WoodPellets.com stocks coffers for winter
It's a small industry, but pellet stove makers see more people looking to heat with biomass.
When it comes to converting plants into usable energy, biofuels garner the bulk of attention and dollars. But there's a growing number of people using biomass for heating.
One company that's betting on continued growth is New Hampshire-based WoodPellets.com, which on Monday plans to disclose that it has raised $11 million to expand its online home wood pellet delivery service.
With the money, the 3-year-old e-commerce company plans to expand its distribution network to more places in the U.S. (right now, it works mainly in the Northeast) and to develop ways to do bulk shipments of pellets. Investors are venture capital firm 406 Ventures and private equity company Monitor Clipper Partners.
Pellets are made by compressing sawdust into small pellets that look a little bit like pet food for rabbits or guinea pigs. The appeal of heating by burning pellets is that it can be cheaper than heating with oil, it's a domestic fuel source, and it's less polluting, say proponents. There are currently 800,000 Americans that heat all or partially with pellet stoves, according to the Pellet Fuels Institute.
The fuel can be up to half as expensive as heating with oil and the payback on a stove, with small ones starting at about $2,000, can be two to five years, according to WoodPellets.com. (Disclosure: I am a.)
On the environmental front, pellet stoves are typically more efficient and burn more cleanly than older wood-burning stoves. The Pellet Fuels Institute claims that burning biomass in efficient stoves or boilers is carbon neutral since the growth of trees will absorb the carbon dioxide emissions from burning the wood.
The environmental picture isn't perfect, though. The level of particulate matter from burning pellets is higher than burning natural gas and oil. But particulars per million BTUs is lower than an EPA-certified wood stove and dramatically lower than burning wood in a fireplace or an uncertified wood stove, according to the EPA.
The source of wood is typically lumber mills, which sell sawdust for different wood products. Although there are well-documented cases of deforestation around the world, Strimling said forests in the U.S. are generally well managed, as landowners and forest management services have an interest in sustainable growth.
On the policy side, biomass heating this year received a significant policy boost--buyers are able to get a 30 percent tax credit on the purchase of stoves.
WoodPellets.com expects it can grow quickly simply by serving existing customers, many of whom buy pellets from big-box retail stores or from stove vendors. To buy pellets online at WoodPellets.com, consumers put their ZIP code in and get options for buying different types of pellets and for scheduling delivery.
The company developed the logistics software to track the availability of pellets for consumers in different regions from several different suppliers and different storage locations--which is "not an easy math problem," said Strimling.
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Right now, pellets are delivered in plastic bags--a stove could burn through a bag a day. WoodPellets.com is looking to develop a system where pellets are delivered in bulk from a truck and stored in a hopper in a basement or garage.
Another issue that has choked growth of biomass heating--and spiked the price of pellets--in the past is availability of fuel, but a number of new mills have come online in the past few years. According to a recent U.S. Department of Agriculture study, 1.1 million metric tons of pellets were produced in 2003, 4.2 million tons in 2008, and as much as 6.2 million tons in 2009.