Pellet Stove Payback Period?

ovenovenfire · Jan 13, 2010

Newbie here....I have a few questions on pellet stove economics. I am a new homeower living in VA. House is new construction, 2100 sf, all electric with two air-source heat pumps (1 downstairs, 1 upstairs). I used to have gas heat before and that was great, you could turn it down at night and warm the house up quickly in the morning and my bill never got to be above $150/month (albeit it was a smaller 1000 sf house). Now, the heat pump worked well in the fall and early winter when temps were in the 30s and 40s at night but now, the heat pump struggles to keep the house at 70 (especially the 2-story great room), the heat strips are kicking in often, especially during the last few weeks when temps got into the teens and single digits. So, far we've consumed 1500 kWh and the month is not half over.

I have thought about getting a pellet stove to use as a *supplement* to the heat pump when the weather turns cold (not on a regular basis as I don't want to be hauling pellets and cleaning ashes all winter). I had a few friends when living the pacific northwest who loved theirs a few years ago.

However, after looking at the high cost to buy+install a stove ($3000 for a Quadrafire Santa Fe according to local dealer, or close to $2000 for an Englander model which get mixed reviews), I am wondering whether getting a pellet stove really is a financially sound decision to supplement the heat pump, which is already quite efficient except when it has to run on auxiliary heat. I wonder if I should instead keep my money and get an electric space heater for those occasional nights when it gets really cold (this year is obviously an exception).

I've been looking at the Heating Fuel Comparison Calculator by the Dept. of Energy and based on my electric rate (11 cents/kWh), and entering the proper HSPF for the heat pump (6.4 adjusted), the cost per million BTU is $18.54. Wood pellets cost $260 a ton here (not including tax+delivery) and with a stove that gets 85% efficiency that ends up costing $17.23 per MBTU. Adding the delivery charge (around $50 I guess) to the calculation for a ton of pellets cancels out any savings and ends up costing more. It seems pellet prices keep going up and are really just a good alternative if heating with expensive fuels such as oil, propane or straight electric resistance heat (which seems is what most folks who buy pellet stoves switch from). So, according to those figures, a pellet stove will never pay off or it will take many years.

However, I do wonder if one can save substantial money using a pellet stove by turning down the heat during the day and at night and then "cranking" the stove up to heat the house up fast when you get home or after waking up (the heat pump needs to be left at a set temperature so it always has to keep running). Also, the heat pump keeps the whole house warm when we really just need it in a few rooms (they don't connect so I could not shut off the heat pump entirely). Obviously this would involve running the pellet stove more often/more regularly but I'd be willing to do that if that will save enough money. I estimate that may save around 1000 kWh per month ($100/month) which is about $300 per year (3 cold months, the remaining months will be fine on heat pump alone) so it would take 10 years to pay back the pellet stove. Is my estimate wrong?

My girlfriend thinks we should forget the stove and stick with a couple of electric space heaters to stay warm on those nights when it gets really cold and keep the money. We don't want to deal with wood stoves (too much work and mess). The initial outlay is obviously less. I would really like the $2000-3000 outlay for a pellet stove to pay itself back in 4-6 years to be worth the investment. Any opinions? I like the idea of the pellet stove making the house WARM and being eco-friendly but the initial outlay makes me reconsider. Does adding a pellet stove add to the value of a house should I have to sell it?

Does the cost of stoves and pellet drop enough come spring/summer to make the numbers more favorable?

Any input is appreciated.

sammypoodle · Jan 13, 2010

First off, let me say I really like my pellet insert. The heat, the look, etc. It was a good investment. With that said. I really do not think I save any money using the stove. Sure my oil consumption has fallen alot but it only shifted the fuel usage. Pellet stoves require alot of maintenance, pellet storage etc. That is money in a sense. All and all I think its a wash. I will say we are much warmer and my house is very toasty warm. I have no regrets and really like the stove. As far as saving any money with the purchase, install, buying stacking pellets, cleaning etc. the money saved is very little if any. The pay back period has to be several years if not more for any payback.

cac4 · Jan 13, 2010

well, it doesn't seem like you'd ever get "payback" on a pellet stove, used as you described. BUT...

those btu comparison calculations--you have to take those with a grain of salt. Most that I've seen do not take into consideration any loss that will occur between the heating plant and the heat that actually gets into the rooms. When they say that my oil furnace is "80% efficient"...that is measured at the furnace. not at the registers in the room. There is considerable loss between here and there. The ducts travel through a cold basement, they leak, etc, etc. I did see a calculator out there that took such factors into consideration, but I can't remember where it was. But it said that my forced hot air system, with the type of ducts I have, could be as low as 50% efficient.
so...btu's per lb or per gallon or per kwh x cost per gallon/lb/kwh doesn't tell the whole story.

