Former ski resort exec launches wood-pellet venture
With oil prices continuing to rise, a former ski industry mogul who is also a former part-owner of the Boston Red Sox has started a venture that aims to convert thousands of home heating systems in the Northeast from oil to wood pellets.
Les Otten is investing $10 million to launch Maine Energy Systems, which will import pellet-fueled boilers from Europe and install them in homes beginning this summer.
The company initially will focus on Maine, with Otten hoping to switch 10 percent of the state's oil-burning residences - about 44,000 houses - to pellets within five years. The company, of which Otten is the lead investor, also plans to expand to New Hampshire, Vermont, Massachusetts, and New York.
With oil prices topping $125 a barrel, wood pellets provide cheaper energy for those willing to spend money to install a new furnace, Otten said. Currently, about 80 percent of Maine homes are heated with oil or kerosene, the highest share in the nation.
"This is like a giant social experiment," Otten said. "Our surveys show people want to switch from oil, but are they really going to do this?"
(A photo from Maine Energy Systems' website shows a boiler designed to burn pellets.)
There are risks with the venture. Decreases in oil prices could negate the cost advantage of wood heat, and there are questions about whether certified technicians can be trained fast enough to install and service the boilers.
Also unclear is whether buyers will spend $12,000 for pellet heating systems, which is nearly twice as high as a typical oil boiler. The company calculates that an average home, burning seven tons of pellets, will save roughly $2,300 a year.
Energy prices are particularly volatile now, and consumers should be cautious about switching from oil to save money, said Jamie Py, executive director of the Maine Oil Dealers Association.
"Oil prices could drop anytime and wood pellet prices could rise," Py said. "You've got to look past the hype."
Otten bought the Sunday River ski resort in Newry in 1980 and used it as the foundation to create American Skiing Co., which purchased Maine's Sugarloaf ski resort and resorts in five other states. Otten was eventually forced out of American Skiing and became a minority partner of the Red Sox before selling his stake in the club last year.
Most recently, he has been active in real estate development and other business ventures while taking an interest in renewable energy issues and heading a wood-to-energy task force formed by Gov. John Baldacci.
Maine Energy Systems' business plan calls for the sale of fully automated boilers made by Bosch Thermotechnologies, an arm of the large German appliance maker.
The technology is far different from traditional wood boilers, which require users to keep cords of wood and feed the wood into the furnace by hand.
Instead, a fleet of delivery trucks will pump pellets into storage tanks, where they can be automatically fed into the boilers, Otten said. The boilers produce less pollution and less ash residue than outdoor boilers and conventional wood stoves because they use a refined product that is burned at high temperatures, he added. (AP)