PORTLAND, Maine — In a nondescript warehouse on Presumpscot Street, around a dozen high-tech wood pellet boilers arrived this week from Denmark aboard a ship from Iceland, bound for installation in Maine.
The winding journey took years to align, but leaders of the Portland-based Interphase Energy say the commercial infrastructure has developed enough for Maine’s burgeoning wood pellet industry to carve out its own niche in Maine and the Northeast.
The physical challenges are many: It was only eight months ago that Interphase had a system designed and made by a Sanford machine shop to deliver pellets from trucks to home storage bins. In February, the company expanded its footprint sixfold in expectation of growth.
“Maine’s done all the hard work — we’ve figured out all of the challenges and the opportunities, and now we have a model,” Interphase co-founder Jacob Roberson said.
While Interphase and others in the pellet industry tackle those individual business challenges, they and state regulators are eyeing revisions to requirements they say are out of line with their products and not suited to rapidly changing heating technologies.
A new group of industry representatives, state officials and engineers assembled by the rule-making Maine Fuel Board plans to review and suggest just how pellet boilers should fit in with the state’s existing standards for oil and solid-fuel systems that those in the pellet industry argue aren’t suited to their products.
“Quite honestly, if you want to run one of these wood pellet boilers, you need to know more about programming logic than you do about wood,” said Jim Knight, CEO of the Orono-based Pelletco.
The working group will meet for a third time Friday with an ultimate goal of recommending by this fall new rules that govern installation of wood pellet boilers and licensing of installers.
“The rules have been at a very basic level around solid fuels,” Roberson said. “[The Fuel Board] didn’t want to rewrite the rules for 100 systems in the state. Now it’s time for the rules to catch up.”
The company owners say certain rules in the solid fuel regulations applied to pellet systems are leading to unnecessary costs.
“A lot of the rules were designed around wood boilers and are being applied to our equipment,” Interphase co-founder Ryan Hamilton said. “It’s driving up the cost for the end users, manufacturers and for us.”
For instance, Hamilton said, the company must use black stovepipe for its units rather than less expensive and more readily available galvanized pipe used in oil systems, based on risk for creosote buildup linked to chimney fires in solid fuel systems. Hamilton said that’s not a risk with pellet systems.
“It’s another barrier that we’re having to remove,” said Bill Bell, executive director of the Maine Pellet Fuels Association.
The average cost of their Kedel boiler system ranges from $10,000 to $15,000.
Wood pellet boilers now make up a small portion of household heating systems in the state, but the number of installations has nearly doubled annually for the past four years, Bell said.
“We can do that because you’re starting at a very low figure,” said Bell, who estimates around 1,000 pellet boiler systems have been installed and that installations will continue in Maine at a pace of around one per day, based on installation figures from Efficiency Maine. “[Pellet boiler installations] are definitely growing rapidly, but it’s still only beginning to make a dent in the overall picture.”
A shortage in wood pellets at large retailers this winter should not be viewed as an obstacle to wood pellet boiler conversion, industry proponents say, because the problem was largely attributed to the unexpected cold. Orders placed were based on lower use in previous years.
The latest census data estimates nearly 390,000 Maine homes — more than 70 percent — use fuel oil or kerosene for heat, a number that has declined in the past three years. By comparison, the number of Maine homes using some kind of wood heating is on the rise. An estimated 65,000 homes used wood heat in 2012, up from around 47,000 three years prior.
A small portion of that is made up from pellet boilers, whose fuel offers a price slightly more than cordwood and just less than natural gas, according to the latest statewide average price estimates from the Governor’s Energy Office. On fuel cost alone, pellets are about half the cost of heating oil, measured in British thermal units.
Harry “Dutch” Dresser, a managing director of the Bethel-based Maine Energy Systems, said another part of the industry’s regulatory problem is that licensing requirements have left too few installers. That’s a problem the group advising the fuel board also hopes to address.
“Anybody who runs a company installing any kind of boilers today will tell you there’s a shortage of installers,” Dresser said.
His company, owned by Les Otten — a former Republican gubernatorial candidate, former CEO of American Skiing Company and early champion of pellet heating — got approval two years ago for a pilot project that allows its systems to be installed by people with oil system certifications who get a two-day training based on manufacturer guidelines, in part to provide more information about changing regulations around pellet boilers. His company also imports its boilers from Europe.
The formation of stakeholders including Maine Energy Systems, Interphase and other oil and pellet industry representatives is joined by other signs that wood pellets are getting more attention as a home heating option.
And this year, the Northeast Biomass Heating Expo’s selected Maine for its annual conference held earlier this month at the Cumberland County Civic Center. A veteran at that event, Hamilton said this year’s conference showed the systems in use for decades in Europe are moving from research to sales in the United States.
“Two years ago, if 2,000 people out of the general public would have come to the show in Saratoga Springs, they would have been like, ‘Why am I here?’” Hamilton said.
Commercial appeal of pellet systems is indicated also in growing partnerships with traditional oil dealers like Daigle Oil in Fort Kent and Huetz Oil in Lewiston, which launched Heutz Pellet Systems in 2008. Daigle and Heutz recently joined Interphase’s founders for a trip to Denmark, where pellet boiler manufacturer NBE unveiled a new production facility.
“I had a conversation with a banker last week — and she cold-called me — wanting to know about financing pellet boilers,” Roberson said. “I think that’s a sign that we’re maturing as an industry.”