alternative technologies to transform biomass into energy€¦ · 1.overview of transforming...

Alternative Technologies toTransform Biomass into Energy

Prepared for

Ontario Federation of Agriculture

Prepared by

Western Sarnia-LambtonResearch Park

December, 2012

Table of ContentsAcknowledgements.................................................4Preface.....................................................................5Executive Summary.................................................61. Overview of Transforming Biomass into Energy ...........................................91.1 Ontario Agricultural Sector

and Energy Use ..........................................91.2 Biomass and Competing

Energy Sources.........................................101.3 Preliminary Assessments of

Alternative Technologies...........................112. Biomass Harvesting, Storage, Transportation and Handling ............................142.1 Harvesting of Biomass ..............................142.2 On-Farm Storage ......................................172.3 Transportation of Biomass

to Conversion Facilities .............................192.4 Handling and Process Infeed ...................21

3. Evaluation of Alternative Technologies.............243.1 Introduction ...............................................243.2 Technologies Examined............................243.3 ProGrid Evaluation Solutions.....................253.4 ProGrid Evaluation Process ......................253.5 Interpretation of the Evaluation Results ....29

4. Technical Details of Emerging Technologies....304.1 Pyrolysis ....................................................304.2 Gasification ...............................................314.3 Torrefaction................................................334.4 Small-Scale Energy Storage .....................354.5 Micro-Turbine ............................................37

5. Economics of Selected Bio-Energy Technologies ..................................385.1 Anaerobic Digestion..................................385.2 Direct Combustion ....................................405.3 Bio-Ethanol and Bio-Diesel .......................425.4 Pyrolysis and Gasification.........................47

6. Bio-Energy Value Chain for Ontario Agricultural Producers .........................516.1 Five Forces Analysis of

Bio-Energy Generation..............................516.2 Growth Pyramid and

Investment Options ...................................526.3 Importance of Economies of Scale...........546.4 Participation in

Bio-Energy Value Chain ............................557. Summary, Conclusions and Recommendations............................................587.1 Summary of Findings and

Conclusions...............................................587.2 General Recommendations ......................61

References ............................................................63Appendix ...............................................................64

4 Alternative Technologies to Transform Biomass into Energy

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Dr. Katherine AlbionBowman Centre for TechnologyCommercialization

Dr. Clem BowmanBowman Centre for TechnologyCommercialization

Mr. Steve ClarkeOMAFRA

Mr. Ted CowanOFA

Mr. Jake DeBruynOMAFRA

Mr. Peter FranshamAdvanced Biorefinery Inc.

Mr. Don HarfieldAlberta Innovates, Technology Futures

Dr. Clarke HenryBowman Centre for TechnologyCommercialization

Dr. Don HewsonBowman Centre for TechnologyCommercialization

Acknowledgements

Mr. John KabelConsultant

Mr. Charles LalondeOFA

Dr. Aung OoBowman Centre for TechnologyCommercialization

Dr. Walter PetryschukBowman Centre for TechnologyCommercialization

Mr. Mohammad RahbariCennatek Bioanalytical Services

Dr. Nick RuzichCennatek Bioanalytical Services

Mr. John WardBlueGreen Innovation Group Inc.

Mr. Ping WuOMAFRA

Mr. Ted ZatylnySarnia-Lambton Economic Partnership

The OFA would like to thank the following members of the evaluation team for assessing alternativetechnologies and providing their valuable input.

Alternative Technologies to Transform Biomass into Energy 5

In 2010, the Ontario Federation of Agriculture(OFA) received Agriculture and Agri FoodCanada (AAFC) funding through the Canadian

Agricultural Adaptation Council (CAAP) to conductproducer level research and value chaindetermination in support of commercializingagricultural biomass into energy and co-products.

In earlier studies, the OFA examined theopportunities to use biomass as a substitution forcoal and natural gas, including a business casefor purpose-grown biomass as a combustion fueland the sustainable harvest of crop residues.These reports are available on the OFA websitealong with other biomass studies. Please visitwww.ofa.on.ca/issues/overview/biomass to accessthese previous studies including this report.

In order to complete their due diligence on behalfof producers, the OFA placed a high priority onexamining all existing technologies as well aspromising emerging technologies that could beuseful to convert agricultural biomass intoelectricity, fuel or other forms of energy. Hence,the scope of this study was broadened to look atall pathways leading to energy production. Thisstudy represents a significant deviation fromprevious studies where combustion technologieswere examined to produce energy.

A worldwide search of emerging commercialtechnologies resulted in more than 20 differenttechnologies being evaluated by a technical panel.The panel assembled the knowledge and skillsfrom various sources including the researchcommunity, the commercial sector andgovernment staff. The OFA wishes to thank thosewho diligently participated.

Based on the information presented, the Reportprovides useful guidance to the agricultural sectorwith respect to a greater understanding of therisks and opportunities of each technology.Recommendations on investment opportunitiesand scenarios will help producers with theirindividual investment decisions.

The report is also unique because a biomassproducer, Scott Abercrombie of Gildale Farms,authored a chapter in the Report on harvesting,handling, storage and transportation of biomassmaterials. The OFA wishes to thank Scott for hisimportant contribution to the study.

The OFA would like to thank the Western Sarnia-Lambton Research Park and its authors, Dr. Aung Oo and Dr. Katherine Albion for theirthoroughness and dedication in preparing this report.

Preface

Preface

Aung Oo Katherine Albion Scott Abercrombie Charles Lalonde


This study reviews alternative technologiesto transform biomass into energy and co-products and also examines the

applications of these technologies in theagricultural sector in Ontario. The consumption ofdifferent types of energy in Ontario agriculturalsector is analyzed, and potential energygeneration from agricultural biomass is estimated.The alternative technologies to transformbiomass into energy and co-products areevaluated for their technical and commercialstrengths and suitability for the agricultural sectorin Ontario. Biomass harvesting, storage,transportation and handling activities for the bio-energy sector are also discussed. The financialspreadsheet models are developed to estimatethe return on investment for the selectedtechnologies. The status of research anddevelopment of emerging bio-energytechnologies are presented. The segments of thebio-energy value chain are analysed to determineto what extent agricultural producers shouldparticipate in the bio-energy industry.

The agricultural sector in Ontario could notonly be energy self-sufficient but could alsoprovide biomass for energy use in othereconomic sectors. The agricultural sector inOntario consumes a significant amount ofgasoline, diesel, and propane, heating oil,electricity and natural gas for the livestock andfarming activities. This annual energyconsumption in the Ontario agricultural sector isequivalent to 3.35 million tonnes of biomass.Ontario farms produce over 50 million tonnes ofgrains, beans, and feeds and about 14 milliontonnes of crop residues annually. Approximately3 million tonnes, i.e. 20% of total crop residue

produced, can be sustainably harvested annually.An additional 3 million tonne/yr of biomass canbe produced by planting purpose-grown cropssuch as miscanthus and switchgrass on less than5% of agricultural lands in Ontario. Approximately30-35% of grain corn grown in Ontario iscurrently used to produce ethanol.

There are about 1.7 million cattle in Ontario(OMAFRA statistics) whose manure wastecould be used to produce 1.55 TWh or over60% of total electricity consumed in theagricultural sector. Approximately 5,500 TJ/yrof electricity could be theoretically generatedfrom manure biogas if all of it were availablefor digestion facilities. Anaerobic digestion is amature bio-energy technology at farm scale,ranging from 300 to 3,000 kW of electricitygeneration capacity. Ontario agriculturalproducers should participate in the completevalue chain of AD bio-energy systems. Farmorganization like OFA should lobby for betteraccess to the electricity grid and for a betterpremium price of energy generated from the ADsystems.

Anaerobic digestion, direct combustion, bio-ethanol and bio-diesel productions are thefour integrated bio-energy systems with thegreatest technical and commercialopportunities in Ontario. The direct combustionof biomass integrated with steam turbines is amature technology which generates renewableheat and power. To be financially viable, theminimum electricity generating capacity of adirect combustion system should be 10 MW. Forthe direct combustion of bio-energy systems,Ontario producers could participate in feedstocksupply and transportation of biomass. A partialparticipation in the form of taking minority stakesor joint venture with the energy producer could

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Executive Summary


be possible in selected locations. Economies ofscale would be an important factor for bio-ethanol industry, and availability of inexpensivefeedstock is critical for bio-diesel industry.Participating in bio-ethanol and bio-dieselindustries would provide a reasonable hedgingfor Ontario producers who consumeconsiderable amounts of liquid fuels intransportation during farming activities. Takingminority stakes or forming joint ventures withfinancially performing bio-ethanol and bio-dieselmanufactures are recommended.

Pyrolysis, gasification, torrefaction, microturbines, and small scale energy storage areemerging technologies for agricultural bio-energy generation. More research anddevelopment is required, especially usingagricultural biomass as feedstock for thecommercialization of pyrolysis, gasification andtorrefaction. It should be noted that the researchand development of emerging bio-energytechnologies is not an area of expertise forOntario producers. If bio-energy systems withthese emerging technologies were built inOntario, agricultural producers should participatein the feedstock supply and biomasstransportation of the value chain. Participating inenergy production, marketing and selling of theenergy and co-products would require furtherassessment for these technologies on a case-by-case basis. A similar approach could beemployed for other emerging bio-energytechnologies.

Economies of scale are important in bio-energy generation. The unitgeneration/production cost of a small facilitycould be 3 to 4 times higher than that of a largefacility. Portable biomass processing and bio-energy production units have been developing in

recent years. They range from portable biomasspelletizers to mobile pyrolysis units to smallbiomass gasification systems. These small unitscan process 1 to 3 tonnes/hr, (fewer than 30,000tonnes/yr) of raw biomass. In many Ontariocounties, approximately 150,000 tonne/yr ofbiomass can be gathered within 100 km radius.With smaller systems aimed at processing 20 to30,000 tonnes of biomass annually could besupported locally with favourable economies ofscale. Extreme care should be exercised inanalyzing the financial feasibility of small scalebio-energy systems. Once the profitability of asmall system is proven, there will likely be newlarger entrants to the industry with favourableeconomies of scale.

The return on equity of most bio-energysystems ranges from 10 to 15%. Currentprices for biomass and other energy sourcesas well as feed-in-tariff rates for electricityfrom biomass influence the actual return rateon equity for various projects. Generating heatand power from agricultural biomass at largescale would be relatively new for Ontario, andrisks associated with bio-energy technologiesmust be carefully managed. The threat of otherenergy sources on the bio-energy sector inOntario is significant. At the current low price ofnatural gas in Ontario, energy generation usingnatural gas as a feedstock is very attractive. Also,competition from other biomass resources fromthe forestry sector and municipal solid wastesshould not be underestimated. The financialadvantages of a bio-energy system usingagricultural biomass should be identified at thefeasibility study stage of each project.

Executive Summ

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Forming alliances with bio-energy industryorganizations and R&D centres isrecommended to monitor the development ofemerging bio-energy technologies. For thelarge-scale use of biomass for energy generation,the best practices and industry standards needto be developed for biomass harvesting, storage,transportation and handling activities. Since mostrenewable energy receives regulatory supports, itis important to influence policy makers by

highlighting the potential socio-economicbenefits of responsible bio-energy production tothe agricultural and rural sectors. The low price ofnatural gas and increasing electricity cost inOntario could result in significant changes inenergy consumption mix in the medium to longterm timeframe. Further analysis is required toexamine these effects on the bio-energy industry.The potential integration of bio-energy facilitieswith other bio-based industries should also beinvestigated.Ex

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Biomass is considered a renewable energysource. Farms in Ontario traditionallyproduce grains, beans and meat for

human consumption, feed for livestock, andfeedstock for various industries. The agriculturalsector can also offer purpose-grown biomassand crop residues to be utilized in generatingelectricity, heat and other by-products. As asignificant consumer of energy products, theagricultural sector could potentially benefit fromparticipating in bio-energy generation. In thischapter, the consumption of different types offuels in the Ontario agricultural sector ispresented. Energy from biomass is comparedwith other energy sources in the province.Preliminary assessment of alternativetechnologies to transform agricultural biomassinto energy and by-products is discussed.

1.1 Ontario Agricultural Sector andEnergy UseOntario is one of the most prominent agriculturalprovinces and home to approximately 50% ofCanada’s agricultural Class 1 land. Ontario is thelargest producer of grain corn and soybeans,about 65% and 75% of Canadian total,respectively (Statistics Canada). The agriculturalsector is one of the main economic pillars inOntario, creating jobs in rural areas and in foodprocessing industries. Farming activitiesconsume significant amount of energy,representing about 2% of total energyconsumption in Ontario. Table 1.1 lists theconsumption of major energy types in theagricultural sector in Ontario.

Energy consumption is expressed as biomassequivalent in million tonnes. Ontario farmsproduce over 50 million tonnes of grains, beans,and feeds annually (OMAFRA crop statistics).

Approximately 14 million tonnes/yr of cropresidues such as corn stover and wheat straware also generated. Oo and Lalonde (2012)suggested that about 3.1 million tonne/yr of cropresidues can be sustainably harvested. If 0.5million acres, which is about 3.7% of totalagricultural land in Ontario, were dedicated topurpose-grown biomass such as miscanthus orswitchgrass, over 3 million tonne/yr of biomasscould be produced. These estimates and energyconsumption data shown in Table 1.1 suggestthat Ontario agricultural sector could not only beenergy self-sufficient but could also providebiomass for energy use in other economicsectors.

Electricity generated from biomass and otherrenewable sources can be sold to the grid atpremium prices offered by the Feed-in-Tariff (FIT)program in Ontario. The majority of renewableelectricity in Ontario comes from solar and windsources. There has been no significantdevelopment in electricity generation frombiomass except biogas electricity throughanaerobic digestion of manure. There are about

Overview

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Chapter 1 – Overview of Transforming Biomass into Energy

Energy Source

Consumptionin Agri. Sector

(TJ/yr)% of Ontario

Total

BiomassEquivalent(milliontonne/yr)

Natural gas 12,655 1.54 0.68

Electricity 8,752 1.95 1.58

Diesel 8,238 3.41 0.45

Gasoline 7,315 1.29 0.40

Propane 3,245 8.43 0.18

Heating oil 1,339 3.93 0.07

Total 41,544 1.93 3.35

Source: Statistics Canada; Assumption: 30% electricity generationefficiency in estimating biomass equivalent

Table 1.1 Energy Consumption in OntarioAgricultural Sector


20 biogas electricity plants in the Ontarioagricultural sector based on personalcommunication with industry experts. There areabout 1.7 million cattle in Ontario (OMAFRAstatistics), and approximately 5,500 TJ/yr, i.e.1.55 TWh of electricity could be theoreticallygenerated from manure biogas. This potentialmanure-based electricity represents about 63%of total electricity consumed in Ontarioagricultural sector (see Table 1.1).

The price of energy could fluctuate on a short tomedium term time frame; however, prices willlikely increase in the long term due to scarcity ofenergy resources, increasing population andeconomic activities. Therefore, participating inenergy generation would provide a hedge for theOntario agricultural sector against greater inputcost of farming operations resulting fromincreased energy price. Approximately 30 to 35%of grain corn grown in Ontario is currently used toproduce ethanol (Grier et. al, 2012). This allowsOntario agricultural sector participation intransportation liquid fuel energy markets to someextent. However, there is a potential for greaterparticipation in energy markets due to theavailable biomass resources discussed above.

1.2 Biomass and Competing Energy SourcesWhen electricity generated from biomass is soldto the grid, it entitles the premium price asprovided by the FIT program. However, for otherforms of final energy such as space heatingapplications or onsite power generation of ownuse, biomass has to compete with differentenergy sources available in Ontario. Theestimated cost of different types energy sourcesare compared with biomass pellets in Figure 1.1.The costs are at consumers’ gate and comparedin the unit cost per energy content ($/GJ).

As seen in Figure 1.1, coal and natural gas arethe most cost-competitive fuels in Ontario. Liquidtransportation fuels, diesel and gasoline are thehighest cost energy sources. Production of bio-diesel and corn/cellulosic ethanol could befinancially attractive for the Ontario agriculturalsector. Additionally, the bio-fuels used fortransportation are mandated by federal andprovincial regulations. Biomass pellets, bothforestry and agricultural, are relatively lessinexpensive than heating oil and propane.Therefore, space heating applications, whereheating oil and propane are heavily used due tolack of natural gas infrastructure, could offerpotential markets for biomass pellets. The fuelcost of such space heating applications could bereduced by approximately 65% by switching tobiomass pellets.

The consumption of heating oil and propane inselected sectors, mainly for space heatingapplications in Ontario, is given in Table 1.2. Thebiomass equivalent in million tonnes/yr is alsoestimated. The commercial and institutionalsector is the largest consumer of heating oil andpropane, representing over 50% of the provincialtotal. As shown in Table 1.2, the potential

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Figure 1.1 Comparisons of Biomass Pelletswith Other Energy Sources in Ontario


demand of biomass, replacing heating oil andpropane, is approximately 3 million tonnesannually. This demand can be met by cropresidues or purpose-grown biomass grown onless than 4% of agricultural land in Ontario.

Two noteworthy trends in energy markets inOntario are the increasing price of electricity andthe declining price of natural gas. In the OntarioLong-Term Energy Plan released in 2010, theprovincial government stated that residential billsare expected to rise by 3.5 per cent per year, andindustrial prices are expected to rise by 2.7 percent per year over the next 20 years. In themeantime, the price of natural gas hasdecreased significantly from its peak in 2007-2008 and is expected to remain at current leveldue to abundant shale gas discovered in nearbyregions. These trends could result in theimproved economics of Combined Heat andPower (CHP) using natural gas as a fuel inmedium to large industries where there areconsiderable heat demands. For example, theIGPC Ethanol Inc. is installing such a CHP unit attheir plant in Aylmer, Ontario (personalcommunication with IGPC Ethanol Inc.).

