Accurate cost modeling is no small feat, especially when the system you are trying to model spans a large number of operations and variables that have varying degrees of impact on the ultimate cost of your product. For a burgeoning industry like the biomass-based market we serve, this can be even more challenging because you may not have decades of data collection at your disposal. In spite of these challenges, we must be able to accurately forecast costs for our customers.
Over the last two years, Genera Energy has been developing and refining a Biomass Supply Chain Feedstock Costing Model. The scope of the system we are modeling is everything from farm gate to plant gate. We model establishment, maintenance, harvest, staging, storage, and transport operations. At the center of our model are our budgets. We have collected real-world data based on in-the-field experiences for various feedstocks, including fertilizer rates, herbicides, planting methods, harvest scenarios, staging methods, and storage methods. Our transport costs are modeled by calculating a geo-spatial weighted average of the fields according to soil quality. We then can estimate road mileages for these soil qualities to more accurately reflect the true cost of the system.
At its heart, Genera Energy’s feedstock model is a linear optimization model that takes a number of supply chain scenarios and parameters, including yields for various feedstocks and soil classes, soil rental rates for counties within a defined project area, and road network data to produce a least cost solution of land allocation for feedstock production. We can also target specific kinds of land for various feedstocks to help simulate the real complexities around planting various feedstocks in different kinds of soil. For instance, some feedstocks require tillage, which means they cannot be planted on steep slopes. We can simulate this by restricting these areas in our model via geospatial tools. We can model different crops using various harvesting, staging, and storage methods and let them compete for acreage. The model will then choose where these acres get planted and in what soils, thus determining land allocations and selecting production budgets for each unit of land.
Once land selection has taken place, we can then simulate the stages of the Biomass Supply Chain. The model runs over a ten year period or longer, simulating establishment, maintenance, harvest, staging, storage and transport of the material through the system. We derive these production numbers from our budgets and can estimate the cost per dry ton, cost per green ton, and even a cost per acre for the material, in additional to total annual cash flows.
Genera Energy’s Biomass Supply Chain Feedstock Costing Model provides an accurate tool that can project the feedstock supply chain costs for your developing project. Contact us today to see how Genera can help your project be successful!
By Marshall Hauser, Feedstock Information Systems Developer
