By Dutch Dresser

On March 13, 2012, the Mass Energy Consumers Alliance website reported average Massachusetts heating oil prices to be $4.12/gallon. In Maine the government website on March 12, 2012, reported a statewide average price of $3.86. Assuming these to be the new baseline oil prices from which future increases will grow, it is interesting to look at some options for ordinary homeowners.

It is common for us to get calls from people whose homes are currently burning 1200 gallons per year. It is also common for many of those people to find it difficult to manage cash payment for the installation of a new renewable energy heating system in their homes. Even with the cost of commonly available financing, the savings associated with heating those homes using wood pellet central heating systems instead of oil-fired systems are significant.

At $3.86/gallon, a house burning 1200 gallons of oil would spend $4,632 a year on oil if there were no finance or carrying charges added onto the cost of fuel.

Loose bulk wood pellets delivered by Maine Energy Systems directly to the residential storage unit would provide the same heat from 10 tons of pellets for $2,390 with a price that is guaranteed through June 30, 2014.

A 20KW MESys/OkoFEN boiler system with a 3-ton storage system would serve this home well and would cost about $18,000 all installed. For many homeowners a cash expenditure of that size would be difficult. However, if the homeowner financed the system with a 20% down payment ($3,600) at a rate of 4.5% for a 15 year term, monthly payments would be $110.16, or $1,321.92 for the year.

That makes the total annual expenditure for heating fuel and payment for the brand new heating system $3,711.92, or $911.08 less than the same heat using #2 heating oil at today’s average oil prices in the old oil-fired system.

The pellet fuel price advantage is very apt to improve over time. The Mass Energy Consumers Alliance website provides the following heating oil prices for the March 15 over the past three years:

  • March 13, 2012: $4.12
  • March 1, 2011: $3.77
  • March 16, 2010: $2.86

Maine Energy Systems loose bulk pellet prices for the same period:

  • March 2012: $239/ton ($1.99/gal oil equivalent)
  • March 2011: $235/ton ($1.96/gal oil equivalent)
  • March 2010: $280/ton ($2.33/gal oil equivalent)

It should be noted that the current price of $239/ton ($1.99/gal oil equivalent) is guaranteed for new MESys boiler customers through June 30, 2014.

The trendlines are clearly different.

Dutch Dresser is the Managing Director of Maine Energy Systems in Bethel, Maine