1.3 Preliminary Assessments ofAlternative TechnologiesEnergy contained in biomass can be transformedinto heat and/or power through a number ofprimary conversion technologies and integratedconversion technologies. Primary conversiontechnologies include anaerobic digestion, directconversion, gasification and pyrolysis. Integratedconversion technologies include gas-fired boiler,oil-fired boiler, Internal Combustion (IC) engine,indirect fired gas turbine, micro turbine, gasturbine, fuel cell, Stirling engine, heat exchanger,steam turbine and energy storage. Some of thetechnologies are commercial while some can beconsidered as emerging technologies. Thepreliminary assessments of selected alternativetechnologies to transform biomass into energyare summarized in Table 1.3.

Anaerobic Digestion (AD) is a proven commercialtechnology to convert wet biomass such asmanure or municipal green wastes intocombustible gases. Integrated conversiontechnologies listed in Table 1.3 further transformthe combustible gases into heat and power. ICengines are the most common integratedconversion technology for the anaerobicdigestion system to generate power. The typicalelectricity generation capacity of AD systemsranges from 250 to 500 kW, and up to 3,000 kWunits are commercially available. Indirect firedgas turbines can be also used in the anaerobicdigestion power systems; however, they are morecostly than IC engines. Gas turbines, microturbines (which are small gas turbines), and fuelcells require relatively clean gases to operate.Stirling engines have been proven at lab scales;however, extensive commercial use has yet to beconfirmed.

Overview

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Table 1.2 Potential Biomass Space HeatingMarkets in Ontario

Source of consumption data: Statistics Canada

Energy Source Consumption (TJ/yr)Biomass Equivalent(million tonne/yr)

Agricultural Sector

Propane 3,245 0.18

Heating oil 1,339 0.07

Residential Sector

Propane 8,446 0.46

Heating oil 12,765 0.69

Commercial and Institutional

Propane 12,096 0.65

Heating Oil 17,573 0.95

Total 55,464 3.00


Heat and power can also be produced by directcombustion of biomass in fixed bed or fluidizedbed boilers as the primary conversion integratedwith heat exchangers or steam turbines. Thisenergy conversion system has been incommercial operation for decades. Directcombustion steam turbine biomass powergeneration systems are relatively larger rangingfrom 10 MW to over 300 MW of electrical power.Co-firing biomass with coal to generate heat andpower could have some issues at higherbiomass-to-coal ratio since the combustiontemperature of coal-fired boilers is higher thanthe ash melting temperature of biomass causingfouling of boilers. However, the direct combustionsystems dedicated to biomass are designed atlower combustion temperatures and operate withno major technical issues.

Biomass can be heated to 550-850 °C in theabsence of air/oxygen to produce syntheticgases, mainly hydrogen and carbon monoxide.This primary conversion is called gasification andhas been used commercially. The syntheticgases can then be converted into heat andpower through the integrated conversiontechnologies shown in Table 1.3. The typicalpower generation capacity of biomassgasification systems ranges from 250 kW to 5 MW.Most commercial biomass gasification energysystem use wood as feedstock; however,agricultural biomass gasification systems havenot been used extensively in commercialapplications. This is due to the relatively morecorrosive nature of gases produced fromagricultural biomass in comparison with forestrybiomass. Advancements in cleaning of synthetic

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Table 1.3 Preliminary Assessments of Selected Alternative TechnologiesPrimary Energy ConversionTechnology Final Form of Energy

Integrated ConversionTechnology Comments

Anaerobic digestion (Commercial)Heat Gas-fired boiler Commercial, could feed steam to steam turbine

Power

IC engine Commercial and widely-used

Indirect fired gas turbine Commercial

Micro turbine Commercial, gas cleaning is essential

Gas turbine Commercial, gas cleaning is essential

Fuel cell Emerging

Stirling engine Emerging

Direct combustion of biomass infixed bed and fluidized bedboilers (Commercial)

Heat Heat exchanger Commercial

Power Steam turbine Commercial and widely-used

Gasification in fixed bed andfluidized bed gasifiers(Commercial with forestrybiomass, demonstration-commercial with some agriculturalbiomass)

Heat Gas-fired boiler Commercial, could feed steam to steam turbine

Power

I.C. engine Commercial and widely-used

Indirect fired gas turbine Commercial

Micro turbine Commercial, gas cleaning is essential

Gas turbine Commercial, gas cleaning is essential

Fuel cell Emerging


Pyrolysis (Emerging-demonstration)

Heat Oil-fired boiler Commercial, could feed steam to steam turbine

PowerIndirect fired gas turbine Commercial



gases could improve the commercial viability ofthe gasification heat and power systems usingagricultural biomass as feedstock.

Pyrolysis is an alternative primary conversiontechnology which can produce synthetic gases,bio-oil and bio-char by heating biomass atrelative lower temperatures of 350 to 550 °C inthe absence of air/oxygen. Producing specialitychemicals through pyrolysis has been incommercial operation, e.g. renewable chemicalsfor food and wood processing industries fromEnsyn Corporation (www.ensyn.com). However,the production of energy through pyrolysistechnology can be considered at the emerging todemonstration stage, especially for agriculturalbiomass feedstock. Pyrolysis has a greatpotential as an alternative technology due to theversatility of its products. Bio-oil could betheoretically further refined like crude oil toproduce an array of fuels, chemicals and otherproducts. Bio-char could be used in energyapplications or as fertilizer, which iscomplementary to agricultural activities. Currently,a significant amount of research anddevelopment is attempting to resolve sometechnical issues such as higher acidity andinstability of bio-oils.

In addition to the technologies shown in Table 1.3,torrefaction is another alternative technology ofinterest in recent years. Torrefaction is essentiallythe roasting of biomass at 200-300 °C, producingenergy dense and hydrophobic biomass,especially suitable for outdoor storage and co-firing with coal at large power plants. Theresulted coal-like biomass has a number ofadvantages over conventional biomass pellets,including lower transportation cost per unitenergy content. This advantage would allowbiomass exports to Europe, where solid biomass

demand is expected to grow significantly overthe next decade (Ginther, 2011). Torrefactiontechnologies are currently in laboratory to pilotscale productions and mostly use forestrybiomass. Torrefaction of agricultural biomass is atthe laboratory research and development stageat present. In southern Ontario, torrefaction ofagricultural biomass could occur at the point ofuse for small to medium scale applications due torelatively short transportation distance.

Bio-based liquid fuels, mainly ethanol and bio-diesel, are currently produced in commercialoperations. Production of ethanol fromstarch/sugar crops is a relatively maturetechnology. However, cellulosic ethanoltechnologies are at pilot to demonstration stageand have yet to be proven for commercial viability.In 2012, DuPont has started the construction of acommercial scale cellulosic ethanol plant in Iowa.This plant is expected to begin production in mid2014 using corn crop residues as feedstock. Bio-diesel technologies are also commercially proven.At current mandatory blend rates in Ontario, bio-diesel plants seem to be financially attractive onlyif inexpensive feedstock such as used cooking oilor other industrial wastes are available. Bothsugar/starch ethanol and bio-diesel technologiesare expected to progress gradually in loweringthe production costs. The development ofcellulosic ethanol technologies should also bemonitored since a large quantity of crop residuesis available in Ontario.

Overview

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Biomass into Energy


The initial activities relating to biomassconversion include harvesting, storage,and transportation to a processing or

conversion facility and material handling to pre-process the biomass to the facility‘sspecifications. Agricultural biomass is a low valuecommodity as compared to grain or foragecommodities. Thus, it is important in these initialsteps in the biomass supply chain that allefficiencies must be maximized to supplybiomass such that both the supply and theconversion of the biomass are economicallyviable. The objective would be to minimize thenumber of steps, handling, labour and costincurred to supply biomass to the conversionfacility. At the present time, corn stover residualand purpose grown crops including switchgrassand miscanthus hold the most potential asagricultural biomass feedstock. Thus, these willbe the focus of this chapter in the report.

2.1 Harvesting of Biomass2.1.1 Conventional Equipment

Many farms have conventional forage equipmentto harvest crops such as corn silage, hay andstraw by either chopping using a forageharvester or by cutting and bailing. The sameequipment can be used to harvest corn stover byraking and bailing or for purpose grown crops byswathing and bailing or by chopping with aforage harvester. Thus, harvesting corn stover orpurpose grown crops can be done withoutadditional capital costs in equipment. However,there are limitations to conventional equipment

that must be considered. For example, balerswho produce a round bale are very common.However, round bales are not as efficient forstorage, transportation, and handling comparedto large square bales, especially high densitybales made by newer generation balers capableof chopping the material while baling. Highdensity balers can produce bales with up to 25%greater density, which translates into improvedefficiencies for handling, storage, and transport.Additionally, because of the greater density, thebales withstand stacking and handling betterthan the round bales. Because of the inefficiencyof rounds bales, in many cases round bales willnot be accepted or face a discriminatory priceadjustment at the end conversion facility.Furthermore, round bales may require pre-processing at another location since theequipment to break up round bales is differentfrom square bales and the operation producesconsiderable dust. Another limitation may be thecapacity of smaller or older forage equipment.

Newer generation forage equipment such as highdensity balers or high capacity forage harvestersshould require no modifications and only littleadjustment to harvest biomass material. Whilethis equipment might be cost prohibitive forproducers with small acreage, many customoperators will provide these services costeffectively, especially as this equipment is notlikely to be utilized during the timeframe ofharvest of the biomass crops. Examples of newgeneration, high capacity conventionalequipment are shown below in Figure 2.1 andFigure 2.2. Several equipment manufacturersoffer similar equipment.

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Chapter 2 – Biomass Harvesting, Storage, Transportation and Handling


Another tool that offers increased efficiency forharvest of biomass is a bale accumulator, anexample of which is shown in Figure 2.3. A baleaccumulator is drawn behind a tractor and uses

hydraulics to pick up bales in the field by drivingalong side and grabbing the bale while still inmotion. The bale is then positioned on the carrierwhich automatically aggregates the bales into astack that can be tipped up and unloaded whenfull. This allows the farmer to quickly andefficiently collect and clear bales from the fieldwith a single tractor and operator, compared tousing a loader tractor and wagons which requirestwo tractors and operators. Using a baleaccumulator creates neat stacks of balesfacilitating subsequent loading onto a truck fortransport.

2.1.2 Developing Equipment Specific toBiomass

In response to the opportunity to harvest cornstover, especially for the ethanol market, severalequipment manufacturers have modifiedcombines to harvest both the grain corn and cornstover or corn cobs simultaneously in a one passoperation. Examples of specialized equipmentare shown Figure 2.4.

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Figure 2.1 High Density Baler (Krone)(Source: www.krone-northamerica.com)

Figure 2.3 Bale Accumulator Used toAggregate Bales in the Field(Source: www.fwi.co.uk)

Figure 2.4 Specialized Combines to HarvestGrain Corn and Stover(Source: www.cngva.org)

Figure 2.2 High Capacity Forage Harvesterwith Kemper Head(Source: www.claas.com)


2.1.3 Economic Cost of Harvesting Activities

The economic costs of harvesting biomass canbe derived using rates for the required harvestactivities for custom operators for traditionalforage crops and adjusting for differences inyield. The rates used in calculating the harvestcosts were taken from the OMFRA Survey ofCustom Farm work Rates (http://www.omafra.gov.on.ca/english/busdev/facts/10-049a3.htm).

2.1.3.1 Switchgrass

Assuming an average yield of 10.0 DM t/ha, thecosts to harvest a switchgrass crop by swathing,raking and bailing and removing the biomassfrom the field are shown in Table 2.1. Costs forraking are included as it is assumed that theswitchgrass is swathed in the fall; thus in thespring prior to bailing raking would likely berequired to turn the swaths to help facilitatedrying of the biomass.

2.1.3.2 Miscanthus

Miscanthus is commonly harvested either inchopped form or in baled form. Assuming anaverage yield of 16.0 DMt/ha, the costs for bothharvesting methods are shown in Table 2.2 andTable 2.3. The rate per hectare for swathing hasbeen increased by 40% as a slower groundspeed and increased fuel consumption would berequired due to the large volume of biomass from

a miscanthus crop. Due to the low density ofchopped biomass, the cost in this harvestmethod is nearly equal between thecutting/chopping operation and removingmaterial from the field.

2.1.3.3 Corn Stover

Corn stover collected after the primary grain cornis combined would be harvested by using a stalkchopper to shred the stover, raking into a windowand then baling. Costs to harvest corn stoverusing this approach are shown in Table 2.4 andare based on a yield of 5.0 DMt/ha. Thisapproach would maximize the yield as comparedto allowing the combine to discharge the cobsand husks into a windrow and subsequentlybaling only this biomass. Recently, the Universityof Illinois has published a calculator to enableproducers to calculate the value of their residuecrops (http://miscanthus.ebi.berkeley.edu/Biofuel/CropSelection.aspx and BiomassMagazine, Nov., 2012).

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Table 2.1 Harvest Costs for Switchgrass

Harvest Activity RateHarvest Cost

($/DMt)

Cutting/Swathing (Fall) $39.52/ha ($16/acre) $3.95

Raking (Spring prior tobaling)

$17.29/ha ($7/acre) $1.72

Baling $8/bale $19.04

Field Removal $2/bale $4.76

Total $29.47


($/DMt)

Chopping (direct cutwith Forage Harvester)

$177.84/ha ($72/acre) $11.12

Field Removal $172.90/ha ($70/acre) $10.80

Total $21.92


($/DMt)

Cutting/Swathing(Spring)

$55.34/ha($22.40/acre)

$3.46



Total $27.26

Table 2.3 Harvest Costs for Miscanthus inChopped Form

Table 2.2 Harvest Costs for Miscanthus inBaled Form


As discussed earlier, corn stover may also beharvested in a single pass operation using aspecialized combine. At the present time, thismethod is uncommon in Ontario, but researchsuggests a theoretical harvest cost of $32/DMt(Shinners et. al, 2003).

2.1.4 Practical Considerations andImplications of Harvest Methods to BiomassQuality

Operators must understand the requirements andspecifications of the specific supply opportunityfor which biomass is to be harvested. Forexample, switchgrass may be cut and swathed inthe fall and baled either several weeks later whendry or in the early spring. Baling in the fall willreduce the opportunity for nutrient leaching butwill increase the yield potential as more of the leafportion of the plant will be collected. Whenharvesting miscanthus, baling will pick up a lot ofthe leaves that have been shed from the stockand fallen to the ground in comparison toharvesting by chopping with a forage harvester,which will only harvest the standing stocks.Similarly, when harvesting corn stover, collectingthe stover in a one pass operation will eliminatethe pick up of any roots and dirt from the stocks.However, by harvesting with this method, themoisture content of the stover biomass must beaddressed as it will be 30% or greater in a typicalOntario fall harvest. Collecting stover in thespring by raking and bailing will allow stover tobe harvested at moisture contents under 10%;

however, there is a much greater potential forincreased contamination from dirt picked up theroot mass of the stock, mud tramped into thestover from grain harvest equipment, or from dirtthat has splashed onto the stover from heavyrainfall. These examples demonstrate the trade-offs and the quality implications of harvestmethods and timing which must be considered.

2.2 On-Farm StorageOnce the biomass is harvested, it must be storeduntil needed. Conversion facilities will generallyonly have a working storage representing a smallbuffer as compared to the total annual processedtonnage. Thus, biomass will likely be stored onfarm. This represents a challenge because of thehigh volume and low bulk density of the biomass.Also, each biomass crop is generally only anannual harvest. Additionally, biomass must bestored in a manner to preserve the quality of thebiomass, thereby limiting deterioration.

2.2.1 Suitability of Current Storage MethodsUsed for Forage Crops

Forage crops such as corn silage and hay arecommonly stored on many farms. Typical storagemethods for baled material are storing the balesunder the cover of a building or tarp or to wrapthe bales in a plastic film to protect the crop fromthe environment to facilitate outdoor storage.Bales may be wrapped individually or as a stackor row to reduce costs. The same storagemethods are suitable for biomass crops stored inbaled form.

Forage crops harvested in chopped form aretypically harvested wet at approximately 40 to70% moisture content, and ensiled within astructure such as an upright silo, concrete bunker,or a plastic ag-bag. Using proper storageprotocols and ensuring the material is withincritical moisture content will cause the crop to

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($/DMt)

Stalk Chopping $37.05/ha ($15/acre) $7.41

Raking $17.29/ha ($7/acre) $3.46



Total $34.67

Table 2.4 Harvest Costs for Corn Stover


ferment slightly to stabilize and prevent furtherdegradation(http://www.omafra.gov.on.ca/english/crops/facts/07-047.htm ). This method of storage is likelysuitable for only biomass crops if they are goingto be used as a feedstock in an anaerobicdigestion conversion process. For otherconversion processes, harvesting and storingbiomass crops in this manner has majordisadvantages in terms of biomass quality.Harvesting biomass while green eliminates anyopportunity for nutrient leaching to occur in thefield, thus creating higher nutrient replacementcosts. Additionally, if the conversion facilityrequires dry biomass material, the biomass mustbe dried in a commercial dryer at a much highercost than allowing biomass to dry naturally in thefield before harvest.

The use of the same storage structures for thestorage of dry chopped biomass is an option;however, the capacity is greatly reduced even ona dry matter basis. Dry biomass will not compactwell within the storage structure and will remain‘spongy’. Further research relating to the use ofvertical silos and bunkers for storage of drybiomass is warranted as there are many of thesestructures with significant storage capacity inrural Ontario which are sitting idle, therebypotentially creating low cost storage structures.

