Biobased industries invest millions on feedstock and supply chains with energy crops. Find 10 ways to save millions on energy crops asking for independent advice and avoid huge risks. Energy crops are being considered for several uses in most countries of the world. Huge investments in power facilities, cellulose plants and pelletizers are considering right now a supply chain from residues and plantations. As more species are investigated for biomass as feedstock for power stations, pellet production, biogas digester and gasifiers or 2nd generation ethanol, more uncertainties are included in the business plants of most companies.
Here you will find best ways to minimize your risks and some good reasons to ask for independent advice when starting your project on energy crops.
1. BIOMASS SUPPLY CHAIN MAY BE HIGHEST COST CONTRIBUTION FACTOR.
Typical projects with energy plantations of perennial grasses and short rotation coppice (trees) will often determine biomass supply costs that are a main contribution in your business plan.
Changes in yields will be a major driver in farming operation and will largely contribute to your biomass supply cost. A reduction level of 20% in assumed yields may determine often changes in the supply chain and in the case of the power station mentioned that would sum about 1 to 2 million dollars annually !!
For example, assume a power station consuming 200,000 Oven Dry Tons (ODT) per year. Most commercial projects in the world have established biomass supply costs ranging from 30 to 150 dollars per dry ton. Sometimes this in equivalent to ranges between 3 to 8 $ / GJ of energy delivered (at the gate of the plant). In a 200,000 tons/year supply chain, an OPEX of 4 million dollars per year is a typical supply cost we see every day (assuming 40 $/odt as average costs at the gate of plant.
Asking for advice on farming operations and determination of average productivities is then a MUST and all companies involved in energy plantations will require to consider.
2. INCOMPLETE INFORMATION AVAILABLE. ON LARGE SCALE PROJECTS
Energy crops and biomass markets are still on first stages regarding commercial implementation. There already thousands of hectares cultivated with annual and perennial grasses and short rotation woody crops, from poplar and willows in higher latitudes, to bamboo and eucalyptus, or Pennisetum purpureum, Miscanthus and Arundo donax, we have been involved in hundreds of projects and supply chain systems with energy crops. And we all know that logistics are a major issue determining sustainability and economic costs.
Any project in a new location that uses biomass residues and would complete feedstock from energy crops or even utilize them as main raw material source, will surely require to consider past experiences, failures and success stories.
As scientific and research experiences are not always scalable, the opinion and experience of energy crops experts involved in large scaled plantations must to be considered. Several companies are involved in one or two species.
But who knows whether there are demonstrated viable alternative crops better suited for my conditions?
How an investor can really know about realistic operational risks of a supply chain?
How to estimate risks and uncertainties in areas with high productivity potentials where biomass drying and storage systems are difficult to implement using biomass from high yielding species?
Is there any crop that dries better? Is the selected species a best alternative for pellets considered for the final use?
Which would be the cost assuming harvest efficiencies and transportation costs when establishing a logistic chain of ethanol, biogas or power/heat production from a certain lignocellulosic biomass crop?
Is my project possible to upscale considering the POWER PURCHASE AGREEMENT we are going to have during the next 10, 15 or 25 years?
In many projects we see only partial information has been supporting assumptions and assume local conditions for large scale projects. In most cases that information cannot be replicated or demonstrated to be applicable or extrapolated to project specific field conditions.
An expert opinion will help you a lot.
3. EXAGERATED YIELDS AND BIASED INFORMATION OFTEN DERIVE IN SCAM WHILE SELECTING SPECIES FOR YOUR SPECIFIC SITE CONDITIONS
Most companies promoting crops, sell customers planting materials AND consultancies. Avoid biased information considering the following aspects.
* Several huge yield expectations are based only in small trials. See our post about that right here.
* NO NEED OF ROYALITIES NEITHER LICENCE FEES in commercial plantations. The performance of varieties and sub-species are found to be similar and we only see companies claiming to have a “MIRACLE CROP” just in order to charge companies for its finding. Agronomic management and selection of best strains for the local conditions are the major issue for success.
* Some companies offering species of bamboo for biomass have never tried biomass plantation patterns (only work in construction sectors). Cutting for biomass, implies changes in management and productivity. Most expectations and false and there are many investors being involved in scam in many areas of the world.
* There are companies providing materials of Arundo donax and Pennisetum purpureum in the market which yield claims are unfeasible and unrealistic. Some of them have only worked in small scales or in 2 or 3 countries (some only in Europe or United States). Several considerations need to be done if your project will take place in a tropical area or developing country where personnel, machinery, climate and soil conditions but also management will often require a very strict vision and highly focused evaluation to optimize the cropping system and the supply chain.
