I see this question getting asked a lot: “Can I make my own wood pellets?” With pellet prices in Tasmania ranging from about $11 to $13 a bag (as of July 2025), I totally understand why people think about making their own wood pellets. The short answer is yes, technically you can make wood pellets at home. But here’s the thing – while it is possible to make your own wood pellets for your pellet heater – the reality is way more complicated and expensive than most people think. So, please, don’t try and make your own wood pellets. Read on below to understand why.
Why People Want to Make Their Own Pellets
Look, I get it. When you’re burning through pellets that cost $13 a bag or more, any way to cut costs sounds pretty appealing. Plus there’s something satisfying about being self-sufficient, especially here in Tasmania where we like doing things ourselves. You might have access to sawdust from a mate’s workshop, or live on a property with heaps of wood waste, and think “surely I can turn this into pellets and save a fortune.”
I had similar thoughts when I first got my pellet heater. Coming from a wood heater where I was constantly splitting and stacking firewood (and believe me, that got old fast living on a hill), the idea of making my own fuel seemed like a logical next step. But after doing my homework – and I mean really digging into this – I quickly realised it’s not as simple as it sounds.
What Actually Goes Into Making Wood Pellets
Making quality wood pellets isn’t just about compressing sawdust – there’s a whole complicated process involved that most people (myself included initially) don’t fully understand.
Getting the Raw Materials Right
First up, you need the right materials. And I’m not talking about just any old sawdust or wood scraps. Your materials need to have:
- The right moisture content – we’re talking 10-15%, which means most raw materials need serious drying first
- Consistent particle size – everything needs to be 3-5mm, no bigger, no smaller
- No contamination – one bit of metal or stone and you’ll wreck your equipment
- Good binding properties – softwood sawdust works best because of the natural lignin
I quickly learnt that the “free” sawdust from your local guy on FaceBook or Gumtree probably isn’t going to cut it without serious processing.
The Equipment You Actually Need
This is where things get expensive fast. To make decent pellets, you need:
Screening equipment to remove rubbish and get consistent sizing – we’re talking $3,000-8,000 for something that actually works.
Hammer mills to crush everything down to size. These things are serious bits of kit that use 37-100 kW of power, make a racket (100+ decibels), and cost $15,000-25,000 for a small one. Plus you’re replacing the hammers every 300-500 hours.
Drying equipment because most raw materials come in at 40-60% moisture and need to get down to 8-15%. A proper dryer will set you back $15,000-40,000 and uses massive amounts of power to remove the water from the raw material you need to evaporate.
The actual pellet mill – this is where the magic happens, but it’s also where costs really blow out. You can get small flat die mills for $2,000-15,000, but the reality is you need to spend $40,000-80,000 for something that’ll actually work reliably.
Cooling and finishing equipment because pellets come out hot and need proper handling.
The Real Costs Will Shock You
When I sat down and actually crunched the numbers (and I mean properly, not just wishful thinking), here’s what I found:
For a basic home setup that might produce 3-4 tonnes a year:
- Minimum equipment cost: $40,000-65,000 for something that actually works
- Operating costs: Sawdust and other raw material isn’t free, at least not anymore. Plus electricity an maintenance.
- Annual savings: compared to buying wood pellets it’s going to take decades to pay off.
If you burn a tonne of wood pellets a year, then you are looking at a payback period of at least 40 years. That’s why I said it just doesn’t make sense to make your own wood pellets.
Why Small-Scale Production Just Doesn’t Stack Up
If the above hasn’t already made it clear why there’s no point in trying to make your own wood pellets, here’s more reasons why making your own pellets is so much harder than people think:
You’re Competing Against Industrial Operations
The big pellet mills benefit from economies of scale that you just can’t match at home. They buy materials in bulk, run automated systems, and have professional maintenance. What costs them $70-120 per tonne in materials might cost you double or triple because you’re buying small quantities.