I don't know too much about heat pumps (not used much up here, as its just too cold most of the time), but I'm assuming that it heats air, and blows it to your rooms through ducts. there will be "loss" there.

A pellet stove dumps 100% of the heat it creates into your living space. no loss.

You won't be able to quickly heat up a cold house with a pellet stove. It just doesn't have enough btu output to change the temp that quickly. It would certainly heat up faster than the heat pump alone, but it won't do it by itself. (not "quickly". it will do it, though.) On the coldest days, (like we just had over the last few), it takes my stove a couple of hours to get the temp up from the low 60's to about 70. My furnace can do it in a few minutes...(it was broken over the weekend. go figure). Once the temp is brought up by the furnace, the stove can maintain it all day; when you think about it, all it has to do in this case is pump out enough btu's to match the heat load on the house...make up for the loss. If you're trying to raise the temp in the house, you have to first match the load (or "loss), and then exceed that number, by a significant amount.

One thing you'll see posted here over and over and over is the reminder that a pellet stove is a "space heater"; its not a good replacement for other types of central heat...but a great adjunct. You'll also see lots of people saying that oil is cheaper than pellets....well, its not. not unless you're talking about comparing a pellet furnace/boiler (central heat) to a fossil-fuel furnace/boiler. I save money using pellets, because I'm not consuming as many btu's. And I'm not consuming as many btu's, because I'm not heating my basement with my leaky ducts. I'm not heating my upstairs bedrooms as much, because they are farther away from the stove.
You can, of course, get that same exact effect w/ electric space heaters. Maybe for less, where you are. certainly for alot less buy-in price. Anyway, its not the fuel that makes it cheaper, so much as the style of heating. space vs. "central".

as for the delivery cost, most people overcome that by buying their whole season's fuel supply at once. You need to have the storage space for that, though...

anyway, I'd say that if your motivation is purely economic, a pellet stove is probably not your best bet. But they are just plain "nice"...toasty warm when you're near them, and a greener method of heating than electric space heaters. There's a lot to weigh.

Fsappo · Jan 13, 2010

The payback is more than several years on paper. What you do need to consider is the cost savings of space heating vs house heating. If you could put a nice pellet stove (dont waste money on a cheap one at this point, especially with the tax credit to fool with) in for 3K and use it to warm up that large 2 story great room without having to run the electric, you may be saving more. Here's the other thing (Note, I am promoting a stove I sell, but I dont sell in the OPs area)

There is a pellet stove called the Europa which uses gasification. It will provide the same heat as a typical pellet stove but it requires 30-40% less fuel to accomplish that. So right off the top, our customers up here in NY that have Europas are using 1-3 tons less fuel per year than someone with a typical stove. So if pellets=oil and Europa is .65 cost to operate, the Europa is .35 cheaper than oil. More or less thats the easy math. The kicker is, those stoves run $4400-4900.

There may be other 95% efficient biomass stoves (Heat exchanger efficiency using the lower heat value) on the market. If you find one, I would look at that as well. I just dont know of any. If you have questions you can PM me at [email protected] I'll try to put you in touch with someone in your area if your interested.

Excell · Jan 13, 2010

I would consider a multi fuel so that you can burn any kind of pellets that you can find ,maybe even some corn . I find my pellet stove very fussy about what kind of pellets that I burn . From what I have read on this site the multi fuels do not have that problem .

tjnamtiw · Jan 13, 2010

First off, seek out the fool that talked you into heat pumps in Virginia !!!

