Report shows business case for purpose-grown biomass in Ontario

By Luke Geiver | April 05, 2012

Ontario will benefit from greater use of purpose-grown biomass, according to a study released by the Western University Research Park, Sarnia-Lambton campus. The Canadian province would benefit through economic diversification, soil enrichment and the creation of new biobased markets, according to the report, titled “Assessment for Business Case for Purpose-Grown Biomass in Ontario.”

The information in the report was gathered for the Ontario Federation of Agriculture. The data recorded shows the gross and net margins of energy crops on a per-acre basis, the production costs and resulting margins for certain crops, and the economics of biomass aggregation, including both transportation and processing.

“There is a business case in favor of utilizing purpose-grown biomass for heat and power generation in selected markets in Ontario,” the report reads. “Producers can cultivate purpose-grown biomass crops with a margin comparable to that of cash crops, while reaping the soil improvement and other environmental benefits of perennial grasses.”

The report points to miscanthus as the most promising energy crop. The acceptable price of purpose-grown biomass in the province ranges anywhere from $104.4 per metric ton to $148.7 per metric ton, according to the report. Of those purpose-grown crops, miscanthus offers the lowest production cost because of its comparatively high yield.

To utilize a crop like miscanthus in the province, however, developing a biomass aggregation chain is crucial. Although the few biomass aggregation locations, including pellet mills, are relatively small, the report does indicate the transportation portion of the supply chain is already fairly established. The report estimated the total cost of biomass pelletizing at roughly $38.88 per metric ton, which includes the sub-total processing cost of $23 per metric ton and a financing cost of $15.88 per metric ton. “For this total processing cost, investing in a new agricultural pellet mill would provide a return on equity of 17.5 percent,” the report states. A capacity of 150,000 metric tons per year is considered the optimum size to draw purpose-grown biomass from a 100 kilometer radius, it adds.

While purpose-grown biomass pellet operations would benefit large thermal applications, the report also notes the impact those biomass-based pellets could have on space heating applications. At a current cost of $28.42 per gigajoule (GJ) for heating oil and $30.58 per GJ for propane to end users, the report said that miscanthus or switchgrass pellets could provide a large savings, coming in at $9.32 per GJ and $11.01 per GJ respectively.

“The long-term goal of the purpose-grown biomass industry in Ontario should be the development of local industries which manufacture diverse bioproducts,” the report reads.  

To view the 44 page report in its entirety, click here.