothing, please do but I am doing all I can to protect my financial resources and the well being of my family.  

Winter will come and everyone in the Northeast will require heat and hot water!  You indicate it would be "JUST AS SILLY to use current pricing to do so......" (to figure heating costs for this year), do you suggest using historical prices such as those you indicate ($.69/gallon).  I wish you well and I will no longer contribute to this forum as it seem you (as the Moderator) are more interested in telling people to do nothing rahter that be educated and make plans to ensure their family's health and well being this winter.


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## webbie (May 31, 2008)

Uh, perhaps you have so strong a point of view that you didn't read this part of my post:
"Rather than outright say “it pays to switch”, it might be best just to give the figures based on a range of prices for both fuels and include the financing, interest, maintenance, etc......"

That is called education. Your tack is called fear. It is best not to operate out of fear - because that is the same emotion that would tell me to buy the biggest hummer I can find so I protect by brood when I am driving around. 

We pursue all sides of subjects here. What is good for you may not be good for someone else. If that offends your sensibilities, that is really not the intent, but we certainly are not going to change our 12+ years of educating the public based on your fear for your survival next winter.


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## Amaralluis (Jun 1, 2008)

I too believe that oil prices are artificially high and will not stay this way very long.

With this said, dont fool yourselves thinking that pellet prices will remain at the same price as they are right now.
If oil prices stay this high, you can expect gas/propane/pellets/wood to follow the same trail.


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## compressedwoodsupplier (Jun 1, 2008)

im in the pellet business and im locked on to my ton price but the only thing that may go up is the trucking.


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## webbie (Jun 1, 2008)

compressedwoodsupplier said:
			
		

> im in the pellet business and im locked on to my ton price but the only thing that may go up is the trucking.



Do you mean for the year?

Southwest Airlines has bought 70% of their jet fuel at about 2.50 a gallon for this year.......but next year is another matter. 

As the old saying goes "the further the squirrel goes out on the branch, the shakier it gets"....

But looking at the last 4 years, we have seen:
Oil prices from $2.25 to $4.50 (approx)
Pellet prices from $200 to $350 (delivered, approx)

Maine Energy has a fairly accurate calculator on their site, so they are not trying to fool anyone. I would hope, only, that people actually use it and set the different variables up and down to see what happens when one fuel gets cheaper and another more expensive.
http://www.maineenergysystems.com/savings_calculator.htm

I immediately set the term to 10 years instead of 20, figuring that it is the rare bird that wants to figure out savings that far in the future...people generally move, etc.

Then I took 1000 gallons of oil and 250 pellets and $3.75 oil (just for guesswork).

That provides a savings of $126 a year, not enough to make me salivate. The truth of the matter is that most of the savings go one place - INTEREST on the financing. As they say, pay now or pay later!


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## sinnian (Jun 2, 2008)

compressedwoodsupplier said:
			
		

> im in the pellet business and im locked on to my ton price but the only thing that may go up is the trucking.



Can you PM me where? (hopefully it is near me!)


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## Amaralluis (Jun 2, 2008)

Webmaster said:
			
		

> That provides a savings of $126 a year, not enough to make me salivate. The truth of the matter is that most of the savings go one place - INTEREST on the financing. As they say, pay now or pay later!



Unfortunately I agree with you.
Alot of people will be fooled this year thinking that they will be saving alot of money by switching from Oil/gas to another source and the truth is that either oil price cannot stay this high or pellets will increase in price considerably (which is what I am afraid of). 

People do your research carefully and do not assume that the price will stay this apart for very long...


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## JustWood (Jun 2, 2008)

PelletOwner said:
			
		

> Giovanni said:
> 
> 
> 
> ...



It doesn't matter if every square inch of unused land in the USA is forested.
It doesn't matter if there is a pellet plant in every town.
And it doesn't matter if everybody and there brother is a logger.
I have 3 pellet mills within 80 miles of me and not one of them is willing to pay enough $ for me to ship them product from my mill or logging jobs (if I wasn't already shut down). For anyone to invest the kind of money it takes to start an operation to supply pellet mills your looking at a 1-2 million dollar investment. At $30/ton it isn't going to happen. Tons of loggers and timberland here but NO ONE is going to log for $30/ton and NO landowner is going to sell at current stumpage prices.