The addition of propionic acid to the biomassprior to storage is another opportunity for furtherresearch. Propionic acid is currently used onmany forage crops to help inhibit mould growthand bacteria. Thus, this also may be beneficial to

prevent degradation of biomass in storageespecially when stored for longer periods. Basedon current prices, the application would costapproximately $2.50 per large square bale.

2.2.2 Alternative storage methods

Another option for the storage of choppedbiomass is to simply pile chopped or bulkbiomass in large piles in the field. Generally, thebiomass would be left uncovered and exposed tothe environment. The top layer of the pile wouldform a crust and serve as a protective layer,preventing precipitation from reaching theremaining biomass. This storage method wouldhave the most potential for quality degradationand spoilage, with potential negative implicationsto the conversion process.

Many other possibilities and opportunities for thestorage of biomass crops exist. An innovativeidea is to combine a biomass storage facility witha rooftop photovoltaic solar system to maximizethe functionality and share capital costs of thestructure.

2.2.3 Economics of storage

Shown in Table 2.5 are approximated costs fordifferent storage options for biomass. Thesefigures assume that biomass is being stored forone year and includes material, equipment andlabour to transfer into and out of storage, andcapital costs of equipment and buildings whereapplicable. For storage using a vertical silo orbunker, no capital costs for the structure areincluded as it is assumed to be idle otherwise.Cost associated with the actual harvest such asbaling or chopping is not included.

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2.2.4 Risks due to unique biological andmaterial properties of biomass

One must consider that biomass, even when dry,is still subject to potential deterioration and drymatter loss from biological processes. Increasedmoisture content, duration of storage,temperature fluctuations and the amount ofbiomass stored all negatively impact the potentialfor deterioration. As deterioration starts, there issignificant risk of the formation of mould sporesand ultimately the possibility of heating to thepoint of spontaneous combustion. It is importantto routinely monitor biomass in storage for anysigns of deterioration and take corrective actionimmediately if needed.

2.3 Transportation of Biomass toConversion FacilitiesDue to the low bulk density of biomass especiallyin chopped form, biomass must be sourced in aclose radius to the conversion facility to minimizetransportation costs. Bulk densities for choppedmaterial can range from 70 kg/m3 to 120 kg/m3

while baled material can be 150 kg/m3 to200 kg/m3.

2.3.1 Transportation Methods

Possible methods of transporting biomass to theconversion facility include farm tractor andwagons, transport truck and trailer or in extremelyhigh volume or long distances, by rail or bymarine freighter. In all methods of transportation,volume would be the limiting factor, given thedensity of either chopped or baled biomass.

Transportation by farm tractor and wagons wouldonly be feasible if the distance from the farm gateto the conversion facility is 40 km or less. Beyondthis distance, it is more economical for a farmerto hire a transport truck.

Transportation by transport truck and trailer islikely to be the most common method. For baledmaterial, either a flat bed trailer, flat bed B-trainsor a walking floor van body trailer would be used.Capacities are shown in Table 2.6 for differenttrailers for both a standard density 1.2x0.9x2.3m(4x3x7.5ft) square bale weighing 420 kg and ahigh density bale with the same dimensionsweighing 525 kg.

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Storage MethodAnnual storage cost

($/DMt)

Unwrapped bales under tarp 5 – 8

Unwrapped bales in coverall structure 22 – 24

Wrapped bales stored outside 16 – 20

Chopped biomass in coverall 32 – 38

Chopped biomass in vertical silo orbunker

14 – 16

Chopped biomass in field piles 10 – 12

Note: Cost estimates are for 300-500 tonne of storage capacity.

Table 2.5 Cost Estimates of Different StorageOptions

Table 2.6 Capacity of Common Road Trailers

TrailerCombination

Standard Density Bale1.2x0.9x2.3 m

High Density Bale1.2x0.9x2.3 m

# BalesWeight(Tonne) # Bales

Weight(Tonne)

53ft Flatbed 42 17.64 42 22.05

B – Train 51 21.42 51 26.76

16.15 m (53 ft)Walking Floor Van Body

39 16.38 39 20.48


For chopped material, a walking floor, van bodytrailer is most efficient and easily facilitatesunloading. A 16.15 m (53 ft) trailer has up to120 m3 in volume which translates into 8.4MT to14.4 MT of biomass per load.

Rail or marine would likely to be applicablemodes of transportation only if the biomass waspelleted prior to transport to increase the bulkdensity.

2.3.2 Economic Evaluation of TransportationModes

In previous studies, costs for the differenttransportation modes have been identified byconsidering both fixed and variable components.The fixed cost would include such things asloading and unloading cost, facility costs, etc.The variable component, which is a function ofthe distance travelled, represents fuel andoperating costs. Transportation costs can becalculated as:

Transportation costs ($/DMt) = C1 + C2 x L

Where;

C1 = Fixed cost constant ($/DM t)

C2 = Variable cost constant ($/DM t/km)

L = Distance in km

Constants assuming a bulk density of 120kg/m3for various different transportation modes arefound in Table 2.7.

As an example, the calculated cost from themodel to transport 14.4 DM tonne a total distanceof 150 km by truck would be $377.84. This isinline with industry rates of $120 per hour for atruck and walking floor trailer as it would takeapproximately 3 hours to complete the aboveexample including loading, driving and unloadingtime for a total cost of $360.

Natural gas has been used in the transportationsector for many years; however, with the recentdrop in natural gas rates compared to theequivalent energy costs of diesel fuel, manyfleets are rapidly converting over to Natural GasVehicles (NGVs). NGVs offer significantlyreduced fuel costs over diesel, with currentmarket prices provided by Enbridge forcompressed natural gas being $.70/L equivalentcompared to diesel at $1.20/L (personaldiscussion with Enbridge sales rep). Thus, fortrucks with high annual fuel consumption,significant savings are realized which quicklyoffset the higher capital costs of purchasing aNGV. Figure 2.5 illustrates the payback whenbuying a heavy or medium duty NGV over adiesel fuelled truck at various price differentialsbetween natural gas equivalent and diesel. As anillustration, a NGV hauling 25 tonnes of biomassa distance of 150 km would expect a costsavings of $26.25, or $1.05 per tonne comparedto a diesel fuelled truck. This is a significant costsavings given that biomass is a low valuecommodity. Additional environmental benefitsresult from reduced greenhouse gas emissionsfrom NGVs.

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Table 2.7 Fixed and Variable Cost ConstantsMode C1 C2

Truck 5.7 0.1369

Rail 17.1 0.0277

Marine 19.6 0.0113


NGVs require specific infrastructure to refueleither at a quick fill station which operates similarto a conventional fuel pump or a slow fill stationwhere the truck would be refuelled over a periodof several hours, for example, parked overnight ina truck yard. Because of this, NGVs are ideallysuited for line haul or regional haul routes. Anexample of a line haul route is a truck running onthe 401 corridor from Toronto to Montreal wherethere is access to quick fill stations. An exampleof a good regional NGV application is apredicable, return-to-base route, such as those ofgarbage trucks or city buses. Rural Ontariohasn’t yet developed a good network of quick fillstations; thus NGVs in rural areas are limited tofleets with access to natural gas and trucks thatare running predicable, return to base routes.With the current infrastructure, this may pose achallenge for the use of NGVs in the role oftransporting biomass. Recently, a producer, FourCorners Poultry introduced a high-pressure,commercial-grade, TSSA/CSA Approved Natural

Gas Compressor and Quick-Fill CNG StorageSystem to fuel its farm service vehicles, in parallelwith Natural Gas warming the family’s chickenbarns, their home, and running approximately100 essential appliances.

2.4 Handling and Process InfeedEquipment used to receive and handle biomassat the conversion facility will be dependent on thenature of the specific conversion process and thecapacity for which the facility is designed. Assuch, a conversion facility is likely to specify theform in which biomass will be accepted, eitherpre-shredded and delivered bulk or in baled form.Furthermore, round and square bales requiredifferent steps and equipment for shredding. Fewfacilities are likely to accept biomass in bothforms as each receiving method requiresdedicated handling and storage equipment withlittle potential for shared equipment utilization.

To minimize complications to the conversionprocess, it is critical that receiving, storage andinfeed system be designed to handle the inherentproperties of biomass, including but not limited tomoisture content, particle size variability, possiblecontaminants, flowability issues, etc. One of themajor inherent risks of handling biomass ispotential for dust explosions as a dust cloud caneasily form in an enclosed environment, creatingthe potential for a source of ignition to ignite theair and fuel mixture. If good management andhousekeeping practices are neglected in theprocess environment, this initial explosion canlead to a similar chain reaction in the facility,igniting any dust that may have accumulated onequipment or in the structure. Thus, equipment

Biomass H


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Figure 2.5 Heavy Duty Vehicle Payback Cost Curves(Source: Canadian Natural Gas Vehicle Alliance, www.cngva.org)

0

Natural Gas to Diesel Price Differential ($/DLE):$0.20$0.30$0.40$0.50

0

1

2

3

4

5

6

7

8

20 40 60Annual Fuel Consumption (thousand litres/yr – diesel)

Payb

ack

(yea

rs)

80 100 120 140


must be designed to minimize the release orbuild up of dust into the process environment,and material handling equipment should haveappropriate safety features such as explosionventing and spark suppression. Theseconsiderations will ensure that the biomassindeed is safe, reliable and consistent for theconversion process to operate efficiently.

2.4.1 Pre-shredded (Bulk) Biomass Handling

Biomass pre-shredded or ground on farm wouldbe delivered to the conversion facility andunloaded from the truck either by means of a self

powered, live bottom (walking) floor trailer ordumped off using a regular dump trailer or atrailer tipper. Examples of these are shown inFigure 2.6, Figure 2.7, and Figure 2.8.

After being unloaded, material could betransferred using a wheeled loader ormechanical conveyors into either storage piles,silos, or onto a live bottom floor to act as storage,and/or a buffer before being introduced to theconversion process.

When the biomass is delivered pre-shredded,consistency and quality of the biomass is moredifficult to monitor and to manage. Additionally,when handled in bulk form, fugitive dust isreleased into the process environment and mustbe controlled to maintain safe operatingconditions.

2.4.2 Baled Biomass Handling

Biomass that is delivered in baled form can beunloaded and handled using a wheeled loader ora telehandler or an overhead crane system.

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Figure 2.6 Unloading Biomass from aWalking Floor Trailer(Source: www.keithdaycompany.com)

Figure 2.7 End Dump Trailer(Source: hmitrailers.com)

Figure 2.8 Trailer Tipper Unloading Biomass(Source: www.phelpsindustries.com)


Figure 2.9 displays the material handling systemsat Drax Power in the UK, which is one of thelargest biomass fired, power generationcompanies. Quality control checks can beperformed on each bale, and further segregationor assimilation of the bales is possible to maintainconsistency of the biomass feed into the process.Source identification and tracking is also moreachievable when handling biomass in baled form.

Onsite storage of biomass would likely remain inbaled form until introduced to the conversionprocess. To introduce the biomass into theconversion process, bales would be fed into abale grinder or chipper such as shown in Figure2.10. With proper consideration and design of anair take-away from the bale grinder, a negativepressure within the grinder minimizes any dust isgenerated and released into the processenvironment.

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Figure 2.9 Material Handling Crane at DraxPower, UK(Source: www.demagcranes.de)

Figure 2.10 Link-ka Bale Grinder(Source: www.linka.dk)


3.1 Introduction

Energy has a significant effect on Ontarioproducers because it is a major input toagricultural production systems. High

energy prices have led producers to have anintense interest in generating energy on theirfarms and in their communities as a means tooffset costs and generate revenue. To assistOntario’s producers, governments havesupported the development of technologies thatutilize non-traditional energy sources for theproduction of dispatchable energy and the saleof energy to the electrical grid. With theimplementation of the Ontario Green Energy Act,Ontario producers are eager to participate in theenergy market.

Advice for producers on the use and optimizationof emerging energy technologies is not readilyavailable to date. Producers engaging andinvesting in these new technologies facechallenges managing technological and financialrisks. Many of these new energy productiontechnologies are being rapidly developed andcommercialized around the world. However,some technologies are being promoted as readyfor market without proven success.

3.2 Technologies ExaminedTwenty emerging and available biomass-basedtechnologies were evaluated for commercialreadiness, for ease of implementation on farmsand in communities; for assistance with themanagement of technological; and financial risksto producers. These technologies were also

analysed to develop strategies to maximizeenergy efficiency through systems integrationsuch as combining various conversiontechnologies. Technologies evaluated in thisstudy include:

Biomass Conversion • Anaerobic Digestion

• Gasification

• Pyrolysis

• Torrefaction

• Direct Combustion

Fuel Enhancement • Biogas to Biomethane

• Hydrogen EnrichedNatural Gas

Energy Storage • Compressed Air EnergyStorage

• Large-Scale Battery

• Small-Scale Battery

• Fuel Cell

Energy Production • Gas-Fired Boiler

• Gas Turbine

• Indirect Gas FiredTurbine

• Internal CombustionEngine

•Microturbine

• Steam Engine

• Stirling Engine

Biofuels • Biodiesel

• Ethanol

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Chapter 3 – Evaluation of Alternative Technologies


3.3 ProGrid Evaluation SolutionsProGrid Evaluation Solutions was used as a toolto assess the commercial and technical viabilitiesof the technologies and to recommend the mostfeasible technologies to monitor in the next 5 to10 years. The ProGrid methodology and softwarewere used as tools along with others to determinethe final technology recommendations.

The ProGrid evaluation methodology allows forthe assessment of the value of intangible assetsto assist with the decision-making process(Bowman, 2005). The ProGrid methodology hasbeen found to be useful to:

• Provide fair and objective procurementpractices

• Identify innovative technologies and monitordevelopment

• Assess the effectiveness of practices

• Establish and monitor long-range goals

ProGrid’s flagship software program isGlobalEvaluator. Global Evaluator is a valuabletool that was used to assess each emergingalternative energy technology. The assessmentresults assisted with the identification of the mostfeasible technologies that are almost ready forimplementation on farms and in ruralcommunities and with technologies that are likelyto be ready for large-scale implementation within5 to 10 years.

3.4 The ProGrid Evaluation ProcessThe ProGrid methodology is comprised of 5 mainsteps (Bowman, 2005), shown in Figure 3.1.

Figure 3.1 The ProGrid Methodology

The methodology follows a sequence ofevaluation steps. First, the main objectives mustbe identified. These objectives are called the“Overarching Objectives”, the two factors involvedin the decision, and required for success. Next,an Evaluation Matrix is created, which containsall the criteria for the evaluation of thetechnologies. The Language Ladders aredeveloped using the Evaluation Matrix and are aseries of progressive statements that representlevels of expectation. A team of evaluatorsassess each technology using the LanguageLadders and the results of the assessment aregraphically represented on a grid.

3.4.1 The Overarching Objectives

Many decisions involve two overarching factorsor objectives, each of which may appear to be inconflict or opposition. A strength of ProGrid is theability to consider the effect of two independentobjectives on the final outcome (Bowman, 2005).

Evaluation of A

lternative Technologies

Identification of the Overarching Objectives

Creation of the Evaluation Matrix

Development of the Language Ladder

Evaluation of the Technologies

Establishment of the Grid


The Overarching Objectives represent the x andy axes of the final Evaluation Grid.

For the evaluation of the alternative energytechnologies, the Overarching Objectives are:

1. Technical Strength

2. Commercial Strength

3.4.2 The Evaluation Matrix

The Evaluation Matrix is the backbone forevaluating intangible assets and contains theevaluation criteria. It is generally presented as atable with 3 columns. The OverarchingObjectives are shown as the headings of the firstand third columns. Criteria that support theOverarching Objectives are listed in theappropriate columns, with criteria influencingboth Overarching Objectives listed in the secondcolumn. The criteria which affect bothOverarching Objectives are called Enablers(Bowman, 2005).

The Evaluation Matrix for the alternative energytechnologies is presented in Table 3.1. All thesecriteria are important for the adoption ofalternative technologies on farms and in ruralcommunities.

The Overarching Objective of Technical Strengthis supported by 3 criteria that include:

• Agricultural Fit: the suitability of the technologyfor the agricultural setting.

• Technology Maturity: the development stage ofthe technology.

• Complete System: the existence of a fullprocess of operations to support the technologyfrom biomass harvest to energy use.

The Overarching Objective of CommercialStrength is supported by 3 criteria that include:

• Energy Production: the amount of energygenerated the final useable form, as well asdispatchability and reliability.

• Co-Products Production: the production ofadditional products to energy or fuel.

• Value Chain: the degree of participation byproducers in the production, marketing andsale of energy and products.

Three criteria that support both the TechnicalStrength and Commercial Strength OverarchingObjectives are referred to as Enablers andinclude:

• Financing: the availability of funds to implementthe technology.

• Skilled Labour: the availability of skilledindividuals to operate the process.

• Infrastructure: the compatibility of thetechnology or process with existing farm andrural operations, and infrastructure.

3.4.3 Language Ladders

Language Ladders are a series of expectationstatements, which serve as measurements for theevaluation. The 4-step “ladder” starts with a basicstatement (“A”), and each “rung” is a statement

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Table 3.1 The Alternative EnergyTechnologies Evaluation Matrix

Technical Strength EnablersCommercialStrength

Agricultural Fit Financing Energy Production

Technology Maturity Skilled LabourCo-ProductProduction

Complete System Infrastructure Value Chain


of higher expectation, until all expectations areexceeded (“D”). There is a Language Ladder foreach of the criteria of the Evaluation Matrix(Bowman, 2005).

The Language Ladders for the evaluation of thealternative technologies are provided in Tables3.2a to 3.2i. The Language Ladders weredeveloped following consultations with experts in

the agriculture and energy fields. The idealresults of implementing the alternative energytechnologies were determined, and the variousstages of development and implementation wereidentified. Evaluation of

Alternative Technologies

The alternative technology:

A Fits with the biomass feedstock available for use in theenergy generation systems (the available feedstock can besourced from the field or are a co-product from a process).