!! Their efficiency goes to crap at about 40F. When you are using the cost comparison, plug in 100% efficiency for the heat pump since your using the strip heaters. You are NOT getting heat pump efficiency! I live in Georgia,a nd heat pumps down here this winter have been useless the last three weeks. I can imagine in VA> Now compare savings. It will look a lot better. I have two Quads and they just barely keep up when it's 15 and windy outside.
I know it's too late but you should have gotten a dual fuel heat pump (me too) or geothermal.
If you have coal available in your area, you can get coal stoves that look and work like pellet stoves ----- unless you're a tree hugger...

jtakeman · Jan 13, 2010

Excell said:
I would consider a multi fuel so that you can burn any kind of pellets that you can find ,maybe even some corn . I find my pellet stove very fussy about what kind of pellets that I burn . From what I have read on this site the multi fuels do not have that problem .

X2 Excell has been paying attention!

Most large purchase's you would like to see a 5 to 10 year payback. I save about $1000 dollars a year give or take! Shorter if you add the AHHHH factor of being warmer all the time! We would keeped the electric at 65ºF and the pellet heat is a steady 72ºF

ovenovenfire · Jan 13, 2010

cac4 said:
A pellet stove dumps 100% of the heat it creates into your living space. no loss.

As far as I understand pellet stoves, some of the heat has to go out the vent pipe. That is not 100% efficient. From what I read, they're around 75-85% efficient...

trogers · Jan 13, 2010

My stove is on track to pay for itself in 2.5 years. I was using propane, which is very expensive. We are a lot warmer thatn we were when we were using the propane FHA, and we are spending about $1600 (net) a year less in fuel costs. Regarding the point about maintenance time being a cost, I guess that I agree to some extent, but I would question wether we apply that same logic to everything in out lives. As an example, I can have my groceries delivered for a small cost to "save" me from having to o to the supermarket. Yes, if I was billing myself for the same hourly rate that I earn in my profession I would be stupid not to have the groceries delivered. The reality, however, is that I can not "charge" myself my hourly rate for doing chores. Yes, the stove does take some time each week to maintain, but so does the yard need time to maintain, or the driveway need time to shovel. For me it was an easy decision...be a lot warmer and have a fuel source that I can be happy with. A bonus factor for considering a pellet stove in my opinion is the fact that the fuel is relativiely carbon neutral.

Anyway, just my opinion.

cac4 · Jan 13, 2010

ovenovenfire said:
cac4 said:

A pellet stove dumps 100% of the heat it creates into your living space. no loss.

Click to expand...

As far as I understand pellet stoves, some of the heat has to go out the vent pipe. That is not 100% efficient. From what I read, they're around 75-85% efficient...

Correct, but I'm talking about something different.

What I am talking about is the amount of the "usable" heat that actually gets into the rooms. When people are talking about furnace or boiler efficiencies, they're talking about how much heat is extracted from the fuel; not all of that heat actually gets to the rooms. I'm sure there are terms for these 2 different concepts, but I don't know what they are. I'll call them "burner efficiency", and "delivery system efficiency".

"burner efficiency" is the amount of heat in the fire - amount that goes up the chimney. In that sense, pellet stoves and oil furnaces are about the same. But with my oil furnace, some of the heat radiates into the basement. Then, every time there is a transfer of energy, some is lost. Hot air furnaces are better than boilers on this front, as the heat isn't transfered as many times as it is with a hot water system. But there is still a transfer. The fire heats the plenum; the plenum heats air. (loss--loss). with a boiler, the fire heats the tank, which heats the water, which heats pipes, which heat fins, which heat the air. (loss loss loss loss loss ;-)
On top of this, there is loss as the heated air or water travels....by the time it gets to where its going, heat is given off in places that you don't want or need to be heated. In my case, the ducts absorb heat...its radiated out in the wall spaces where the ducts go, and heated air leaks out in those wall cavities and in the basement.
With the pellet stove, all of the usable heat is dumped right into the room where you're sitting. the only loss in transfer is the amount lost from the fire heating the heat exhanger, and the heat exchanger heating the air that passes over it. It is basically, a hot air furnace, with no ducts. (and therefore, no duct loss).

BadDad320 · Jan 13, 2010

Being able to purchase all the fuel I need to heat my house at one time gives me security over fluctuating energy prices..... I burn about 6 tons of pellets per year...... I have a shed and buy and store them when I find a good deal...... I still use about 250-300 gallons of HHO per year.....

