Introduction: We believe that research performed in a
has true accountability -- where the value of research is not
judged by individuals writing or reviewing reports, but by
success or failure within a competitive marketplace.
By working with companies within the energy industry to conduct
commercial scale engineering (co-firing) and agriculture (energy
crops) research, our efforts are directed to address the
primary economic criterion of our Research Partners:
The total cost of growing, harvesting,
transporting, and co-firing must be at a cost reflecting a
premium above the cost of coal.
As a point of reference, the cost of delivered coal (FOB) for
electric utilities in Florida, currently ranges in price from
$1.50 to $1.75 per MMBTU.
In the opinion of our Research Partners, building
a new stand-alone biomass energy power plant just can not
currently compete economically with natural gas generation
options (e.g., combined cycle). While there are numerous
environmental benefits of using energy crops as a fuel source,
it is important to understand that our industry Research
already comply or over-comply with every environmental
enacted -- and have spent hundreds of millions of dollars
in doing so (e.g., installation of scrubbers, low NOx burners,
While future market conditions (e.g., increased price of fossil
governmental environmental actions (e.g., additional
initiatives to reduce SO2 and NOx emissions, regulating CO2
emissions, tax credits, renewable energy portfolio standards,
etc.) could very well change marketplace economics -- current
economic benefits just do not exist to achieve even greater
over-compliance with existing environmental laws.
Given this market reality, our research focus on co-firing
crop fuel makes a lot of sense -- as much of an existing fossil
fuel power plant's infrastructure is utilized (e.g., boilers,
turbine/generators, etc.), thus avoiding the high capital cost
building a new stand-alone unit -- capital costs that
would have to be recovered in pricing the electricity generated.
Since co-firing biomass simply represents a "fuel switching
strategy" to a more environmentally friendly fuel source (where
no new generation MW capacity is created) -- we
are making an effort to differentiate to electricity consumers
the product of electricity. In the automotive industry,
like Michelin and Volvo have successfully used this type of
product differentiation and marketing approach for years --
where a sizable market segment of consumers are willing to pay a
premium for safety (above the minimum standards required by
Based on marketing research, it is the opinion of our
energy industry Partners
that a small but significant segment of electricity customers
be willing to pay a small premium (~5% to 10%) for Green Energy.
Cost Estimates: The below table reflects two scenarios of
current cost estimates for energy crop fuel (excluding any
costs of modifying an existing power plant to
co-fire). Both scenarios reflect traditional practices
for forestry (i.e., planting ~1,000 trees per acre) and
harvesting (i.e., using skidders, feller-bunchers).
Base Case Assumptions:   Crop yields of 32 green tons
per acre per year using non-improved tree species. Traditional
harvesting costs in Florida of $13.00 per green ton.
Improved Case Assumption:   Crop yields of 55 green
tons per acre per year by using improved tree species
developed by Shell Energy and the University of Florida.
Reducing harvesting costs to $8.00 per green ton, based on
efficiency improvements demonstrated by Scott Paper Company in
Estimated Cost Per MMBTU For Energy
|| Improved Case
| Establishment|| $0.37
| Harvesting|| $1.88
| Transportation|| $0.41
| Total|| $2.66
With our market-driven perspective, several critical research
objectives become immediately clear. First, even if
in crop yields can be achieved by using improved species of
-- this alone will not realize the primary economic criterion of
our Partners (e.g., costs reflecting a slight premium above coal
which currently is $1.50 to $1.75 per MMBTU). Second, even with
efficiency improvements in traditional methods, harvesting costs
still represent ~65% of total energy crop fuel costs.
Agriculture Research Focus: In order to meet economic
objectives, we are modifying traditional practices in foresty
harvesting -- conducting and structuring commercial scale
research in the following area:
Increased Crop Yields Per Acre: While continuing research
on improved species (e.g., propagation clonal research on
eucalyptus, cottonwood, and willow treestock), we are also
implementing tree planting density research. This involves
planting configurations of up to 3,000 trees per acre (compared
to traditional practices of ~1,000 trees per acre). In addition,
we are performing weed control research by mulching tree beds --
again using a market based approach, evaluating the additional
cost of mulching versus increased crop yields.
Harvesting Research: Recognizing that harvesting costs
using traditional methods (even with improved efficiency) may
represent 65% or more of total energy crop production costs, we
believe that research into this area may provide a key aspect of
achieving economic objectives (e.g., lowering the per unit cost
per MMBTU of energy crop fuel).
We are directing and structuring research into the use of high
efficiency harvesting systems currently used in Europe, such as
the Claas Jaguar forage harvester equipped with a willow head.
Through literature reviews, discussions with Claas, the
Antares Group (the lead consultant for the New York Willow
Project), and others, the estimated cost of using a high
forage harvester is $.50 to $.65 per MMBTU -- approximately
one-third of current harvesting costs using traditional methods.