 Secondly, sawdust and pulp are BYPRODUCTS of logging and milling. ie  No logging and milling, no raw material for pellet mills. Another way of looking at it is , high grade logging has to take place for there to be low grade pulp on the market. Not many loggers are going to go to work for $30/ton just for pulp.


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## PelletOwner (Jun 2, 2008)

The difference between this energy crisis and the 1970's oil crisis is that we're currently past the point where the most oil can be sucked out of the ground.  We're running out of easy oil, and the oil we are taking out of pre-existing oil fields is even harder to get to because we've been running the fields out too fast.  We're running into all sorts of energy problems in the near future, and suggesting that an oil burner can do a typical middle-to-low income household for the next 20 or 30 years - when fuel oil has doubled in a year it is shortsighted at best.






Panicking about diesel oil isn't going to help matters either: it's going to cost the same to truck a load of oil and a load of pellets.  You'll save with pellets because you don't need three, four, or even five loads of #2 every year.  By saving on transportation, you're saving on the biggest heating delivery variable this season: diesel transportation fuel.

I have formally heard from MEsys regarding their pellet prices for the year: $260/ton delivered, maximum.  They have contracted for "multiple thousands" of tons of pellets this year, and are taking a quarter of the new mill in Strong, NH's production as well.

I don't think we need to worry about pellet prices this year


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## Wet1 (Jun 2, 2008)

Amaralluis said:
			
		

> Webmaster said:
> 
> 
> 
> ...




I also have to agree.  My guess is oil will come down a little and pellets will rise.  Either way, I can't imagine we'll continue to see the disparity we see today continue for all that long...  I'd be amazed if it lasted long enough to realized a reasonable pay back period to justify paying $12k (or even $10k) for a central pellet boiler.

One thing I wouldn't do is rip out my existing system in order to convert solely to pellets.  If I were going to spend all this money on one of these systems, I'd leave my existing oil (or gas) system in place so I had options in the future, not to mention the redundancy should there be mechanical problems or supply issues.

Personally, I think leaving the central oil/gas heating system in place and adding one or two pellet stoves in the living area makes the most sense at this point.  I just updated my existing stove to a Harman P38 for $1500, even if I needed two to cover all the living area ($3000), this is still a small fraction of what these central units cost.  Yes this takes a little more work, but I just can't see investing $10k-$12k to be a sound move given the uncertainty of the markets and relatively small market share pellets have today. .  If 15 years from now oil is insanely expensive, pellets are cheap & more widely used, and the industry has moved from central oil to pellet, then I can certainly see justifying such a move... But today is just to early for me to consider making such a move.  There are just too many "what ifs"... What if oil settles back to under $3.00/gal.?  What if pellets raise to well over $300 + delivery?  Both could certainly happen.  What's the pay back period then?  What if five or ten years from now these systems are no longer made or supported?  What if pellets aren't around 10 years from now due to some newer technology replacing them?  I know I won't be gambling my $12k today!

I guess I'd just suggest folks weigh historical data and not make any expensive commitments today based on today's abnormal and unsettled commodities markets.


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## webbie (Jun 2, 2008)

I would agree it is unlikely that pellet prices will rise to over $300 this coming season - although the demand might outstrip supply (already has in many areas), which provides another big mess! That means people who already have and buy freestanding stoves cannot get pellets. For instance, Pelletsales.com, the largest (by far) supplier in the USA, has stopped taking orders!

So pellets are likely to beat oil for the next few months.....I'll give you that. And given the extra work and expense, they are always likely to track somewhere below oil - unless some (stupid) buyers decide to pay $400 a ton. If they do, then that will be the price.

I would doubt that pellet deliveries will cost less than oil. Remember that the oil depot is usually relatively local and the truck makes multiple deliveries in the same area. Pellet will usually come from further away. I would call this a draw for both fuels in the end (transportation)....in fact, up until perhaps this year, transportation is a large portion of the energy in pellets (been brought from as far away as British Columbia).

I do think Pellet central heating will grow and occupy a small niche in the Northeast and perhaps other areas near pellet supply. There is a subset of people with the $$, plus a lot of folks who want to go "local" and "greener". My (usual) concerns are that folks should be more careful when:
1. Borrowing money for such projects
2. Relying 100% on a single or few vendors

For those who have the money - well, heck, it is certainly a better project than a new boat or an upgraded pick-me-up. If I had oil heat (I have NG, cheaper than pellets), I would strongly consider a pellet furnace myself!