* Most suppliers extrapolate yields from nurseries and small commercial plantations which are not realistic in large scale projects in other locations. In most cases they won’t show you commercial large scale projects or will bring you to a plantations in which you won’t be able to measure anything.
4. ECONOMIC, SOCIAL AND ENVIRONMENTAL CONSIDERATIONS AND RISKS
When setting up a project with energy crops, environmental, social and economic issues can be a critical aspect to consider. Most sustainable alternatives should consider:
* Social aspects, employment and personnel risks. Any country has a different culture and workers may require special considerations for best performance and cost reductions. We often see two different crops with same yield and costs per delivered biomass, and one may require 30 jobs and other one, only 3. Depending on local conditions, you will need to analyze best alternative species to be selected as well as machinery available.
* From selection of best species as energy crop feedstock to the real implementation in large plantations, your project has to consider environmental issues. A project based on crops producing renewable energy often require a life cycle assessment, reductions in footprint, low impacts on ground and surface water, considerations regarding fertilizer and nutrient leaching and carbon sequestration.
* A crop might be 6 meters high and you can be enthusiastic about it. But your main concern is the final cost in terms of $/GJ delivered to the gate of the facility. Select species considering farming and logistic costs is easier when a good expert is in your team.
5. ESTABLISH LIFETIME SCOPE FOR YOUR PLANTATIONS IN YOUR EXACT LOCATION
Any business plan requires information on depreciation and lifetime for its activities. In the case your project considers dedicated energy crops to produce biomass. You will require a good estimation of particular lifetime for the specific conditions (climatic, soil and genetics) in your plantations. This is particularly relevant on perennial species including trees, shrubs, short rotation forestry or short rotation coppice and in perennial grasses like Giant King Grass, Miscanthus, Arundo donax, Switchgrass, grasslands, Cynara cardunculus and many other species.
Most companies providing you planting materials don’t know neither give customers scientific and demonstrated commercial information or highly reputed peer-reviewed published data on plantation LIFETIME for the materials they offer. Considering 5, 10 or 30 years will change dramatically your expectations.
6. YIELD EVOLUTION DURING LIFETIME IN PERENNIALS IS A KEY ISSUE
Any bioenergy perennial cropping system has depreciation and that implies to consider a specific curve during its lifespan. Depending on soils, climatic conditions, nutrients, irrigation and cutting management, roots, rhizomes and other parts of the plant can have considerable impacts.
And we all know there is a curve with a maximum and a decay that will be directly related to plant reserves and source-sink carbon allocation relations. It is a problem about plant physiology and it is well studied. And we also know that each land and climate make that numbers to possibly change. Severe droughts or rianfall distribution during the year as well as recovering time after harvesting, would determine part of the function. If you divide establishment costs and planting materials per acre and lifetime annualized costs, the annualized cost in $/t might be completely different.
Consider that supply chain is a big part of any project. Biomass residues and lignocellulosic crops often are being produce at farm with a cost from 10-20 U$D per ton. Moisture levels, harvesting techniques and realistic yields are a KEY ISSUE !
A project with 1000 hectares producing 20 dried tons per hectare per year can have 20000 tons that will often cost (production cost at farm, once harvested on trailer) from 20-70 $ / dried ton.
Assuming an average cost of 40 U$D and (just for now) no transportation costs, a project with 20000 tons/year can have each year a supply cost of 20000 tons x 40 U$D: 800.000 U$D
An expert can reduce that cost drammatically from farm production costs to supply logistics!
7. CONSIDER MUCH MORE THAN A SINGLE OPTION
Most projects we evaluate focus on renewable energy and sustainability alternatives. But most of them promote a monoculture. Considering much more than one single option may determine several species to reduce your risks. Imagine that pests, climatic catastrophe or unexpected events may always be present along your project lifetime. Ask your experts to know as much as possible on different alternatives.
Sustainable projects may also consider:
- More than one feedstock will increase biodiversity in your area
- Some crops yield less but cost much less than others. Your goal is the cost ($/t) at the gate of destination.
- Residues collection may reduce land use changes and reduce costs
- Integration of bioenergy crops with food sector in rural areas (biomass alternative uses and markets could be interesting)
- Some facilities can be flexible using herbaceous and woody raw materials from several species
- More alternatives often determine lower risks and lower costs in the long term.