B ... AND will lead to more efficient harvesting and processingof the available agricultural biomass ...

C ... AND will result in new farming practices (such asincreased nitrogen applications) ...

D ... AND will ensure sustainability of farm land by producingco-products that can be returned to the soil to maintain thethreshold value of soil organic matter.

The alternative technology is:

A An emerging technology at the research and developmentstage.

B Proven at the demonstration-scale with the use of a varietyof feedstock.

C In commercial operation without serious reliability issues ...

D ... AND is modular and can be rapidlytransferred/duplicated for implementation over a wide area.

Table 3.2b Technology Maturity

For the operation of the alternative technology in ruralcommunities:

A Workers must be brought in to operate the systems.

B Workers are available and specialized training is required.

C Skilled workers are available and some additional training isrequired ...

D ... AND these workers have agricultural experience.

Table 3.2e Skilled Labour

The alternative technology:

A Installation competes with other land uses.

B Requires specialized farm buildings or equipment (biomasshandling), some of which are in place.

C Infrastructure is in place throughout the value chain(transmission lines, pipelines) ...

D ... AND the technology generates products (energy and/orco-products) that can be used in Ontario and exported.

Table 3.2f Infrastructure

When the alternative technology is implemented, it will be part ofa system which:

A Requires supporting units and processes which have not yetbeen developed.

B Produces co-products and has a positive overall energybalance ...

C ... AND which can be integrated with other agriculturalactivities ...

D ... AND allows for energy storage.

Table 3.2c Complete System

The energy generated from the alternative technologies:

A Results in a neutral or small positive energy balance.

B Can be used by the producer on-site or allows producers toparticipate periodically in the energy market ...

C ... AND will be a sustainable, reliable supply ...

D ... THAT can be stored or rapidly dispatched depending onthe supply and demand.

Table 3.2g Energy Production

To implement the alternative technology:

A Governments are willing to provide subsidies and support.

B Financial institutions are willing to provide funding in theform of loans.

C The risk-reward ratio is favourable ...

D ... AND there is affordability in every step of the value chainwith minimal waste at any stage.

Table 3.2d Financing

Table 3.2a Agricultural Fit


3.4.4 The Evaluation of Technologies

Experts in the energy and technology fields wereinvited to evaluate the technologies listed insection 3.2. The ProGrid software createsevaluation forms containing the LanguageLadders. These evaluation forms are distributedto the evaluation team. An evaluation form iscompleted by each member of the evaluationteam for each technology. The evaluation input isanalysed by ProGrid and presented graphically.

3.4.5 Establishment of the Grid

The results of an evaluation can be shown in theform of an Evaluation Grid with the OverarchingObjectives as the axes. The Evaluation Grid forthe alternative technologies is shown in Figure3.2. The x and y axes are the OverarchingObjectives. The evaluation result of eachalternative technology is represented by a greycircle on the chart.

A circle in the top right quadrant indicates thatthe technology has received high technical andcommercial strength ratings and suggests thatthe technology is nearly ready for implementation.

A circle in the bottom left quadrant indicates lowtechnical and commercial strength rankings andsuggests that the technology is in the earlystages of development. A high technical strengthand low commercial strength (upper leftquadrant) result indicates that there is a highcommercial risk associated with the technology.A high commercial strength and low technicalstrength (bottom right quadrant) result suggeststhat there is a high technical risk associated withthe technology.

During the evaluation, the focus was on energyand fuel production. It is important to note thatthese technologies were evaluated based on theuse of biomass as a feedstock to produce energyor fuels and not for the production of chemicals.

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The alternative technologies produce:

A Co-products that do not yet have a use.

B Useful co-products that can generate revenue if marketsexisted.

C Co-products with established uses and markets ...

D ... AND that can be used as a soil amendment to improvecrop production and contributes to sustainability.

Table 3.2h Co-Product Production

Use of the alternative technologies allow the producers to:

A Only supply the biomass as a feedstock ...

B ... AND participate in the operation of the system togenerate energy and co-products ...

C ... AND participate in value-added processing of energy andco-products ...

D ... AND market and sell the value-added products.

Table 3.2i Value Chain

Ready forImplementation

HighTechnical

Risk

HighCommercial

Risk

EarlyStages

A

B

C

D

E

F

G

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Ready forImplementation

HighTechnical

Risk

HighCommercial

Risk

EarlyStages

00

5

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5Commercial Strength

10

A. Anaerobic Digestion

C. Pyrolysis D. Torrefaction E. Direct Combustion F. Biogas to Biomethane G. Hydrogen Enriched

Natural Gas H. Compressed Air Energy

Storage I. Large-Scale Battery J. Small-Scale Battery

K. Fuel Cell L. Gas-Fired Boiler M. Gas Turbine N. Indirect Gas Fired

Turbine O. Internal Combustion

Engine P. Microturbine Q. Steam Engine R. Stirling Engine S. Biodiesel T. Ethanol

Figure 3.2 The Alternative TechnologiesEvaluation Grid


3.5 Interpretation of the EvaluationResultsThe Evaluation Grid presents the results of theassessments. It shows that the technologies thatare currently the most feasible for use on farms orin rural communities include Direct Combustion,Gas-Fired Boiler, Anaerobic Digestion, Biodieseland Bioethanol production. These technologiesare represented by grey circles in the top rightquadrant, close to the “Ready for Implementation”arc. These technologies are expected to beready for large-scale implementation for theproduction of energy from biomass on farms or inrural communities in the near-term.

In the longer-term (5 to 10 years), the alternativeenergy technologies that are expected to beready for implementation on the farm or in ruralcommunities include Pyrolysis, Gasification,Torrefaction, Microturbine and Small-ScaleEnergy Storage. These were identified as themost commercially viable in the future based onthe evaluation results presented on the EvaluationGrid, the Opportunity Profiles of Appendix A, andthe comments provided by the evaluators.

Pyrolysis has been used for many years toproduce chemicals from biomass. The strengthsof pyrolysis include the production of energy andco-products as well as the suitability of thetechnology to the agricultural setting. The mainweakness is the maturity of the technology forenergy and fuel production. Pyrolysis has manypotential benefits for the agricultural community,and once the technology has been proven forenergy and fuels production, markets areexpected to grow rapidly.

Gasification is an established technology for theproduction of energy from fossil fuels. However,gasification is at the early stages of developmentfor the use of biomass feedstock to produceenergy. The greatest strength of gasification is

the production of energy, whereas the mainweakness of the technology is with regards to theacquisition of financing.

There is much interest in torrefactiontechnologies, and production facilities have beenconstructed in Europe. A major strength of thetorrefaction technology is the production of fuel.Major weaknesses identified by the evaluatorswere the lack of maturity of the technology(process flow for variable particle sizes fromagricultural biomass) and the ability to acquirefinancing. There are very few commercialtorrefaction plants in operation; however,torrefaction provides for the inexpensive storageof biomass feedstock and produces adispatchable fuel.

Microturbines are a mature technology withstrengths in energy production and the potentialfor producers to participate in the value chain.Microturbines will likely require skilled labour foroperation and may be unsuitable for allagricultural settings. Also, microturbines do notproduce co-products for the generation ofadditional revenue.

Small-Scale Batteries were identified as afeasible technology due to the maturity of thetechnology, the production of energy, and theparticipation of producers in the value chain.Weaknesses identified were unsuitability to theagricultural setting, the acquisition of financingand the lack of co-product production.

Although there are challenges associated withthese five technologies, many of thesechallenges can be overcome within the next 5 to10 years. It is expected that with continuedtechnology development, these technologies willprogress through the commercialization processand become feasible for producers to implementon the farm and in rural communities.

Evaluation of A

lternative Technologies


There are a number of bio-energytechnologies being developed around theworld searching for greater efficiencies of

energy conversion, increased ability to processdiverse feedstock, lower production costs,improved reliability of operation, etc. Based onthe current intensity of global research anddevelopment activities and the characteristics ofenergy sector in Ontario, the evaluation panelidentify pyrolysis, gasification, torrefaction, small-scale energy storage and micro-turbine asemerging technologies. These technologiescould be employed significantly once theirtechnical and commercial strengths improve inthe evolving energy sector in Ontario. However, itshould be noted that it is not easy to predict thetimeframe for the commercialization of thesetechnologies. In this chapter, technical details ofthese selected emerging technologies arediscussed.

4.1 PyrolysisPyrolysis is the thermo-chemical decompositionof biomass. In the absent of oxygen, biomass isheated to approximately 500 °C to produce liquidbio-oil, a mixture of gases (syngas), and solidchar (bio-char). Pyrolysis processes can becategorized into three speeds: fast, intermediateand slow. These are characterized by how longbiomass is heated or residence time, in thepyrolysis reactor. The residence time of a fastpyrolysis process could be as short as 2 seconds,and that of a slow pyrolysis process could be 30minutes. Varying residence time and processtemperature could result in different proportionsof liquid, gas and solid fractions. In general, morebio-oil is produced by shortening the residencetime while more bio-char is obtained by

increasing the residence time. A simpleschematic of a pyrolysis process is shown inFigure 4.1.

Pyrolysis technologies are often named based onthe types of the reactor or how biomassfeedstock is moved in the reactor. The pyrolysistechnologies, therefore, include fixed bed, auger,ablative, rotating cone, fluidized bed, circulatingfluidized bed and vacuum. A particulartechnology usually works well for some types ofbiomass at a range of particle size. A samplemass and energy balance of a pyrolysis processis shown in Figure 4.2 (adapted from Manganaroet al., 2011 and Mullen et al, 2010). Enthalpy isthe measure of total energy, and enthalpy rate isthe flow of energy at a given point in Figure 4.2.Approximately 30 – 35 % of energy contained inbiomass feedstock is consumed in the entirepyrolysis process. Typical chemical compositionsof pyrolysis products are shown in Figure 4.3 forcorn stover. The Canadian companies activelydeveloping pyrolysis technologies are AdvancedBiorefinery Inc., Agri-Therm, Alterna, Dynamotive,Ensyn/Envergent, Pyrovac, RTI and Titan.

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Chapter 4 – Technical Detail of Emerging Technologies

Figure 4.1 Schematic of Pyrolysis Process(http://www.cleantechloops.com/biomass-pyrolysis/)


Bio-oil can be potentially upgraded to producespeciality chemicals or transportation liquid fuels.Chemicals found in bio-oil include levoglucosan,hydroxyacetaldehyde, acetic acid, acetol, furfural,furfuryl alcohol, phenol, cresol, dimethyl phenol,ethyl phenol, guaiacol, and isoeugonol.Successful commercialization of high valuespeciality chemicals from bio-oil couldsubstantially improve the economics of pyrolysistechnologies. The current research anddevelopment of pyrolysis technologies focuseson robustness of the reactors, consistency and

stability of bio-oil, lowering the acidity of bio-oil,and development of bio-char products. Bio-charcould be potentially used to improve the soilquality; therefore, pyrolyis is quite suitable for theagricultural sector once it is commercialized.

4.2 GasificationGasification is a thermo-chemical process inwhich biomass is mainly transformed into amixture of combustible gases. In this process,biomass is heated to a high temperature ofapproximately 850 °C without combustion with acontrolled amount of oxygen or steam. Theresulting mixture of gases, called syngas, can beburned in gas engines or can be potentiallyrefined to produce speciality chemicals ortransportation liquid fuels. Gasification wasdeveloped over 150 years ago and was theprominent technology to generate energy fromcoal and forestry biomass. Stringentenvironmental regulations and competition fromnatural gas have made biomass gasification lessattractive alternative at present. A schematic ofbiomass/coal gasification is shown in Figure 4.4.

Technical Detail of

Emerging Technologies

Dryer Grinder

Pyrolyzer 1 3 4

567

2

StreamNo. Stream

Mass FlowRate (kg/h)

Enthalpy Rate(MJ/h)

1 Biomass (30 wt% moisture)

1,000 14,087

2 Water Vapour 189 512

3 Dry Biomass (~10 wt% moisture)

811 14,598

4 Ground Biomass 811 14,598

5 Syngas 162 973

6 Pyrolysis Oil 487 10,754

7 Biochar 162 3,406

Figure 4.2 Sample Mass and EnergyBalance of Pyrolysis Process (Adapted from Manganaro et al., 2011 and Mullen et al, 2010)

Pyrolysis Oil

C 53.97 wt%H 6.92 wt%N 1.18 wt%S <0.05 wt%O 37.94 wt%Ash <0.09 wt%HHV 18 MJ/kg

Biochar

C 57.29 wt%H 2.86 wt%N 1.47 wt%S 0.15 wt%O 5.45 wt%Ash 32.78 wt%HHV 23 MJ/kg

Syngas

Carbon Dioxide 40.3 vol%Carbon Monoxide 51.6 vol%Methane 6.0 vol%Hydrogen 2.0 vol%

Pyrolysis of Corn Stover at 500°C

Figure 4.3 Chemical Compositionsof Pyrolysis Products for CornStover (Adapted from Mullen et al, 2010)


Gasification technologies are also named basedon the types of gasifier and how biomassfeedstock is moved in the gasifier. The majorgasification technologies are downdraft, updraft,cross-draft, bubbling bed, circulating fluidizedbed, entrained bed, spouted bed and cyclone.The residence time and operating temperature ofa biomass gasifier is usually optimized for aparticular feedstock. A sample mass and energybalance of biomass gasification is given in Figure4.5 (adapted from Swanson et al., 2010).Approximately 35 – 45% of energy contained inbiomass feedstock is consumed in the entiregasification process. Typical chemicalcompositions of gasification products are shownin Figure 4.6 for corn stover. Major Canadiancompanies active in biomass gasification areEnerkem, Norampac, Nexterra and Plasco.

To generate heat and power, biomass gasificationis usually integrated with gas engines for small tomedium plants of < 10 MW or with steam turbinesfor larger plants. Hundreds of smaller size

biomass gasifiers (10-500 kW) are also deployedmainly for intermittently operating thermalapplications in China, India and South East Asia.However, reliability and maintenance of theseunits for continuous operation seems be an issuefor the smaller gasification systems (Bauen et. al,2009). The gasification of agricultural biomasshas more issues than that for forestry biomass.Agricultural biomass contains some chemicalswhich could lead to melting of ash at loweroperating temperatures, creating corrosivematerials and forming deposits in the gasifier.Particulate emission from biomass gasification isalso an issue in some jurisdictions where theenvironmental regulations are stringent.

Production of transportation liquid fuels andspeciality chemicals from syngas throughFischer-Tropsch process is one of the majorareas of research and development at present.They are mostly at demonstration stage forforestry biomass feedstock, and the economics isyet to be proven. Further R&D is needed foragricultural biomass feedstock. Co-producing

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Figure 4.4 Simple Schematic of GasificationProcess(Source: www.newenergyandfuel.com)

Dryer Grinder

Gasifier 1 3 4 7

2 5 6

StreamNo. Stream

Mass FlowRate (kg/h)

Enthalpy Rate(MJ/h)

1 Biomass (30 wt% moisture)

1,000 14,087

2 Vapour 189 512

3 Dry Biomass (~10 wt% moisture)

811 14,598

4 Ground Biomass 811 14,598

5 Air 260

6 Steam 173 43

7 Syngas 1,244 9,755

Figure 4.5 Sample Mass and EnergyBalance of Biomass Gasification Process (Adapted from Swanson et al., 2010)


fuels, chemicals and energy at a biomassprocessing plant, which is termed as bio-refinery,is the concept currently investigated in the laband pilot plants around the world. Potentialimprovements in biomass gasification areenvironmental performance, conversion efficiency,multiple feedstock processing, superior reliabilityof smaller systems, syngas cleaning, and lowercapital and operating costs.

4.3 TorrefactionTorrefaction is essentially the roasting of biomass.In order to drive off moisture and volatiles,biomass is heated to 200 – 300 °C in this thermo-chemical process. The residence time of biomassin the torrefaction reactor could be as short asone minute in a fast process and could be aslong as 60 minutes in a slow process. The idealproduct from a torrefaction process ishydrophobic and energy dense coal-likematerials. If torrefied , biomass is pelletized andcould be transported over long distances at alower cost per unit energy content in comparisonwith regular biomass pellets. The hydrophobicproperty of torrefied biomass has attractedinterest from coal-fired power plant where coal isstored outdoor. If torrefied, biomass can behandled and burned like coal. The potentialmarket size for torrefied biomass will besignificant. Torrefaction technologies are currentlyat pilot to demonstration stages. A sample layoutof a torrefaction process is shown in Figure 4.7.

Technical Detail of


Co-Products

Ash 4 wt%Char 3 wt%Tar 0.6 wt%

Syngas

Carbon Dioxide 45 wt%Carbon Monoxide 25 wt%Water 13 wt%Hydrogen 2 wt%Methane 3 wt%Others

Gasification of Corn Stover at 870°C

Figure 4.6 Chemical Compositions ofGasification Products for Corn Stover (Adapted from Swanson et al., 2010)

Combustion

Air

Utility fuelFlue gas

Flue gas

Flue gas

Torrefaction

DP

Cooling PelletisationDryingBiomass

Torrefactiongas Gas

recycle

BO2 pellets

Heatexchange

Figure 4.7 SampleLayout of TorrefactionProcess(http://www.ecn.nl/)


Torrefaction can be performed as a batchprocess or as a continuous process. Thetorrefaction process which has been incommercial operation for decades is the roastingof coffee beans. There are diverse designs oftorrefaction reactors, mainly differing in how thebiomass is moved in the reactor. In sometorrefaction reactors, biomass is mechanicallytransported by means of conveyors, screws,moving beds, rotating drums, etc. Pneumatictransport mechanisms such as fluidized beds orcentrifugal swirling are employed in sometorrerafaction reactors. A combination ofmechanical and pneumatic methods and steamexplosion techniques are also being investigated.Torrefaction technologies can also becategorized as a slow reactor at low/hightemperature or a fast reactor at low/hightemperature. One of the technical challenges oftorrefaction technologies is the consistency of theproducts. Unlike coffee beans, biomass inpractical applications significantly varies inparticle size as a result of shredding and in othercharacteristics. The effective separation ofcompletely torrefied biomass from partiallytorrefied biomass from the reactor needs furtherdevelopment work.

