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Biomass Sourcing Project Final Report Client: University of Iowa

Office of Utilities & Energy Management, Office of Sustainability

Glen Mowery Director of Utilities & Energy Management

Ferman Milster Associate Director of Utilities and Energy Management Liz Christiansen Director, Office of Sustainability

Team: University of Iowa, Tippie School of Management, Full-time MBA Program Jon Finley

Erik Tefteller Tim Chwirka David Wylie Andrew Wiese

Executive Summary The University of Iowa Office of Utilities and Energy Management, in coordination with the Office of Sustainability, requested an analysis of the market feasibility to source approximately 100,000 tons annually of wood chip biomass for use in the university power plant. This request is a direct result of the University of Iowas 2020 Sustainability Targets, which state that we will increase the use of biomass, geothermal, solar, wind, landfill gas, gasification and other emerging energy alternatives to achieve the goal of 40% renewable energy consumption on the campus by 2020. Such biomass will partially replace coal in one of the three plant burners. Biomass must be sourced locally (within a 50 mile radius of Iowa City), competitively priced, sustainably farmed, and delivered reliably to the university power plant. The Team has undertaken a project to analyze the market and candidate sources of biomass, determine a viable business entity to manage the operations (such as a private company or new farmers cooperative), and research best practices. Best Practices Research The project started with an analysis of best practices in sourcing biomass, and research into similar projects. The Team researched biomass sourcing at the Universities of Montana, Idaho, South Carolina, Missouri as well as Iowa State, Purdue, and Colorado State. The University of Missouri is the best example for Iowa, because the institution seeks 100,000 tons of wood chips annually and is situated in similar geographic and climatic zones. Missouri will source one third of their needs from each waste stream, new growth, and forestry management. New growth will occur on flood plain land, which will generate between 9 and 13 tons per acre within three years. The Team also contacted Dr. Richard Hall at Iowa State University. Dr. Hall is an expert in biomass sourcing and is a knowledgeable resource willing to assist with the project going forward.

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Land Analysis After completing best practices research, the Team analyzed candidate sources for biomass proximate to the University of Iowa. Using land census data from the ten counties surrounding Iowa City, the Team determined that there are over 900,000 acres of farmland not used for row crops. There are an additional 600,000 acres of non-farmland within the ten county region, and over 520,000 acres of non-crop, non-CRP land in the ten-county area. The Team also analyzed the Clear Creek watershed within Johnson County. This watershed, which encompasses over 66,000 acres, is adjacent to Iowa City and contains 23% ungrazed grassland and 8% deciduous forest. It is also home to the Amana Society and a significant portion of flood plain and river bottom land unsuitable for farming row crops. Sourcing new growth trees as well as biomass from forestry management is very likely within Clear Creek. Market Analysis The Team reached out to the local market to determine interest and feasibility. On March 2, 2011, the Team held a conference call with Gary Swenka, the president of Consumers Cooperative in Coralville. While farmers may be interested in biomass sourcing, they would be unwilling to switch from row crops or allow CRP land to be used upon contract expiration. Management of forested acres or growing trees on flood plain land unsuitable for farming are the most viable options. A private entity or new cooperative will need to be established for the purpose, and should be closely managed by the University. On March 4, 2011, the Team held a meeting in Amana, Iowa with representatives from Amana Farms Inc., Iowa Valley RC&D, and USDA/NRCS. There is strong interest in the project and future collaboration is likely. Consistent with previous information, the Team learned that river bottom or flood plain land is the best option for new growth biomass. Forestry management, especially on lands owned by Iowa DNR or Amana Farms Inc., is very viable. Amana Farms already sources significant wood through managing their own forests, and owns many acres of river bottom land. Participants reiterated that a private business entity will be needed for harvest, chipping, storage, and transport.