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## Wet1 (Jun 2, 2008)

PelletOwner said:
			
		

> The difference between this energy crisis and the 1970's oil crisis is that we're currently past the point where the most oil can be sucked out of the ground.  We're running out of easy oil, and the oil we are taking out of pre-existing oil fields is even harder to get to because we've been running the fields out too fast.  We're running into all sorts of energy problems in the near future, and suggesting that an oil burner can do a typical middle-to-low income household for the next 20 or 30 years - when fuel oil has doubled in the past is shortsighted at best when the price of oil has doubled in the past 12 months:



I don't know that I completely agree with everything you've said here, I think the folks on Wall St. have a lot more to do with this than typical supply and demand issues.  It's not like oil has suddenly dried up in the last 12 months!  We are seeing a spike today.  Post the same chart for oil prices over the last 25 years, it's quite a contrast to the chart you've posted here.  Will prices be higher in the distant future?  Sure they will, but I can assure you wood/pellet prices aren't going to be a today's prices either!






> Panicking about diesel oil isn't going to help matters either: it's going to cost the same to truck a load of oil and a load of pellets.  You'll save with pellets because you don't need three, four, or even five loads of #2 every year.  By saving on transportation, you're saving on the biggest heating delivery variable this season: diesel transportation fuel.


Using your logic, let's keep in mind it takes significantly more weight and volume of pellets than it does to create the same btu's in oil.  For example, 1600 gal of oil only weighs about 9600 lbs.  To get the same btu in pellets you'd need about 13 tons of pellets.  13 tons of pellets also take up a lot more volume that 1600 galls does.

Keep in mind we already have trucks and tankers designed to mass distribute oil.  The same is not so for pellets.  Also, how many houses can these same trucks sevice on routine residential service calls?  I know a typical oil truck residential oil truck can deliver to a lot of houses w/o having to run back and forth to refill.  How many homes can even a full sized tractor-trailer service w/o out having to run back to grab another load?  I can tell you that they are pretty much limited to 23 tons of pellets per load.  Even so, these things are certainly more expensive to operate than a typical residential oil truck, and they certainly aren't designed to operate in residential areas!   And let's not forget how far the trucks have to go to reload!

Further more, are you suggesting that everyone wants a giant pellet $ilo outside there house?  I can tell you that won't fly where I live!  I'd much rather have 2 oil tanks in my basement than a 4+ ton silo on the side of my house if given the choice...



> I don't think we need to worry about pellet prices this year


Maybe not, but what about 2, 5, or even 10+ years from now???


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## PelletOwner (Jun 2, 2008)

LEES WOOD-CO said:
			
		

> It doesn't matter if every square inch of unused land in the USA is forested.
> It doesn't matter if there is a pellet plant in every town.
> And it doesn't matter if everybody and there brother is a logger.
> I have 3 pellet mills within 80 miles of me and not one of them is willing to pay enough $ for me to ship them product from my mill or logging jobs (if I wasn't already shut down). For anyone to invest the kind of money it takes to start an operation to supply pellet mills your looking at a 1-2 million dollar investment. At $30/ton it isn't going to happen. Tons of loggers and timberland here but NO ONE is going to log for $30/ton and NO landowner is going to sell at current stumpage prices.
> ...



Just to clarify, are pellet mills paying $30 a ton for sawdust or $30 a ton for whole wood?  If it's $30/ton for whole wood, I understand, but $30 a ton for sawdust is probably a different, lower price than whole wood. (Just guessing, but it makes sense that a tree is more valuable than tree dust, right?)  When mills start demanding whole wood because the sawdust market is drying up, whole wood prices will increase and suddenly a logging operation is viable again.

Also, most of the new plants coming on-line deal with whole trees as well as sawdust.  I know that there may be a sawdust drought, but you have to remember that there is going to be solid demand for wood, not just sawdust.  When you take out "produce and ship sawdust" from the production chain, you suddenly save money on diesel, processing costs, and fine loss.

I'm not seeing how pellet prices are going to skyrocket faster than oil, or that a new heating technology will catch on within the next ten years.  With oil on the rise and pellet prices rising only relative to diesel instead of oil, it makes complete sense to switch over to a cheaper fuel that is being rolled out aggressively by a company with everything to lose.

