Aug 31, 2022   SOURCE: BusinessWire

With an Energy Crisis Likely This Winter, U.S. Pellet Producers Strongly Urge Consumers to Plan Ahead

Wood pellet producers across the U.S. are urging owners of pellet heating appliances to secure fuel early. This is primarily due to the significant supply hole created by the Russian invasion of Ukraine, as well as the high prices of oil and natural gas, which will have many consumers switching to pellet heating.

Russia contributed more than 2 million tons of wood pellets to global pellet markets in 2020. Next to the U.S., the country is the second largest producer globally, but sanctions and restrictions due to the war have upended wood exports, putting the onus on U.S. pellet producers to fill the gap.

“The demand to fill these missing tons from Russia is being felt throughout the world, including here in the United States,” says to Tim Portz, Executive Director of the Pellet Fuels Institute (PFI), a trade association representing manufacturers of wood pellets in the U.S. and the companies and organizations that support them.

Although pellet inventories in the U.S. are strong right now, pellet producers are highlighting the importance of keeping inventory moving through the system in the run up to the heating season. Lignetics Group, the largest residential wood pellet manufacturing company in the U.S., notes that strong late summer sales will allow producers to run at full throttle and build inventory before usage begins to outpace production in the depths of winter.

“This is an incredibly uncommon situation to be in, and it’s why we’re getting the word out to consumers,” says Brett Jordan, the CEO of Lignetics Group, which has the capacity to produce more than 1 million tons of wood pellets each year. “We strongly urge people to secure a good portion of what they will need this winter now versus later.”

The Russian invasion in Ukraine isn’t the only reason pellet demand will be significant for the 2022-2023 heating season.

“Heating oil, natural gas, electric and propane prices are nearing historically high levels,” Portz says. “And we know this leads to increased use of wood pellets with consumers who have both oil and pellet appliances in their homes."

In some cases, depending on the region in the U.S., the price of heating oil can be 47% more expensive than wood pellets. “Wood heating pellets are a renewable, sustainable and more cost-efficient option, so we’re likely to see both new customers this year and customers who have multiple heating options choosing pellets instead of oil, propane, or electricity,” Jordan says.

In the past five years, annual pellet sales have fluctuated between 1.7 million and 2.2 million tons, according to the U.S. Energy Information Administration, and exports are already outpacing 2021 numbers. “These numbers illustrate how dynamic and unpredictable wood pellet demand can be,” says Portz. “If we have a colder than average winter, I think a record sales year is possible.”

Wood pellets are used as primary or secondary space heat in more 1 million homes in the U.S. They are made from the waste streams generated by the manufacturers of primary and secondary forest products like dimensional lumber, hardwood flooring, wood pallets and cabinetry.

About the Pellet Fuels Institute

The Pellet Fuels Institute (PFI) is a trade association representing the manufacturers of wood pellets in the United States and the companies and organizations that support them. The PFI is dedicated to raising awareness about the benefits of using wood pellets to heat homes, businesses and institutions and ensuring that consistent, high-quality product is readily available in the marketplace. For more information, visit pelletheat.org.