Cost evaluation of alternative switchgrass producing, harvesting, storing, and transporting systems and their logistics in the Southeastern USA

Purpose - The US Department of Energy has a goal to make ethanol from biomass cost competitive with petroleum by 2012. Feedstock procurement is expected to represent a significant portion of the operating costs for a refinery that produces ethanol from biomass such as switchgrass. Thus, costeffective feedstock logistics will be a key factor for the future development of a capital intensive cellulosic ethanol industry. The purpose of this paper is to analyze the cost of various logistic methods of switchgrass production, harvesting, storing, and transportation. Design/methodology/approach - This study applied enterprise budgeting and geographical information system (GIS) software to analyze the costs of three logistic methods of acquiring switchgrass feedstock for a 25 million gallon per year refinery. Procurement methods included traditional large round and rectangular bale harvest and storage systems and satellite preprocessing facilities using field-chopped material. The analysis evaluated tradeoffs in operating costs, dry matter losses during storage, and investment requirements among the three systems. Findings - Results suggest that the preprocessing system outperformed the conventional bale harvest methods in the delivered costs of switchgrass. Practical implications - The cost savings in harvest, transportation, and dry matter losses for the preprocessing system offset their extensive capital costs and generated cost advantages over the conventional methods. Social implications - The traditional round bale system has a higher overall investment cost, may not be the most cost-effective way to procure switchgrass feedstock for a refinery, and may limit farmer participation in the feedstock value chain. Originality/value - GIS methods combined with enterprise budgeting can be useful tools for evaluating investment in feedstock supply chain infrastructure.