Can anyone explain the mechanism by which oil is going to magically fall a dollar a gallon?  OPEC won't or can't increase supply, so that's out.  Demand for oil isn't going to fall anytime soon, so that's out.  With no increase in supply, and no drop in demand, how is a commodity supposed to lose value?  Maybe if the US Dollar achieves Euro parity - but that's not going to happen in the next five years without some serious restructuring of how the dollar works in society.  

Not to mention the lack of new refining capacity in the US - there's buzz of another in North Dakota, but that's the first that will be built in over *three decades*.  As in, last time there was an energy crisis, they started building new refineries.  

*They're building refineries in the US again - but there's no upcoming energy crisis, right, guys?*


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## webbie (Jun 2, 2008)

Remember that wood on the stump (or logs) are sold GREEN, and that means 50% of the weight is water. Dust is probably more valuable for pellets since it is partially (sometimes fully) dry - for instance, New England Wood Pellet is largely supplied by furniture factories and the like - that stuff is almost ready to go!

Also, a large quantity - about 16% - of the wood is used to furnaces to dry out the rest of the wood (which is green) to 6% or so moisture. Taken together, my guess is that creates a raw material for dried sawdust at over $70 a ton. Even at that price, $200 pellets should be easily done - seems so from afar, but if you invested tens of millions in a pellet mill, would you take any less than the MOST you could get (which, in our economy, simply means the fools who is willing to pay the most).

As to oil dropping, it is not worth discussing.......it is economics 101. It can drop for MANY reasons, some which are already in play:
Stronger dollar (your oil is priced in dollars)
Perception by oil exporters that they will lose energy market share if people conserve
New producers or existing who are not part of OPEC and therefore have complete freedom in pricing and amount pumped

And others......

The only way to see is to look back in a year, then again in 2 years, etc. - We'll talk then. As of now, I don't see Heating Oil at $4.50 plus once this season starts, but that is only a guess and opinion. Pellets have already gone up 30% or more in the last 60 days also. There were many sources for around $200 reported here just 6-8 weeks ago.

Now if we want to start placing bets on this stuff - Aw....not here! But I am likely to put my money where my mouth is in the stock market (I am calling for stronger dollar, slightly lower oil, but still a boom in alternative energy). When it comes to this stuff, no "expert" is more correct than any other - the market rules (in the end).


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## PelletOwner (Jun 2, 2008)

The trucks are already designed - how do you think pellets get around in Sweden, Austria, Norway, Germany, Denmark, Poland, etc, etc, etc?  True, maybe it will cost more per trip - but when you have one or two trips per customer per year, transportation costs are equal or less per BTU in household.  Let's say that the delivery trucks can hold 20 tons, because that's what they're specified as from MEsys.  Now, when you have a 20 ton capacity truck, you can make five deliveries.  *Since delivery services will have 300 tons of pellet storage on-site to be an authorized distributor*, they don't have to worry about going back to a mill to pick up more pellets until maybe mid-way through the heating season.  Think of how silly that sounds - do delivery trucks hook up to a refinery and drive 60 miles to their destination, or do oil distributors have on-site storage? If you don't *need* routine service calls due to the in-home fuel capacity, then you save money on transportation costs.  So much so, in fact, that it makes economic sense to deliver to four or five customers in one go.

When you fill up, you fill up for half a year, not weeks. I also know of a lot of people - according to a survey, 64% of Maine - that would switch to an alternative fuel if given the chance to buy one that was as "hassle-free" as oil.

I'm suggesting people want a silo in their basement.  If they want a larger one outside, they can probably do that - but their main silo product is in-basement, four-ton hoppers.

Ten years from now, diesel is going to be a huge cost in heating, no matter what.  I'd wager that diesel could be up over $7 a gallon in ten years - making transportation, not heating fuel, the biggest cost.  When you don't need enough bunker oil to get your heating oil from Saudi Arabia, and enough diesel to get your heating oil from the terminal to your home, suddenly the 80 miles to a pellet mill looks like a viable alternative for those whose business is transportation of energy sources.


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## PelletOwner (Jun 2, 2008)

Stronger dollar (your oil is priced in dollars)
It's an election year, our currency is incredibly unbalanced, and the Euro (which the international oil market is priced in) keeps going up relative to the dollar.

