Pellets are a by product from sawmills and planer mills. Similar to shavings used for animal bedding.
However, a pellet mill is a fairly substantial investment. Plus you have to bag them. Then put them 50 of the 40 pound bags on a pallet.
Here in southern NH they are popular because in the rural areas natural gas is not available. I heat my house with forced hot water boiler furnace. It burns #2 heating oil. Which is almost identical to diesel. The only other option is propane for heat in rural areas. Along with electric(too expensive) and cord wood. Traditional wood stoves or outdoor wood furnaces.
Bagged pellets are sold at Home Depot. Lowes, Tractor Supply, independent farm and Ag stores and the pellet stove retailers. You can buy them a bag at a time $5.99-8.99 or by the pallet(50 40# bags = 1 ton). Companies will deliver them to your house. They are shrink wrapped. So they are made to sit outside and be “weather proof”. As long as the shrink wrap does not get damaged.
I typically buy them by the pick up truck load. I have a spot in my garage I can fit about 24 bags.
I own a Harman pellet stove insert. Harman IMHO is the best quality pellet stove made in North America. There are also some good European brands too. Harman are made in PA.
I have the Harman Accentra 52i. It is an enamaled finish brown color. It sits in the masonry fireplace in my family room. This is not an inexpensive appliance. It is like buying another furnace. You also have to remove the damper and block off the chimney with stainless steel. Then run a flexible stainless steel flue pipe up to the top of your chimney. Altogether, it was over $7K.
It has reduced our heating oil use. I do not know exactly how much. It also allows us to keep the main room/floor of our home much warmer than I would just running the oil burner furnace.
The main negatives are it is loud when it is running. It has a combustion fan and two circulation fans. The combustion fan blows the air up the chimney. The circulation fan takes the air from the room and blows it through chambers above the burn pot. Warming the room air and blowing it back into the room. Ideally, you want to bring in outside air for combustion. That is much more difficult to do with a masonry fireplace.
The other negative as opposed to a regular wood stove is that you need electricity to run it. So, in the advent of a power outage it is hooked up to a circuit powered by my gasoline generator.
Lastly, mine is now nine heating seasons old. I need to replace the circulation fan. It still works but it is getting pretty loud. Like when it turns on, we have to increase the volume on the TV from 15 to 20. It is only 5’ from my wifes end of the couch.
All that being said, I am glad I have it. Plus, I guess I am also being GREEN because I typically burn pellets made right here in New England. Not that EVIL CO2 ERF killing petroleum .
It also seems like you're set up to not depend 100% on just one heating source. If pellets get hard to come by you have the heating oil (diesel). If oil gets hard to come by you have your pellets that might be enough to get by. Does that sound right?
I don't have that kind of diversified dependency on my house, but I do in my travel. If the left makes power hard to come by, then we can drive the gas pickup for long trips. If the left makes gasoline hard to come by, then we can drive the EV. (Of course with solar, if the left makes both power and gas hard to come by, then we can drive the EV at least for local driving.)
LOL, ran into that last year, had to replace it, now it is quieter but still certainly not silent. I'm trying to buy a big enough battery and inverter to shut it down during an outage, needs to run about a half hour. The inverter I bought and battery doesn't stay constant on, so I think the battery is still too small.