It’s Way More Technical Than You Think
Making good pellets requires understanding biomass science, industrial equipment operation, quality control, and safety protocols. It’s not like splitting firewood where you can just wing it – get the moisture content wrong, the particle size off, or the compression settings incorrect, and you’ll end up with expensive sawdust instead of pellets.
The Safety Risks Are Real
This isn’t something I see talked about enough, but pellet production involves serious safety risks. We’re dealing with combustible dust (explosion risk), high-powered rotating machinery, industrial electrical systems, and fire hazards. Most people just aren’t prepared for all the risks and things that can go wrong when you try to make your own wood pellets.
The Raw Material Reality Check
Even if you think you’ve got access to cheap or free materials, the reality is often different:
- Transportation costs add up fast when you’re moving bulk materials
- Storage requirements mean you need proper covered, ventilated space
- Quality issues with “free” materials often make them unusable
I’ve seen people say they have access to free sawdust or cheap wood waste that could be used to make pellets, but they didn’t think about how much it costs to transport, store, and process the raw material so it can be used to make wood pellets.
What About DIY Equipment?
You’ll find plenty of YouTube videos and forum posts about building your own pellet mill. Trust me, I’ve watched them all. But the reality is these machines just aren’t meant to make wood pellets. They are great at making feed pellets but that’s it.
Homemade pellet mills typically produce poor quality pellets with lots of fines, break down constantly, and present serious safety hazards. The small wood pellet machines just aren’t up to what it takes to compress and produce wood pellets like a commercial machine.
When It Might Actually Make Sense
Now, I’m not saying it’s impossible for everyone. There are a few scenarios where small-scale pellet production might work:
- Large property owners with abundant on-site wood waste and existing equipment like screener and hammer mill
- Small commercial operations producing 50+ tonnes annually with secured material contracts
- Community cooperatives where multiple households share equipment and costs
But for the average pellet heater owner wanting to heat their house? The numbers just don’t add up. So please don’t waste your time trying to make your own wood pellets.
Better Ways to Save Money on Pellets
Instead of trying to make your own wood pellets for your pellet heater, here’s what I’ve found actually works:
Buy Smart
- Buy in bulk during summer and spring when prices are lower
- Coordinate with neighbours for group purchases if you can’t bulk buy alone
- Find reliable suppliers who offer delivery discounts
I buy 30 bags at a time and store my wood pellets under the house. Much easier than dealing with production equipment.
Improve Efficiency
- Insulate properly – I spent money insulating my 1996 house and it made a huge difference
- Use timers and WiFi to avoid running the heater when you don’t need to
Consider Alternatives
Heat pumps aren’t as warm as pellet heaters but they work fine when it’s not super cold. Consider using a heat pump when the days are cool. They are very efficient and the cheapest form of heating, but they just don’t put out the same kind of heat as a pellet heater, so use them on cool days and not the middle of winter.
The Bottom Line
Look, I love my pellet heater. After dealing with the hassle of wood heating for years – splitting, stacking, drying, storing, moving firewood up a bloody great hill – heating with a pellet heater is much better than a wood heater for me. But making your own pellets? That’s taking on way more work and expense than most people realise.
The pellet industry exists because large-scale production creates efficiencies that small operations simply can’t match. When you buy commercial pellets, you’re benefiting from decades of industrial optimisation. The quality is consistent, the supply is reliable, and you know what you’re getting.
My advice? Spend your time and money on making your house more efficient and finding good pellet suppliers with competitive pricing. Leave pellet production to the professionals and focus on what matters – staying warm and comfortable without the hassle of firewood.
The reality is: Your time and money are better spent enjoying your pellet heater rather than trying to manufacture the wood pellets yourself. I’ve done the research so you don’t have to, and trust me, buying pellets is the way to go.
That’s my take anyway. If you found this useful, come join us in the Tasmania Pellet Heater Owners Facebook group where we talk about all things pellet heating. If you’re new to pellet heaters, check out my beginner’s guide to pellet heaters to get started. Happy heating! 🙂