Perception by oil exporters that they will lose energy market share if people conserve
I'm just not sure how to answer this one - is oil afraid of coal, or nuclear energy?  I mean, when you're supplying 62% of the national energy supply alone, I think you have a decent enough market share.

New producers or existing who are not part of OPEC and therefore have complete freedom in pricing and amount pumped 
Canada and Mexico are the only ones doing this thus far, and we're sucking them dry.  Their production is dropping annually, and we're taking up production from increasingly smaller countries who are host to increasingly smaller and more remote (expensive) oil fields.


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## JustWood (Jun 2, 2008)

PelletOwner said:
			
		

> The trucks are already designed - how do you think pellets get around in Sweden, Austria, Norway, Germany, Denmark, Poland, etc, etc, etc?  True, maybe it will cost more per trip - but when you have one or two trips per customer per year, transportation costs are equal or less per BTU in household.  Let's say that the delivery trucks can hold 20 tons, because that's what they're specified as from MEsys.  Now, when you have a 20 ton capacity truck, you can make five deliveries.  *Since delivery services will have 300 tons of pellet storage on-site to be an authorized distributor*, they don't have to worry about going back to a mill to pick up more pellets until maybe mid-way through the heating season.  Think of how silly that sounds - do delivery trucks hook up to a refinery and drive 60 miles to their destination, or do oil distributors have on-site storage? If you don't *need* routine service calls due to the in-home fuel capacity, then you save money on transportation costs.  So much so, in fact, that it makes economic sense to deliver to four or five customers in one go.
> 
> When you fill up, you fill up for half a year, not weeks. I also know of a lot of people - according to a survey, 64% of Maine - that would switch to an alternative fuel if given the chance to buy one that was as "hassle-free" as oil.
> 
> ...



Distributors  won't own the delivery trucks, the mills will and all pellets will be direct shipped. To much extra infrastructure and  transportation to be cost effective.


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## JustWood (Jun 2, 2008)

PelletOwner said:
			
		

> LEES WOOD-CO said:
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## PelletOwner (Jun 2, 2008)

LEES WOOD-CO said:
			
		

> PelletOwner said:
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Now you're just incorrect - MEsys has no interest in the distribution business, and wants all the oil distribution companies to distribute pellets as well.  It's a lot easier to give the delivery guys a chance at a cut instead of forcing them out of the market, plus they have preexisting customer relations.  I mean, it makes sense from your perspective, but that's not how MEsys wants to do business.


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## Wet1 (Jun 2, 2008)

PO, 

I agree with some of what you say, and disagree with others.  I think part of this is because we are from two different areas.  You're in Maine (I don't know where), and I'm in southern CT.  Where you are it might be feasible for a tractor-trailer to deliver pellets in "residential" areas, but where I am it will just never happen as "residential" most likely has a totally different meaning.  Also, there are no pellet mills around me (that I'm aware of).  The closest one to me is probably in RI, and never mind that it couldn't come close to suppling the volume needed to sustain all of southern NE.  OTOH, there are oil ports close by.  Even if my local oil company ran out of oil tomorrow, they only have a 20 mile drive to the refueling port.  And while they are out refueling my neighbors, it cost them very little extra to drive a 1/2 mile down the street to refuel me as well.  And like yourself, I have (2) 275 gal oil tanks that will hold enough oil for me for an entire year if I chose to use only oil.  Even if you look at the average guy, how many times do they deliver each year?  4 times maybe?  Like I said, they are usually in the area anyway...

You're also making assumptions that people want a 4+ ton pellet hopper in their basement, or even have room for such a thing.  Hell, some folks only have a crawl space, or no basement at all.  There's no doubt oil is easier to package.  And where I am at least, it's a lot more feasible to distribute...

Regarding oil prices, I think you've forgotten about all the speculators on Wall St.  Since this market was recently deregulated, they've significantly impacted oil prices.  And like like anything else, prices can, and will, be volatile until they rewrite the rules again.  Right now it's just far to easy for anyone to risk hardly anything by only having to put up 6%... it's no wonder prices have skyrocketed.  Keep in mind they could possibly drop just as fast.

