A Case Study for using the Cooperative business model for Biomass Aggregation
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Transcript of A Case Study for using the Cooperative business model for Biomass Aggregation
A Case Study for using the Cooperative business
model for Biomass Aggregation
Randy Kyle, CPA, MBTKyle Consulting Group, Inc.
Office – [email protected]
We are on a path of discovery to explore the market potential of commercializing the aggregation and densification of fibrous, mostly non-woody, biomass for use in the commercial generation of electricity using the Cooperative business model.
Where Cooperatives are/have been
• Ethanol investment
• Biodiesel investment
• Soy Crush Plant
• New opportunities with restructured ethanol plants
• Biomass?????
Biomass
• Typically waste wood and wood bi-products
• Likely high in moisture
• Likely average to low in BTU value
• Not products typically handled by Producer Cooperatives or its members
• Other non-woody sources
Why Consider getting into Biomass?
• Micro economics – local nature
• Access to the material
• Does not compete with food uses
• Producers have the equipment and experience
• Additional source of revenue for producers
• Carbon credit opportunity
Why Consider the Cooperative Model?
• Farmers dealing with farmers• Profits can be returned as patronage• Producer control• Membership/ownership can be tied to
supply agreements• Familiar Structure• Trust
BCAP is the Starting Point(Biomass Crop Assistance Program)
• Defines eligible material
• Sets a payment schedule
• Establishes criteria for conversion facilities
• Provides sample agreements
• Administered by FSA
• http://www.fsa.usda.gov/FSA/webapp? area=home&subject=ener&topic=bcap
Fibrous Biomass Characteristics
• 7,500 to 8,000 BTU per pound
• Coal - 13,500 BTU per pound
• When processed, fibrous biomass can be very consistent in energy content
• Control of moisture content
• Renewable – annual crops
Financial Summary
• Need to pay farmer $45 to $60 per ton
• BCAP payment – additional $45 per ton
• Possible patronage
• 5-7 Tons/acre - $100/ton
• Attract acres/aggregation????
Operating Model
• Rural location – accommodates delivery
• Rail – accommodates shipping
• Distributed storage and delivery of raw materials
• Limited on-site storage
• Local support for permitting and construction
Off Take Agreements and Other Uses
• Long-term vs. short-term
• Fixed vs. variable
• Mandates vs. lowest cost producer
• Viability without BCAP
• Carbon trading
• Alternative uses for off take
• It’s time to negotiate
The following material is being used with the permission of Show Me Energy Cooperative
• Show Me Energy Contacts– Steve Flick, Chairman of the Board
– Kurt Herman, CEO• [email protected]
– Office phone - 660-656-3780– www.goshowmeenergy.com