IRS issues guidance on biomass stove tax credit

On Monday, June 1, the Internal Revenue Service issued its guidance for the consumer tax credit for the purchase and installation of efficient biomass-burning stoves. This tax credit is for 30% (up to $1,500) of the cost of a biomass-burning stove that is at least 75% efficient.

Flickr Account

I opened up an account on Flickr to post photos to.

Wood yard project

Over the last couple of days, Michigan Wood Pellet Fuel has been shut down so we could expand the capacity of the wood yard. The wood yard is where we store all of our wood chips and processed wood chips before they are pelletized. Expanding the wood yard will allow us to accept more chips during the week and allow for better wood sorting. This should allow us to increase production marginally. The project involved pouring a new slab of thick cement and moving our primary hammer mill across the property.

We hope to execute another project later in the summer which will greatly increase production. Stay tuned.

Pellets vs. Propane

Over the last several weeks I have heard from many of our wood pellet dealers that consumers are holding off on taking advantage of early buy offers for pellets due to the fact that propane continues to drop in price. It is true; propane has come down significantly over the last several months, compared to the high prices we witnessed last year.

The purpose of this posting is to offer a comparison, based on dollars spent per British Thermal Unit (BTU), of wood pellets vs. propane.

At a pre-season price of $225 per ton of wood pellets (I have seen them cheaper recently,) it costs the consumer $16.80 per million Btu. How did I arrive at this calculation? Assuming wood pellets produce ~8,000 Btu per lb and the typical pellet stove is 87% efficient, then your net output is 6,960 Btu per lb. The total output per ton is therefore 13,920,000 Btu per ton of wood pellets.

$225/13,920,000 Btu * 1,000,000 = $16.10 per MBtu

At $1.64/gallon of propane (recent pre buy price I was quoted by a dealer in Southwest Michigan,) it costs the consumer $19.50 per million Btu. Assuming that one gallon of propane produces 91,330 Btu and assumes that propane furnaces are 92% efficient, therefore the net output per gallon is 84,023 Btu per gallon.

$1.64/84,023 Btu * 1,000,000 = $19.50 per MBtu

$16.80 per million Btu for wood pellets vs. $19.50 per million Btu for propane represents a 17%+ discount on wood pellets vs. propane.

With crude nearly reaching $60 per barrel today, one can only predict one direction for the price of propane and every other fossil fuel, up! Also, you can feel better about using wood pellets because they are carbon neutral and keep your money here in the states!

Let me know what you think! - jmoran@wspellets.com

This particular posting was written to our audience of dealers and consumers located within a 200 mile radius of our pant in Holland, MI.

Pellet Stove Demand in '08

I recently had the opportunity to attend the Hearth Patio & BBQ Association Expo in Reno, NV. I learned that 2008 was a banner year for pellet appliances, shipments increased by 161% over 2007 shipments. This should result in close to 500,000 tons of new demand for wood pellets.

Get your orders in soon.

New Season

The 2009/2010 season is upon us, believe it or not. Pellets are already arriving at many of our dealers. No one wants to feel the crunch that we felt last summer, so consumers and therefore dealers, are already securing their fuel.

We have added several new dealers throughout the region. Please visit www.michiganwoodpellets.com and click on the dealer locator button along the navigation bar.

This summer we hope to further increase production. We have the opportunity to increase production by 20%. Stay tuned.

Big News

As part of the recently signed federal government stimulus package, our industry has scored a huge win! A consumer tax credit, of up to $1,500, will be provided for the purchase of a 75% efficient biomass burning stove in 2009 and 2010. Click on the link above to learn more about what it means. A big thank you should go out to the Pellet Fuel Institute and our industry leaders who helped make this happen.