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One of the most critical bottlenecks for biomass power plants is the supply chain bottlenecks that could result in non-availability of feedstock. A related problem is the volatility, or more precisely increase, in the feedstock price. Both these could render the project unviable.
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Highlighted in this article are some of the industrial perspectives in overcoming barriers for procuring a balanced feedstock supply.
EAI’s research with industry experts suggest that there is no established biomass value chain that exists in India for the procurement and transportation of the biomass feedstock. Typically, the facility staffs from a biomass gasification plant acquires biomass from several to dozens of small-scale biomass suppliers on a relatively informal, non contractual basis; although some have considered the use of aggregators, there is no data or proof available from the Indian biomass gasification companies that have engaged such a service as yet.
The biomass procurement model that is typically followed in India is discussed below:
Route #1 – Biomass Producer –>Transport Contractor –> Biomass Collection Centres (BCC’s) –> Power Producers
The biomass producer i.e. the farmers/mill owners hands over the feedstock to a transport contractor who in turn delivers the feedstock to the biomass consumers or BCC’s.
The BCC’s (managed by the biomass consumer) pay the farmers and the power producers collect the feedstock from these collection centres as and when required.
At some instances, the farmers deliver the feedstock in the power producer’s facility and get directly paid for it.
Route #2 – Biomass Producers –> Waste Processing Mills –>Biomass Power Producers
For feedstock where further processing is required, the farmers/mill owners deposit the feedstock in waste processing mills.
From the waste processing mills through a transport contractor the feedstock is deposited in the BCC’s or directly in the power producer’s facility.
In some cases, especially in briquetting, the processing is done in the collection centres itself where a mobile briquetter is taken and the briquettes that are processed are directly delivered to the facility or collected by the power producers.
Key Strategies to be Followed for Effective Biomass Feedstock Procurement
EAI’s interactions with the industry reveal that the following strategies have to be adopted in order to bring both the availability and price of biomass under control:
- Security should be addressed by obtaining a written formal supply agreement with a reputable, local supplier. A five-year signed supply agreement with pricing and minimum volumes can go a long way in helping to secure necessary financing. A bioenergy project that is totally reliant on only one source of feedstock will be at risk, so two supply contracts are even better. This will also allow one to negotiate a better feedstock price, as the supplier will benefit from a long-term relationship and a guaranteed market. An interested lender needs to know that both the feedstock supplier and bioenergy processor are committed to the project.
- It can be beneficial to hire an independent professional to verify one’s biomass supply projections and double-check that the feedstock supply is sustainable over the long term
- Backward integration and own captive biomass source (one company, Orient Green Power, is even trying out a novel technique of going for energy plantations on their own wind farms)
- According to the Washington based biomass supply company ‘Powerstock’, for a well-managed supply, an inclusive definition of biomass is needed. The company is also taking efforts to educate the public on the value of well-managed, productive forests.
- The bottom line of feedstock security is composed of several aspects: grower relations, harvesting, marketing, equipment utilization, proprietary techniques and agricultural economics. Hence it’s important to manage the entire process from seed to market.
- The supply sector needs to make the transition from a residues-based approach to an integrated, dedicated feedstock supply system using energy crops, plus residues.
Also check out: EAI Consulting for Bio-energy & Biofuels, Bioplastics & Other Biomass-based Value Added Products
