Alternative Energy: US Pellet company in Maine selling 'heat' wood pellets seeks Investors : by Tux Turkel

A startup company in Orono is trying to convince mid-size businesses and institutions in New England that they can save money by converting from heating oil to wood pellets without buying any fuel or equipment.

The concept is intriguing, but some observers in the pellet-fuel industry say Pelletco LLC faces challenges to perform on a large scale over time.

High and volatile oil prices have commercial users looking for alternatives. The next year or so will help show whether selling just heat, rather than fuel and equipment, is a viable option in Maine.

Pelletco brings a wood-pellet boiler and a storage building, called a HeatPod, to a client's business, sets it up outdoors and connects it to the heating system. Pelletco operates and maintains the unit. The client pays only for heat, buying BTUs at a price that's nearly 20 percent below the cost of oil. Pelletco says it has 11 HeatPods installed.

The 3-year-old company has an ambitious growth plan. Financial material obtained by the Portland Press Herald shows that Pelletco, which expects to lose $366,125 this year, is seeking investors to transform it into a break-even energy-services provider with $3.5 million in earnings. That would require hooking up about 80 new customers by 2016, the company acknowledges.

The company has the support of a key lender for renewable energy that sees enough potential in the plan to provide seed capital; but its business plan has drawn a cautious response from more established members of the state's pellet-fuels industry.

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Europe's new climate policies creating a wood pellet business boom in the US and Canada

US wood pellets reducing EU greenhouse gas emissions

The wood pellet industry is enjoying a speedy, zero-to-80 growth surge across the United States and Canada.

Hundreds of millions of dollars are being invested in factories – some of them converted from old lumber mills – in coastal plain forests from Virginia to Louisiana and Maine.

They are serving a market created, almost overnight, by new environmental policies that are driving European electric utilities to burn imported wood in their boilers instead of coal.

This came about as the European Union adopted aggressive targets for reducing greenhouse gas emissions that contribute to global warming. They created incentives for electric utilities to cut back on their use of coal and will require renewable sources to provide 20 percent of all energy by 2020. Wind and solar power are also a part of this equation. 

European power companies are looking to close the gap with biomass – primarily with imported wood pellets. Biomass use in Great Britain, 3 million tons last year, is expected to grow tenfold over the next five years.

Britain’s biggest carbon emitter is the Drax Group, a Yorkshire utility that operates the largest power plant in western Europe. Drax is converting half its plant from coal to wood pellets. Coal is one-third the price of pellets, but Drax CEO Dorothy Thompson said her company is responding to renewable-energy credits and a British carbon tax, introduced this year at $7 a ton, that will grow by 2020 to more than $60 a ton.

In Europe, the United Kingdom is the No. 1, importer bringing in 855,000 metric tons (mt) from Canada last year and another 475,000 mt from the U.S. While Canadian pellets dominate the U.K. market, the U.S. is the biggest supplier to the Netherlands and Belgium. Denmark and Sweden receive the most pellets from Russia.

While the EU power market has gotten much attention, the heating market comprises 40 percent of the EU pellet market, with no subsidy required, because Pellets are 30 percent cheaper than heating oil. Currently, 90 percent of Canadian exports are being shipped from western ports and going through the Panama Canal, but an effort is underway to organize the smaller pellet producers in eastern Canada to pool resources and product to develop export facilities in the east.

The bottom-line is that the consumer marketfor pellets  in the EU has grown into a very stable market, It is no longer seasonal and some people even prefer to buy pellets in the summer months.

The annual increase each year in the EU has hovered around 700,000 tons of pellets for the past few years, but is projected to exceed 1 million tons in 2013, based on the sales of boilers and stoves. Italy is showing the most rapid growth currently, having added over 1 million pellet stoves in recent years. Consumption is expected to exceed production in both Austria and Germany this year, which will add to import demand.

Read more here: http://www.charlotteobserver.com/2013/08/17/4244134/european-climate-policy-drives.html#storylink=cpy

In the foreseeable future the US and Canada seem to be well poised to meet these European demands.

Maryland-based Enviva LP the US’s biggest pellet maker, opened its Ahoskie mill in 2011 and a second one in Northampton County this year. Together, they produce 865,000 tons of pellets annually to be shipped out of the port at Chesapeake, Va.

In 2015, Enviva expects to start exporting an additional million tons from a planned $40 million terminal at the Wilmington port. The company is scouting sites for two new pellet mills in southeastern North Carolina, one of them in Sampson County.

At the same time, California-based International Woodfuels has said it will produce 285,000 tons a year from a planned pellet mill in Wilson County and a new export terminal at the Morehead City port.

Eastport in Washington County, Maine, near the Canadian border, which is planning a $120m wood-pellet factory, is one of the areas which seems especially well positioned to benefit from this European "craving" for wood pellets.

Chris Gardner, the director of the Eastport Port Authority says, "Eastport is the closest port on the US East-Coast to the European heartland. We can get European consumers their wood pellets before anyone else in the US".

The pellet industry is a "green industry" and not harmful to the environment as it is founded on a climate-friendly, carbon-neutral rationale.

All forests use photosynthesis to soak up carbon dioxide. This stored-up carbon is released into the air when wood pellets are burned, but wood is called a renewable fuel because that carbon eventually is recaptured by new trees that grow in place of the old ones.

The wood pellet industry can certainly become a win-win proposition for everyone.

EU-Digest

Read more here: http://www.charlotteobserver.com/2013/08/17/4244134/european-climate-policy-drives.html#storylink=cpy

Wood Pellets - Demand for wood pellets in Europe a boon for southeast ( and northeast) U.S. - by Wayne Faulkner

Wood Pellets

The Port of Wilmington in North Carolina may reap the benefits of environmental regulations in Europe that have spurred a huge increase in demand for forest byproducts from the southeastern United States.

Wood pellets, often used in wood-burning stoves, are taking the place of coal in many European power plants with the aim of reducing their carbon footprint.

“Without a doubt the demand for this product is being driven by clean energy requirements in the U.K. and Europe, and the Atlantic Seaboard is economically advantaged in supplying the pellets,” said Jeff Miles, acting executive director of the N.C. State Ports Authority.

European demand will continue growing for many reasons, from business to policies and regulations, said Daniel Saloni of the Department of Forest Biomaterials at N.C. State University.

Note EU-Digest: A subsidiary of Cate Street Capital released a statement recently confirming that it has plans to construct a multimillion-dollar wood pellet plant near the Port of Eastport marine cargo terminal. Thermogen Industries indicated in the release that it signed a letter of intent with the port authority’s board on Feb. 19. The plan calls for construction of a $120 million plant that can produce between 200,000 and 300,000 tons of torrefied wood pellets each year. 

Depending on the size and capacity of the plant, the facility could create approximately 75 jobs in Eastport and more than 300 additional forestry-related jobs in the Maine woods, the company indicated.

Read more: Demand for wood pellets in Europe a boon in southeast U.S. | StarNewsOnline.com