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Published on: December 18, 2013
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EU energy producers need to look at agricultural residue to keep the growth in bioenergy production affordable http://pr.co/p/001fqo
Summary
EU energy producers are looking for new ways to keep the growth in bioenergy production affordable. The increasing competition for solid biomass, such as wood pellets, will create space for relatively novel biomass sources to enter the market, among which agricultural residues like straw and stover have the greatest potential. Rabobank expects that the practical challenges of using these residues will be overcome because their supply costs will be among the cheapest for bioenergy producers. Furthermore, agricultural residues are less likely to face the type of sustainability concerns that affect forestry-based biomass. Rabobank believes that agricultural residues will have an increasing role in the use-and potentially trade-of biomass for energy by 2020.
Details

"The importance of bioenergy will continue to grow in Europe as it is one of the cheapest renewable energy options, and one of few to supply continuous renewable heat and power on a large scale" says Rabobank analyst Paul Bosch. "However, as the price of solid biomass increases, the search for non-forestry alternative biomass options will continue to rise."

One such alternative feedstock is agricultural residues. These offer two key benefits over other biomass sources. Firstly, agricultural residues are a potentially cheap and abundant bioenergy feedstock. Secondly, they also face fewer restrictions when it comes to sustainability considerations.

While some current forestry biomass feedstocks have been criticised for not reducing greenhouse gas emissions, this is not an issue for residues such as sawmill dust, because the residue is created as a by-product. Agricultural residues score well on greenhouse gas emissions reduction and it is estimated that their use could reduce emissions by at least 80 percent compared to coal.

The business case for agricultural residues is compelling. Compared with the current use of wood pellet co-firing, dedicated agricultural residue-fired plants could save between EUR 15 million and EUR 63 million, before taking subsidies into account. If necessary, some of these cost savings could be invested in de-risking agricultural residue supply chains.

Bosch says; "Supply chain issues, which can arise from sourcing from a large number of suppliers, have so far prevented the widespread exploitation of agricultural residues, but with demand for bioenergy on the rise globally and a slow supply response, the question is whether bioenergy producers can afford not to tackle these issues."

Rabobank believes that the key step that must be taken by bioenergy developers using agricultural residues is to design and manage a secure supply chain. This could be done by providing long-term offtake contracts for residues, which are unusual in agriculture, or by offering favourable payment terms to feedstock suppliers. Another possibility is for bioenergy projects to backward integrate and invest in the access to agricultural residue material, possibly in the form of storage, collection or treatment.

"Initiatives in the UK and Denmark are showing that the business case for agricultural residues in bioenergy projects can work, on a relatively large scale, indicating the potential to replicate similar projects across Europe." Bosch concluded.

Quotes
The importance of bioenergy will continue to grow in Europe as it is one of the cheapest renewable energy options, and one of few to supply continuous renewable heat and power on a large scale. However, as the price of solid biomass increases, the search for non-forestry alternative biomass options will continue to rise.

— Paul Bosch