Commercial Use of Wood Energy is Heating Up

- by Michael Mccord, Novem­ber 26, 2014, New Hamp­shire Busi­ness Review

New Hampshire’s recent­ly released 10-year ener­gy strat­e­gy acknowl­edged an ongo­ing fact of life for the state’s com­mer­cial and res­i­den­tial sec­tors: New Hamp­shire imports 100 per­cent of its fos­sil fuels and nat­ur­al gas. Accord­ing to the NH Wood Ener­gy Coun­cil, New Hamp­shire pays more than $1 bil­lion annu­al­ly to import heat­ing oil, with a large chunk of that paid for by busi­ness­es, since the state’s com­mer­cial sec­tor is the sec­ond most depen­dent on heat­ing oil in the nation, just behind Maine.

As ener­gy cus­tomers real­ized again last win­ter, this depen­dence makes the state vul­ner­a­ble to wild mar­ket swings and, in the case of nat­ur­al gas last win­ter, short­ages due to lim­it­ed pipeline infrastructure.

That’s why, among its many rec­om­men­da­tions, the state’s ener­gy strat­e­gy calls for a greater use of wood as a fuel source. Wood, the ener­gy report says, “offers a promis­ing alter­na­tive to home heat­ing oil and oth­er petro­le­um prod­ucts, pro­vid­ing a much need­ed option to extend fuel choice to rur­al areas of the state. Since New Hamp­shire is one of the most forest­ed states in the nation, wood also presents an oppor­tu­ni­ty to cap­i­tal­ize on locally-produced resources, keep­ing mon­ey in state while pro­mot­ing land con­ser­va­tion efforts.”

In fact, the growth of a wood/biomass heat­ing alter­na­tive for com­mer­cial use has been an ongo­ing under-the-radar trend tak­ing place in more rur­al areas of New Hamp­shire. Like the wood stove heat­ing the gen­er­al store a cen­tu­ry ago, bio­mass heat­ing in the forms of wood pel­lets and wood chips has become an eco­nom­i­cal­ly viable option for larg­er-scale munic­i­pal, school and com­mer­cial operations.

“For almost all busi­ness­es, how they heat their build­ing is more impor­tant than elec­tric­i­ty prices because heat­ing can account for as much as 40 per­cent of their oper­at­ing costs,” said Char­lie Niebling of the New Hamp­shire Wood Ener­gy Coun­cil, a pri­vate-pub­lic non­prof­it that advo­cates for bio­mass heat­ing alter­na­tives. “Wood chips or pel­lets are a less expen­sive and local­ly pro­duced renew­able resource. They keep fuel dol­lars cir­cu­lat­ing in our economy.”

Eco­nom­ic stimulus

Lured by tech­no­log­i­cal advances, the chang­ing eco­nom­ics of the bio­mass indus­try and federal/state rebate pro­grams, scores of schools, munic­i­pal orga­ni­za­tions, non­prof­its and pri­vate enter­pris­es have begun to make the switch to wood over the past decade.

Niebling, an indus­try vet­er­an and a part­ner with the con­sult­ing firm Inno­v­a­tive Nat­ur­al Resource Solu­tions, believes momen­tum is on the side of this major shift.

“This is an oppor­tu­ni­ty for busi­ness­es around the state,” he said. “We are nev­er going to be the main heat­ing fuel source, but we can be a sig­nif­i­cant alter­na­tive to lessen our vast depen­dence on fos­sil fuel.”

After years of research on how best to attack ris­ing ener­gy and heat­ing costs, Lit­tle­ton Region­al Health­care, par­ent of Lit­tle­ton Region­al Hos­pi­tal, installed a $2.8 mil­lion wood chip heat­ing sys­tem in 2013. It went ful­ly oper­a­tional in Jan­u­ary and Hen­ri Wante, direc­tor of engi­neer­ing and facil­i­ties at LRH, said the two Messer­smith auto­mat­ed wood chip heat­ing bio­mass boil­ers have replaced three exist­ing oil burn­ers, leav­ing two burn­ers as a back­up to the new system.

“We start­ed look­ing into bio­mass about sev­en years ago,” Wante explained. “(LRH) has to pro­duce steam for ster­il­iza­tion as well as heat­ing and water. We were very inter­est­ed in the recent tech­no­log­i­cal advances in bio­mass and this allowed us to take a more seri­ous look at it.”

The LRH project includ­ed the instal­la­tion of a large chip stor­age bin that can hold two semi-trail­er loads of chips – enough for about one week dur­ing the peak heat­ing season.

LRG’s sys­tem includes emis­sions con­trols that make it clean­er-burn­ing, with up to 99 per­cent of all par­tic­u­lates removed before exhaust exits the stack. The non­tox­ic waste ash pro­duced can be recy­cled as a source of organ­ic potas­si­um used by farmers.

Even though the sys­tem has been in oper­a­tion less than a year, Wante said the finan­cial pay­back has already begun.

