GARDINER — The city will save an estimated $195,000 in heating oil costs during the next 25 years with its new pellet boiler.

The boiler is expected to be running in a month or so.

Gardiner is the first municipality in Maine to use a wood pellet boiler system, according to the Maine Municipal Association.

The boiler, delivered to City Hall on Friday, is the second the city has bought in the last two years.

The city replaced the oil-fired boiler in the public works garage on Brunswick Avenue with a $75,000 pellet boiler in December 2009. The Eco Pellet Heating boiler for the garage was bought from Maine Energy Systems and installed by Heutz Oil Co..

The city got a $61,000 grant for the $122,000 City Hall project as part of the American Reinvestment and Recovery Act of 2009.

City Manager Scott Morelli said the local match for the grant was $61,000, which was included in the 2011 municipal budget. The pellet boiler will replace City Hall’s 40-year-old oil-fired boiler.

A 2009 study determined that the pellet boiler would pay for itself in just less than 17 years, based on purchase price, maintenance cost and average heating oil costs of $1.98 a gallon, Morelli said.

Because half the cost of the project was paid for with a grant, the city’s actual return on the investment will occur in about 8 1/2 years, he said.

“The cost of oil is much higher than the $1.98 a gallon used in the 2009 study, thus reducing the return on investment by a few more years,” Morelli said.

He said the alternative heating system will reduce the city’s release of carbon dioxide entering the air.

Morelli said the boiler was manufactured in Bethel and the pellets are made and distributed in Maine.

Mechele Cooper — 621-5663

mcooper@centralmaine.com