Oregon State University: Biomass Enterprise Economic Model

The Biomass Enterprise Economic Model is designed to help users rapidly evaluate and appropriately scale biomass utilization enterprises. Users can explore how woody biomass input volumes and the salable products mix influences capital establishment costs, annual operating costs, and annual revenue. The model is pre-loaded with cost and pricing data that automatically scales to the […]

The Biomass Enterprise Economic Model is designed to help users rapidly evaluate and appropriately scale biomass utilization enterprises. Users can explore how woody biomass input volumes and the salable products mix influences capital establishment costs, annual operating costs, and annual revenue. The model is pre-loaded with cost and pricing data that automatically scales to the specific design scenario selected by the user. Many of the cost factors and product sales prices are also user-editable, to account for existing assets or different configurations and market conditions. The user can quickly see the impact of key variables on annual cash flow, capital investment, and simple payback. The details associated with attractive scenarios can be downloaded and saved.

Model users begin by specifying the scale of the enterprise to examine. Four basic size classes are available; Small, Medium, Large, and Major, and each is determined by the annual volume of woody biomass material available as raw material. The primary functional unit is the bone dry ton, or bdt. The user specifies the form the biomass will be in when delivered to the plant gate, and a desired product mix that is achievable with that raw material form. The kinds of enterprises supported by the model generally require starting with logs. Field-ground biomass or bundled tops and limbs may be suitable for making energy or biochar, but are not suitable for generating pulp chips, firewood, posts & poles, or boards. Short logs, specified as “chunk wood” is a third choice. Only Large and Major scale enterprises can justify the complexity to process both logs and non-log material simultaneously. The Model is not designed to evaluate depots for transferring field grindings to biorefineries or power plants.

The mix of salable products must reflect the realities of the conversion technologies. If clean chips are desired, then allowances must be made for bark and other losses in the form of hog fuel. A small sawmill or post & pole plant will produce by-products in the form of sawdust and shavings, as well as hog fuel and off-quality product. The Model is designed to assist the user with designation of appropriate by-products associated with primary products. In all cases, the economic data is generated from the bdt raw material input and the specified product mix. Conversion factors, such as bdts of logs to cords of firewood or number of standard fence posts, are built in.

This Model should be used as a tool for getting a general idea of the economics of biomass enterprises, and insights into how variables such as plant size, product mix, and market prices influence viability. It should not be used to justify a business plan, and is no substitute for diligent research into markets and production costs. Users should view it as a starting point. By running various “What if” scenarios, it can show which configurations may be viable and which others have no chance of ever making a profit.

For more information and to download the model visit http://owic.oregonstate.edu/biomass-enterprise-economic-model.

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