Feedstock Contract Considerations for a Piedmont Biorefinery

Abstract

A biorefinery purchasing feedstock (perennial grass) must offer contracts that provide the same opportunity to earn a profit for a feedstock contractor located 50 or 5 km from the biorefinery. The business plan presented here specifies that the biomass is purchased in satellite storage locations (SSLs), and the load-out and hauling costs are paid by the biorefinery. Contracts can be offered for harvest in September, October, and November, a three-month harvest window, or the harvest window can be extended to December, January, and February, a six-month harvest window. Required total storage capacity is 75% of annual consumption for the three-month window and 50% for the six-month window, a significant difference in total storage capacity (cost). The storage cost difference paid by the biorefinery is 5.27 and 3.52 USD/Mg for the three-month and six-month, respectively. Several issues must be addressed in the feedstock contracts: (1) earlier harvest, before plant senescence, means less nutrients are translocated back into the soil and more are removed at harvest; (2) harvest losses are higher for all harvests after the September harvest; and (3) storage losses increase with storage time in the SSL. Time of removal from the SSL is dictated by the biorefinery; thus, the feedstock contractor must be compensated. The contracts paid by the biorefinery, averaged across the entire annual consumption, were about the same for the three-month window, and six-month window. This result was obtained because fertilizer cost decreases and harvest losses increase as the harvest date increases; thus, the two factors tend to offset. Using a 77 USD/Mg base cost, representative feedstock payment at the SSL (no storage losses included) for contractors with various month contracts are September (84.30), October (85.54), November (86.72), December 88.63), January (89.98), and February (90.58). Subsequent compensation for storage losses depends on the amount of time the particular unit of biomass is in storage before shipment.