Project Lifecycle The overall project to supply the University of Iowa with a reliable, sustainable source of biomass for fuel is quite large and broad. Due to this fact and the constraints of the project being within an eight-week course in the MBA program, the Team was able to focus on a few steps of the overall project, so that the Team could make contacts with key players, and then the later steps could be completed. Below we will highlight all of the large phases of the overall project that will need to happen for this project to become a reality.

1. Identify the Universitys needs for biomass fuel. 2. Identify type of biomass fuel and machine specifications. 3. Identify the market for biomass. 4. Reach out to contacts within each market. 5. Create a business model. 6. Solve project logistics. 7. Create boundaries within which to produce fuel. 8. Sign up fuel producers into contracts.

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1. Identify the Universitys needs for biomass fuel. This step of the project was completed by the University of Iowa Facilities Management, who told the team that to meet the 2020 Sustainability Goals, the University would need the equivalent BTUs of 100,000 tons of woody biomass per year to fuel the power plant.

2. Identify type of biomass fuel and machine specifications. The University houses three boilers at the power plant which heat the entire campus. The Team was specifically looking at one boiler which currently uses coal, but will eventually be using biomass as fuel. Due to the specifications of this particular boiler, the University needs a source of biomass that resembles coal both physically and how it burns (BTUs). The biomass would need to resemble coal due to the fact that the fuel would need to be loaded into the boiler in a similar fashion (as an example, this boiler would not be able to use oat hulls as fuel because they would not be dense enough). The University determined that biomass made from wood would be the best source of fuel, as it has a similar burn rate, physically resembles coal, and can be grown in the area. The University is open to have any type of wood used as biomass, as long as it is able to have the needed BTUs and size. The University also specified that it would need 100,000 dry bone-dry tons of woody biomass per year, which would give the University the required amount of BTUs. If any of the wood were to have moisture in it, the BTU level would decrease, and hence, the number of tons needed would increase. For example, if the University were to be supplied with wood that had 10% moisture content, it would now need 110,000 tons of woody biomass to supply the number of BTUs for the year. Similarly, if the University were supplied with wood that were 50% moisture, that number would be 200,000 tons. The point about the inverse relationship between moisture content and amount of wood needed is very relevant, in that the University will need to plan for either having the logistics solved so that the wood will be completely dry when it reaches the power plant, or, that it will need to have additional acres supplying woody biomass to make up for any moisture content. One process that may be able to harvest woody biomass in the manner that would meet the Universitys needs would be torrefaction. Torrecaction processes wood into dense pellets that would be able to have similar burn rates as coal, and also are able to be handled similarly as coal.12 During the Teams research, they found that the University of Missouri was working with New Holland to use machines that were able to harvest the tops off of trees to use for biomass. In addition, the University indicated that it has a contact at Roto Chopper (Sales Representative Steve Pieper, (608) 486-2851, spieper@rotochopper.com, www.rotochopper.com) whom they have been working with to identify machinery that would be able to harvest wood to their specifications.

1 http://newenergyandfuel.com/http:/newenergyandfuel/com/2008/11/19/torrefaction-%E2%80%93-a-new-

process-in-biomass-and-biofuels/ 2 http://torrefication.blogspot.com/

mailto:spieper@rotochopper.comhttp://www.rotochopper.com/http://newenergyandfuel.com/http:/newenergyandfuel/com/2008/11/19/torrefaction-%E2%80%93-a-new-process-in-biomass-and-biofuels/http://newenergyandfuel.com/http:/newenergyandfuel/com/2008/11/19/torrefaction-%E2%80%93-a-new-process-in-biomass-and-biofuels/http://torrefication.blogspot.com/

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3. Identify the market for biomass. The Team spent the first part of the project identifying best practices in using biomass as fuel. After identifying the best practices, the team then went on to identify the specific markets/channels that would be able to provide the woody biomass for the University. Outlined in the report below is a list of many possible sources of biomass for the University. However, the Client indicated that it wanted the Team to spend its time specifically researching biomass from local farmers, as that would be the most beneficial use of our time for the Client. The majority of the following report i