12 ways to reduce risk when scaling up biomass feedstock operations

November 17, 2020 |

By David F. Peterson, B.S., MBA, Lee Enterprises Consulting

Special to The Digest

This is the first article in a two-part series addressing the challenges of implementing and scaling up hemp production from a biomass management perspective. After the product or products are chosen and the business strategy is developed, biomass scale-up considerations largely sift down to three factors: biomass, the technology to process the biomass and management practices.  With that in mind, this biomass processing scale-up topic will be addressed in two articles with management considerations enmeshed in both:

  1. Hemp Biomass Management (Part 1)-Technology Development and Scale-up Risks
  2. Biomass Management (Part 2)-Managing for Excellence and Profits.

To start, it will be useful to share a few foundational observations. 

Background

Observation #1: The process for scaling up is complex. Whether developing new technology, building new facilities or expanding an existing facility, it is not for the faint hearted. It is especially complex when producing products from natural feedstock materials like hemp.  There are a myriad of unique needs and issues associated with natural feedstocks that add to the challenges of scaling up, such as additional due-diligence, specific information needs and unique quality measures.

Observation #2:  Integration of thorough planning and engineering[i], accurate information and key business elements into a cohesive strategic plan will lead to a more successful venture with minimal risk. While hemp has been used as a source of fiber and numerous materials for several thousand years, we know from experience that in a competitive and evolving world, methods of manufacturing and technology are continuously changing. This is especially true for hemp due to a larger assortment of uses and project market growth[ii].  Consequently, there is an ongoing need to adapt and innovate in order to continue to be competitive.

Observation #3: For an assortment of reasons, biomass can be overlooked in terms of the importance to the overall project.  This observation is certainly not meant as a criticism or to prioritize one area over another—it is more an observation regarding a mindset that will help create a successful outcome. While often the less glamorous part, biomass feedstock is in many ways the heart of an operation. Feedstock drives the financials, determines the technology, defines the process and dictates the supply chain and sets the facility design. Many other crucial functional skill sets, such as marketing, sales, supply chain management, financing, accounting, legal agreements, etc., strongly depend on a sound understanding of the biomass feedstock and how to manage it. For operations that use natural product feedstocks, like the growing hemp market, it is vital that the biomass be well understood.

Observation #4:  While the process of scaling up technology and production is complicated, with sound engineering support, good information and information analysis, seasoned advisors and knowledgeable subject matter experts, these challenges can be overcome and the risks minimized.  There are ample examples of entrepreneurs, companies and industries that have successfully overcome the numerous challenges of growing new markets to achieve success. In fact, it can be fun and exciting–there is something about successfully building a new facility or creating value that is deeply rewarding.

Growth Strategy

In a new or relatively new industry, growth is achieved largely by increasing scale or modularly by adding manufacturing lines. Growth by increasing scale can occur by going from pilot to pre-commercial or pre-commercial to commercial.  Adding manufacturing lines is especially practical where:

  • Technology is capped or the risks/costs of increasing the scale are too significant or
  • Debottlenecking a process will significantly increase capacity.

The costs and benefits of each option must be carefully weighed based on the technical and financial merits of each technology.  Serious errors can be made by increasing scale too quickly or by using incorrect assumptions. There are numerous war stories concerning decisions to increase scale based on invalid conclusions, incorrect assumptions, no data or taking too a jump resulting in substantial financial losses, obsolete facilities, lost time or a fatal decision that bankrupts the company or project. On a positive note, sometimes these mistakes, if not fatal, can be used as steppingstones to an unexpected benefit.

Reducing Risks

Here are a dozen well-established means of reducing the risks when scaling up biomass feedstock management operations:

  • Carefully design and engineer larger scale operations with precise attention to areas where scaling up can be troublesome. These areas are typically in mixing, heat transfer, chemical addition, drying, shear points, particle size reduction and other unit operations that could be affected by an increase in scale. When possible, it is beneficial to dynamically model the process to provide valuable information on what will happen as scale size is increased.

 

  • Complete long-term continuous operating periods on pilot and demonstration-scale equipment to develop data that replicates ongoing, steady-state operation. This is immensely valuable for equipment wear, maintenance needs, corrosion issues, chemical balance and reactions, heat transfer, fouling and material buildups, environmental emissions, safety issues, supply chain requirements and feedstock variability to name several key factors.

 

  • Collect meaningful data. Good data is a prerequisite for good decisions. The careful installation of sensors and sample points are crucial for developing data to scale up technology and equipment. Intermediate sample points provide invaluable information to monitor in-process properties. It is imperative that data integrity be supported by management.

