Biomass power plant feedstock procurement: Modeling transportation cost zones and the potential for competition

Abstract

Transportation of comminuted (processed) woody biomass from the production site to a utilization point is one of the most costly operational components in feedstock procurement. This study identified potential sources of feedstock based on transportation cost from which three woody biomass power plants in Humboldt County, California, could economically obtain their supply. We conducted service area and locationallocation network analyses for timberlands and sawmills, respectively, and created inclusive and exclusive networks to model three transportation cost zones (TCZs). The area within the $20/bone dry ton TCZ had the highest potential supply of woody biomass in the county (709,565 acres). All sawmills in the county were within an economically viable distance of the power plants. Even though there was no competition for raw materials at the time of this study, a competition risk analysis suggested that this could change with shifts in the demand for biomass or the price of electricity. The methods we developed for this study could be adapted to other regions with managed timberlands and a strong forest products industry.H umboldt County, California, has approximately 1.7 million acres of forestland and maintains a strong forest products industry. Electrical power imports to the county are constrained by its remote location and lack of infrastructure. Consequently, it is a prime location for wood-based biomass energy plants. However, transportation costs have been a fundamental barrier to woody biomass utilization (Han and Murphy 2012). Even at 50 miles or less, transportation costs can be $10 to $30 per bone dry ton (BDT) (Galik et al. 2009). The fixed maximum weight limit on a chip truck of 40 tons in California increases transportation cost compared to neighboring states, which allow an increase of weight limits with an increase in the number of axles and axle spacing in a truck.Therefore, the first objective of this study was to determine the transportation cost zones (TCZs) for procuring woody biomass (the byproducts, or residues, of forest management and sawmill operations) from various timberlands and sawmills to fuel wood energy power plants in the county.Humboldt County has three power plants that are primarily fueled by woody biomass: DG Fairhaven in Samoa, Blue Lake Power in Blue Lake, and Green Leaf (Eel River plant) in Scotia. Together, the plants have the ability to generate 54 megawatts (MW) of electricity (table 1). However, in the recent past, the Blue Lake Power and Green Leaf power plants have shut down temporarily due to the low price of electricity, emission permit issues and the inability to secure supply at an economical price (Sims 2012). Even though competition for raw materials among these three power plants does not seem severe in this region, high demand for renewable energy (e.g., woody biomass) or entry of an additional competitor for fuel resources can lead to increased competition for resources (Walter Nystrom, Blue Lake Power LLC, pers. comm.). Consequently, the second objectiv...

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“…Procurement managers 4 (Northern = 3, Southern = 1) 19 1 Participants having primary workstation in more than one subregion or working for forestry sector for the whole state.…”

“…The trucking (also referred to as secondary transportation) part in this process is considered important because of its essential function of moving products from one place to another. It is also one of the expensive phases and can be crucial in fixing prices of delivered forest products [1][2][3]. Despite the prevalence of railroad transportation, trucking is the most common way to deliver wood products [4].…”

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