Anyway, as a pellet stove owner, I'm all for pellet technology.  I'm just not prepared to fully invest in buying a boiler given the infancy of this market and instability of all the fuel prices.  I just don't think we'll see today's (fuel) price disparity remain in the future... at least not long enough for me to risk spending $10k+ to convert.  To me pellet stove(s) are the way to go until the future becomes a little more clear.  A lot less is invested, a lot less risk, and I still get the same savings today... plus I have flex-fuel options.

Just my 2 cents...


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## JustWood (Jun 2, 2008)

PelletOwner said:
			
		

> LEES WOOD-CO said:
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I highly doubt a distributor of 300 tons per year is going to invest  $150,000 - $200,000 in a delivery truck and who knows how much for bulk storage( can't do didly squat  for less than $100,000 anymore) to handle that amount.


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## PelletOwner (Jun 2, 2008)

LEES WOOD-CO said:
			
		

> PelletOwner said:
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It's about $500k for a fully equipped delivery node, complete with two 9-ton trucks and one 23-ton truck.  They break even at around 500 customers within 30 miles.  MEsys isn't interested in making too much of a profit on delivery - they want the organic heating delivery network to take care of delivery.


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## JustWood (Jun 2, 2008)

They don't have a clue about truck operating expenses or they are just realing you in. Once they have all this in place after a few years ,you know where the price will head to make up for the years they operated at a loss.


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## PelletOwner (Jun 2, 2008)

Wet1 said:
			
		

> PO,
> 
> I agree with some of what you say, and disagree with others.  I think part of this is because we are from two different areas.  You're in Maine (I don't know where), and I'm in southern CT.  Where you are it might be feasible for a tractor-trailer to deliver pellets in "residential" areas, but where I am it will just never happen as "residential" most likely has a totally different meaning.  Also, there are no pellet mills around me (that I'm aware of).  The closest one to me is probably in RI, and never mind that it couldn't come close to suppling the volume needed to sustain all of southern NE.  OTOH, there are oil ports close by.  Even if my local oil company ran out of oil tomorrow, they only have a 20 mile drive to the refueling port.  And while they are out refueling my neighbors, it cost them very little extra to drive a 1/2 mile down the street to refuel me as well.  And like yourself, I have (2) 275 gal oil tanks that will hold enough oil for me for an entire year if I chose to use only oil.  Even if you look at the average guy, how many times do they deliver each year?  4 times maybe?  Like I said, they are usually in the area anyway...
> 
> ...



There exist traditional "oil truck" sized trucks for delivery, and pellets can be delivered (in fact, the cheapest delivery is) by rail car.

I used to live in CT (east lyme, if you're interested) and it sounds like you're near bridgeport/new haven.  There's a ton of oil flowing through the area to meet the NYC metro area's demand, so oil might be a better way to go.  I do take issue with the assertion that oil is easier to package, though.  Oil is flammable, toxic, and intensely difficult to clean up.  As a friend said, "A pellet mess needs a shovel, an oil mess needs a hazmat team."  Pumping oil means you need to have a reduced-static environment that is completely sealed off from the outside (or you risk either violating code or making it really unpleasant for the homeowner).  A specialized pump is needed, and an entire sealed infrastructure needs to be in place from the sands of Saudi Arabia to the tank in your home.  

I agree with a lot of what people are saying about it not being a tested technology (in the US).  I have a feeling, however, that if someone were to look for feedback in swedish or german you'd be looking at hundreds of positive reviews for the same or a similar system.


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## PelletOwner (Jun 2, 2008)

LEES WOOD-CO said:
			
		

> They don't have a clue about truck operating expenses or they are just realing you in. Once they have all this in place after a few years ,you know where the price will head to make up for the years they operated at a loss.



They're not renting nodes, though.  The nodes are going to be available to anyone who wants to buy one - and after the factories have made five this year, the costs might come down slightly.  500 people means 1000 deliveries, which means 500 truckloads with the small truck.  If you divide them up, then you need about 125 deliveries per small truck, and 250 deliveries with the large one.  This works out to probably 50 delivery days per year - hardly the same yearly operating expenses as an oil truck that has to deliver to homes 3+ times per year while running back to the distributor.  (50 delivery days per year assumes that each truck only makes one trip per day, which is probably a good hedge).