Torrefaction is theoretically an auto-thermalprocess, i.e., torrefaction gas coming out fromthe process can provide sufficient energy to heat

the biomass. Typical mass and energy balanceof a torrefaction process is given in Figure 4.8.Approximately 20% of mass and 10% energycontained in biomass feedstock are converted totorrefaction gases and consumed in the process.These mass and energy losses could be higherfor higher operating temperatures and longerresidence times. The energy density, i.e., energyper unit mass, of torrefied biomass is 10-20%higher than that of raw biomass. Subsequentpelletization of torrefied biomass significantlyincreases mass and energy per unit volume ofthe products.

As mentioned earlier, coal-fired power plantshave great interest in torrefied biomass as apotential alternative fuel. The major requirementsof coal-fired power plants for torrefied biomassinclude hydrophobicity and grindabilityproperties similar to coal. The current researchand development of torrefaction technologies areexplained in Figure 4.9. Four operating regimesof torrefaction are shown in Figure 4.9 based onthe residence time and operating temperature,and the properties of torrefied biomass arequalitatively compared.

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Torrefaction200-300°C

Torrefaction Gases20% Mass, 10% Energy

BiomassBiomass

100% Mass,100% Energy

80% Mass,90% Energy

Figure 4.8 Typical Mass and Energy Balanceof Torrefaction Process

Figure 4.9 Torrefaction Process Regimes andProduct Properties

(15-20%)(30-40%)

(10-15%) (20-30%)

60

30

0200 250 300


Torrefied biomass producers prefer to operate atlower temperatures and shorter residence times,i.e., lower left regime in Figure 4.9. Theeconomics of torrefaction in this regime isimproved due to lower mass losses, and thetorrefied biomass is easier to pelletize. However,the hydrophobicity and grindability properties ofthe product are poor in this operating regime.This implies that outdoor storage of torrefiedbiomass is probably unfeasible and the coal-firedpower plants need new grinding equipment. Theend users, mainly coal-fired power plants, preferthat biomass is torrefied at higher temperaturesand longer residence times because currenttechnologies would provide better qualityproducts in this operating regime. The economicsof torrefaction in that operating regime isunfavourable due to higher mass losses.Furthermore, the torrefied biomass is too crispy inthis operating regime and too difficult to pelletize.

Torrefaction technologies are still underdevelopment. The optimum operating regimewhich would provide products customers needeconomically is yet to be identified. The largesttorrefaction demonstration plant was built in theNetherlands by Topell Energy in 2010. Theprocessing capacity of Topell demonstrationplant is 8 tonne/hr of torrefied biomass. RWE,which is a large German energy firm, invested inthe Topell torrefaction plant. It should be notedthat RWE built a regular wood pellet plant with750,000 tonne/yr capacity in the state of Georgiain USA in 2011. Diacarbon Energy Inc. is buildinga 1.3 tonne/hr torrefaction plant in BritishColumbia, Canada. The commercial large-scaleproduction of torrefied biomass is yet to be seen,and this could potentially create an export marketfor Ontario agricultural biomass.

4.4 Small-Scale Energy StorageBiomass is considered as dispatchable energyamong the renewable sources. Heat and powercan be generated from biomass on demand. Thisis a prominent advantage of biomass over windor solar power which may or may not be availablewhen the energy is needed. Small-scale energystorage systems are being developed especiallyto lower the capital and operating costs andmainly for wind and solar renewable energygeneration. Small-scale energy storages maywork with on-farm anaerobic digestion energysystems which produce biogas continuously.However, the small scale energy storage has tocompete economically with biogas storage forthe AD energy systems. The basic premise ofintegrating energy storage to bio-energy systemsis to store the power generated during off-peakhours and sell it at a higher price during peakhours.

The major factors in the economics of small-scaleenergy storage systems are the price differentialbetween off-peak electricity and peak electricity,the capital cost of the energy storage system, thelength of peak hours, and the operating cost orthe expected life of the energy storage. The FITrates in Ontario for renewable energy do not offera differential price for peak electricity at present.Installation of energy storage systems for largeconsumers is common in jurisdictions where theprice of peak electricity is significantly higherthan that of off-peak electricity. The current pricedifferential Ontario consumers are currentlypaying for electricity during peak hours does notseem to be high enough to install energy storagesystems.

Technical Detail of



The capital cost of small-scale energy storagesystems is still relatively high, ranging $2,000 -$4,000 /kW of electricity production. For instance,the capital cost of a 1,000 kW on-farm AD energysystem could be $4 million without energystorage. The installation of small-scale energystorage for this AD energy system could add$3 million to the capital cost. The energy storagesystems will be used only 4-6 hours a day forpeak electricity. The price of peak electricityshould be substantially higher to justify theintegration of energy storage. The potentialclosure of peaking coal-fired power plants andthe gradual increase of renewable energy inOntario could raise the price of peak electricity.The small-scale energy storage systems, whichare under extensive research and developmentfor wind and solar power, could play a role withthe bio-energy systems in the future. Figure 4.10exhibits the demonstration unit small-scalebattery energy storage system.

The commercially available small-scale energystorage technologies which can be integratedwith bio-energy systems include pumped-hydrostorage, compressed air storage, thermal storage,lead acid and NiCd conventional batteries, andsodium sulphur and sodium nickel chloride hightemperature batteries. Technologies underdevelopment include regenerative fuel cells,

superconducting magnetic energy storage, flowbatteries and hydrogen storage. Current researchand development in the energy storage systemsfocus on extending the life especially batteries ofthe systems, lowering the capital cost, increasingthe reliability and maintaining the performanceover the life of the system.

Pumped-hydro storage is the mature andcommercially available energy storagetechnology. Conventional pumped hydro facilitiesconsist of two large reservoirs: one located at alow level and the other is situated at a higherelevation. During off-peak hours, water ispumped from the lower to the upper reservoirwhere it is stored. To generate electricity, thewater is then released down to the lower reservoir,passing through hydraulic turbines andgenerating electrical power. The utility sizepumped-hydro store could be as large as 1,000MW and are in commercial operation around theworld. Micro pumped-hydro storage systemscould fit with bio-energy systems at selectedlocations.

Compressed air energy storage systemspressurize air into an underground reservoirduring off-peak hours and release thecompressed air to power a turbine/generatorduring peak hours. This mature technology isalso commercially available. The size of thecompressed air storage ranges up to 300 MW.Smaller compressed air storage systems couldwork well for bio-energy systems if theeconomics are favourable. Thermal storagesystems have operated commercially around theworld. Freezing ice or melting salt during off-peakhours for peak cooling and heating loadsrespectively, during peak hours is the basicoperating principle of the thermal storagesystems.

Lead acid and NiCd conventional batteries andsodium sulphur and sodium nickel chloride high

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Figure 4.10 Demonstration Unit of Small-Scale Battery Energy Storage(Source: www.solarthermalmagazine.com)


temperature batteries are technically proven andcommercially available energy storagetechnologies. The capacity of a battery storagesystem could range from < 10 kW to 10 MW. Allbatteries are electrochemical cells. They arecomposed of two electrodes separated by anelectrolyte. During discharge, ions from theanode (first electrode) are released into thesolution and deposit oxides on the cathode(second electrode). Reversing the electricalcharge through the system recharges the battery.When the cell is being recharged, the chemicalreactions are reversed, restoring the battery to itsoriginal condition.

4.5 Micro-TurbineGas turbines convert energy contained ingaseous fuels into heat and power. The majorcomponents of a gas turbine are compressor,combustor, turbine and generator. Air ispressurized in the compressor and combustedwith fuel in the combustor. The high temperatureand high pressure combustion gases then moveacross the turbine, providing rotational forces toturn the generator for power generation. Theenergy- contained exhaust from gas turbinescould be recovered through a heat exchanger toprovide heat. Gas turbines are technically matureand commercially available at 500 – 15,000 kWelectricity generation capacity. Micro-turbines aresmall gas turbines, about the size of a householdrefrigerator, with capacities ranging from 30 – 200kW of electricity generation.

If the cleaning of biogas and syngas improvestechnically and economically, micro-turbinescould play a role in the energy use andgeneration in the agricultural sector. Furthermore,the relatively lower price of natural gas incomparison with other energy sources in Ontariocould lead to the generation of heat and powerusing micro-turbines in small agriculturalindustries such as grain processing or biomass

pellet production. Micro-turbines are consideredas the system for distributed energy generation.Increasing price of electricity in Ontario wouldgradually make on-site energy generationfinancially attractive, and micro-turbines could bean important component of the evolving energysystem in Ontario. Figure 4.11 shows the size of amicro-turbine and the internal components.

The commercial manufacturers of micro-turbinesinclude Capstone, Honeywell, NorthernResearch& Engineering Corporation and ElliottEnergy/GE Power Systems. Since the operation ofmicro-turbines is based on a mature gas turbinetechnology, there are potentially a number ofmanufacturers entering the market once thestrong demand is created. The energy conversionefficiency of a micro-turbine is 15-25% forelectricity generation only and 40-65% forcombined heat and power generation. The unitcapital cost ($/kW) of micro-turbines issignificantly higher than that of larger gas turbines.The areas of improvements of the micro-turbinesinclude reliability of operation, energy efficiency,recuperator technology, fuel flexibility and thecapital cost. Additionally, the environmentalperformance of micro-turbines could be an issueif the fuel is biogas or syngas which contain moreimpurities in comparison with natural gas.

Technical Detail of


Figure 4.11 Micro-Turbine Set and InternalComponents (Sources: www. wppsef.org and Capstone)


Generating electricity and heat frombiomass has been financially proven inEurope because of regulatory supports

and relatively higher energy prices in comparisonwith those in North America. In this chapter, theeconomics of selected bio-energy technologiesare examined at the given prices of electricity,heat and other by-products in Ontario.Assumptions are made for some by-productssuch as bio-char since there are limitedcommercial markets at present. The selected bio-energy technologies include anaerobic digestion,direct combustion, bio-ethanol, bio-diesel,pyrolysis and gasification. The capital andoperating costs of these selected technologiesare based on literature and communication withindustries. The return of investment of eachselected technology is estimated at differentproduction capacities.

5.1 Anaerobic DigestionElectricity generation through the anaerobicdigestion of manure has been slowly progressingin Ontario in recent years. There are currentlyabout 20 AD power generation systems inOntario connected to the electricity grid. Most ADsystems use manure from cattle farms as primaryfeedstock, and the average size is about 300 kWof electricity generation. Livestock farming is animportant and integral component of theagricultural sector in Ontario. Total marketreceipts of Ontario’s farms are over $10 billion,and approximately 50% is from livestock farming(OMAFRA statistics). Dairy and beef farms areamongst the largest livestock operations in theprovince. Although the number of cattle has beendeclining in Ontario, there are approximately1.75 million cattle and calves in the province(OMAFRA statistics). Theoretical energygeneration from Ontario’s cattle industry is

18,500 TJ/yr, which is 44.5% of total energyconsumption in Ontario agricultural sector.

A financial spreadsheet model was developed toestimate the Return on Equity (ROE) of AD powergeneration system and is illustrated in Table 5.1.The AD system shown in Table 5.1 has the

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Chapter 5 – Economics of Selected Bio-Energy Technologies

General Parameters Value

Capacity of the system (MWe) 0.4

Unit capacity cost (M$/MWe) 5.5

Debt to equity ratio 1.0

Interest rate (%) 5.0

Loan repayment period 15

Price of electricity ($/kWh) 0.13

Price of heat ($/GJ) 4.0

Number of diary cows equivalent 997

Cost of biomass ($/tonne) 0

Cost Items Value

Operating costs

Biomass fuel (m3/yr) 44,843

Biomass fuel cost (M$/yr) 0.00

Labour (M $/yr) 0.05

Repairs and maintenance (M $/yr) 0.10

Handling and storage (M $/yr) 0.05

Sub-total operating costs (M $/yr) 0.20

Financing costs

Total capital cost (M $) 2.19

Loan (M $) 1.10

Equity (M $) 1.10

Interest (M $/yr) 0.04

Loan repayment (M $/yr) 0.07

Sub-total financing costs (M $/yr) 0.11

Net income (M $/yr) 0.13

Income tax (M $/yr) 0.03

Return on equity (%) 9.42

Energy Generation and Revenue Value

Electricity generation (MWh/yr) 3,264

Heat generation for sale (GJ/yr) 4,147

Sale of electricity (M $/yr) 0.42

Sale of heat (M $/yr) 0.02

Total revenue (M$/yr) 0.44

Table 5.1 Financial Model for AnaerobicDigestion Energy System


electricity generation capacity of 400 kW,requiring about 1,000 dairy cows or equivalent. Itshould be noted that daily manure produced by adairy cow is approximately 1.7 times higher thanthat of a beef cow (Beaulieu, 2004). The financialparameters such as debt-to-equity ratio andinterest rate for the system are also shown inTable 5.1. Heat recovered from the I.C. engine isvalued at $4/GJ, and the heat sale representsless than 5% total revenue. The manure isassumed at no cost for this on-farm AD system,and the value of by-product biomass fiber fromthe AD process is not considered in the financialmodel.

The capital cost of the AD energy system with400 kW electricity generation capacities isestimated at $2.19 million, including the gridconnection. The annual sub-total operating costand sub-total financing cost of the system are$0.20 million and 0.11 million, respectively. Thetotal revenue from energy sale is $0.44 million/yr.The FIT rate of $0.13/kWh for electricity frombiomass is used to estimate the revenue fromelectricity sale to the grid. The estimated ROE ofthis manure-fed AD energy system is 9.42%. Thislevel of ROE is un likely to attract significantinvestments from private investors; however, it isworth consideration for Ontario producers withsizable livestock operation for manuremanagement and additional income perspectives.

Using the spreadsheet model, a sensitivityanalysis was performed to estimate the ROE ofdifferent cattle farm sizes. Figure 5.1 provides theelectricity generation capacity in kW and the ROEof four on-farm AD energy systems with differentnumbers of cattle. The minimum number of cattlefor a positive ROE of an on-farm AD energysystem is 500 as shown in Figure 5.1. The ROEwould improve to 15% for a large livestock farm

with 2,000 dairy cows. It should be noted that theaverage herd size of Ontario cattle industry isless than 100 cows (OMAFRA statistics), makingon-farm AD energy systems uneconomic in mostcases. This could be one of the reasons for theslow progress of the AD energy systems inOntario. The ROE of AD energy systems wouldimprove if off-farm manure and other wet biomassare available as low cost feedstock.

The ROE of on-farm AD energy systems wouldalso improve with the increased price ofelectricity. Figure 5.2 shows the ROE of on-farmAD energy systems with 100 and 250 dairy cows.The economics of both systems becomesomewhat favourable at the electricity price of$0.25/kWh. The price of electricity at consumergate in Ontario currently ranges $0.13/kWh-$0.16/kWh (http://www.ontarioenergyboard.ca/OEB/Consumers/Electricity/Your+Electricity+Utility), and is expected to increase.Therefore, integrating the AD energy systemswith light agricultural industries in rural areascould be financially attractive with increasingprices of electricity in Ontario.

Economics of Selected

Bio-Energy Technologies

Figure 5.1 Electricity Generation Capacityand ROE of On-farm Anaerobic DigestionEnergy Systems

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0100200300400500600700800900

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Number of Cattle


Another operating scenario considered for theAD energy system in this study is generatingelectricity only in peak hours, which presumablywould get a higher electricity price with a gasstorage system. Table 5.2 compares the ROE ofAD energy systems for a regular 24 hour/daygeneration and peak hours only generation. Forlivestock farms with 1,000 dairy cows, a regularAD energy system would need 402 kW electricitygeneration equipments. However, for the samenumber of cattle, larger equipment of 1,041 kW

electrical capacities would be required for thepeak hours only generation. A gas storagesystem, estimated at approximately $1 million forthis capacity, would also be an additional capitalcost. As shown in Table 5.2, the ROE of a peakhour only AD energy system is lower than that ofa regular AD energy system. The ROE of peakhours only generation would improve if the peakhour electricity price is significantly higher thanthe current FIT rate for electricity from biogas.

5.2 Direct CombustionGeneration of energy from biomass throughdirect combustion is technically andcommercially proven, especially in Europe. Thedirect combustion system can be designed atlower combustion temperatures to burn biomassto avoid the issues of ash melting and corrosion.Oo and Lalonde (2012) estimated thatapproximately 3.1 million tonnes of agriculturalcrop residues, mainly corn stover and cerealstraw, could be sustainably harvested annually inOntario. This amount of crop residues couldpower 500 MW base load power plant. However,a distributed system, smaller power plants of 10-50 MW capacity located across the province,would be preferable for agricultural biomassfeedstock. The direct combustion of biomass forspace heating also has a potential in some ruralOntario areas where propane and heating oil arecurrently used.

