Financing Bioeconomy Ventures, Pt. 9: Site Selection – Landscape Risk Analysis for Biomass Acquisition

October 5, 2017 |

By Thomas W. Robb, Daniel Lane and John Diecker, Lee Enterprises Consulting

Special to The Digest

In the cascade of the decision-making process for site selection of a biomass project, the first two things that must be determined are the availability of infrastructure to support the project AND the availability of feedstock to feed the process. Infrastructure availability is a straightforward process and is the established procedure of ticking things off the list of identified needs. Feedstock availability, however, can be somewhat difficult especially if the project is to utilize crop residues. Using published “book” values (tons biomass per acre related to grain yields) will not always give you the right answer. One must take it further and apply local sustainability criteria, such as competing uses (e.g.: erosion prevention), to arrive at the amount that will be reliably available year after year to support the feedstock needs of the facility. For annual energy crop feedstocks, sustainability criteria may also need to be applied: for these it’s not to modify yield projections, but to take into account any extra agronomic practices that must be applied and account for them in the acquisition pricing structure. The next factor to overlay on the feedstock availability side of this equation is how far out from the project site will you need to go to obtain the necessary quantities for the project. Lastly, the pricing of the feedstock needs to be determined. The premise of the rest of this article is that the biomass pricing will be competitive in the market. Obviously this will change depending on whether the feedstock is a dedicated energy crop, or a crop residue.

For many biomass based projects, product developers tend to stop at this point. Unfortunately, the work has only just begun to truly assess the validity of individual sites.

Components of Biomass Acquisition

Correct site selection evaluation must then go on to identify all the individual components in the landscape that can have an impact on the collection, harvest, storage, and transportation (CHST) of the feedstock. Then each of these components must be assessed for the risk (or benefit) associated with them, and if deemed significant, mitigation procedures must be developed and evaluated for not only effectiveness, but cost as well.

For project developers who recognize the need for this, many tend to want to see these lists and mitigation procedures developed and assessed in-house by the project team. And while this is certainly valid, there are other individuals that absolutely MUST be involved in not only the identification of the various factors, but also their importance, and how to mitigate them. These are the other stakeholders in the biomass availability equation, and those individuals who are producing the biomass, harvesting the biomass, storing the biomass and transporting it.

This process cannot be done in the vacuum of a corporate structure/office. One has to get out to the projected site and start to establish relationships with the biomass stakeholders and get their input in the development of the landscape issues and how to deal with them.

The sites required for biomass-based projects utilizing agricultural waste can be large in size. The size must be adequate to provide storage that accounts for the seasonal availability of this type of biomass while not taking high-quality agricultural land out of production.

Weather – The Most Critical Issue

Within the landscape of CHST, there are several issues that impact all acquisition and logistical issues and weather is probably the biggest one. There is a lot of data on annual rainfall. However the correct assessment of weather impact will also address unusual weather patterns and how often they can be expected. For example, wet weather during harvest time in the high plains can happen, however it’s not common and a factor of say, once every 20 years, this will have the potential of limiting harvested biomass by 50% or more. This will be different for the corn-belt areas of Illinois and Iowa where the potential could be once every 7 to 10 years. Similar weather-related issues exist in other parts of the world. Obviously the mitigation procedures for this risk will be different based on the expected frequency of the event. A plethora of other issues need to be determined and evaluated. While it’s certainly not complete, the following table gives an idea of some of the risks associated with biomass acquisition that must be addressed:

Biomass Availability Collection and Harvest Storage Transportation
Competitive uses (mulch, erosion control, animal feed, others). Identification of who you will be competing with and how to deal with them Weather Weather Weather
Competitive market pricing Soil compaction All weather access All weather road access
Willingness of producers to supply at given price Estimation of working days per month Acceptability by neighbors Any limitation on road use during certain times of year (e.g., In some ILL counties, road structure is good, however rural roads have wt limit during winter)
Support of local community including the SCS office, University and extension groups Estimation of work hours per day Fire Risk Fire Risk
Average field size (larger fields are harvested more efficiently – lower costs) For baled material, impact of broken bales and “strings” left in the field Distance from fire department Allowable wt limit of loaded trucks
Topographical issues with fields to be harvested Determination of any agronomic practices that may have negative impact on product quality (dirt content) Willingness of fire department to work with storage groups Truck dimensions (can you use multiple trailers per truck?)
Soil types and determination of any differences in projected harvested amounts based on soil type Identification of who will do this and how to pre-qualify/train them Environmental regulations related to storage of biomass. And waste disposal in case of fire Identification of who will do this and how to pre-qualify them

Space limitations do not allow for a discussion of all the items in the table above. However, to give a flavor of what to look for, we will give some details on two of these items.