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## JustWood (Jun 2, 2008)

PelletOwner said:
			
		

> LEES WOOD-CO said:
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Tandem axel truck- 9 ton capacity.    Insurance,plates ,registration,permits,etc   $5000-$8000/year
Tri -axel         $8000-$12,000/year
Fuel $400/day

 You're preaching to the choir.  I know the logging,milling,trucking, and waste business inside and out. 
The cost of alternative energies will follow the price of oil.


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## ugenetoo (Jun 2, 2008)

PelletOwner said:
			
		

> The trucks are already designed - how do you think pellets get around in Sweden, Austria, Norway, Germany, Denmark, Poland, etc, etc, etc?  True, maybe it will cost more per trip - but when you have one or two trips per customer per year, transportation costs are equal or less per BTU in household.  Let's say that the delivery trucks can hold 20 tons, because that's what they're specified as from MEsys.  Now, when you have a 20 ton capacity truck, you can make five deliveries.  *Since delivery services will have 300 tons of pellet storage on-site to be an authorized distributor*, they don't have to worry about going back to a mill to pick up more pellets until maybe mid-way through the heating season.  Think of how silly that sounds - do delivery trucks hook up to a refinery and drive 60 miles to their destination, or do oil distributors have on-site storage? If you don't *need* routine service calls due to the in-home fuel capacity, then you save money on transportation costs.  So much so, in fact, that it makes economic sense to deliver to four or five customers in one go.
> 
> When you fill up, you fill up for half a year, not weeks. I also know of a lot of people - according to a survey, 64% of Maine - that would switch to an alternative fuel if given the chance to buy one that was as "hassle-free" as oil.
> 
> ...



 the trucks, storage facilities and delivery equipment has been available and in use for years. the grain and feed business uses the exact same equipment! this isnt rocket science as mr otten and gov balducci would have you believe. 
 yes, pellets have a bulk density that is almost 4 times that of fuel oil (per btu), but consider that if you spill 1/2 ton of wood pellets ,(or other biomass for that matter) you wont have to call in an environmental consultant and a lawyer to cover your a**.
 i will always remember the town drunk telling me one day when he saw an oil delivery truck go by;" it dont make much sense to be burning that stuff over here. ill bet they dont burn wood over there in the desert."
i dont know if anyone could actually put a price on a gallon of fuel oil what with all the subsidies that would apply.
 i for one think that with all the new capacity coming online, pellet prices will stay the same or even drop a bit.
 i keep looking at the pellet prices in the lake states area and wonder why we are paying up to $40 a ton more than they are.


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## Sting (Jun 2, 2008)

ugenetoo said:
			
		

> i will always remember the town drunk telling me one day when he saw an oil delivery truck go by;" it dont make much sense to be burning that stuff over here. ill bet they dont burn wood over there in the desert."
> i




Thats a great quote Steve!


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## PelletOwner (Jun 2, 2008)

So I did some calculations, and it turns out that at $240/ton bulk, $260/ton delivered, 2 trips per day of operation per vehicle, and 500 houses, you're still making $29,777 a year in gross profit.

naturally, the margins widen up some when you put in realistic pellet prices and a larger boiler installed base.  Same pricing, 600 houses, $41,666 gross.  

If you have a thousand houses, and make the trucks fill up 3x a day, then your profit goes to $102370 gross profit.  If the bulk/delivered price difference increases by $5 (235/260), and you have a thousand houses, you get $142,370 gross profit.


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## JustWood (Jun 2, 2008)

PelletOwner said:
			
		

> So I did some calculations, and it turns out that at $240/ton bulk, $260/ton delivered, 2 trips per day of operation per vehicle, and 500 houses, you're still making $29,777 a year in gross profit.
> 
> naturally, the margins widen up some when you put in realistic pellet prices and a larger boiler installed base.  Same pricing, 600 houses, $41,666 gross.
> 
> If you have a thousand houses, and make the trucks fill up 3x a day, then your profit goes to $102370 gross profit.  If the bulk/delivered price difference increases by $5 (235/260), and you have a thousand houses, you get $142,370 gross profit.




Are these figures based on the 3 trucks you were talking about in an earlier post ?


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## PelletOwner (Jun 2, 2008)

LEES WOOD-CO said:
			
		

> PelletOwner said:
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Yes.  I mean, I'm not trying to say that MEsys is 100% right here - just giving a rough calculation based on the numbers you gave me.


