I recently had the opportunity to talk with a municipal officer in a small Maine town. As in so many small towns, the large, old town office building has an old, inefficient oil boiler in the basement in desperate need of replacement. And, as in so many small towns, financial pressures force choosing allocations among many good options with the limited resources available.
In this particular case, loan money was readily available at 4.5% interest, and pellet fuel was available at a good price for a large customer.
After doing the arithmetic, the municipal official was surprised to find that changing out the building’s boiler was “better than free” in several ways. Here are excerpts from an e-mail I sent the town official after the visit.
Dear [municipal officer,]
I did not stop by this morning to sell you a boiler. I did stop by to get your opinion on available interest rates. Thank you for your help.
At the same time, I can’t help but point out an opportunity for you that works with, or without, [grant funding]…
If I use the following assumptions:
* #2 oil use: 2500 gallons/year
* #2 oil cost: $3.80/gallon (actual current price)
* pellet cost: $210/ton
* pellet use: 20.59 tons (energy equivalent of 2500 gallons of oil)
* installed system cost: $32,000
* full system: financed at 4.5%
* payment term: 15 yrs
I arrive at the following results:
* current annual oil cost: $9,500
* annual pellet cost: $4,353.23
* annual debt service: $2,937.60
* total pellet fuel cost and debt service: $7,290.83
* net annual cash savings: $2,209.17
Obviously, if you can make a down payment on some part of the system, your savings improve noticeably. It should also be clear to anyone paying attention that oil prices will only continue to go up. Pellet prices have remained stable, or declined, over the past decade; there is no reason to expect them to increase beyond CPI increases in the foreseeable future. Maine Energy Systems will guarantee its fuel price until June 30, 2014.
This model demonstrates that you can have a brand new, renewable fuel boiler system in [your municipal building] with no immediate out of pocket expense and spend less money annually on fuel and debt service than you’re currently spending on fuel alone. We call these systems “Better than Free.”
You can confirm my figures, and play with other models, by using the calculator at
If you’d like me to address [your elected officials] about this, I’d be delighted to do that.