Soil compaction: It’s very common in the agronomic community to understand that soil compaction can have a negative impact on crop yields. The practice of making bales out of biomass, like any other farming practice, has the potential to compact soil. Raking and baling procedures only make one pass over any give area of the land, and unless the soil is wet, soil compaction is minimal. However, during the process of removing the bales from the field and transporting them to a field-side stack, operators tend to develop paths to drive on. While not noticeable at the time it is occurring, when the next year’s crop is about 50% grown, the lines of these paths start to show up as retarded growth. It’s especially noticeable during harvest time and the yield reduction can be readily apparent. This is the type of thing that the crop producer needs to be made aware of before the biomass is removed and adequate plans made to minimize it. With correct training, operators can minimize passes over the same area and therefore minimize soil compaction.

Bale binding strings: Bales being broken during the baling process is a fact of life, and it will occur. Operators not trained to account for all strings and remove them from the ground cause to a HUGE problem the next time the producer farms the land. From strings getting wound around equipment and causing the operator to stop to clean it out, to the string that gets wound around an axle and ultimately works into, and destroys a wheel bearing, this must be avoided at all costs. The author has had the unpleasant experience of talking to a farmer who had a $300,000 tractor end up in the repair shop to replace a wheel bearing due to a string left on the field getting into the bearing and destroying it. Repairs of this nature can be expensive (up to $10,000) in addition to lost productivity when the machine they are depending on is out of commission.

Summary

Evaluating a site for the availability of feedstock is not a quick process. It requires the systematic identification of all the various items in the landscape that can impact feedstock availability and supply, and the development of risk assessments and mitigating measures for each of them. It is also a process that absolutely requires the input of all stakeholders in the process – from the producer of the feedstock, through the CHST cycle and ultimately to the end user of the material.

About the Authors:

Thomas Robb, Ph.D., is a member of Lee Enterprises Consulting with 25 years’ experience in agriculture, biomass and related industries. He is a knowledgeable and proven executive with leadership experience producing results across diverse industries, including bio-energy, agriculture, pharmaceutical, research, education, government, and animal health. Skilled strategist who has successfully increased organizational value, improved P&L, and implemented positive change through the development of long-range business plans. Strong tactical leader with broad foundation of experience leading nearly every functional area of the business, including operations, business development, research, global supply chain, logistics, client relations, technology, procurement, and risk management.

Daniel Lane, Ph.D., is a member of Lee Enterprises Consulting with extensive experience in renewable chemicals process and technology development. Dr. Lane has held executive and senior leadership roles with multiple start-up companies in the renewables industry focusing on biomass conversion and scale-up of technology and processes. He has been instrumental to the design and construction of seven pilot- and demonstration-scale facilities around the world, producing first- (corn) and second-generation (cellulosic) ethanol, cellulosic sugars, and bio-based animal feeds from a variety of lignocellulosic feedstocks. Dr. Lane spent the first half of his career in process engineering and project management, commercializing technology with such companies as Procter & Gamble and Degussa, performing process and equipment troubleshooting, benchmarking, feasibility studies, and installing and commissioning myriad process packages. With his proficiency in process simulation and technoeconomic modeling, Dr. Lane is a recognized expert in technical assessment for both private and government funding sources and has helped companies secure over $170MM in financing.

John Diecker has 38 years’ experience in the electric power generation and transmission industry with over three decades of that experience in Southeast Asia. A member of Lee Enterprises Consulting, John has served as a technical, project management and project development consultant to power project owners, developers and contractors, including governments, state-owned enterprises, financial institutions and insurance firms. He has been involved in many types of renewable energy projects and his experience with biomass includes virtually all stages of project development from site selection, engineering, feasibility studies, fuel availability studies, environmental and community impact review, licensing, permitting and construction supervision through operations & maintenance.

 

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