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## JustWood (Jun 2, 2008)

PelletOwner said:
			
		

> LEES WOOD-CO said:
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$142,370/year  for 3 trucks is DIDDLY !

What about $35,000/year per driver.  =$105,000/year.
Insurance,registrations,permits and don't leave out DOT fines   @ on average  $8000/year per truck  = $24,000
Fuel  $300-$500/day  per truck. Let's just use  $300/day x 3 trucks= $900/day x roughly 250 work days a year=  $225,000/year for JUST FUEL !
Tires for my Tri-axels cost $5000/year. So you can figure these 3 trucks being tandems and tri's will probably cost $10,000/year
You can figure after the first year the trucks are going to need about $2000-$3000/year x 3 trucks in maintenance.
I'm already up to $373,000/year just in expenses.
I don't even want to guess what workmans comp/unemployment insurance costs will be.

I'm using the high number you gave me so they will have to charge $60+/ton just to break even. And thats if they can do that many deliveries a day. My Tri-axles are loaded in 10-15 minutes and we dump and run. 5-7 deliveries/day is realistic.  Hooking up a hose or jockeying an auger is going to take alot longer than opening a tailgate and dumping.

If this distribution company is basing their business plan on the figures you gave me then they will be teats-up in no time.

OH, and I almost forgot the payment on the $500,000 capital investment.  And don't think a bank will string this out for 30 years like a mortgage.  Try 6 years max if you have good credit.


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## PelletOwner (Jun 2, 2008)

Nope, I'm doing my own calculations.  I don't know too much about trucking overhead, and I'm sorry if we got off on a combative first step.  I would guess that loading these things is pretty simple, all you have to do is dump some pellets in from an overhead hopper.  

I calculated the number of days that it'll have to run with two full loads per day, and it's much less than the 250 days/year you quoted.  For example, if you have 500 homes, you have to make 1000 deliveries yearly.  If you have 1000 deliveries, then you can take care of them in 1000/(2 small trucks*2 hoppers each*2 full trucks per day + 5 hoppers/truck*2 full trucks a day) = 56 working days.  If you make it one full load per day, it takes 112 days.  This is still dramatically lower than the 250 days/year you quoted.  If you could show me what those 250 days break down into, then maybe we can have a working conversation about these costs.

If you don't have to do as many deliveries, you can make the position seasonal and screw the little guy to boost your margins.  I'm not sure what delivery system they're using - so far I'm hearing pneumatic, but that doesn't give me anything in tons per minute.

Also, I'm pretty sure that the pellets are going to be cheaper than my estimate, given that they've contracted for "multiple thousands" of tons of pellets.


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## JustWood (Jun 2, 2008)

I'm not being combative just realistic.
 Ever heard of 30% debt to income ratio. This is one of the things the bank looks at to determine  wether a company is credit worthy and stable. If it takes $500,000 to start up this business ,it needs to gross $1.5 million/year to be profitable. 
Enough said.


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## ugenetoo (Jun 3, 2008)

PelletOwner said:
			
		

> If you don't have to do as many deliveries, you can make the position seasonal



hey leeswoodco
 would you like to depend on am  "seasonal" employee to make your deliveries for you?


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## ugenetoo (Jun 3, 2008)

Sting said:
			
		

> ugenetoo said:
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actually... that quote is from me. our town is so small that we dont have a town drunk.

whoop whoop whoop

we all take turns!


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## webbie (Jun 3, 2008)

I'm gonna close down this thread - getting too long and off course.

I think we know that there are a lot of variables involved.......and that, in business (as ANYONE who has done it can confirm) EVERYTHING costs more and takes longer than what you first calculate. That has always been true for me!

I think it is also clear that there are massive logistics involved in moving millions of pounds of pellets, keeping them dry, getting them paid for, etc. 

I would not be surprised if, in the end, the pellet supply business was 100% separated from the boiler part. You CAN make $$ on appliances and installation.

All in all, I'm please that people (and capital) are taking the chances. But that does not make it any less of a risk! Tying oneself to a single source of appliance, service and fuel supply is inherently risky. If a corporation does not do well, they can simply close up shop and there goes the warranty, service and all the other promises and paperwork. 

Maine Energy is reaching for the sky - thinking fairly big....and they probably have some $$ to do so. I'm a small time thinker myself, often finding that the taller they stand, the harder they fall. 

It will be interesting to watch this all come to fruition.


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