From the Director’s Desk: May Biomass Densified Fuel Report Data Released, Pulling for Reprise of the '18-'19 Heating Season, Pellet Appliance Tax Credit Data Released
May Biomass Densified Fuel Report Data
The data:
Production - May 2024 - (5-year average)
East 75,173 tons (78,958 tons)
South 11,313 tons (18,960 tons)
West 29,550 tons (33,403 tons)
U.S. Total 116,036 tons (131,320 tons)
Sales - May 2024 - (5-year average)
East 59,120 tons (60,195 tons)
South 13,830 tons (32,544 tons)
West 22,945 tons (15,801 tons)
U.S. Total 95,895 tons (111,849 tons)
Inventory – May 2024 – (5-year average)
East 231,704 tons (134,428 tons)
South 53,229 tons (38,771 tons)
West 108,471 tons (60,667 tons)
U.S. Total 393,404 tons (233,866 tons)
The story of the latest data release from the EIA’s Monthly Densified Biomass Report must be the pellet inventory levels across the country as May closed out. At 393,404 tons wood pellet inventories are as high as they have been since October of 2017. The June and July data sets will be interesting to see. Considering that standing inventory at the end of April had already eclipsed 350,000, I thought May would show a bigger drop in production. Only the South showed the kind of reduced output I might have expected. Both the West and East were off the 5-year average, but not by much. At this point, it seems inevitable that the high-water mark for the summertime wood pellet industry will reach 400,000 tons…
Pulling for a Reprise of the '18-'19 Heating Season
…so, I’m rooting for a reprise of the 2018-19 heating season. In July of 2018, producers had a stockpile of 373,693 tons. To be fair, 2018 found producers just two years into the Densified Fuel Report being published and the industry was still searching for some balance. Still, the lessons of the heating season are relevant. Starting in September of 2018, sales took off. Producers sold over 200,000 tons each month. October of 2018 saw producers sell a whopping 289,000 tons, the highest monthly total in the report’s 9-year history. The sector will need strong sales this heating season to bring the inventory numbers around to the levels we’ve experienced for the past five years. The 5-year average for inventory in March before this year was 160,371. As March closed out earlier this spring, the industry had over 300,000 tons on the ground. We won’t have to wait that long to get a feeling about where we might end up. In that famed '18-'19 heating season inventory took a 100,000-ton step down in September. That year, there must have been a run on early freezes, cold mornings, and people wearing mittens to football games.
Pellet Appliance Tax Credit Data Released
As this edition of the Pellet Wire was being written, I received an email notice directing me to a report on using the federal income tax credit for wood and wood pellet-burning appliances. The report was generated by the IRS and uses data from Form 5695 “Residential Energy Credits.” Already, I’m finding myself wishing for more granularity and detail. Let’s start by looking at what the report does tell us. In 2023, a claim for a “Biomass Stove and biomass boiler” was indicated on 48,180 federal tax returns. The total amount indicated on those returns was $251,557,000 with an average of $5,221 per return. My current interpretation, based on a review of the 5695 form, is that the $5,221 average is the total price of the installation. The credit, you’ll remember, is for 30% of the installed cost capped at $2,000 and a 30% credit against the average of $5,221 is just over $1,500. Already the list of things we wish the report would tell us is being written. Can I see these credits distributed across states? Can I see which of the $5,221 credits were wood pellet appliances? What percentage of wood pellet appliance sales in 2023 qualified for a tax credit? There is state-level data, but unfortunately, the data has been aggregated, mixing biomass stoves in with efficient air conditioner (and other qualifying technologies) deployments. So, while it is great to know that in Maine 21,730 filers (about 3.5% of all filers in the state) submitted a Form 5695 the data about which technologies were deployed is not shared. Certainly, it was captured, but the IRS hasn’t released the data set with that level of granularity. The PFI will make a request and I suspect we won’t be alone. If I represented manufacturers of ultra-efficient air conditioners, I’d have the same question. There’s good intel here and I suspect we might be able to shake loose even more detail in the coming weeks.
—Tim Portz
Executive Director
