A Case Study for using the Cooperative business model for Biomass Aggregation Randy Kyle, CPA, MBT...

A Case Study for using the Cooperative business model for Biomass Aggregation

Randy Kyle, CPA, MBTKyle Consulting Group, Inc.Office [email protected]

We are on a path of discovery to explore the market potential of commercializing the aggregation and densification of fibrous, mostly non-woody, biomass for use in the commercial generation of electricity using the Cooperative business model.

Where Cooperatives are/have beenEthanol investmentBiodiesel investmentSoy Crush PlantNew opportunities with restructured ethanol plantsBiomass?????

BiomassTypically waste wood and wood bi-productsLikely high in moistureLikely average to low in BTU valueNot products typically handled by Producer Cooperatives or its membersOther non-woody sources

Why Consider getting into Biomass?Micro economics local natureAccess to the materialDoes not compete with food usesProducers have the equipment and experienceAdditional source of revenue for producersCarbon credit opportunity

Why Consider the Cooperative Model?Farmers dealing with farmersProfits can be returned as patronageProducer controlMembership/ownership can be tied to supply agreementsFamiliar StructureTrust

BCAP is the Starting Point(Biomass Crop Assistance Program)Defines eligible materialSets a payment scheduleEstablishes criteria for conversion facilitiesProvides sample agreementsAdministered by FSAhttp://www.fsa.usda.gov/FSA/webapp? area=home&subject=ener&topic=bcap

Fibrous Biomass Characteristics7,500 to 8,000 BTU per poundCoal - 13,500 BTU per poundWhen processed, fibrous biomass can be very consistent in energy contentControl of moisture contentRenewable annual crops

Financial SummaryNeed to pay farmer $45 to $60 per tonBCAP payment additional $45 per tonPossible patronage5-7 Tons/acre - $100/tonAttract acres/aggregation????

Operating ModelRural location accommodates deliveryRail accommodates shippingDistributed storage and delivery of raw materialsLimited on-site storageLocal support for permitting and construction

Off Take Agreements and Other UsesLong-term vs. short-termFixed vs. variableMandates vs. lowest cost producerViability without BCAPCarbon tradingAlternative uses for off takeIts time to negotiate

The following material is being used with the permission of Show Me Energy CooperativeShow Me Energy ContactsSteve Flick, Chairman of the [email protected] Herman, [email protected] phone - 660-656-3780www.goshowmeenergy.com

A Case Study for using the Cooperative business model for Biomass Aggregation Randy Kyle, CPA, MBT...

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