Tucked back on Manchester Street in Keene, a 40,000-square-foot building rises up, flanked by heaps of wood chips that will heat facilities across rural New England.

Froling Energy hosted a grand opening and tour of its new biomass fuel plant Tuesday, which dries wood chips to be burned in boiler heating systems. A few dozen people attended the event, including city officials, local loggers and energy nonprofit representatives.

The mechanical contracting company specializes in installing commercial wood-pellet and wood-chip boilers. In an interview following the ribbon-cutting ceremony, Mark Froling, the company’s president, said this kind of wood-chip production first came onto his radar about eight years ago.

“I had gone to Europe most years, and during that time I started seeing what the boilers were like in Europe and what they were using for fuel,” he recalled. “I was installing pellet boilers at the time and then soon after I got an appetite for these dry chips.”

Froling Energy began producing precision dry chips in a Peterborough facility on Hancock Road. After seven years in Peterborough, the company moved to the new plant in Keene to meet growing demand for the product.

Planning for the new facility began about three years ago, and construction took about a year and a half, according to Jim Van Valkenburgh, vice president of business development and sales. The plant began operating in January.

Van Valkenburgh described the dried chips as a happy medium between wood pellets and green wood chips. Green wood chips are freshly cut wood and have about 45 percent moisture content. While green chips are relatively inexpensive, green chip boiler systems are extremely expensive to install, he said, and the cost can be prohibitive. Wood pellet boilers, on the other hand, cost less to install. But because pellets — which are drier and therefore burn more efficiently — are more expensive, a pellet boiler doesn’t always make sense for larger commercial enterprises. The dry wood chips have about 25 percent moisture content, and cost-wise fall between pellets and green chips.

As wood is a renewable resource, the chips are a greener alternative to fuel oil. Froling Energy purchases the chips from local loggers, typically from areas within 40 or 50 miles of Keene, Van Valkenburgh said, and the chips come from wood that can’t be used for lumber. With the new plant up and running, Froling Energy expects to eliminate the importation and burning of 1 million gallons of oil annually in the coming years, Van Valkenburgh said in an email to The Sentinel.

The plant also produces its own electricity on site, Froling explained. Steam from a boiler passes through a turbine generator, which generates electricity to power the plant, he said, and the low-pressure exhaust from the turbine is used to dry the wood chips.

In an interview after Tuesday’s tour, Van Valkenburgh said that when working at max speed, the plant can produce about 3 tons of dry chips an hour, and will likely produce around 7,000 tons of chips this winter.

The company currently has 11 employees, according to Van Valkenburg.

Froling said that as the company grows, so will employment opportunities.

“We have about 60 percent additional capacity for drying more. So we can more than double our facility and then as we generate more, we need more truck drivers, more operators, more personnel.”

Molly Bolan can be reached at 352-1234, extension 1436 or mbolan@keenesentinel.com. Follow her on Twitter @BolanMolly.