Otten makes 'green' business push
Toolbox
By Bruce Edwards Staff Writer - Published: March 1, 2009
Les Otten has never shied away from a challenge. The former ski magnate has taken his well known energy and passion to his newest endeavor — helping to wean New England and other cold weather states off their dependence on foreign oil.
Last year, Otten and two partners pulled together roughly $10 million and started Maine Energy Systems (maineenergysystems.com) with the goal of outfitting homes in Maine with wood pellet furnaces imported from Europe.
Otten's timing couldn't have been better. With the price of home heating oil soaring hovering near $5 a gallon last summer, homeowners became open to alternative and less expensive modes of home heating. Pellet and wood stove sales jumped.
While pellet stoves heat a large area, Otten's company takes it a step further with imported Bosch pellet furnaces that replace a home's existing oil furnace. So far, Maine Energy Systems has sold 100 pellet boilers.
While saying business is reasonably good, Otten also acknowledged that interest in his pellet-fired home heating system has cooled somewhat coinciding with a sharp drop in oil prices that began in the fall.
"It hasn't eliminated their interest but it's taken the emergency need off of it," Otten said from his headquarters in Bethel, Maine. "But I don't think there's any long term prognostication that oil is going to stay at $40 a barrel."
Otten said wood energy is just one green energy solution along with wind, solar and geothermal. He said the more renewable energy the country can produce the less reliance on foreign oil — a finite resource with dwindling reserves.
The benefits of alternative energy sources are both economic and environmental. Otten said it means less money going overseas and a carbon footprint that's much less than produced by fossil fuel.
"Time and education I think are the keys to transforming New England into being a little bit more energy responsible then we have been," he said.
For a homeowner, it will also take money.
While a pellet stove can cost $4,000 or more, retrofitting a home's heating system with a wood pellet boiler costs between $13,000 and $18,000, depending on the size of the house. Otten said that's an average of $5,000 more than an oil furnace.
Pellet boilers are fed automatically from a storage bin in the basement or outside. Unlike pellet stoves that are fed daily with 40 pound bags of wood pellets, Otten's company has a network of dealers that make bulk pellet deliveries.
Bulk deliveries save money. While wood stove pellets cost upwards of $300 a ton, Otten said bulk pellets in Maine run between $240 and $280 a ton, delivered.
He said pellet furnaces are self-cleaning and fully automated with adjustments made based on outside temperature and the Btu value of the type of wood pellets used.
Otten's foray into the renewable energy business comes after years of making a name for himself in the ski business. In 1980, he purchased the struggling Sunday River ski area in Bethel, Maine from his employer, Sherburne Corp., which owned Killington Resort. He built upon the success of Sunday River and later acquired Killington's parent company and its stable of ski resorts. It made Otten's American Skiing Company the largest ski resort operator in the United States. But critics say Otten's appetite for growth far outpaced his pocketbook and that eventually led to the demise of the company which was forced to sell off its resorts one by one.
Never one to look back, Otten moved on and facilitated the purchase of the Boston Red Sox, bringing together Tom Werner and John Henry. It also gave Otten a minority ownership in the team which he sold after the team won the 2004 World Series.
According to The Governor's Wood-to-Energy Task Force Report, Maine per capita is the most heating oil dependent state in the country with 440,000 households consuming an average of 900 gallons of heating oil a year. At a July 2008 price of $4.64 a gallon that amounts to $4,100 per Maine household.
The multi-stakeholder task force, chaired by Otten, concluded that wood-to-energy can lower the cost of home heating with the cost per Btu of energy from wood chips or wood pellets approximately 25 percent to 50 percent the cost of the same Btu generated from No. 2 heating oil.
The report (www.maine.gov/doc/initiatives/wood to energy/task force.html) also noted that pellet stoves are "very efficient and clean burning."
The 36-page report issued in September said that wood pellet furnace systems are common in Europe and that 80 percent of new homes in Sweden and 76 percent of new homes in Austria are constructed with pellet fuel central heating systems.
A large-scale switch to wood energy would increase demand for wood and Otten said Maine can handle the increased demand without any environmental damage.
"The northern New England forest is growing at a much greater rate than it is being harvested," he said.
The report cited the Maine Forest Service as concluding that employing the correct management and harvesting practices the state over time "can increase sustainable and environmentally responsible yield per acre substantially above current levels."
The report went on to say that if 10 percent of Maine homes converted to wood pellet fuel, 650,000 tons of green wood per year would be needed to produce 340,00 tons of pellet fuel.
Maine has three pellet fuel mills that have a combined annual capacity of 400,000 tons. Vermont has no pellet mills but one is proposed in the Northeast Kingdom.
Most pellets are made from wood scraps from the logging and lumber industry sectors. But as demand for pellets increases so will the demand for more wood.
Otten's enthusiasm for wood pellets isn't shared by one of Maine's leading environmental groups.
"It was a very strange task force because it was headed by Les Otten who had this tremendous business interest in the outcome," said Nick Bennett, staff scientist with the Natural Resources Council of Maine.
Otten helped underwrite the task force's staffing costs, according to Bennett, something he called "odd" and "unprecedented."
Otten bristled when told of Bennett's comments saying that no one was paid to write the report and that the only underwriting was his secretary volunteering to send out the minutes.
He said the report is based on input from a diversity of interested parties including the Conservation Law Foundation and Bennett.
"By the way, it is a consensus report," said an obviously agitated Otten. "There are parts of the report I don't agree with either."
Bennett said choosing wood energy over heating oil isn't as simple as the pellet industry would have the public believe. For example, he said burning wood is not carbon neutral because trees take decades to grow back which doesn't address the immediate problem of climate change.
He also questioned the report's conclusion that Maine's forests could handle the increased demand if more households switched to wood energy.
Bennett said burning pellets made from wood waste is a good thing and that the stoves themselves are quite efficient. He added, though, that efficiency must be weighed against how much energy it takes to make the pellet fuel and the cost of transportation.
Robert De Geus, a utilization forester with the Vermont Department of Forests, Parks and Recreation, said the state's forests have the capacity to handle increased demand provided quality forest management and forest practices are adhered to.
Unlike Maine, however, De Geus said Vermont has a limited number of regulations on the books that address forest management. "It's a less robust environment for ensuring quality practices than Maine has," he said.
How much demand Vermont's forests can handle hasn't been quantified, but De Geus felt comfortable that with sound forest management practices the state could handle at a minimum a 10 percent increase in wood harvesting.
While Otten is bullish on wood energy, he said wood alone is not a panacea for the country's energy needs.
"Pellet fuel, biomass fuel from the forests of northern New England are a partial solution and I emphasize partial solution," he said. "Along with all the solutions we're talking about, conservation of energy and energy efficiency are paramount."
bruce.edwards@rutlandherald.com
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