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Cost evaluation of alternative switchgrass producing, harvesting, storing, and transporting systems and their logistics in the Southeastern USA

Author

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  • James A. Larson
  • Tun-Hsiang Yu
  • Burton C. English
  • Daniel F. Mooney
  • Chenguang Wang

Abstract

Purpose - The US Department of Energy has a goal to make ethanol from biomass cost competitive with petroleum by 2012. Feedstock procurement is expected to represent a significant portion of the operating costs for a refinery that produces ethanol from biomass such as switchgrass. Thus, cost-effective feedstock logistics will be a key factor for the future development of a capital intensive cellulosic ethanol industry. The purpose of this paper is to analyze the cost of various logistic methods of switchgrass production, harvesting, storing, and transportation. Design/methodology/approach - This study applied enterprise budgeting and geographical information system (GIS) software to analyze the costs of three logistic methods of acquiring switchgrass feedstock for a 25 million gallon per year refinery. Procurement methods included traditional large round and rectangular bale harvest and storage systems and satellite preprocessing facilities using field-chopped material. The analysis evaluated tradeoffs in operating costs, dry matter losses during storage, and investment requirements among the three systems. Findings - Results suggest that the preprocessing system outperformed the conventional bale harvest methods in the delivered costs of switchgrass. Practical implications - The cost savings in harvest, transportation, and dry matter losses for the preprocessing system offset their extensive capital costs and generated cost advantages over the conventional methods. Social implications - The traditional round bale system has a higher overall investment cost, may not be the most cost-effective way to procure switchgrass feedstock for a refinery, and may limit farmer participation in the feedstock value chain. Originality/value - GIS methods combined with enterprise budgeting can be useful tools for evaluating investment in feedstock supply chain infrastructure.

Suggested Citation

  • James A. Larson & Tun-Hsiang Yu & Burton C. English & Daniel F. Mooney & Chenguang Wang, 2010. "Cost evaluation of alternative switchgrass producing, harvesting, storing, and transporting systems and their logistics in the Southeastern USA," Agricultural Finance Review, Emerald Group Publishing, vol. 70(2), pages 184-200, August.
  • Handle: RePEc:eme:afrpps:v:70:y:2010:i:2:p:184-200
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    References listed on IDEAS

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    1. Jensen, Kimberly L. & Clark, Christopher D. & Ellis, Pamela & English, Burton C. & Menard, R. Jamey & Walsh, Marie E., 2006. "Farmer Willingness to Grow Switchgrass for Energy Production," 2006 Annual meeting, July 23-26, Long Beach, CA 21355, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Larson, James A. & Mooney, Daniel F. & English, Burton C. & Tyler, Donald D., 2010. "Cost Analysis of Alternative Harvest and Storage Methods for Switchgrass in the Southeastern U.S," 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida 56518, Southern Agricultural Economics Association.
    3. Lawrence D. Mapemba & Francis M. Epplin & Charles M. Taliaferro & Raymond L. Huhnke, 2007. "Biorefinery Feedstock Production on Conservation Reserve Program Land," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(2), pages 227-246.
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    Citations

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    Cited by:

    1. Chugh, Shikha & Yu, T. Edward & Jackson, Samuel & Larson, James & English, Burton & Cho, Seong-Hoon, 2015. "Exploring the Potential to Penetrate the Energy Markets for Tennessee-Produced Switchgrass," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196899, Southern Agricultural Economics Association.
    2. Bansal, Ankit & Illukpitiya, Prabodh & Singh, Surendra P. & Tegegne, Fisseha, 2013. "Economic competitiveness of ethanol production from cellulosic feedstock in Tennessee," Renewable Energy, Elsevier, vol. 59(C), pages 53-57.
    3. Mafakheri, Fereshteh & Nasiri, Fuzhan, 2014. "Modeling of biomass-to-energy supply chain operations: Applications, challenges and research directions," Energy Policy, Elsevier, vol. 67(C), pages 116-126.
    4. Zhong, Jia & Yu, T. Edward & Larson, James A. & English, Burton C. & Fu, Joshua S. & Calcagno, James, 2016. "Analysis of environmental and economic tradeoffs in switchgrass supply chains for biofuel production," Energy, Elsevier, vol. 107(C), pages 791-803.
    5. Sharp, Benjamin E. & Miller, Shelie A., 2014. "Estimating maximum land use change potential from a regional biofuel industry," Energy Policy, Elsevier, vol. 65(C), pages 261-269.
    6. Yu, Edward T. & Fu, Joshua S. & Larson, James A. & English, Burton C. & De La Torre Ugarte, Daniel & Wilson, Bradly & Yun, Jeongran & Gao, Yuan & Calcagno, Jimmy, 2012. "The Transportation Emission Impact of the Biomass Feedstock Traffic of A Potential Commercial-Scale Biorefinery in East Tennessee," 53rd Annual Transportation Research Forum, Tampa, Florida, March 15-17, 2012 207080, Transportation Research Forum.
    7. Zhou, Xia “Vivian” & Clark, Christopher D. & Lambert, Dayton M. & English, Burton C. & Larson, James A. & Boyer, Christopher N., 2015. "Biomass supply and nutrient runoff abatement under alternative biofuel feedstock production subsidies," Agricultural Systems, Elsevier, pages 250-259.
    8. Okwo, Adaora & Thomas, Valerie M., 2014. "Biomass feedstock contracts: Role of land quality and yield variability in near term feasibility," Energy Economics, Elsevier, pages 67-80.
    9. Zhang, Jun & Osmani, Atif & Awudu, Iddrisu & Gonela, Vinay, 2013. "An integrated optimization model for switchgrass-based bioethanol supply chain," Applied Energy, Elsevier, pages 1205-1217.
    10. Larson, James A. & Yu, T. Edward & English, Burton C. & Jensen, Kimberly L. & Gao, Yuan & Wang, Chenguang, 2015. "Effect of outdoor storage losses on feedstock inventory management and plant-gate cost for a switchgrass conversion facility in East Tennessee," Renewable Energy, Elsevier, vol. 74(C), pages 803-814.
    11. Gouzaye, Amadou & Epplin, Francis M., 2016. "Land requirements, feedstock haul distance, and expected profit response to land use restrictions for switchgrass production," Energy Economics, Elsevier, pages 59-66.

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