Seeking Alpha

RedChip's  Instablog

RedChip
Send Message
RedChip's long history of success includes the first to issue independent research coverage on Starbucks in 1992. Other names RedChip discovered as they were on the cusp of becoming Blue-Chip stocks were: Nike™, MarketWatch.com™, Daktronics™. Over the years, RedChip has evolved into a... More
My company:
RedChip Companies, Inc.
My blog:
Smallcap Ideas
  • Wood Pellets Fuel Viridis Energy’s Business Growth 0 comments
    Aug 17, 2010 3:10 PM
    In recent years, there has been a dramatic and growing shift in renewable energy       fuels from oil and gas heating units to clean-burning wood pellets. Not only switching to wood pellets decrease the average household’s heating bill by 50% each month, it is the most environmentally friendly and practical home heating source, as it also burns  more efficiently than other wood fuel alternatives such as dried logs.  Wood pellets burn at a very high temperature, eliminating the waste product so often associated with wood-based fuel. According to the Wood Pellet Association of Canada, a forty-pound bag of pellets produces only three ounces of ash.

    Although at first glance it may appear to consumers that both wood pellets and logs are similarly priced, the heat value of wood pellets is three times more efficient because the pellets contain less moisture and are therefore more cost-effective than logs. The pellets are burned in pellet stoves, most of which have automated feed hoppers. Once the stove is filled with a bag of wood pellets, a person must only set the thermostat to the desired temperature and sit back and relax by the cozy fire. Without the hassle and mess of firewood ash, it is no surprise that more and more American families are turning to pellets as an alternative energy fuel during heating season. In less than five years, America’s pellet industry has transformed from virtually nonexistent to producing 2 million tons in 2009.

    In Germany, consumption of wood pellets is about 1.6 million tons per year. Wood pellets are used in 150,000 homes and businesses as a central heating fuel. The European market is booming, and Canada is the second largest pellet exporter. This is good news for Canadian company Viridis Energy Inc. (TSX: VRD.V), which exports over 90% of its production overseas. Viridis is a Vancouver, B.C.-based company in the green energy and biofuels sector. Specializing in wood pellets, the company has access to the largest supply of quality softwood in all of Canada. Viridis currently distributes four premium softwood pellet brands to the North American market: Okanagan Pellets™, Clean Burn™, Dragon Mountain™ and Surefire™.

    In a recent article in Biomass Magazine, writer Adrian Pirraglia explains a foreseeable surge in the global wood pellet industry as the number one choice for renewable energy. During the past four years, the global wood pellets market has experienced a dramatic increase. Global production went from almost 8 million tons per year in 2007 to more than 13 million tons in 2009, of which European countries consumed more than 8 million tons (2009). North America produced about 7 million tons in 2009, of which almost 5 million tons were intended for exports to Europe.

    According to the European Biomass Association, Europe is expected to reach a consumption level of 50 million tons per year by 2020, compared with 8 million tons in 2009. Leading countries in the consumption of pellets in Europe are Sweden, Austria, and Finland, while Germany, France and Italy are experiencing the largest market growth in both capacity and consumption of pellets. With a seemingly bright future for the wood pellet industry and the vast scope of resources at its disposal, this Canadian company has the potential to be the leading provider in its field as well as the opportunity to expand rapidly for years to come.

    Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.



    Disclosure: VRD.V is a client of RedChip.
Back To RedChip's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.