Wood pellets spell opportunity for investors (MN)

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http://www.businessnorth.com/briefing.asp?RID=2310

With oil and natural gas prices showing no signs of retreat, industry experts say wood is an alternative to fossil fuels. In northern Minnesota and Wisconsin communities where the timber sector is struggling, a shift to biomass fuels provides hope, and investor opportunity.

One notable bright spot is wood pellet production. A recent study by Bill Berguson, forestry program director at the University of Minnesota Duluth Natural Resources Research Institute, concludes pellet stoves burn about 20 percent more efficiently than wood burning stoves and are within a few percentage points of both propane and natural gas furnaces.

As appealing — at least for now — is the reasonable price of pellets. Berguson predicts more people will turn to wood pellet heating where their only alternatives are propane or heating oil. “Replacement of propane or heating oil with pellets is economically attractive to many homeowners,” Berguson said. “After factoring costs and combustion efficiencies, the cost of pellet-derived heat is a little more than half the cost of oil or propane.”

The waste wood for pellets comes from two main sources: sawmills and woody residues left on the forest floor after harvesting. Both sources are abundant in the region.

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