Wante said that from Jan­u­ary to Sep­tem­ber 2013, LRH spent $526,000 on heat­ing oil; in 2014 dur­ing the same time peri­od the cost for heat­ing dropped to $207,000, includ­ing $61,000 for oil to be used as emer­gency back­up and for oth­er operations.

Over­all, LRH esti­mat­ed it is using 20 gal­lons a day of heat­ing oil com­pared to the more than 1,200 gal­lons per day of aver­age dai­ly use.

There’s anoth­er ben­e­fit: the mon­ey spent on wood chips (about $150,000 through Sep­tem­ber) is stay­ing in the North Coun­try econ­o­my. LRH has a three-year con­tract for hard­wood bole chips with A.B. Log­ging in Lancaster.

“The North Coun­try has tak­en quite a hit over the years, and keep­ing this mon­ey in the local econ­o­my and sup­port­ing local indus­try is impor­tant for us,” Wante said.

Wante said he expects the entire project will be paid off in five to sev­en years.

Not a panacea

Far­ther south in Pem­broke and Loudon, Pleas­ant View Gar­dens began its bio­mass con­ver­sion in 2008.

Jeff Elkins, the facil­i­ties man­ag­er, said the com­pa­ny was con­cerned about “dras­ti­cal­ly ris­ing fuel costs” that con­tin­ued to erode the bot­tom line of its plant mate­r­i­al busi­ness for grow­ers and gar­den cen­ters through­out the country.

“We weren’t near a nat­ur­al gas line and we were look­ing for an alter­na­tive ener­gy course,” Elkins said. “The high heat­ing oil prices were impact­ing our bot­tom line, and it was becom­ing hard­er to pass those costs onto our customers.”

After exten­sive research and inspec­tions at dif­fer­ent bio­mass oper­a­tions of man­u­fac­tur­ers in the U.S. and Cana­da, Elkins said a mas­ter plan was created.

The first bio­mass sys­tem was installed at the Pem­broke green­house loca­tion in 2008, and then a few years lat­er in Loudon. Alto­geth­er, the com­pa­ny invest­ed more than $5 mil­lion in the sys­tems (a deci­sion helped by more than $500,000 in U.S. Depart­ment of Agri­cul­ture grants), and it has cut its heat­ing oil costs significantly.

At the Pem­broke site alone, heat­ing costs dropped from about $1 mil­lion a year for No. 2 heat­ing oil to $250,000 annu­al­ly in wood chips. Elkins expects the invest­ment will be com­plete­ly paid back in the next four to five years.

“This is much bet­ter for us than oil, nat­ur­al gas or propane,” Elkins said. “And the beau­ty of it is that rather than send­ing as much as $2 mil­lion out of state for heat­ing oil, we are putting more than a half a mil­lion dol­lars in a 30-to-40-minute radius of our local economy.”

As with nat­ur­al gas, wood heat­ing is not a panacea for high heat­ing ener­gy costs. For exam­ple, at the con­sumer lev­el, there was a short­age of wood pel­lets dur­ing the win­ter of 2013–2014.

As the ener­gy strat­e­gy report notes: “Wide­spread adop­tion of bio­mass heat­ing sys­tems could result in the state import­ing wood in the same way that it cur­rent­ly imports fos­sil fuels, with sim­i­lar eco­nom­ic results … to the extent pos­si­ble, the state should work to ensure that con­ver­sions to bio­mass heat­ing sys­tems are occur­ring strate­gi­cal­ly, focused in places locat­ed near wood sup­ply and in con­cert with com­pre­hen­sive effi­cien­cy efforts.”

“It’s still an imma­ture indus­try,” said Mark Frol­ing of Frol­ing Ener­gy Sys­tems in Peter­bor­ough, which has trans­formed from a bio­mass man­u­fac­tur­er to a full-ser­vice bio­mass con­trac­tor with more than 100 com­mer­cial instal­la­tions through­out New England.

Frol­ing said his firm has nev­er been busier than today, but the indus­try itself is ham­pered by two vital fac­tors – a con­sis­tent wood pel­let pro­duc­tion infra­struc­ture and financ­ing to help busi­ness­es make the switch.

“When I wrote a busi­ness plan in 2008, I thought we would have much steep­er growth,” Frol­ing said. “The pay­back for larg­er com­mer­cial projects can range from two to sev­en years. It’s fun­ny, but we put a bid on a project that would have had a pay­back of just over four years, and this busi­ness is hav­ing a hard time get­ting financ­ing even though it will help its long-term bot­tom line. With all these major eco­nom­ic shifts, it has become hard­er to get money.”

But the sup­ply side aspect of the indus­try is being sort­ed out, said Froling.

“We have seen huge growth and acqui­si­tions with a lot of these oper­a­tions being well-cap­i­tal­ized and being run more pro­fes­sion­al­ly,” he said. “I think we are going to go from 15 plants to about 22 plants which will make a big difference.”