Biomass is poised for a boost from federal funds and new consumer financing
photo/Becky Shea
Alain Ouellette, director of work force development with the Northern Maine Development Commission
photo/Becky Shea
Carl Flora, president and CEO of Loring Development Authority, says there could be tremendous economic impact around the bioheat industry
Last September, the Northern Maine Development Commission was awarded $1.9 million through the Obama administration's Jobs and Innovation Accelerator Challenge, a $37 million initiative aimed at supporting high-growth clusters throughout the country. Now these investments are starting to bear fruit as a push toward biomass-based heating is promising returns.
In northern Maine, identifying high-growth clusters has been an ongoing effort of the NMDC and Aroostook Partnership for Progress. Since 2009, the two organizations have been collaborating on the Mobilize Northern Maine initiative to leverage the region's strengths and assets, with renewable energy and information technology topping the list.
Last fall's influx of federal funding gave MNM the chance to launch its GreenME project. Serving Aroostook and Washington counties through a renewable energy industry cluster, GreenME focuses largely on developing a market for wood biomass as a means of creating jobs and reducing fuel costs for homeowners and businesses while capitalizing on one of the region's most abundant natural resources.
"Biomass is especially enticing to us because we have so much forest, a robust forest industry and pellet manufacturing companies," says Robert Dorsey, president and CEO of Aroostook Partnership for Progress.
The goal of GreenME is to transition 9,000 residential units and 20 commercial facilities to wood biomass fuel within four years and create more than 400 jobs across the two counties. "The whole motivation is to create a market for biomass, because it creates demand in the pellet industry, which creates demand for forest products," says Dorsey.
So far the JIAC funds have been put to use in six initiatives, according to Alain Ouellette, planning, work force and economic development division director for the NMDC: developing grass pellet boilers; creating a regional venture development organization; developing a wood pellet add-on for traditional oil furnaces; training for wood harvest contractors; using small-diameter trees for biomass feedstock; and forming a joint Aroostook-Washington county economic development district.
This measured, resource-based approach to economic development is a departure for the counties, says Ouellette. "It was once nothing more than a shotgun approach where you hope, pray and believe [businesses] will come to Fort Kent. We did not have the same level of recognition and appreciation of our intrinsic assets," he says.
Maine's northernmost county is uniquely poised to defray energy costs through the use of biomass due to Aroostook's wealth of natural resources and forest products manufacturing facilities. The proximity of the biomass supply chain means that money spent on fuel stays in the state, and feeds the county's homegrown industries.
"Seventy-eight cents of every dollar spent on oil leaves the state, but for every dollar spent on biomass, 95 cents stays right here in the state. Anytime you can keep money in the state, that fuels economic growth," says Dorsey.
By Dorsey's estimates, 22 major commercial enterprises within the county have converted or are in the process of converting to biomass boilers. The effort has also seen five to 10 apartment buildings and up to 50 homes making the switch.
The GreenME initiative will not only help to create jobs in Aroostook and Washington counties, which rank last and fourth from last in the state respectively in median household income, but also lower heating and operating costs for homes and businesses, says Dorsey. "Energy savings is going to be vital for business retention and, from my perspective, business retention is just as important as growth," says Dorsey, who estimates he has saved $2,000 a year in home heating costs since he switched over to a biomass boiler four years ago.
Citing the county's lower-than-average income, older population and frigid climate, Dorsey says Aroostook is a sort of testing ground for the North American biomass industry. Biomass has been a growing source of energy in the European market for years. In 2010, consumption of bioenergy in Europe accounted for 70% of all renewable energy and is expected to keep rising, according to a report from the European Biomass Association.
Northern Maine Community College President Tim Crowley says an increased European demand for biomass offers an intriguing opportunity for the county's biomass producers. "There are markets in Europe that will be looking for pellets, and I think Aroostook County is in a tremendous position to be part of that," says Crowley.
The Aroostook-Washington county economic development district could play a vital role in breaking into the European market, says Ouellette. Topping that list of assets is the new $8 million bulk conveyor system and holding yard for wood chips and pellets recently installed at the Port of Eastport.
Carl Flora, president and CEO of the Loring Development Authority charged with redeveloping the former Loring Air Force Base in Limestone, says that investment around bioheat could be a game-changing economic driver. He says the authority is contemplating installing a multi-building biomass boiler.
"There are certainly a lot of scenarios where a biomass-based industry could take hold here. We're centrally located with the county and we believe it may be the key to a new level of prosperity for the region," he says.
Delivering service
The growing awareness around the savings associated with biomass has prompted some local businesses to expand into the pellet business. Dan Vaillancourt, president of Fort Kent's Daigle Oil Co., says increased activity around pellet boilers convinced him to go into the emerging market four years ago, selling and servicing pellet boilers and stoves.
With the GreenME initiative now under way, Daigle is set to delve further into the biomass heating market. Purchasing pellets from Ashland's Northeast Pellets LLC, Daigle will begin bulk pellet delivery service to customers in Aroostook and Penobscot counties starting in mid-May.
The delivery service will help address one of the biggest obstacles cited by those who are considering biomass heating, according to Vaillancourt: It needs to be as easy and efficient as fossil fuels without costing much more. Older consumers might see the economic benefits of biomass, but aren't eager to lug 40-pound bags or refill a stove in the middle of the night.
"We have an elderly population, so one of the challenges the working group addressed was home delivery," says Dorsey, adding that the average residential customer would go through six to eight tons of biomass a year. "While there are savings, it is work."
The Daigle pellet service, branded as DOC Bioheat, will offer bulk delivery service, made practical by a newer generation of pellet boilers from European manufacturers that are both self-cleaning and self-feeding.
"Our focus is on higher-end European boilers that are designed for storage and bulk supply," says Vaillancourt. "There is certainly potential for a market to develop, but the installation of these European boilers is not an insignificant cost."
Loans for stoves
Pellet boilers can deliver heat at a cost of $12 cheaper per million BTUs than No. 2 heating oil, according to the Maine Pellet Fuels Association; they also can range in cost from $8,000 to $25,000.
The issue of financing is compounded in the counties, where lower home values mean less equity to leverage for biomass investment. To address that, the Mobilize Northern Maine team reached out to area credit unions to establish a new type of loan. County Federal Credit Union, headquartered in Caribou, and Acadia Federal Credit Union, based in Fort Kent, have responded.
The County Federal Credit Union offers a new loan to members of up to $12,000 over 72 months with 5.95% fixed interest for renewable energy investments. Acadia has a similar product.
"Traditionally a home equity loan would help finance this, but for people who don't have enough equity to take out another mortgage, there was kind of a roadblock," says Dan Bagley, vice president of lending at The County Federal Credit Union. Although the new loan represents some risk to the credit union, the potential for cost-savings associated with biomass convinced the organization to roll the dice, he says.
As owner of Northeast Pellets, Matt Bell recognizes switching a heating system to biomass fuel can be expensive.
"One of the big hurdles, especially on the residential side, has been strictly the capital cost of the appliances and getting them installed," says Bell.
He's hopeful initiatives like the heating loans will help fuel demand. His manufacturing facility currently operates at 50% capacity; an increase in biomass boilers will mean more demand for his pellets and the opportunity to hire more workers, he says.
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