SANDPOINT — A wood burner slated to provide energy for businesses and homes in the city must be self sufficient or council members will not approve the project.

Despite a funding shortfall for the city’s plan to install a woody biomass generator at the city’s industrial park council members approved a measure at a special meeting Monday to move ahead with the $500,000 project as long as the city bears no costs.

City Council member Stephen Snedden, one of four council members present at the special meeting, tentatively supported the measure as long as further scrutiny deems it economically feasible.

“I like the idea of trying out alternative energy production,” Snedden said.

His vote in favor of the proposal came with a caveat.

“I won’t support this if it costs the city money,” he said.

Council members including Marsha Ogilvie, Justin Schuck and Carrie Logan unanimously sided with Snedden in favor of accepting the grant as long as a feasibility study shows the boiler will pay for itself.

“It’s so tentative,” Snedden said. “A lot of details need to be worked out such as whether it is economically prudent, whether it is cost feasible, whether we can obtain commitments for fuel.”

When those questions are answered in December, the council will make a final decision, he said.

Sandpoint was approved for a $65,000 stimulus-funded grant in March from the Office of Energy Resources, with the money earmarked for the biomass project.

The award was less than officials applied for, but it was in addition to $250,000 the city received for the biomass project last December.

Jeremy Grimm, Sandpoint city planner, said despite the fewer dollars, the city will make the project work.

The council accepted the grant money and entered into a contract with the state to build the burner as the essential part of an energy grid that will provide city-owned buildings as well as private businesses a cheaper power source.

Once the state signs the contract, the city will hire an engineer to begin designing the system. The process includes several phases with a completion date set in December 2011.

The city hopes to find an additional $160,000 funding source to make up for the budget deficit, Grimm said.

The timeline includes completion of the design and presenting a financial analysis to council in seven months.

If approved, the city shop, Lead-Lock building and the Bonner Business Center would take advantage of the new energy source, which would save the city approximately $11,194 in annual energy bills, Grimm said. In addition, an energy grid at the site could provide energy to nearby private businesses.