Chilkat Valley News - Serving Haines and Klukwan, Alaska since 1966


Study: Pellet heat not economic for borough


Wood-pellet heat wouldn’t be cheaper than oil for Haines Borough buildings and it’s not clear it pencils out at public buildings elsewhere in Southeast where such systems are in place, Jim Rehfeldt of Alaska Energy Engineering told borough leaders Friday.

Heating the school and pool with pellets comes closest to breaking even, with life-cycle cost comparison of $5.22 million for oil versus $5.44 million for pellets, Rehfeldt said.

Rehfeldt was presenting the draft results of a grant-funded, $25,000 borough study aimed at researching the feasibility of using pellet-fired boilers in buildings here. Some area homes have switched to pellets and a pellet burner is used by Chilkoot Indian Association at an apartment complex in Chilkoot Estates subdivision.

But wood pellets are nearly twice as expensive in Juneau as they are in the Pacific Northwest and construction costs are higher here due to labor and material costs, said Rehfeldt, in his report’s summary.

In addition, wood systems require “considerably more maintenance” than oil and wood boilers last about half as long as oil ones, the report said.

“The prudent course of action is to wait and see how this energy source plays out over time,” Rehfeldt wrote, including tracking private investment into wood heat. “There is little lost in waiting as the economics do not currently provide a strong incentive to invest in wood heating.”

Some in the audience of were skeptical of the findings.

Resident Ron Jackson said the possibility of finding construction funds in grants or other non-local sources could help the economics of pellets. “If somebody else throws in 80 percent of the cost of construction, the whole picture changes, at least for the first life cycle.”

Borough Mayor Stephanie Scott said she’d like to see at least one borough building heated with wood in her lifetime. Reasons for switching to a pellet or wood system include becoming independent of oil and reducing damage to the environment, she said.

“When a pellet-filled tanker goes up on a reef, I’m not going to worry,” she said.

Scott said after the meeting that she’s not insensitive to arguments about cost.

“It matters what it costs. I’m not saying, ‘Hang the expense.’ But the price of anything is going to be volatile. I think we can say we want to use resources that are available locally,” she said.

The cost of maintaining a wood system, if it provides local jobs, isn’t strictly a cost, Scott said. “You can say that’s a cost. But that money’s also jobs.”

Rehfeldt said the cost of oil has increased 6.6 percent annually in the past 20 years. Pellets become economic when the annual increase reaches 8 percent, he said. “We’re close.”

Even in the Pacific Northwest, where economics for wood pellets are more favorable than in Southeast Alaska, there’s been no mass switch to wood heat, he said. “They’ve got the roads. All the wood’s there. The manufacturers are there,” Rehfeldt said.

A similar, grant-funded study on use of wood chips by the Haines Borough, conducted by engineering firm CE2 of Anchorage in 2010, found that it also wouldn’t be economic here.

A chip-burner used by the City of Craig was used at that time as an example of a successful system. Chips, as a waste produce of a Klawock mill, were provided free. But Rehfeldt said a new $250,000 chip drier is being installed there because the wood was still too wet. “It’s working for them but it’s not an economic success.”

The success of other large buildings burning wood pellets in Southeast can’t be gauged in part because owners aren’t sharing cost information, he said.

Rehfeldt said while waiting to see if the economics of wood heat improves, Haines could begin planning its energy future, he said. Each community in Southeast faces its own energy challenges and opportunities, he said.

A draft Southeast Alaska Integrated Resource Plan, developed by the Alaska Energy Authority and the Southeast Conference, makes a strong recommendation for wood heat conversions. But, Rehfeldt said, that plan failed an analysis of sustainability and cost throughout the region. “Without the analysis, the wood heating recommendation lacks basis,” Rehfeldt wrote.

Rehfeldt said there are many reasons why an individual or a group may want to convert from an oil system to wood heat, and they include environmental concerns. The price argument still isn’t there. “The push is ahead of the economics.”

Rehfeldt’s final draft will go to the Haines Borough Assembly for action. There will be opportunities for the public to weigh in on it, Mayor Scott said.