MCPO · Jan 13, 2010

ovenovenfire said:
cac4 said:

A pellet stove dumps 100% of the heat it creates into your living space. no loss.

Click to expand...

As far as I understand pellet stoves, some of the heat has to go out the vent pipe. That is not 100% efficient. From what I read, they're around 75-85% efficient...

Most probably fall into the 78% brackett.
Thats why I`ve harped so much regarding the heat exchanger itself being where the most important improvement can be made.
The manufacturers should be doing more in this area.

MCPO · Jan 13, 2010

Personally I haven`t been inclined to spend heavily on a simple space heater that isn`t worth zilch to resell once it leaves the store and even less when used. IMO, it `s a bigger loser than a new automobile. Not that I`m cheap but I have a rather good central heating system and the oil burner tech tells me the burner data he measured reads 84% efficiency.
So having bought my used Harman for $500 and my new Englander for $490 after tax credit I`m not a bit concerned about any ROI or the length of payback period. I do like the pellet heat looks / ambience and direct heat from it, reminiscient of my former wood stove but a lot less work and much safer.
Whatever Pellets I use offsets the less oil I burn so its kind of a wash. And yes there are some unusually good buys out there on pellet stoves new and used. remember, any one can pay full retail price. Anything can be had if you want to pay the full boat.
But that`s just how I feel. I certainly wouldn`t expect everyone to agree.

Doocrew · Jan 13, 2010

I look at it differently. I think my stove paid for itself in the first year. I bought my stove because I received my oil pre-buy contract for the 2008-2009 heating season and it was $3200 for 800 gallons. Like everyone else, I said no way and bought my pellet stove for $2000 and 4 ton of pellets at $239 a ton. I ended up burning 100 gallons of oil all winter to heat the hot water. Granted, oil came down as the season progressed so had I chosen to stay with oil and not participated in pre-buy, my total heating cost for the season would have been about $2500. I have never not pre-bought oil so like a sap, I probably would have done so had I not developed a mild case of pellet flu. The way I see it, the stove paid for itself in the first year. Pre-buy costs this year were around 2.50 a gallon so I would have spent $2500 on oil. I bought 4 ton of pellets this year at $230 a ton, plus I will burn 100 gallons of oil which cost $2.39 a gallon. My heating costs for this year will be about $1200 which is about a 50% savings. Either way, the stove would have paid for itself in 2 years depending on which way you look at it.

peterpski666 · Jan 14, 2010

Doocrew said:
I look at it differently. I think my stove paid for itself in the first year. I bought my stove because I received my oil pre-buy contract for the 2008-2009 heating season and it was $3200 for 800 gallons. Like everyone else, I said no way and bought my pellet stove for $2000 and 4 ton of pellets at $239 a ton. I ended up burning 100 gallons of oil all winter to heat the hot water. Granted, oil came down as the season progressed so had I chosen to stay with oil and not participated in pre-buy, my total heating cost for the season would have been about $2500. I have never not pre-bought oil so like a sap, I probably would have done so had I not developed a mild case of pellet flu. The way I see it, the stove paid for itself in the first year. Pre-buy costs this year were around 2.50 a gallon so I would have spent $2500 on oil. I bought 4 ton of pellets this year at $230 a ton, plus I will burn 100 gallons of oil which cost $2.39 a gallon. My heating costs for this year will be about $1200 which is about a 50% savings. Either way, the stove would have paid for itself in 2 years depending on which way you look at it.

Exactly the same usage and expenses I have, heating comfortably a 1700 sf colonial.

Skippydo · Jan 14, 2010

Heating whole house with Harman PF100,2500SF plus, used 7 ton last year
at a cost of $1575.00 (No tax)...Propane would have cost me $3200.00.
This year my pellets were $1560 for 8 ton. That has cut my propane bill
in half again.
Give me one more year, and stove has paid for itself.
As far as cleaning the stove; you won't find me outside in the snow and
blistering wind......Take my time cleaning the stove, and you can even
make it enjoyable, especially with a brew besides you. It usually takes
me two brews to clean the stove......

krooser · Jan 14, 2010

I live in a drafty, marginally insulated 120 year old wood frame home with a forced air NG furnace. I bought a used stove for $1100.00, spent around $150.00 on a vent kit and installed it myself.

