Why are wood pellets so expensive?

Wood pellets themselves are actually not expensive, coming in much cheaper than such alternatives as oil, propane or electric heat (depending on where you live). However, there is an upfront cost of a wood pellet stove or furnace, and good ones are not cheap. The idea is that you’ll incur a short payback period and save money in the long-term by converting to wood pellet systems, all while reducing your carbon footprint.