Table 5.3 gives the financial spreadsheet modelfor the generation of heat and power from directcombustion of biomass for a 50 MW electricitygeneration capacity. This base load power plantwould consume approximately 300,000 tonne ofbiomass annually. Since this amount of biomasscould be locally sourced in some Ontariocounties, it is assumed that agricultural biomassbales can be chopped and fed into the boilers.There will be significant cost savings because ofno pelletization of biomass and shorter

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Figure 5.2 Return on Equity for On-Farm ADEnergy Systems at Different Prices ofElectricity

Table 5.2 Economics of AD Energy Systemsfor Regular and Peak Hours ElectricityGenerations

Parameter

AD Systemwithout GasStorage

AD System with GasStorage for PeakHours ElectricityGeneration

Number of cattle 1,000 1,000

Electricity generationcapacity (kW)

402 1,041

Capital cost (M $) 2.20 5.18

Operating cost (M$/yr) 0.20 0.19

Price of electricity ($/kWh) 0.13 0.19

Return on equity (%) 9.48 5.66


transportation in comparison with the centralizedutilization of biomass at a large power plant likeOntario Power Generation station. For thisdistributed energy generation scenario, the costof biomass bales are assumed at $90/tonne,which could be an average cost of crop residuesand purpose-grown biomass.

The capital cost of a 50 MW biomass power plantis estimated at $175 million. The annual operating

cost of the plant is $32.77 million, which includesthe cost of biomass fuel of $27.07 million.Assuming equal debt and equity for thisinvestment, annual financing cost of this biomasspower plant is $8.93 million. The power plant isassumed to have cogeneration capability, andheat generated is valued at $4/GJ. Total annualrevenue from electricity and heat sales is $55.11million, and the electricity sale represents over96% of total revenue. The estimated ROE of a50 MW biomass power plant is 12.28%. This levelof ROE is unlikely high enough to attractsignificant capital from private investors. However,participation of Ontario producers in theinvestment could be seen as a risk-sharingmeasure by private equity investors.

Direct combustion biomass power plantstypically use fluidized bed boilers and steamturbines to generate heat and power. Skilledworkers such as stationary engineers would berequired by the industry regulations to operatehigh pressure systems like steam turbines. Theelectricity generation capacity of less than 10MW is most likely uneconomical for direct




Capacity of the system (MWe) 50







Cost of biomass bales ($/tonne) 90

Cost Items Value

Operating costs

Biomass fuel (tonne/yr) 300,737






Financing costs


Loan (M $) 87.42

Equity (M $) 87.42













Table 5.3 Financial Model for DirectCombustion Energy System

Figure 5.3 ROE of Direct CombustionSystems at Different Electricity GenerationCapacities

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combustion systems due to higher unit capitalcost and operating expenses. A sensitivityanalysis was performed to estimate the ROE ofthe biomass direct combustion energy systemsat different electricity generation capacities andthe results are shown in Figure 5.3. The electricitygeneration capacity should be greater than25 MW for a reasonable ROE at the current priceof electricity. The sensitivity of the ROE of directcombustion systems to the price of electricity andthe cost of biomass feedstock is presented inFigure 5.4.

5.3 Bio-Ethanol and Bio-DieselProduction of ethanol from starch/sugar cropshas been commercialized around the world.Advanced bio-ethanol processes using non-foodbiomass such as cellulosic material are currentlyat demonstration stage. The bio-ethanol industryis largely supported by the Renewable FuelStandard (RFS) or mandatory blendingrequirements in different jurisdictions. Ontario isthe largest grower of grain corn in Canada,representing 65% of total (Statistic Canada).Approximately 30-35% Ontario grain corn isconsumed by bio-ethanol industry (Grier et. al,2012), and the rest is used for food processing,animal feed and other industrial applications. Bio-ethanol plants in Ontario are listed in Table 5.4.

The supply and demand of grain corn in Ontariois currently balanced with a small percentage

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Figure 5.4 ROE of Direct Combustion Systems at Different Electricity and Biomass FeedstockPrices

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25 MWe – $90/tonne25 MWe – $120/tonne


imported or exported to nearby provinces/states,depending on the corn yield in a given year. Anadditional corn-ethanol plant with a significantcapacity would require importing corn if cornacreages are not increased. The increasing priceof grain corn in recent years and lower gasolinedemand in North America has reduced the profitmargin of bio-ethanol industry. This has led to theclosures of many small to medium bio-ethanolplants which were built pre-financial crisis in 2008in the USA. Uncertainty in RFS improvement isalso an issue for the expansion of bio-ethanolindustry. At current levels of RFS and gasolinedemand, only bio-ethanol plants with greatereconomies of scale would be financially viable.

Table 5.5 exhibits the financial spreadsheetmodel for a corn-ethanol plant of 50 milliongallon/yr (190 million litres/yr) capacity. Thecapital cost of this plant is estimated at $101million. The long-tem price of corn is assumed at$5.75/bushel since the recent significant increasein corn price is largely due to the draught inmany regions in USA. The wholesale price ofethanol is $2.20/gal; however, this shouldimprove with the closure or temporary productionhalts of smaller corn ethanol plants. Thewholesale price of by-product Dried DistillersGrains (DDG) is assumed at $180/tonne. Total

revenue of the plant is $130.15 million/yr. Annualoperating costs and financing cost are $119.23million and $5.17 million, respectively. The cost ofgrain corn feedstock is $99.32 million,representing 83.3% of total operating cost. TheROE of this 50 million gal/yr corn ethanol plant isestimated at 9.07%. The sensitivity of ROE to theplant capacity and the prices of corn and ethanolare shown in Figure 5.5 and Figure 5.6.



Table 5.4 Bio-Ethanol Plants in Ontario

(Source: Canadian Renewable Fuels Association)

Plant City Capacity

(million litre/yr)

Amaizeingly Green Products L. P.

Collingwood 58

GreenField Ethanol Inc.Chatham

Chatham 195

GreenField Ethanol Inc.Johnstown

Johnstown 230

GreenField Ethanol Inc.Tiverton

Tiverton 27

IGPC Ethanol Inc. Aylmer 162

Iogen Corporation (Cellulosic) Ottawa 2

Kawartha Ethanol Inc. Havelock 80

Suncor St. Clair Ethanol Plant Sarnia 400


Capacity of the system (M gallon/yr) 50

Unit capacity cost (M$/M gal/yr) 2.03




Price of ethanol ($/gal) 2.20

Price of DDG ($/tonne) 180

Cost of grain corn ($/bu) 5.75

Cost Items Value

Operating costs

Grain corn feedstock (M bu/yr) 17.27

Grain corn cost (M$/yr) 99.32

Chemicals and energy cost (M$/yr) 16.63





Financing costs


Loan (M $) 50.64

Equity (M $) 50.64








Bio-ethanol production (M gallon/yr) 47.5

DDG production (M tonne/yr) 0.14

Sale of bio-ethanol (M $/yr) 104.50

Sale of DDG (M$/yr) 25.65


Table 5.5 Financial Model for Corn EthanolProduction


Most existing corn ethanol plants had been builtbefore 2008, and the price of grain corn then wasless than $5/bushel. At the higher gasolinedemand before 2008, the wholesale price ofethanol was approximately $2.2/gal. As shown in

Figure 5.6, the ROE of ethanol plants at thosefavourable prices of corn and ethanol are higherthan 25%. The ROE of corn ethanol plantsdeclines with increasing price of grain corn. Atthe current grain corn price of over $7/bushel,building a new corn ethanol plant is financiallyunattractive unless the wholesale price of ethanolsignificantly improves. More small to mediumcorn ethanol plants with higher operating costsare becoming uneconomical. The closure ofthose plants could eventually improve the priceof ethanol. The mandatory blending of bio-ethanol with gasoline is expected to stay;therefore, the corn ethanol industry will likelycontinue to operate. However, operating ethanolplants at lower costs becomes critical at thecurrent thin margin environment.

A number of bio-diesel plants are in commercialoperation in Ontario. Used cooking oils andanimal Fats, Oil and Greases (FOG) from

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Figure 5.5 ROE of Corn Ethanol Plants atDifferent Production Capacities

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Figure 5.6 ROE of Corn Ethanol Plants at Different Prices of Corn Feedstock and Ethanol


slaughter houses are the most commonfeedstock for bio-diesel production in Ontario.Soybeans, one of the major crops in Ontario with75% of Canadian soybeans produced in thisprovince, can also be used to produce bio-diesel.However, the higher price of soybeans is not costcompetitive in producing bio-diesel at present.Approximately 3% of canola produced in westernCanada is used for bio-diesel production(Statistics Canada). Non-food grade corn oil, theby-product of corn ethanol plants, could be anattractive feedstock for bio-diesel production(Saville, 2006). Bio-diesel plants are usually smallin comparison with corn ethanol plant since theavailability of used cooking oils and FOG islimited. Bio-diesel plants in Ontario are given inTable 5.6.

The financial spreadsheet model for a 10 milliongallons/yr (37.9 million litres/yr) bio-diesel plant isshown in Table 5.7. The capital cost of this bio-diesel plant is estimated at $28.32 million. Thecost of feedstock oil which could be acombination of used cooking oils and corn oils isassumed at $400/tonne. Many existing bio-dieselplants in North America have no or negativefeedstock costs since bio-diesel is producedfrom waste materials. However, bio-dieselproducers will likely have to pay for wastefeedstock as more and more bio-diesel plants arebuilt. The price of by-products glycerol and soap-stock is $500/tonne; however, the sale of by-products represents only 8.8% of the total

revenue. Total annual operating costs andfinancing costs are $18.92 million and $1.45million, respectively. The ROE of this bio-dieselplant is estimated at 14.42%. It should be notedthat the availability of inexpensive feedstock iscritical in the financial feasibility of bio-dieselplants. Most bio-diesel plants are located closeto the feedstock source and ideally not very farfrom the markets.



Table 5.6 Bio-Diesel Plants in Ontario

Source: Canadian Renewable Fuels Association

Plant City Capacity

(million litre/yr)

BIOX Corporation Hamilton 66

BIOX CorporationHamiltonPlant 2

67

Methes Energies Canada Mississauga 5

Methes Energies Canada Sombra 50

Noroxel Energy Ltd. Springfield 5


Capacity of the system (M gallon/yr) 10

Unit capacity cost (M$/M gal/yr) 2.8




Price of bio-diesel ($/gal) 2.20

Price of glycerol and soapstock ($/tonne) 500

Cost of feedstock oil ($/tonne) 400

Cost Items Value

Operating costs

Feedstock oil (k tonne/yr) 35.91

Cost of feedstock oil (M$/yr) 14.36

Chemicals and energy cost (M$/yr) 3.23





Financing costs


Loan (M $) 14.16

Equity (M $) 14.16








Bio-diesel production (M gallon/yr) 9.5

Glycerol and sopastock production (k tonne/yr) 4.05

Sale of bio-diesel (M $/yr) 20.90

Sale of glycerol and soapstock (M$/yr) 2.02


Table 5.7 Financial Model for Bio-DieselProduction


The required feedstock oils and the ROE of bio-diesel plants at different capacities are shown inFigure 5.7. As mentioned earlier, feedstockavailability and access to markets usually limitthe size of bio-diesel plants under 30 milliongallons/yr (113.7 million liters/yr). The economicsof bio-diesel improves with the size of the plant.The estimated ROE of a 30 million gal/yr bio-diesel plant is 27.2%. However, the ROE of a bio-diesel plant depends significantly on the cost offeedstock oils and the wholesale price of bio-diesel as shown in Figure 5.8. If the cost offeedstock oils is $300/tonne, the bio-diesel plantsare financially attractive. However, the bio-dieselplants will be unprofitable if the price offeedstock oils increases to $600/tonne. The priceof soybeans oil is over $1,000/tonne, which is tooexpensive to produce bio-diesel. Therefore, usedcooking oils, FOG and corn oil from ethanolplants are expected to remain as feedstock forbio-diesel.

Both bio-ethanol and bio-diesel industries arelargely driven by government policies. TheRenewable Fuel Standard (FS) in USA andmandatory blending rates in Canada should beincreased to improve the bio-fuels demand.Without increases in the RFS, it will take sometime to resolve the current overcapacity situationof the corn ethanol industry throughrationalization of smaller plants with higheroperating costs. Some smaller corn ethanolplants in the USA are planning conversion toproduce butanol, which could have greaterdiversified applications than ethanol. Theperformance of these demonstration butanolplants should be observed with interest. Atcurrent Federal mandate of 5% renewablecontent for gasoline, corn ethanol production willlikely continue in Ontario, and medium to largeethanol plants will financially perform better thansmaller plants.

As noted in the economic analysis of the bio-diesel plants, the long-term availability ofinexpensive feedstock is the key factor. Therenewable diesel mandate of 2% in Canadacould improve the increasing demand for bio-diesel. Renewable bio-fuel production in Canadais only 4% of that in USA (Grier et. al, 2012). TheUS is now exporting bio-ethanol to Europe andother countries (RFA, 2012), and the globalsupply and demand of bio-ethanol is verydynamic. Based on the fuel demand and lowerrenewable fuel mandatory blending rates, thebio-fuels industry especially bio-diesel in Canadahas potential to expand. Monitoring thedevelopment in policy and economic drivers forbio-fuel industry in USA and Canada is essentialto participate in this transportation liquid fuelproduction.

Advanced bio-fuels which are produced fromnon-food biomass feedstock can be consideredas emerging technologies. A number ofdemonstration plants are being built around theworld to commercialize cellulosic and otheradvanced bio-fuels and chemicals. Theeconomics of advanced bio-fuels technologiesare relatively unknown. Crop residues andpotential purpose-grown biomass resources in

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Figure 5.7 ROE of Bio-Diesel Plants atDifferent Production Capacities


Ontario would allow the farm operators toparticipate in advanced bio-fuels industry oncethe technologies are commercially proven.

5.4 Pyrolysis and GasificationPyrolysis is one of the emerging technologieswith a significant potential for producing energy,bio-oil and bio-char from agricultural biomass.Bio-char can be used to enrich soil so thatpyrolysis is a great fit withthe agricultural sector.There are pyrolysis systemsin commercial operationsproducing specialitychemicals from forestrybiomass. Pyrolysistechnologies for energyapplications usingagricultural biomass asfeedstock are mostly at

pilot to demonstration stages. A number ofassumptions are made for the financial analysisof pyrolysis since technologies are still underdevelopment and the products, bio-oil and bio-char, are currently not commercially tradedcommodities. The estimated values of theproducts of a pyrolysis process are shown inFigure 5.9. It should be noted that the processparameters could be modified to produce morebio-oil or more bio-char.



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Figure 5.8 ROE of Bio-Diesel Plants at Different Prices of Feedstock Oil and Diesel

1 tonne ofBiomass

175 kg of Syngas(145 kWh of electricity + 0.52 GJ of heat)$20.93 (@ $0.13/kWh and $4/GJ)

PyrolysisProcess

405 kg of Bio-oil$68.26 (@ $0.15/litre of bio-oil)Note: Crude oil is ~ $0.60/litre, energycontent of bio-oil is ~ 40% of crude oil

175 kg of Bio-char$78.75 (@ $450/tonne of bio-char)Note: Horticultural char is >$1000/tonne at retail

Figure 5.9 Values of the Products of a Pyrolysis Process


As shown in Figure 5.9, syngas produced by thepyrolysis process is used to generate electricityand heat. The price of electricity from biomass atFIT rate is $0.13/kWh, and the price of heat isassumed at $4/GJ. The total value of 175 kg ofsyngas is, therefore, $20.93. Bio-oil has lessenergy content per unit mass in comparison withcrude oil. At $0.15/liter of bio-oil, the value of

405 kg of bio-oil is $68.26. As mentioned earlier,bio-char is not a commercially traded commodity.The price of horticultural char at retail gardeningstores is over $1,000/tonne. If the wholesale priceof bio-char is assumed at $450/tonne, the valueof 175 kg of bio-char is $78.75. Therefore, totalvalue of all pyrolysis products is $167.94/tonne.

The financial spreadsheet model of a pyrolysisplant with a processing capacity of 165tonne/day of raw biomass is shown in Table 5.8.This pyrolysis system can generate 1,000 kW ofelectricity from syngas produced. Annual bio-oiland bio-char productions are 25.46 million litresand 9,792 tonnes, respectively. The capital costof the system is estimated at $23.85 million. Theestimated ROE of this pyrolysis energy system is9.10%. It should be noted that there are nocommercial markets for bio-oil and bio-char atpresent, and the financials of the system arebased on the assumed price of the products.

The ROE of a pyrolysis system would improvewith the processing capacity as shown in Table5.9. Larger pyrolysis systems will likely benefitfrom economies of scale; however, they need tosecure markets for the products. There areuncertainties in the price of bio-oil and bio-char inthe financial estimates of pyrolysis systems. Table5.10 gives the changes in ROE of a pyrolysissystem with the processing capacity of 40tonnes/day if the prices of bio-oil and bio-charare varied. The financial performance of pyrolysissystems could improve if bio-oil can beeconomically refined to produce specialitychemicals. A great deal of research anddevelopment is underway for pyrolysis and bio-oilrefining technologies. Pyrolysis could potentiallycreate value adding activities for the agriculturalsector if it is commercialized.

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Price of bio-oil ($/liter) 0.15

Price of bio-char($/tonne) 450


Cost Items Value

Operating costs







Financing costs


Loan (M $) 11.93

Equity (M $) 11.93









Bio-oil production (Ml/yr) 25.46

Bio-char production (tonne/yr) 9,792


Sale of bio-oil (M$/yr) 3.82

Sale of bio-char (M$/yr) 4.41


Table 5.8 Financial Model for PyrolysisSystem


Biomass gasification technologies have beenused in commercial operations around the world.Forestry biomass is the major feedstock forbiomass gasification. The combustible gasesfrom the gasifier can be fed into IC engines orgas-fired boilers for generating heat andelectricity. Due to the higher alkali and otherchemical compounds in agricultural biomass,gasification systems using agricultural feedstockare mostly in pilot to demonstration stages. If thenutrients from agricultural biomass can beeffectively removed, gasification could be anattractive alternative energy technology for theagricultural sector.

