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Feasibility of an Adaptable Biorefinery Platform: Addressing the Delivery Scale Dilemma under Drought Risk

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  • Farmer, Michael C.
  • Benson, Aaron
  • Liu, Xiaolan
  • Capareda, Sergio
  • Middleton, Marty

Abstract

Conversion of biomass to electricity is often not economically feasible as a result of large transportation costs and low output prices. We build a model of an adaptable biorefinery situated at an agri-processing facility that already has biomass on-site and consider the optimal scale of the plant to achieve a price premium by selling peaking power given uncertain biomass deliveries year over year as a result of climatic variability. We find that, for conservative electricity prices, a plant situated near cotton gins in Texas could operate with positive expected net revenue while converting on average only 38% of available biomass for peak electricity prices.

Suggested Citation

  • Farmer, Michael C. & Benson, Aaron & Liu, Xiaolan & Capareda, Sergio & Middleton, Marty, 2014. "Feasibility of an Adaptable Biorefinery Platform: Addressing the Delivery Scale Dilemma under Drought Risk," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 46(1), pages 57-71, February.
    • Handle: RePEc:cup:jagaec:v:46:y:2014:i:01:p:57-71_00
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    References listed on IDEAS

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    1. English, Burton C. & Ugarte, Daniel G. De La Torre & Walsh, Marie E. & Hellwinkel, Chad & Menard, Jamey, 2006. "Economic Competitiveness of Bioenergy Production and Effects on Agriculture of the Southern Region," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 38(2), pages 389-402, August.
    2. Epplin, Francis M. & Haque, Mohua, 2011. "Policies to Facilitate Conversion of Millions of Acres to the Production of Biofuel Feedstock," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 43(3), pages 1-14, August.
    3. Popp, Michael & Nalley, Lanier & Vickery, Gina, 2010. "Irrigation Restriction and Biomass Market Interactions: The Case of the Alluvial Aquifer," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 42(1), pages 69-86, February.
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    More about this item

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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