 

  • Understand and use established standards for testing and use accredited labs that have experience using the proper test protocols, procedures and materials.

 

  • Carefully analyze process data using knowledgeable process experts to ensure opportunities are captured and key data are properly analyzed. Even bench-scale observations can be quite useful. Throughout the commercialization process, the discipline of documenting observations in detail, open sharing of information, communicating results and team ad hoc discussions are invaluable to solving problems and developing positive working environment.

 

  • Perform thorough design reviews to proactively reduce risks. This includes using technology and science to help reduce risks in the process and instrumentation drawings. For challenging process control issues, be proactive in the design and construction phase to install sample points, sensors or other technology to help provide information to resolve risks.  Too often these items are avoided in design reviews to save costs to only later be added retroactively at considerable expense.

 

  • Use information or data from similar or related industries to obtain operating information and establish best practices. The value of obtaining information from existing equipment owners cannot be emphasized enough in terms of gaining information and removing risks. In the world of processing biomass feedstocks, the benefits of drawing upon experts and experiences of others are significant in terms of scale up knowledge. This is especially true regarding related industries such as: agriculture, biopharmaceuticals, forest products, ethanol and chemical extraction industries to name a few significant sectors. Careful comparison of information from related industries can reduce risks and save significant time. In more established industries, the volumes produced at the pilot scale could be commercial scale in the hemp industry.  To illustrate, a large CBD plant would consume 1500 tons of biomass in one year, whereas about any large pulp and paper operation could consume that much biomass in one day.  The agricultural, natural product extraction and forest product industries are full of related sources of technology and experienced talent for the emerging hemp industry. These have already developed storage, transportation, drying, comminution, and extraction solutions.  In fact, not only is it beneficial to look to other industries for solutions, it is good practice to adapt to keep problem solving fresh and avoid ‘group think’.

 

  • Select equipment carefully. Today we have innumerable options for equipment. The selection of pumps, sensors, dryers, granulators, mills, conveyors, etc. available are sometimes overwhelming.  To minimize risks, use off-the-shelf technology wherever possible.  Used equipment that has been properly maintained and meets performance requirements can lower the initial capital spend compared to brand new equipment.  As one piece of advice, the overall cost of acquiring, retrofitting and maintaining used equipment in scaling up may be higher than buying new equipment.

 

  • Perform rigorous internal analysis of technology options. This is especially needed if proprietary technology is a consideration. Proprietary technology needs considerable due-diligence to verify it is worth the investments to scale-up and develop vs. licensing similar technology that is proven and may even have performance guarantees along with documented operating information.

 

  • Use existing contract research or contract manufacturing capabilities. When it is cost effective to save time and reduce risks, contract services can also provide benefits in term of process experience and readily available equipment solutions.

 

  • Utilize the testing and piloting capabilities of equipment manufacturers or vendors. As much as possible, take advantage of vendor testing and piloting services. This may not only save time but can also provide access to relevant key knowledge and data.

 

  • Supportive and knowledgeable leadership. Ensure leadership is open to new ideas and hold everybody accountable to the highest standards of collecting, interpreting and reporting data to avoid decisions based on opinions versus facts during the activities to scale-up technology. All too often opinions can adversely affect important decisions. From the start, leadership needs to establish a culture and expectation to have an absolute adherence to data integrity and openness to new ideas and solutions based on the merits of the ideas.

Conclusions

In our bioeconomy there are well established methods and sources of expertise to reduce scale-up risks. Hemp is joining a family of well-established industries that have developed numerous solutions to scale-up challenges.

Lee Enterprises Consulting is the world’s premier bioeconomy consulting group with over 150 bioenergy and biochemical experts worldwide. Our experts are world renowned leaders in their field, selected based on their education, experience, and reputation and have done thousands of projects worldwide. The group is divided into sections including biofuels, biomaterials, biochemicals, feedstocks, technologies, land & natural resources management, food & livestock production, and cannabis/hemp and provides hundreds of services including business & financial, technical & engineering, project management, legal & regulatory, and a variety of highly specialized services like due diligence, market research, risk analysis, litigation support and techno-economic analysis.

The next article in this series, “Managing for Excellence and Profit”, will build on these fundamentals, examining techniques for better managing your hemp biomass feedstock processing operations

References:

[i] https://www.chemengonline.com/scaleup-options-and-risk

 

[ii] https://www.globenewswire.com/news-release/2020/09/15/2093501/0/en/Global-Cannabidiol-CBD-Oil-Market-Report-2020-2025-Market-to-Grow-from-967-2-Million-in-2020-to-5-3-Billion-by-2025.html

 

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