The financial spreadsheet model for agasification system with 10 MW of electricitygeneration capacity is shown in Table 5.11. Thesystem will require approximately 72,000 tonne/yrof raw biomass. The estimated capital cost of thisgasification system is $18.43 million. Annualoperating costs of the system are $8.80 million,including the cost of biomass feedstock. Heatsale is considered for the system although it



Table 5.9 ROE of Pyrolysis System withDifferent Processing Capacities

Table 5.10 Changes in ROE of PyrolysisSystem with Prices of Bio-Oil and Bio-Char

Small Medium Large

Biomass feedstock (tonne/day) 40 165 330

Syngas electricity generationcapacity (kW)

250 1,000 2,000

Capital cost (M $) 9.55 23.85 37.68

Bio-oil production (M litre/yr) 6.37 25.46 50.92

Bio-char production (tonne/yr) 2,488 9,792 19,584

Return on Equity (%) -4.02 9.10 17.66

Base case RangeROE of 40

tonne/day Plant

Price of bio-oil $0.15/liter +50% 3.98 %

-50% -12.02 %

Price of bio-char $450/tonne +50% 5.21 %

-50% -13.24 %










Cost Items Value

Operating costs







Financing costs


Loan (M $) 9.21

Equity (M $) 9.21













Table 5.11 Financial Model for GasificationSystem

represents less than 4% of total revenue. Theestimated ROE of this gasification energy systemis 11.13%.

Biomass gasification systems should be built atcertain scales to be financially attractive asshown in Figure 5.10. The gasification systemswith less than 10 MW electricity generationcapacity are unlikely to be profitable at thecurrent prices of electricity and heat in Ontario.


Therefore, biomass gasification systems are morefor farm cooperative scales rather than forindividual farm operators. It should be noted thatat present there are both technical andcommercial risks associated with gasificationsystems which use agricultural biomass asfeedstock. The development of specialitychemicals from agricultural biomass throughgasification could change the economics ofbiomass gasification systems.

Figure 5.10 Biomass Consumptions andROE of Gasification Systems

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Generating electricity and heat frombiomass includes a number of activitiessuch as producing biomass, harvesting,

transporting, pre-processing, generating energyand by-products, marketing and sale. Theseactivities are the segments of the bio-energyvalue chain. Ontario agricultural producers couldbe the supplier of biomass to the bio-energyplants or can participate in the complete valuechain. In this chapter, two economic models arediscussed to analyse the bio-energy industry andinvesting options for Ontario producers. Basedon the evaluation of alternative technologies andthe economic analysis presented in previouschapters, recommendations are offered forOntario producers on how to participate in thebio-energy value chain of selected technologies.

6.1 Five Forces Analysis of Bio-Energy GenerationMichael Porter of Harvard Business School(Porter, 1979) developed Five Forces Analysiswhich is a framework for industry analysis andbusiness strategy. Porter identified five forcesthat determine the competitive intensity andtherefore attractiveness of an industry. Figure 6.1exhibits the five forces analysis. Three of Porter’sfive forces are the competition from externalsources, and the rest are internal threats. Anindustry will be profitable if it can manage theseforces. If the combination of these forces acts toweaken the profitability, the industry will befinancially unattractive.

If an industry is highly profitable, it will attract newfirms. This could lead to lower market shares forexisting firms in the industry. This thread of newentrants is dependent on the existence of

barriers to the entry. In general, the barriersinclude investment cost, economies of scaleavailable to existing firms, regulatory and legalrestrictions, and product differentiation, access tosuppliers and distribution channels, andretaliation by established products. There are nota lot of existing firms for generating heat andpower from agricultural biomass in Ontario. TheFIT rate for electricity from biomass is not asattractive in comparison with solar and windelectricity. Since the bio-energy industry is for themost part unprofitable, the thread of new entrantsis relatively low. Access to the electricity grid inOntario is one of the major barriers for smallerenergy producers such as AD power systems.For the larger bio-energy systems, the capitalrequirement is relatively high for individual farmproducers.

Bio-Energy Value Chain for O

ntario Agricultural Producers

Chapter 6 – Bio-Energy Value Chain for Ontario AgriculturalProducers

Figure 6.1 Five Forces Analysis of anIndustry (Porter, 1979)

Substitutes

Suppliers

IndustryCompetitors

NewEntrants

Bargainingpower ofsuppliers

Threat ofnew entrants

Threat ofsubstitues

Bargainingpower ofbuyers

Intensity ofRivalry

Buyers


If the suppliers of an industry have bargainingpower, they will exercise the power to increasethe price of their products, thereby reducing theprofit margin of the industry. In general, thesuppliers have greater bargaining power when:

• There are only a few large suppliers

• The resource they supply is unique

• The cost of switching to an alternative supplieris high

• The customer is small and unimportant

• There are no or few substitute resourcesavailable

Ontario has significant agricultural biomassresources to be used as feedstock for generationof heat and power. In addition to the agriculturalsector, forestry and municipal solid wastes canalso provide a considerable volume of biomass.Therefore, the biomass suppliers in Ontario donot have a relatively high bargaining power fortheir feedstock for bio-energy generation.However, grain corn which is used to produceethanol is in tight supply in Ontario.

A substitute product can be defined as theproduct that meets the same need. The extent ofthe thread from substitutes depends on the priceand performance of the substitute, the customers’willingness to switch and the switching costs. Thethread of substitutes for bio-energy sector inOntario is significant. Biomass is not the onlyresource which can be used to generate heatand power. At the current low price of natural gasin Ontario, energy generation using natural gasas a feedstock is very attractive. The IGPCEthanol Inc. is building a natural gas poweredcogeneration unit at their plant, and a few coal-fired power plants in USA are switching to naturalgas. It should be noted that for the emergingpyrolysis technology which produce bio-oil andbio-char, natural gas is not likely a substitute.

The customers or buyers with strong bargainingpower can drive down the price of the industryproducts and therefore squeeze the profit margin.Factors determining the bargaining power ofbuyers include the number of customers, thenumber of suppliers, the size of orders, and thecost of switching to substitutes. For electricitygeneration from biomass, the FIT rate isdetermined by a government organization inOntario. For heat generation from biomass, thebargaining power of buyers is associated withthe substitutes which could be natural gas orpropane or heating oil. For transportation liquidfuels from biomass, the mandatory blending ratesand the demand of liquid fuels define thebargaining power of buyers.

If the competition from the industry participants isintense, the resulting price war combined withincreased costs of marketing and sale promotioncan, therefore, reduce the profit margin of theindustry. However, innovation and emergence ofnew products can also be expected fromindustry with intense internal competition. Factorsdetermining competition from the industryrivalries include number of competitors, marketsize and growth rate, product differentiation,competitive edge and innovation, and the coststructure of the industry. As mentioned earlier,generating heat and power from agriculturalbiomass in Ontario is relatively new, and thecompetition from the industry participants is notas significant in comparison with other issuessuch as access to the electricity grid. However,the competition in corn ethanol industry can beconsidered as intense due to the increasing priceof grain corn and the existing production capacity.

6.2 Growth Pyramid and InvestmentOptionsThe core competencies of Ontario agriculturalproducers include growing crops, managing soiland crop residues, harvesting and transportation

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of agricultural products. As producers of biomass,Ontario producers could potentially participate inemerging bio-energy sector and diversify theirbusiness. It is important to determine to whatextent in the value chain of the bio-energygeneration Ontario producers should participate.McKinsey growth pyramid shown in Figure 6.2 isworth mentioning for this new business venture ofbio-energy generation.

As shown in generic options of Figure 6.2 forOntario agricultural producers, bio-energygeneration would be new products and services,new delivery approaches, new industry structureand new competitive arenas. The geographiescould also be new since most markets withhigher demand of energy products could beaway from the farms. McKinsey suggests thatbusiness growth strategies should be based on(http://tutor2u.net/business/strategy/mckinsey_pyramid.htm):

• Operational skills

• Privileged assets

• Growth skills

• Special relationships

Operational skills are the core competencies thata business has which can provide the foundationfor a growth strategy. Ontario producers areskilful in operating agricultural machineries, andsome of those skills could be transferrable to bio-energy generation. Privileged assets are thoseassets held by the business that are hard toreplicate by competitors. Ontario producers havethe privileged assets of productive lands to growbiomass feedstock. However, the competitionfrom forestry biomass should not beunderestimated. Growth skills are the skills thatbusinesses need if they are to successfullymanage a growth strategy. Farm cooperatives inOntario are managed by business professionals,

and Ontario producers aresupported by a number ofindustry organizations. For bio-energy generation, Ontarioproducers need to developspecial relationships with neworganizations such as OntarioPower Authority, large energyusers, and service providers forenergy generation equipment.

As shown in Figure 6.2,McKinsey‘s model suggests anumber of investment optionswith different risks to grow abusiness or to diversify abusiness. The investmentoptions in the order ofincreasing risk are organicinvestment, marketingpartnerships, strategicalliances, minority stakes, jointventures and acquisitions.



New competitivearenas

Generic options and investment structuresfor a growth strategy

New industrystructures

New geographies

Acquisitions

Joint Ventures

Minority Stakes

Strategic Alliances

Marketing Partnerships

Organic Investment

New deliveryapproaches

New productsand services

Existing productsto new customers

Existing products toexisting customers

How?

Incr

easi

ng R

isk

Figure 6.2 McKinsey Growth Pyramid (http://tutor2u.net/business/strategy/mckinsey_pyramid.htm)


Ontario producers should evaluate theseinvestment options for each technology toparticipate in the bio-energy value chain. Forinstance, at current mandatory blending ratesand gasoline demand, only medium and largecorn ethanol plants are likely to be financiallyattractive. The capital cost required to build amedium to large corn ethanol plant could be toohigh for an individual Ontario producer or evenfor a farm cooperative. Therefore, taking minoritystakes in medium to large corn ethanol plantscould be the best investment and participationoption for Ontario producers.

6.3 Importance of Economies of ScaleThe unit production cost can be generallyreduced by producing more or by increasing theproduction capacity and this advantage is calledeconomies of scale. If the unit production costincreases by producing more or by increasingthe production capacity, it is termed asdiseconomies of scale. Figure 6.3 shows thebasic concept of the economies of scale. Byincreasing the production from Q to Q1, the unitproduction cost would decrease from C to C1,offering the cost advantage for the firm. However,

if the production is increased beyond Q1, therewill be diseconomies of sale.

There are different economies of scaleassociated with each bio-energy technology. Theeconomies of scale in bio-energy generationlikely depend on availability of feedstock in thearea, transportation costs, the staffingrequirements of the system, and the demand ofenergy products in the area. For instance, thehigh transportation cost of wet biomass wouldlimit the size of an AD power system. If a bio-energy system is sized so that biomassfeedstock is to be transported from a longerdistance, i.e. over 100 km in Ontario, there willlikely be diseconomies of scale.

The unit processing cost is also an importantfactor in determining the optimum size of a bio-energy facility. In order to illustrate this, the unitproduction cost of wood pellets versus theproduction capacity is shown in Figure 6.4. Theabsolute cost numbers of Figure 6.4 may notcurrently be applicable since the estimates weredone in 2006. However, Figure 6.4 highlights theorder of magnitude difference in the wood pelletproduction costs of small and large plants. The

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production costs of wood pellets at a 2 t/hr plantcould be 3 – 4 times higher than that of a 15 t/hrplant. The average processing capacity of woodpellet plants in British Columbia is 15 -20 t/hr(personal communication with industry experts).

There have been activities in the development ofportable biomass processing and bio-energyproduction units in recent years. They range fromportable biomass pelletizer to mobile pyrolysisunit to small biomass gasification system. Most ofthese portable units can process 1 – 3 tonne/hr,i.e. fewer than 30,000 tonnes/yr, of raw biomass.In most Ontario counties, approximately 150,000tonne/yr of biomass can be gathered within 100km radius. Extreme care should be exercised inanalyzing the financial feasibility of small scalebio-energy systems. Once the profitability of asmall system is proven, there will likely be newlarger entrants to the industry with favourableeconomies of scale.

6.4 Participation in Bio-Energy ValueChainBio-energy technologies are evaluated in thisstudy. Some technologies are mature, and some

are still considered as under development oremerging. The economics of selected bio-energysystems are also investigated in this study. Sometechnologies have lower financial risks, and someare well below investment grade threshold.Porter’s five force analysis and McKinsey’sgrowth pyramid also provide additionalconsiderations for Ontario producers inparticipating in bio-energy industry. Economies ofscale are also important for each bio-energytechnology. Based on these discussions, therecommended participation in the bio-energyvalue chain for selected bio-energy systems aregiven in Table 6.1.

As previously discussed, the capacity of an ADpower system in Ontario is limited by the averageherd size and the high transportation cost of wetand bulky biomass feedstock. The competitionfrom other biomass feedstock for AD powersystem is not intense. Ontario agriculturalproducers should participate in the completevalue chain of AD bio-energy systems. Farmorganization like OFA should lobby for betteraccess to the electricity grid and for greaterpremium prices of energy generated from the ADsystems. The environmental benefits of AD



Table 6.1 Participation in Bio-Energy Value Chain for Ontario Producers

� Full participation recommended� Partial participation possible� Participation needs further analysis

F: Feedstock supplyT: Transportation of feedstockP: Production of energy and co-productsM&S: Marketing and sales

Bio-Energy System F T P M&S Recommended Approach/Investment

Anaerobic digestion � � � � Lobby for better grid access and greater premium pricefor energy generated

Direct combustion � � � � Minority Stakes to Joint Venture

Pyrolysis � � � � Strategic Alliance to Minority Stakes

Gasification � � � � Strategic Alliance to Minority Stakes

Bio-ethanol � � � � Minority Stakes to Joint Venture

Bio-diesel � � � � Minority Stakes to Joint Venture

Torrefaction � � � � Strategic Alliance

Energy storage � � � � Strategic Alliance to Minority Stakes

Bio-methane � � � � Strategic Alliance to Minority Stakes

Hydrogen enriched natural gas � � � � Strategic Alliance


systems which reduce the emissions ofgreenhouse gases from manure should behighlighted in the lobbying efforts.

The direct combustion of biomass integrated withsteam turbines is a mature technology togenerate renewable heat and power. To befinancially attractive, the system should have aminimum electricity generating capacity of 10MW, which requires a relatively large capitalinvestment for individual agricultural producer.Furthermore, the competition from forestrybiomass could be intense in some areas ofOntario. For the direct combustion bio-energysystems, Ontario producers could participate infeedstock supply and transportation of biomass.A partial participation in the form of takingminority stakes or joint venture with the energyproducer could be possible in selected locations.

Pyrolysis and gasification are emerging bio-energy technologies. More research anddevelopment are required, especially usingagricultural biomass as feedstock forcommercialization of these technologies. Ifpyrolysis and gasification bio-energy systems arebuilt in Ontario, agricultural producers shouldparticipate in the feedstock supply and biomasstransportation of the value chain. Participation inenergy production, marketing and sales of theenergy and co-products would require furtherassessment for these technologies on a case-by-case basis. A similar approach could beemployed for torrefaction and hydrogen enrichednatural gas technologies.

Bio-ethanol and bio-diesel productions in Ontariowill likely continue at current mandatory blendrates as the demand for renewable liquidtransportation fuels is not expanding. Economiesof scale would be an important factor for bio-ethanol industry, and availability of inexpensive

feedstock is critical for bio-diesel industry.Participating in bio-ethanol and bio-dieselindustries would provide a good hedging forOntario producers who consume considerableamounts of transportation liquid fuels in farmingactivities. Taking minority stakes or forming jointventures with financially performing bio-ethanoland bio-diesel manufactures are recommended.

Like in any other industry, risk management isvital in bio-energy industries. Risk managementmeasures could be categorized into feedstocksupply, technology, and marketing and sale. Formanaging risk of feedstock supply, it is desirableto locate the bio-energy facility in the regionwhere the available biomass feedstock issignificantly higher than required by the bio-energy facility. The involvement of localcommunity from the planning stage and properenvironmental and social assessments areimportant. Long-term contracts with biomasssuppliers would secure the feedstock for thefacility. Third party harvesting of some biomass isworth considering. For instance, the harvestingwindow for grain corn has been relatively narrowin Ontario in some years and producersconcentrate their efforts on the grain harvest. Ifcorn stover is the feedstock for the bio-energyfacility, third party harvesting of corn stover wouldensure the feedstock availability. Feedstockpricing options include fixed price, variable pricelinked to the price of other energy sources, andcombined fixed and variable price.

Managing technology risks could be critical inbio-energy industry since some technologies arerelatively at infant stage. It should be noted thatrisks can be transferred to a third party at a cost,similar to health or auto insurance. The amount ofrisk taken depends on the core competencies ofthe organization operating the bio-energy facility.Technology risk management measures includeservice contracts, extended warranty,partnerships with technology providers, and

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participation in industry organizations whichprovide consulting and technology managementsolutions.

For managing risks in marketing and sales,understanding the needs of customers and thestrength of competitors are essential. In manyjurisdictions, the bio-energy sector is driven byregulatory forces and market demand. Therefore,

the assessment of regulatory drivers and theestimates of market demand for the bio-energyand co-products would be prudent. Marketingand sale risk management measures includelong-term sale contracts, off-take agreements,ability to pass the rising costs to customers, andlobbying efforts to ensure regulatory support forthe bio-energy sector.