The last year (2006) relied solely on NG I spent somewhere north of $1200.00 for NG from October until April 1st. Lats year I spent $720.00 on pellets....+ or -. With NG we had to keep the heat at 65F in order to keep it affordable. My house, tonite, with temps in the high teens is 76F. I would never voluntarilt go back... I'm warm and spoiled.

Maintenance is pretty simple... keep the stove clean, pour in some pellets and enjoy. The stove will have good resale value for several years. Save $$$ and install it yourself... pretty easy if you do a simple horizontal vent.

All those numbers you have been crunching make my head hurt... I bought the stove to stay warm... the $$$ it's saving me is a bonus...

ovenovenfire · Jan 14, 2010

Thanks for the detailed responses.

As I figured, most people who have the biggest savings with a pellet stove use propane, electric baseboards or oil for heating. If that were my case, I'd get the stove right away. Most people around here have heat pumps or gas heat or wood stoves and have not even heard of pellet stoves and look at me as if I'm from Mars so it appears they are more useful in colder climates.

Having a heat pump (mine is brand new and in response to FHS, modern heat pumps are quite efficient even down to the 20s, provided the house is well insulated, I asked several HVAC contractors. But yes, a geothermal is a lot better) and adding a stove is kind of a wash. I guess I'm shocked as before I lived mostly in apartments or small rental houses and bills were never this steep. I guess the two-fold increase in square footage with respect to my old rental house does mean double the bills. As I see it, a pellet stove may save $100-150 on electric each month during December-February (looking at my electric bills and comparing how much the bill jumped since it got cold in December) but that is about the cost of 1.5 tons of pellets.

According to the pellet price tracker on this site, pellets in VA don't seem to come down in price, I see reports from June and August in the $250-range per ton. I do like the idea of the warmth of a fire and being eco-friendly but sadly that's not worth $3000 for me, at least now.

How wise is it to put in a used stove? Being a novice I'd hate to buy a lemon or get ripped off from someone on craigslist.

Do stoves get cheaper in the summer or is that a myth?

caledoniacars · Jan 14, 2010

Another former propane user here. I figured I saved about $1000 my first year. This year with cheaper propane I figure it'll be less maybe $500-$800. However if this mild winter continues I may have pellets left over for next year. The warmer heat makes up for the cleaning. All in all I figure 3 years and both the furnace & installation will be paid for.

becasunshine · Jan 14, 2010

Hi, OvenOven!

We are right over the ridge from you in Central Va! Beautiful part of the state in the valley.

Our central heat furnace burns natural gas. We have a Napoleon NPS40 freestanding pellet stove. We bought it new, paid to have it professionally installed, and we have a custom made tile hearth under it. Total cost for stove, vent pipes, hearth pad, outside air kit (OAK), the thimble thingy that goes through the wall, and installation was $3400.

You are right about pellet prices in VA. The best we've seen is $240/ton direct from the factory, you haul, one ton minimum. This year we paid $280/ton delivered.

Given the current prices of natural gas, pellets and the cost of electricity to run the stove (which is minimal but not nonexistent) I'd say that we are perhaps saving a couple hundred dollars a year. At this rate it will probably take us about 15 years to pay off the pellet stove. Would this pellet stove even be in service in 15 years? I don't know.

However, and this is a BIG however, the pellet stove does give us the following advantages:

1. In order to achieve our previous super-frugal natural gas heating bills, we kept the house at 65'F during the day and 55'F overnight. Now we keep the HVAC thermostat at 65'F during the day and 60'F overnight. The pellet stove can hold the house at 65'F during the day without assistance from the gas furnace on all but the coldest days. The gas furnace will cut in early in the morning and perhaps once again later that evening when the outside temps drop into the very low twenties or into the teens. We've never had the gas furnace cut in overnight- the pellet stove has held the household temp above 60'F during the coldest nights unassisted by the furnace.

If the outside temps are in the 30's the pellet stove holds our house well above 65'F without assistance from the gas furnace.

2. Late summer/early fall 2008, as we were researching pellet stoves, our natural gas "budget" bill amount increased by a whopping $37/month, even though we actually used less gas in the previous year than we'd been budgeted to use.

