I just read an interesting article about the sluggish sales of wood pellets. Thought I'd share it with everyone here!
http://www.skyhidailynews.com/article/20100204/NEWS/100209932/1079&ParentProfile=1067
Kremmling, Walden wood pellet plants struggle with sluggish demand
By Reid Armstrong
Sky-Hi Daily News
Six months ago, Gov. Bill Ritter visited the Confluence Energy wood pellet plant in Kremmling, bringing attention to what he hoped would become a major player in the nation's “New Energy Economy” and the next-best solution to Colorado's beetle kill crisis.
Today, the plant in Kremmling, like many across the nation, are struggling just to stay alive, according to founder and CEO Mark Mathis.
“There is a glut in the pellet industry nationwide,” Mathis said. “Very few — if any — plants are running. We are at one-third speed and there's only one other currently running. It's not just Colorado, it's nationwide.”
Shelves at retail stores are stocked, but the product is not moving. The storage yards at the plants are at capacity. Enough 40-pound bags of wood pellets were produced at Colorado's two plants last year to serve the region for the next four years. If the market doesn't grow quickly, more people are going to lose jobs and plants are going to close permanently.
Historically, the Colorado region has used 50,000-60,000 tons of the product per year, Mathis said. The two plants combined are producing 200,000 tons annually.
“Walden opened at the same time as us and there is simply not enough demand in the region to justify two large facilities,” Mathis said. “The upshot is that we're the only viable plant in the region right now.”
Production at Rocky Mountain Pellets in Walden recently shut down.
“We are still going through and selling off what inventory we've already built,” said John Frink, owner/vice-president of RMP. “We have a good 20 (employees) coming in a day.”
At full run, the plant normally employees about 50 people, Frink said.
The hope, it seems, lies overseas. Wood pellets — cylinders of dried, shredded wood — can be burned alongside coal in existing power plants and are a less-expensive way to generate electricity than windmills or solar panels.
The process of burning the pellets is generally considered to be carbon neutral since trees would emit the carbon naturally when they die and decompose, allowing pellets to meet the European Union's stringent renewable energy source requirements.
As Europe's demand for wood pellets increases, the United States has become a major exporter of renewable energy. New pellet plants have opened across the southeastern United States, with factories sprouting in Florida, Alabama and Arkansas in the past year, according to an article published in the Wall Street Journal last July.
The capacity of the three newest plants in the Southeast more than doubled the pellet production in the United States in a single year.
Prior to 2008, there were about 40 pellet factories nationally, producing about 900,000 tons a year, primarily for heating homes. The three new plants in the Southeast alone have the capacity to producing 1.25 million tons of pellets per year. Additionally, five new plants have gone up in the Rocky Mountain region in the last four years, Mathis said.
The United States isn't the only country jumping on the pellet production bandwagon. Australia, New Zealand, Argentina, Vietnam, Canada and South Africa are also exporting pellets to Europe.
(continued in next post below...)
http://www.skyhidailynews.com/article/20100204/NEWS/100209932/1079&ParentProfile=1067
Kremmling, Walden wood pellet plants struggle with sluggish demand
By Reid Armstrong
Sky-Hi Daily News
Six months ago, Gov. Bill Ritter visited the Confluence Energy wood pellet plant in Kremmling, bringing attention to what he hoped would become a major player in the nation's “New Energy Economy” and the next-best solution to Colorado's beetle kill crisis.
Today, the plant in Kremmling, like many across the nation, are struggling just to stay alive, according to founder and CEO Mark Mathis.
“There is a glut in the pellet industry nationwide,” Mathis said. “Very few — if any — plants are running. We are at one-third speed and there's only one other currently running. It's not just Colorado, it's nationwide.”
Shelves at retail stores are stocked, but the product is not moving. The storage yards at the plants are at capacity. Enough 40-pound bags of wood pellets were produced at Colorado's two plants last year to serve the region for the next four years. If the market doesn't grow quickly, more people are going to lose jobs and plants are going to close permanently.
Historically, the Colorado region has used 50,000-60,000 tons of the product per year, Mathis said. The two plants combined are producing 200,000 tons annually.
“Walden opened at the same time as us and there is simply not enough demand in the region to justify two large facilities,” Mathis said. “The upshot is that we're the only viable plant in the region right now.”
Production at Rocky Mountain Pellets in Walden recently shut down.
“We are still going through and selling off what inventory we've already built,” said John Frink, owner/vice-president of RMP. “We have a good 20 (employees) coming in a day.”
At full run, the plant normally employees about 50 people, Frink said.
The hope, it seems, lies overseas. Wood pellets — cylinders of dried, shredded wood — can be burned alongside coal in existing power plants and are a less-expensive way to generate electricity than windmills or solar panels.
The process of burning the pellets is generally considered to be carbon neutral since trees would emit the carbon naturally when they die and decompose, allowing pellets to meet the European Union's stringent renewable energy source requirements.
As Europe's demand for wood pellets increases, the United States has become a major exporter of renewable energy. New pellet plants have opened across the southeastern United States, with factories sprouting in Florida, Alabama and Arkansas in the past year, according to an article published in the Wall Street Journal last July.
The capacity of the three newest plants in the Southeast more than doubled the pellet production in the United States in a single year.
Prior to 2008, there were about 40 pellet factories nationally, producing about 900,000 tons a year, primarily for heating homes. The three new plants in the Southeast alone have the capacity to producing 1.25 million tons of pellets per year. Additionally, five new plants have gone up in the Rocky Mountain region in the last four years, Mathis said.
The United States isn't the only country jumping on the pellet production bandwagon. Australia, New Zealand, Argentina, Vietnam, Canada and South Africa are also exporting pellets to Europe.
(continued in next post below...)