This study reviews alternative technologiesto transform biomass into energy and co-products and examines the applications of

these technologies in the agricultural sector inOntario. The consumption of different types ofenergy in the Ontario agricultural sector isanalyzed, and potential energy generation fromagricultural biomass is estimated. The alternativetechnologies to transform biomass into energyand co-products are evaluated for their technicaland commercial maturity and suitability for theagricultural sector in Ontario. Biomass harvesting,storage, transportation and handling activities forthe bio-energy sector are also discussed.Financial spreadsheet models are developed toestimate the return on investment for the selectedtechnologies. The status of research anddevelopment of emerging bio-energytechnologies are presented. Segments of the bio-energy value chain are analysed to determine towhat extent agricultural producers shouldparticipate in the bio-energy industry.

7.1 Summary of Findings andConclusionsThe agricultural sector in Ontario consumessignificant amount of gasoline, diesel, andpropane, heating oil, electricity and natural gasfor livestock and farming activities. Total energyconsumption of the Ontario agricultural sector isapproximately 41,500 TJ/yr, which represents 2%of the provincial energy demand. This annualenergy consumption in the Ontario agriculturalsector is equivalent to 3.35 million tonnes ofbiomass.

Ontario farms produce over 50 million tonnes ofgrains, beans, and feeds and about 14 million

tonnes of crop residues annually. Approximately3 million tonnes, i.e. 20% of total produced ofcrop residues can be sustainably harvestedannually. Additional 3 million tonne/yr of biomasscan be produced by planting purpose-growncrops such as miscanthus and switchgrass, onless than 4% of agricultural lands in Ontario.There are about 1.7 million cattle in Ontario(OMAFRA statistics) and approximately 5,500TJ/yr, i.e. 1.55 TWh or over 60% of total electricityconsumed in the agricultural sector of electricitycould be theoretically generated from manurebiogas. Approximately 30 to 35% of grain corngrown in Ontario is currently used to produceethanol. Ontario’s agricultural sector could notonly be energy self-sufficient but could also beable to provide biomass for energy use in othereconomic sectors.

Large-scale use of biomass for energyapplications would be relatively new for Ontarioagricultural producers. Activities related to fieldharvesting, transporting, storing and handling ofbiomass are investigated in this study.Specialized biomass harvestingequipment/machineries are under developmentalthough some are available commercially. Incomparison to conventional raking and baling,this specialized harvesting equipment can offerbetter yield and quality of biomass andfavourable implications to grain harvest. Forinstance, high density balers could increase thedensity of biomass bales by 25%, reducing thestorage space requirement and transportationcosts. Bale accumulators could offer greaterefficiency in collecting and clearing biomass fromthe field. The lower price of natural gas in Ontariocould lead to the use liquid natural gas poweredtrucks in transportation of biomass. There arehealth and safety issues in handling biomass instorage and at the bio-energy facilities. The best

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Chapter 7 – Summary, Conclusions and Recommendations


biomass handling practices especially fromEurope should be adopted, and the industrystandards need to be developed.

Alternative technologies to transform biomassinto energy and co-products are evaluated usingProGrid Global Evaluator with the participationsof industry experts. ProGrid Global Evaluator is asoftware package developed as a decisionmaking tool and used by a number oforganizations including Alberta Innovates andOntario Centres of Excellence. The technical andcommercial strengths of bio-energy technologiesare evaluated. The evaluation matrix includesagricultural suitability, technology maturity,complete system availability, financing, skilllabour availability, infrastructure existence,energy production, co-products, and the valuechain. The evaluation suggests that the mostfeasible integrated bio-energy systems in Ontarioat present are anaerobic digestion, directcombustion, bio-ethanol and bio-dieselproductions.

The evaluation panel considers pyrolysis,gasification, torrefaction, micro turbines, andsmall scale energy storage as emergingtechnologies for agricultural bio-energygeneration. Pyrolysis can produce syngas, bio-oiland bio-char from agricultural biomass. Pyrolysiscould be an excellent fit to the agriculturalbiomass since bio-char can be utilized asfertilizer. The current areas of research anddevelopment for pyrolysis include higher acidityand instability of bio-oil, syngas cleaning, bio-oilprocessing, and bio-char products. Gasificationof biomass mainly using wood feedstock hasbeen in commercial operation around the world.Cleaning of gas products and emission ofparticulate matters are the areas of improvementfor the gasification of agricultural biomass.

Torrefaction is essentially roasting of biomass todrive off moisture and volatile components andpotentially produces hydrophobic and energydense coal-like materials. Torrefactiontechnologies currently focus on improvingproduct consistency, hydrophobicity andgrindability and reducing mass losses. Microturbines and small scale energy storage arerelatively more mature technologies which couldplay an important role in bio-energy industrywhen the economics of bio-energy improves.

Financial spreadsheet models are developed toestimate the Return on Equity (ROE) of selectedintegrated bio-energy systems. The costestimates for the financial models are based onindustry data and the literature. The minimumcattle size for an on-farm AD power system is 500dairy cows for a positive ROE at current FIT ratefor electricity from biogas. The ROE of an on-farmAD power system with 1,000 dairy cowsgenerating 400 kW of electricity is about 10%.Availability of off-farm feedstock materials couldimprove the financial performance of the ADsystems. Generation of heat and power frombiomass through direct combustion integratedwith steam turbines could offer an ROE of up to12% at the current FIT rate. The electricitygeneration capacity of direct combustionsystems should be greater than 10 MW for apositive ROE. The economics of two emergingtechnologies, pyrolysis and gasification, are alsoinvestigated. The ROE of a pyrolysis plant withthe raw biomass processing capacity of 165tonnes/day is estimated at 9.1%. It should benoted that there is uncertainty in the price of bio-oil and bio-char since they are not commerciallytraded commodities at present. The ROE ofbiomass gasification plant with 15 MW electricitygeneration capacity is about 16%.

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Approximately 30 to 35% of grain corn producedin Ontario is currently used for ethanol production,and the rest is consumed for animal feed andindustrial applications. Due to the increasingprice of grain corn and lower gasoline demand,the profit margin of corn ethanol is lowered.Medium to large corn ethanol plants withfavourable economies of scale can operateprofitably during these high price periods. Atcurrent prices of grain corn and ethanol, the ROEof a 100 million gal/yr ethanol plant is about 15%.At current grain corn production levels in Ontario,the addition of a large corn ethanol facility wouldcreate the need to import grain corn to Ontariofrom nearby regions. The availability ofinexpensive feedstock oils for a long-term timehorizon s critical in bio-diesel production. Usedcooking oils and FOG are the major feedstock forbio-diesel plants in Ontario, and corn oil fromethanol plants is a potential feedstock. Soybeanoil is too expensive for bio-diesel production. TheROE of a bio-diesel plant could be as high as27%, depending on the capacity of the plant andthe cost of feedstock oils.

Ontario agricultural producers could be thesupplier of biomass to bio-energy facilities or canparticipate in the complete value chain. Twoeconomic models are reviewed to analyse thebio-energy industry and investing options forOntario producers. Porter’s Five Forces analysisidentifies the internal and externalthreats/competitions of an industry. The FIT ratefor electricity from biomass is not very attractivein comparison to solar and wind electricity. Sincethe bio-energy industry is not highly profitable,the thread of new entrants is relatively low.Access to the electricity grid in Ontario is one ofthe major barriers for smaller energy producerssuch as AD power systems. For the larger bio-energy systems, the capital requirement isrelatively high for individual farm producers.Ontario has significant agricultural biomassresources to be used as feedstock for generation

of heat and power. In addition to the agriculturalsector, forestry and municipal solid wastes canalso provide a considerable volume of biomass.Therefore, the biomass suppliers in Ontario donot have a relatively high bargaining power fortheir feedstock for bio-energy generation.However, grain corn which is used to produceethanol is in tight supply in Ontario.

The thread of substitutes for bio-energy sector inOntario is significant. Biomass is not the onlyresource which can be used to generate heatand power. At the current low price of natural gasin Ontario, energy generation using natural gasas a feedstock is very attractive. For electricitygeneration from biomass, the FIT rate isdetermined by a government organization inOntario. For heat generation from biomass, thebargaining power of buyers is associated withthe substitutes which could be natural gas orpropane or heating oil. For transportation liquidfuels from biomass, the mandatory blending ratesand the demand of liquid fuels define thebargaining power of buyers. Generating heat andpower from agricultural biomass in Ontario isrelatively new, and the competition from theindustry rivals is insignificant in comparison withother issues such as access to the electricity grid.However, the competition in corn ethanol industrycan be considered as intense due to theincreasing price of grain corn and the existingproduction capacity.

McKinsey’s growth pyramid provides a basis forbusiness diversification and investment optionsto be considered and is used to analyze the bio-energy industry for Ontario agricultural producers.Bio-energy generation would create newproducts and services, new delivery approaches,new industry structure and new competitivearenas for Ontario producers. The geographiescould also be new since most markets withhigher demand of energy products could belocated away from the farms. Ontario producers

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are skilful in operating agricultural machineries,and some of those skills could be transferrable tobio-energy generation. However, the researchand development of emerging bio-energytechnologies is not likely the core competency ofOntario producers. Ontario producers have theprivileged assets of productive lands to growbiomass feedstock. Nevertheless, thecompetition from forestry biomass should not beunderestimated. Farm cooperatives in Ontarioare managed by business professionals whocould steer the growth in bio-energy industry, andOntario producers are supported by a number ofindustry organizations. For bio-energy generation,Ontario producers need to develop specialrelationships with new organizations such asOntario Power Authority, large energy users, andservice providers for energy generationequipment.

Economies of scale are extremely important inbio-energy generation. The unitgeneration/production cost of a small facilitycould be 3 to 4 times higher than that of a largefacility. There have been activities in thedevelopment of portable biomass processingand bio-energy production units in recent years.They range from portable biomass pelletizer tomobile pyrolysis unit to small biomassgasification system. Most of these portable unitscan process 1 to 3 tonnes/hr, or fewer than30,000 tonnes/yr of raw biomass. In most Ontariocounties, approximately 150,000 tonne/yr ofbiomass can be gathered within 100 km radius,suggesting 15 to 20 tonne/hr of biomass couldbe processed with favourable economies ofscale. Extreme care should be exercised inanalyzing the financial feasibility of small scalebio-energy systems. Once the profitability of asmall system is proven, there will likely be newlarger entrants to the industry with favourableeconomies of scale.

7.2 General RecommendationsGeneration of heat and power and production ofco-products from agricultural biomass couldprovide additional income and a reasonablehedging against the raising energy costs forOntario agricultural producers. However, risksassociated with bio-energy technologies must becarefully managed.

The following general recommendations areprovided to OFA and its affiliates:

• Anaerobic digestion is a mature bio-energytechnology at farm scale, ranging from 300 to3,000 kW of electricity generation capacity.Ontario agricultural producers shouldparticipate in the complete value chain of ADbio-energy systems. Farm organization like OFAshould lobby for better access to the electricitygrid and for better premium price of energygenerated from the AD systems. Theenvironmental benefits of AD systems whichreduce the emissions of greenhouse gasesfrom manure should be highlighted.

• The direct combustion of biomass integratedwith steam turbines is a mature technology togenerate renewable heat and power. To befinancially viable, the system should have aminimum electricity generating capacity of 10MW, which requires a relatively large capitalinvestment for individual agricultural producer.Competition from forestry biomass could beintense in some areas of Ontario. For the directcombustion bio-energy systems, Ontarioproducers could participate in feedstock supplyand transportation of biomass. A partialparticipation in the form of taking minoritystakes or joint venture with the energy producercould be possible in selected locations.

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• Bio-ethanol and bio-diesel productions inOntario will likely continue at current mandatoryblend rates and the demand of liquidtransportation fuels. Economies of scale wouldbe an important factor for bio-ethanol industry,and availability of inexpensive feedstock iscritical for bio-diesel industry. Participating inbio-ethanol and bio-diesel industries wouldprovide a reasonable hedging for Ontarioproducers who consume considerable amountsof transportation liquid fuels in farming activities.Taking minority stakes or forming joint ventureswith financially performing bio-ethanol and bio-diesel manufactures are recommended.

• Pyrolysis and gasification are emerging bio-energy technologies. More research anddevelopment are required, especially usingagricultural biomass as feedstock for thecommercialization of these technologies. Ifpyrolysis and gasification bio-energy systemsare built in Ontario, agricultural producersshould participate in the feedstock supply andbiomass transportation of the value chain.Participation in energy production, marketingand sales of the energy and co-products wouldrequire further assessment for these

technologies on a case-by-case basis. A similarapproach could be employed for otheremerging bio-energy technologies.

• Torrefaction development and implementationshould occur at the end user site in SouthernOntario for small to medium scale applicationsdue to relatively short transportation distance.

• Forming alliances with bio-energy industryorganizations and R&D centres isrecommended to monitor the development ofemerging bio-energy technologies.

• Since most renewable energy receivesregulatory supports, it is important to influencepolicy makers by highlighting the potentialsocio-economic benefits of responsible bio-energy production to the agricultural and ruralsectors.

• The low price of natural gas and increasingelectricity cost in Ontario could result insignificant changes in energy consumption mixin medium to long term time frame. Furtheranalysis is required to investigate their effectson the bio-energy industry.

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Bauen, A., Berndes, G., Junginger, M., Londo,M. and Vuille, F., 2009. Bioenergy – aSustainable and Reliable Energy Source, IEABioenergy.

Beaulieu, M. S., 2001. Manure Management inCanada, Vol. 1, No. 2, Agricultural Division,Statistics Canada.

Bowman, C., 2005. Intangibles: Exploring theFull Depth of Issues. Sarnia: Grafiks.

Ginther, M. S., 2011. Industrial Wood Pellets –the European Market Opportunities,International Biomass Conference & Expo.,May 2 -4, 2011, St. Louis, Missouri, USA.

Grier, K., Mussell, A. and Rajcan, I., 2012.Impact of Canadian Ethanol Policy onCanada’s Livestock and Meat Industry 2012,George Morris Centre.

Manganaro, J., Chen, B., Adeosun, J.,Lakhapatri, S., Favetta, D., Lawal, A., Farrauto,R., Dorazio, L., Rosse, D.J., 2011. Conversionof Residual Biomass into Liquid TransportationFuel: An Energy Analysis. Energy & Fuels, 25,2711-2720.

Mani, S., Sokhansanj, S., Bi, X. and Turhollow,A., 2006. Economics of Producing Fuel Pelletsfrom Biomass, Applied Engineering inAgriculture, 22(3), 421-426.

Mullen, C.A., Boateng, A.A., Goldberg, N.M.,Lima, I.M., Laird, D.A., Hicks, K.B., 2010. Bio-oil and Bio-char Production from Corn Cobsand Stover by Fast Pyrolysis. Biomass andBioenergy, 34, 67-74.

Oo, A. and Lalonde, C., 2012. Biomass CropResidues Availability for Bio-processing inOntario, Report prepared for OntarioFederation of Agriculture, Western Sarnia-Lambton Research Park.

Porter, M.E. 1979. How Competitive ForcesShape Strategy, Harvard Business Review,March/April 1979.

Renewable Fuels Association (RFA), 2012.Ethanol Industry Outlook.

Saville, B. A., 2006. Feasibility Study for aBiodiesel Refining Facility in the RegionalMunicipality of Durham, Report prepared byBBI Biofuels Canada.

Shinners, K.J., Binversie, B.N. and Savoie, P.,2003. Harvest and Storage of Wet and DryCorn Stover as a Biomass Feedstock, ASAEPaper No. 036088.

Swanson, R.M., Satrio, J.A., Brown, R.C.,Platon, A., Hsu, D.D., 2010. Techno-EconomicAnalysis of Biofuels Production Based onGasification. NREL Technical Report NREL/TP-6A20-46587

References

References


An important feature of ProGrid is itsbar charts that show the strengths andweaknesses of each of the alternative

technologies based on the assessments of theevaluators. These bar charts are called“Opportunity Profiles”. In the Opportunity Profiles,the x-axis shows the criteria of the EvaluationMatrix, and the Relative Strength is shown on they-axis. The Relative Strength of each criterion is afunction of the rating assigned by the evaluators.High Language Ladder ratings from the majorityof evaluators for a specific criteria result in a highRelative Strength bar for that criteria in theOpportunity Profile. A high Relative Strengthindicates a strength of the technology, whereas alow Relative Strength represents a weakness.

Each figure of Appendix A presents theOpportunity Profile of an alternative technologyexamined in this study.

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Figure A1. Opportunity Profile for AnaerobicDigestion

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Figure A2. Opportunity Profile for Gasification


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Figure A3. Opportunity Profile for Pyrolysis

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Figure A4. Opportunity Profile for Torrefaction

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Figure A6. Opportunity Profile for Biogas toBiomethane


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Figure A8. Opportunity Profile forCompressed Air Energy Storage

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A9. Opportunity Profile for Large-ScaleBattery

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A10. Opportunity Profile for Small-Scale Battery


Appendix A

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A11. Opportunity Profile for Fuel Cell

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A12. Opportunity Profile for Gas FiredBoiler

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A13. Opportunity Profile for GasTurbine

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A14. Opportunity Profile for IndirectGas Fired Turbine


App

endi

x A

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A15. Opportunity Profile for InternalCombustion Engine

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A16. Opportunity Profile forMicroturbine

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A17. Opportunity Profile for SteamEngine

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A18. Opportunity Profile for StirlingEngine


Appendix A

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A19. Opportunity Profile for BiodieselProduction

0

20

40

60

Rel

ativ

e St

reng

th (%

)

Agr

icul

tura

lSu

itabi

lity

Tech

nolo

gyM

atur

ityC

ompl

ete

Syst

em

Ener

gyPr

oduc

tion

Co-

Prod

uct

Prod

uctio

n

Valu

e C

hain

Fina

ncin

g

Skill

edLa

bour

Infra

stru

ctur

e

80

100

Figure A20. Opportunity Profile for EthanolProduction


Not

es

Notes

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