8. PRODUCTIVITY IS ALWAYS LINK TO FARMING METHODS. WET AND DRY BIOMASS IS NOT THE SAME.
We often see that seed and plantlet suppliers, but also independent agencies offer unrealistic yields when biomass is considered for dry matter production. If your project will pelletize biomass from crops or will consider a combustion process in a boiler, biomass qualities require an exact evaluation. Many management techniques like grass cuttings will allow higher productivities in perennial species with several cuttings per year.
A crop that is cutted many times in the year will have often higher light interception leves and leaf area index (LAI) along the year. It can regrow and that will determine higher biomass production per year if many cuttings are allowed. Nevertheless soil and climatic interactions with genotypes will determine a decrease in yields. Additionally, producing wet biomass and dry biomass will require considerable changes in crop management.
Perhaps something your supplier never will mention is that as lignification is required to avoid high moisture levels, your crop will need to consider senescence and drying process in the field. Except you are willing to pay extremely energy consuming technologies for drying or squeezing methods that are not well suited in general, you need to try a conditioner to reduce moisture levels on the ground. No all conditioners are well suited and you need to change them considering different crops and harvest periods. After harvesting, other collection systems need to be considered to obtain biomass bales or chips with reduced moisture. Morever, bale handling systems have been recently developed and there is always a need to help most agronomist and managers involved with it. Anyway, the point is that all this drying methods, will necessarily imply reductions in productivity as radiation use and photosynthesis activity will both be lower compared to several grass cuttings. This is particularly relevant in tall tropical grasses in areas with rainfall levels higher than 1000mm or in areas where harvest periods occur during months with higher rainfall.
A good expert will tell you the annualized costs /$/gigajoule delivered) to expect both at the farm gate and on the gate of your facility after transportation is considered. From species selection to agronomy and harvest management, transport cost may be different considering the moisture level and volume. In order to avoid water trucking, a good feasibility study to improve logistic issues in your specific region/land will be probably needed.
9. EXPERIENCES IN OTHER REGIONS OF THE WORLD COULD SAVE YOU MILLIONS
When we are involved in research programs, we see often how companies faced problems that are common in other regions too.
This is the case of companies involved in Paulownia trees and Jatropha in many not well suited areas. We saw investments in hundreds of projects worldwide.
Many of those projects are countries in Asia and Latin America that now are facing huge opportunities to replicate results and experience from companies in other countries as well as experiences of success while avoiding failures and fraud. Please be aware that companies offering investors their planting materials and partnership agreements are not always trustable.
That’s certainly a very good reason to consider some advice from an international expert or consultancy firm with a good record.
10. ONLY INDEPENDENT EXPERTS CAN OFFER INVESTORS REALISTIC YIELDS FOR PLANTATIONS
Most crop specialist and scientists use information on small plots with huge biased information. A small parcel only gives NON realistic perspectives and yield potential information about the species. Any company involved in trading of biomass, planting materials production, genetics, seeds or machinery services, could make really good money from your project if you accept its options and advice. Only an independent expert will take you in a safe road avoiding scam or sideffects not considered by a product supplier. Energy crops require an integration vistion considering farming, logistics and energy conversions. The selection of the species can have huge implications in social, economic, environmental and energy issues in your specific project. And sustainability of your business will require to pay attention and know about all those issues.
Don’t believe huge yields of 70-140 dried tons per hectare per year in any species as a possible or typical productivity yield. It is not true if you consider the last 200 projects worldwide. Ask an expert if you could achieve those yields and if you can handle that with reduced costs. Many species and companies claiming huge yields could be unviable in your case and could have been considered only unrealistic assumptions or a nursery in other country or region. Your soil and climatic conditions will determine realistic yields as well as the genetics and its interaction with the specific environmental conditions you have.
Several suppliers are safe and produce excellent planting materials, machinery, technology and improved alternatives to have reduced costs. This is tru for broadleaf crops, grasses and forestry energy plantations. But many of them will give only misleading information. They won’t offer you previous commercial large scale projects with viable and demonstrated yields in your conditions. They won’t tell you about ranges, variability or risks. Most of them plant grow their materials only in greehouses and small plots or make biased samples without repetitions or large scale strips. If you will visit plantations, they will claim 100 tons / hectare each year but you only will see a tall crop (you won’t weight the biomass or will realistically know about densities and measured weitghts!).
From Jatropha myths in some countries to several unviable crops and huge environmental impacts from unexpected factors, we have seen fraud, farm failures and bankrupt everywhere. And most important reason is the lack of right advice and integrated evaluations.
Indepedent scientists and consultants working on real demonstrative or commercial projects, wil be a safer way to achieve goals, and make profits producing renewable energy in a sustainable way. And they will make your project to be in good hands.