Pellet stoves make huge gains in market share

By Alliance for Green Heat | March 26, 2013

In 1999, pellet stoves only had an 11percent share of the stove market.  Nine years later in 2008, they had a nearly 43 percent market share.  Today, for every three stoves sold, two use cordwood and one uses pellets. For a technology that was only invented in 1980s, this is a remarkable innovation success story.

The large percentage of pellet stoves sold today is great news for air quality agencies since they operate far cleaner in homes than almost all wood stoves.  It’s also great news for the renewable energy community since a pellet stove burns 24/7 and is usually a home’s primary heat source.  Pellet stoves typically make as much or more energy than residential solar panels and drastically reduce a home’s fossil fuel. 

Manufacturers shipped 48,277 pellet stoves to sell in the U.S. in 2012, according to the Hearth, Patio & Barbeque Association (HPBA), a trade association that tracks the annual shipments of wood, pellet and gas stoves.  While 2012 sales were slow, the average pellet stove sales over the last five years was nearly 90,000 per year, according to HPBA data, a third of sales of wood stoves.

By contrast, wood stoves and wood stove inserts have sold an average of 137,000 units over the last five years.  Pellet stoves have not yet ever sold more than wood stoves, but they came close in 2006 and 2008.  It is likely only a matter of time before they top annual wood stove sales.  Ten years from now, it is not impossible that pellet stoves would start outselling wood stoves on a regular basis.

Pellet stoves and pellet fuel did not take hold until the mid 1990s, when the component parts of the stoves became more standardized, interchangeable and less expensive, according to Scott Williamson, one of the country’s foremost experts on pellet stoves.  Since then, reliability has improved and install costs are lower than wood stoves, giving them an edge in the marketplace, says Williamson.

Changing demographics also is likely to favor pellets.  “As our population ages, more and more people will be switching from wood to pellets,” says Charlie Niebling, a thought leader in the pellet industry and board member of the Biomass Thermal Energy Council (BTEC). “Programs to change out old wood stoves usually give higher rebates for people to install pellet stoves instead of a new wood stove, and that has helped the market share of pellet stoves,” Niebling adds.

Despite their lower particulate matter emission profile, pellet stoves have rarely been recognized in rebate and incentive programs as distinct from wood stoves.  The federal tax credit has always applied equally to wood and pellet stoves and the ongoing state incentive programs in Idaho, Maryland, Montana and Oregon provide incentives to both wood and pellet appliances.

A recent example of the surge in popularity of pellet stoves is from a stove rebate program run by the State of Maryland.  Maryland residents chose pellet stoves twice as often as wood stoves.  “We are pleased to see rebates for pellet stoves were more popular because we know that pellet stoves are more likely to be used as a primary heating device and are usually cleaner,” said Kyle Haas, the Bioenergy Program Manager at the Maryland Energy Administration

“This is an example of a new and effective renewable energy technology getting off the ground without significant government assistance,” says John Ackerly, President of the Alliance for Green Heat. “While this proves pellet technology can succeed in the market on its own, if it was treated like solar and geothermal in the federal tax code, many more consumers would have a very affordable way to reduce fossil fuels.  Solar, geothermal and wind are great for wealthier families, but pellet technologies are a way to scale up residential renewables far more quickly” Ackerly said.

 Pellet appliances are incentivized in Europe more often than cord wood appliances and have benefited from various green label programs, similar to the US Energy Star label.  There is no regional or national green label in the US that recognizes the cleanest and most efficient pellet or wood stoves, which likely adds to the sluggish sales of these appliances, compared to Europe. 

For the first time, the EPA will regulate pellet stoves as of next year.  In 1990, when the EPA first regulated wood stoves, it exempted pellet stoves.  This will mean that all pellet stoves have to be tested and certified by EPA approved test labs.  The EPA’s draft regulations, which are far from final, do not set strict emission limits.  The average pellet stove emits under 2 grams or particulates an hour.  The EPA’s draft requires pellet stoves to emit under 4.5 grams per hour. 

While pellet stoves have about a 30% market share in the US, in Canada pellet stove sales are only about 10% of the market, according to HPBA.  Data on pellet stoves is tracked by number of stoves that are shipped by manufacturers that year. The data HPBA produces is conservative in nature and that "the numbers HPBA produces for the industry are conservative, containing the vast number of units shipped, although the actual shipment numbers are probably slightly higher,” according to Don Johnson, Research Director for HPBA. Pellet and wood stove shipments also include pellet and wood stove inserts.   Most of the wood stove shipment data produced by HPBA does not include inexpensive wood stoves not certified by EPA.

The pellet stove market in the US is way behind the market in Europe and not just in terms of volume of sales.  For example, reliable, verified efficiencies are not reported by manufacturers of pellet stoves in the US, which may reduce consumer confidence and satisfaction for those who unknowingly buy more inefficient appliances.  And, there is no standardized way to report decibel levels on pellet stoves in the US and noisy fans are one of the biggest complaints of consumers. 

Two major developments that will help propel the industry forward is a pellet fuel standardization program and new regulations by the EPA that will require pellet stoves to report their efficiency.