With winter on the way, business appears to be warming up once again for Martin Lunde and his Garn WHS wood-fired heating systems.

Lunde, a consulting engineer, began developing his high-efficiency, clean-burning system as both oil prices and interest in alternative energy rose in the 1970s. As those conditions returned in recent years, Lunde has rekindled production, largely shuttered since plunging oil prices froze him out of the market in 1989.

A boost could come in March when new federal emissions standards take effect. Lunde said he expects to be among only a handful of today's 40-plus manufacturers whose equipment will meet the new standards.

"People out there finally understand, a lot of them, about emissions and efficiency and what we've been talking about since Day 1," Lunde said. "Other manufacturers are being pulled kicking and screaming to get equipment that's efficient and clean. Some are being successful, others are not."

Unlike a smoldering wood stove or bonfire, the Garn WHS heaters burn efficiently without smoking out neighbors, Lunde said. That, he said, is because his heaters burn continuously at a high rate until all the wood is gone. A two-stage combustion process consumes most of the smoke and creosote, improving efficiency.

The heat is stored in a water tank that surrounds the fire box until it's pumped through radiant floor or baseboard heaters, radiators, forced-air coils or other heating systems. The water then returns to the tank to be reheated.

The system is non-pressurized and is certified for installation indoors or remotely in a small shed. It's been certified as meeting Underwriters Laboratories standards. A three- or four-hour burn can produce enough heat to keep a house warm for 24 hours, Lunde said.

Sales of Garn WHS systems totaled $2 million in 2008. That was nearly triple the year before and a good showing, considering that Lunde only re-launched production in 2005.

In the long term, sales could rise to perhaps $10 million a year based on his lower-end projections of the post-shakeout market. For now he's running a small-scale operation, working with his son David, a University of Minnesota graduate engineering student, and several others.

'Not a cure-all'

Contract manufacturers produce the heaters. Lunde stocks spare parts and tests production models in his Arden Hills headquarters. Lunde is looking for investors, in part to increase sales and marketing efforts. He may also bring some manufacturing in-house.

The heaters are for use only in rural residential, commercial or small industrial buildings and aren't suitable in cities or suburbs, Lunde said.

"It should be in an area where you have a minimum of 3 or 4 acres of land," Lunde said. "This is not a cure-all for all the heating in the world. The best thing to do is make your house or building more efficient. If you're in the rural area and you have trees or cheap access to wood, it's one option."

Lunde sells only through dealers, which you can find through the company's website.

A Garn WHS 1500 model -- which stores about 1,500 gallons of water and is the company's smallest -- likely would cost $15,000 to $18,000 with installation, Lunde said. That compares with the $20,000 to $24,000 he said it would cost to have a comparable heat pump installed.

Longtime users include the Long Lake Conservation Center in Palisade, Minn., where five Garn WHS units heat 48,000 square feet of space in several buildings. The Aitkin County-owned and operated facility installed three units in the late 1980s and two more in the late 1990s.

"The Garn units are a very efficient way of using a renewable energy resource, wood," said Todd Roggenkamp, executive director. "It has done a very good job of heating our facility every winter.''

North of Duluth, Ernie and Hildy Schoenfeld have used a Garn WHS to heat their 5,000-square-foot home since 1991. A link to a video demonstration of their unit is on the company's website.

After the installation the Schoenfeld's heating-oil use dropped from 2,400 gallons a year to 200 gallons a year, mainly to run a water heater.

Back in the '70s, Lunde was running a consulting engineering and architecture firm in Minneapolis when his mostly rural clients began asking about wood heating. In the early stages of development, Lunde financed research himself and through a federal research grant, built prototypes, did field testing and got the first of his patents.

Raising more than $1 million from investors, including Apache Oil under now-retired chairman Raymond Plank, Lunde went into full-scale production in 1985. Units sold in cold-weather states around the country and in Canada.

The demand disappeared overnight, however, when oil prices plummeted at the end of 1989. Apache Oil sold back its stock, and Lunde's board of directors shelved the company. Lunde resumed his work as a consulting engineer, selling a few Garn WHS units a year.

But demand began to grow again in 2003 as oil prices soared. Lunde, who had just completed a five-year project overseeing the design and construction of several buildings in Asia, thought the time was right to ramp up sales and production again.

That's also about the time Lunde volunteered to work with a committee of an international standards development organization that provided input on the new federal emissions standards that he expects will thin out the competition.

"A number of the smaller guys who've done testing already see the handwriting on the wall and are gone," Lunde said. "Five years from now I'd like to be one of the four or five major players in this market."

The expert says: David Deeds, Schulze professor of entrepreneurship in the Schulze School of Entrepreneurship at the University of St. Thomas, said Lunde's experience is "a great story in that it demonstrates the benefits and risks of a niche product."

Deeds cautioned against taking on too much debt. "As he's experienced, it's a very volatile market, so you don't want a lot of leverage on a product like this," Deeds said. Instead, Lunde could take on a partner as another way to raise capital, either someone who has sales and marketing experience or a company with expertise in the marketplace. The professor called this a classic case for a U.S. Small Business Administration loan.

Deeds also suggested that Lunde visit a Small Business Development Center for help on developing a tightly focused marketing plan.

Todd Nelson is a freelance writer in Woodbury. His e-mail address is todd_nelson@mac.com.