July 19, 2012 | Volume 42, No. 29

Borough pursuing pellet heat project

Apparently bucking the recommendations of a draft report by an energy consultant it hired, the Haines Borough is pursuing a wood-pellet-fired boiler for its public safety building.

Mayor Stephanie Scott, an advocate of wood heat, said last week the borough would pursue purchase of such a boiler, following meetings with Nathan Soboleff, natural resource planner for Sealaska regional Native corporation, and Matt Bray, a representative for pellet-boiler manufacturer Maine Energy Systems.

“They are pressuring us to become pelletized. Given their encouragement and knowing as we know Alaska Energy Authority’s enthusiasm for wood heat, we are going to move forward with some further analysis and probably an application for installation of a pellet-fired boiler, probably in this very building,” Scott told the assembly.

The borough recently paid $25,000 for a report by Alaska Energy Engineering that recommended against use of pellets in several borough buildings at this time, due in part to high maintenance and construction costs.

The report’s draft did not study the public safety building specifically but found pellets to be more expensive than oil for the administration building, public library, vocational education building, the school and pool, sewage treatment plant and the Chilkat Center.

“The prudent course of action is to wait and see how this energy source plays out over time. Important signals will be the influx of private money into the industry and favorable long-term assessment of the resource that reduce risk. There is little lost in waiting as the economics do not currently provide a strong incentive to invest in wood heating,” wrote energy engineer Jim Rehfeldt.

Rehfeldt based his findings of Sealaska’s cost of $360 per ton for pellets. Even in the Pacific Northwest, where pellets are $190 a ton, there hasn’t been a mass switch to pellets, Rehfeldt told assembly members about a month ago. “They’ve got the roads. All the manufacturers are there. All the wood’s there,” he said.

Pellet boilers have half the expected life service of oil burners and require daily, weekly, monthly and biannual maintenance, including work requiring specialized training, Rehfeldt wrote in his draft report to the borough in June.

Borough officials, however, are expressing skepticism about Rehfeld’s draft and are particularly critical of his projected maintenance costs.

“The Rehfeldt study is being re-analyzed,” Scott said. “There are questions about some of his assumptions, including the maintenance costs. There are more technically advanced boilers.”

Sealaska, a regional wood-pellet supplier, is “anxious to include us in their pellet-supply stream,” Scott said. “They’re looking at us as a test case. Will it work in Haines?”

Maine Energy Systems is interested in selling the borough a wood-pellet boiler at cost, for $60,000, as a demonstration project and with the idea the borough might buy others, said borough executive assistant Darsie Culbeck. “We’d be a beacon for them, an advocate for their brand.”

Borough officials are looking at the public safety building because an oil boiler there already needs replacing, he said. The system under consideration would come in a housing that would be attached to the building and include storage for 14 tons of pellets, a half-year supply, he said.

The boiler and housing could be picked up with a forklift and moved to another building, he said.

Manager Mark Earnest said last week the borough would seek a grant from the state for final design and construction of a pellet boiler. “We have hurdles to overcome. We don’t know the costs yet. A bit of work will go into a funding request.”

But Culbeck said this week that grant funding might be used to repay borough money spent to bring the MES system on line this year. “This is an opportunity to get it in this year and see what it will do.”

Sealaska is guaranteeing a pellet price of $350 per ton delivered for one year, he said. In addition, buying the MES boiler at cost will save the borough $25,000, Culbeck said.

Culbeck cited Sealaska’s estimate that pellets at $350 per ton would be equivalent to diesel power at $3 per gallon. “Our diesel is $4.50, so then (the difference in cost) is about maintenance cost and construction cost differentials.”

Culbeck said he expected the final draft of Rehfeldt’s study would be amended with new information and may be more favorable to a pellet system.

Sealaska installed a pellet burner in its four-story downtown Juneau building about three years ago. In a 2009 Juneau Empire story, Soboleff said “the whole spirit of this job is to create demand” for wood pellets in Southeast.

The 2009 Empire article quoted Soboleff saying the Sealaska building was to burn a little less than 300 tons of pellets a year, but a pellet-mill in Southeast would need to sell about 20,000 tons annually to be successful.

Rehfeldt’s draft study reported the Chilkoot Indian Association has studied building a wood pellet plant in Haines, using wood from the Yukon Territory or Haines State Forest. But the local tribe “doesn’t have firm plans” to go ahead with the project, Rehfeldt reported.

The draft study found the tribe currently is paying $420 per ton plus labor to fuel a pellet boiler at two new apartment buildings in the Chilkoot Estates subdivision.

Rehfeldt said at a recent meeting here that it’s difficult to determine the economics of existing, pellet-burning boilers at large buildings like Sealaska’s, and at a Coast Guard facility in Sitka because the owners of the facilities haven’t disclosed information that would allow for a full evaluation of costs.

Chilkoot Indian Association tribal administrator Dave Berry said this week the Rehfeldt study inaccurately portrayed the tribe’s thinking on a pellet plant.

Berry said the tribe recently commissioned a feasibility study on a plant here that would create 2,500 tons of pellets per year, using wood from the Yukon Territory and the Haines state forest.

The report was positive, Berry said. “We are seriously looking to go forward with it,” he said.

Berry said the tribe saw “substantial savings” by heating a new apartment building in its Chilkoot Subdivision with pellets last winter.

Advocates of wood heat say increased maintenance cost for wood should be balanced with the benefit of creating new, local jobs. They also say wood heat is friendlier to the environment than reliance on heating oil.