Biomass production price

To test for equilibrium conditions, the demand estimates for each major feedstock are compared with the supply quantity estimate obtained earlier. On the first iteration through this procedure, supply-demand mismatches possibly will occur for various feedstocks and at various time periods. These discrepancies indicate that the equilibrium feedstock prices have not been accurately estimated and that adjustments must be made. If the calculated demand for a particular feedstock exceeds the quantity available at the estimated feedstock price level, for example, then the estimated price is too low and should be adjusted upward. On the next iteration through the procedure, one of the effects of this adjustment will be to make a larger feedstock supply available, as determined by the appropriate biomass resource curve. Another effect will be to push the biomass product prices... 

Typical bio-oil production prices are still relatively high Peacocke et al 04 mention values of 13.2-14.6/GJ for FB and rotating cone technology, respectively, based on the assumptions of biomass costs of 50/t dry and feeding rates of 10 dry t/h. 

Although most ethanol is now produced from corn, research has been done on producing this type of alcohol fuel from cellulosic biomass products including energy crops, forest and agricultural residues, and MSW, which would provide much cheaper feedstocks. The process of chemically converting these cellulosic biomass feedstocks is more involved and until this process can be simplified the price of ethanol will remain high. 

The gasification system must be tailored to suit each application, in particular with regard to consumption of the energy products and availability of feed. Cost of the final energy is very sensitive to the cost of waste or biomass. The price of 14/od ton used in these analyses is felt to represent the value of wood residues as an energy source once the market for these products has been established. Of course, in many instances these residues represent a disposal problem and an energy conversion facility would have to be built for them to realize this energy value. 

There is still no reliable basis for the calculation of prices. In connection with the production of protein from molecular hydrogen and carbon dioxide, an electrical biomass equivalent has been calculated (Schlegel, 1969). It is based on the experimental data with respect to the amount of hydrogen consumed and biomass produced. The hydrogen which can theoretically be produced from 1 kWh by electrolysis of water is equivalent to 66 g biomass or at least 33 g bacterial protein. If, for comparative purposes, one considers the costs of other unconventional crude materials such as hydrocarbons or methane and includes costs for oxygen, carbon dioxide and mineral salts, biomass production on the basis of hydrogen can compete successfully with the processes mentioned. 

The process economic data required for biomass conversion describe the costs and efficiencies required in producing an energy product from a biomass feedstock. This information determines the production price for any biomass product at any specific biomass feedstock cost. 

Biomass product production price — CRF X SCC -I- M -F feedstock cost/e Where ... 

In order to perform a market penetration analysis, a framework of energy product demands and market price projections in which the biomass-derived products compete must be assumed. For each of the markets under consideration, an overall energy demand sets the size of the available market open to the biomass products. A projection of the alternative (nonbiomass) fuel market price also is given as an estimate of the competitive environment... 

The market penetration analysis uses an iterative process that converges toward equilibrium biomass supply/demand/price conditions. Sup-ply/demand/price equilibrium is defined here as the situation in which the production price of the biomass feedstocks is at the levels necessary to match the supplies of feedstocks with the demands for them. Figure I is a flow diagram of the procedure. 

Estimates are first made for the equilibrium marginal production prices of each major biomass feedstock as a function of time and region. Because of the relationships between feedstock price and quantity of feedstock available (as described by a set of biomass resource curves), this also determines estimates for the equilibrium supply quantities of each major feedstock. 

Using the initial feedstock production prices, the model calculates the equilibrium marginal production prices of each biomass-derived product as a function of time. (The equation shown earlier is used to find these prices.) Product penetration estimates can then be made for each biomass product (shown later in this section), and the level of demand for each of the feedstocks can be evaluated for the estimated feedstock prices. 

The basic steps followed in the product penetration assessment are presented in Figure II. This procedure first entails a static economic analysis based on the competition between the biomass-derived product price and the market price. The resuit is a steady-state market share, reflecting a situation that would be expected to exist after a period during which the competitive economic forces remained constant. Steady-state conditions do not hold soon after the introduction of a new, cost-competitive mission, technology, or product. The marketplace will be in a state of flux as the newcomer gains wider recognition and acceptance. 

In this representation, a single representative marginal price is used for each biomass product and alternative fuel. Actually, significant individual variations from these representative prices do exist. For example, continued... 

Biomass product production price — The total of all costs necessary for the manufacture of a biomass-derived product, including manufacturer s profit. 

Steady-state market share — The fraction of the product market that a biomass-derived product would supply at a point long after the biomass product production price and market price had become unchanging with time. 

For this study, the costs of three feedstocks were varied from 25 to 50% higher or lower than the published base case feedstock costs. The optimum profits were then calculated using the same feedstock availability, product demand, and product selling prices as the base case. Figure II summarizes the results of the calculation. The figure indicates that the optimum profits are indeed very sensitive to feedstock cost changes and that continued improvement of biomass production and collection techniques is very desirable to improve total profit. 

Presumably possible increase of prices can be kept small if the increase in the demand (concerning bioenergy) corresponds with the increase of supply (due to land areas no longer needed for food and fodder production). The speed of the expansion of the use of bioenergy within the energy system therefore should be oriented at the technical and organizational possibilities for the expansion of the biomass production internationally it might be essential for the volatility of the markets. 

---