3. Pellet prices fluctuate also, but at least we can bulk buy pellets if we find a price that we like. We can also shop the pellet market and ask for competitive pricing.

4. It's 10pm and I know where my heat is for the rest of the year.

5. Many people use pellet stoves as zone heat. Our house is small enough (1248 sq ft) and the stove is located such that we use it to heat the entire house. Zone heating, if we used it that way, would probably save us more money. Our floorplan doesn't lend itself to that usage so we simply push the heat through the house with a box fan.

I don't know what the future holds for either natural gas prices or pellet prices. We like having a couple of different heating options. In this way, if the price of natural gas shoots up, we have an alternative.

slclem · Jan 14, 2010

Chuck...how do you like your Accentra and how much do you heat with it?

Stentor · Jan 14, 2010

Ovenovenfire,

I think the comments by everyone on your choices are thoughtful and can help you make your decision. A few minor items:

1. Because your intended use of a pellet stove will be intermittent, you will be adding to your payback time.
2. With a new house, you can probably make some easy incremental improvements in energy efficiency, like weatherstripping, new light bulbs, etc., whatever your long term plans.
3. Our house is more comfortable with the stove. That's subjective but we can keep the place warmer, maybe 5 °F on average.
4. Social and environmental issues are worth at least considering, whether or not they are decisive for you.

We are happy with our choice so far and expect break even on the investment in about two more seasons.

mainegeek · Jan 14, 2010

I think my stove will pay for itself in about 3 years. My budget oil payment was $450 ($4950/yr) before and is now $150 ($1650/yr). I still have more insulating to do; which will help. All in all, I can heat the majority of my house on about 5 tons of pellets a year ($1400/yr). I think the math is obvious

BTW, I say "majority" of house because the stove does little to heat the upstairs.... the oil stat is set to a constant 65 deg F up there since its all bedrooms.

cac4 · Jan 14, 2010

slclem said:
Chuck...how do you like your Accentra and how much do you heat with it?

Love it!

My house is a 24'x36' garrison colonial, built in 1994, with 6" walls. 1800sq ft if you measure from the outside dimensions...more like 1600 if you measure the interior room sizes. open floor plan on the first floor; 3 bedrooms upstairs.
The stove is capable of heating the entire house, and it does, most of the time. I've taken to letting the oil furnace run in the morning for a little while, just to keep the basement from getting too cold...although, the furnace crapped out over the weekend, and we had 0-degree weather...no problems. Last oil fill-up was in November of '08, and I still have half a tank.

ronlat · Jan 14, 2010

ovenovenfire said:
Newbie here....I have a few questions on pellet stove economics. I am a new homeower living in VA. House is new construction, 2100 sf, all electric with two air-source heat pumps (1 downstairs, 1 upstairs).... Now, the heat pump worked well in the fall and early winter when temps were in the 30s and 40s at night but now, the heat pump struggles to keep the house at 70 (especially the 2-story great room), the heat strips are kicking in often, especially during the last few weeks when temps got into the teens and single digits. So, far we've consumed 1500 kWh and the month is not half over.

For me, 2 1/2 years burning pellets compared to fuel oil has saved nearly $1900.00. Initial investment of $2700.00 Yes extra work is involved but it amounts to less than 15 min per day on average,

My girlfriend thinks we should forget the stove and stick with a couple of electric space heaters to stay warm on those nights when it gets really cold and keep the money. We don't want to deal with wood stoves (too much work and mess). The initial outlay is obviously less. I would really like the $2000-3000 outlay for a pellet stove to pay itself back in 4-6 years to be worth the investment. Any opinions? I like the idea of the pellet stove making the house WARM and being eco-friendly but the initial outlay makes me reconsider. Does adding a pellet stove add to the value of a house should I have to sell it?

Does the cost of stoves and pellet drop enough come spring/summer to make the numbers more favorable?

Any input is appreciated.

For me, 2 1/2 years burning pellets compared to fuel oil has saved nearly $1900.00. Initial investment of $2700.00 Yes extra work is involved but it amounts to less than 15 min per day on average.

You stated you do not want to haul pellets and deal with cleaning, and furthermore your girlfriend does not want one. Sounds to me that a pellet stove should not be in your future if you want to maintain the benefits of the girlfriend, haha.

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