Economic Sensitivity Analysis of a Switchgrass Biomass Production and Supply System.

The objective of this study was to determine the relative sensitivity of the delivered cost of switchgrass biomass to a processing plant to selected variables within the production, harvesting and transport system. The analysis was conducted by using a spreadsheet model developed from commercial scale production, harvesting and delivery of switchgrass for co-firing with coal at a power plant at Gadsden, AL. It was assumed that switchgrass was mown, dried and chopped in the field, and transported to the plant in closed trucks. The base case model included the following values for input variables: yield, 7 tons/acre/year; plant size, 1,500 tons/day; proportion of land in switchgrass, 5%; labor rate, $16/hr; stand life, 20 yr; land rental rate, $50/acre/yr; diesel cost, $3.00/gal; truck capacity, 13 tons. Use of these values resulted in a delivered cost of $65.67/ton. Sensitivity in delivered cost of switchgrass was determined for the same relative change (20%) in each of the input variables. The analysis indicated that delivered cost of switchgrass was most sensitive to yield, truck capacity, diesel price and labor rate, in that order: a 20% change in these variables resulted in a change of $9.40/ton, $5.67/ton, $2.79/ton and $2.53/ton in delivered cost of switchgrass, respectively. Responses of the other variables evaluated in the analysis resulted in a change in delivered cost of less than $2.00/ton. Results suggest that improving switchgrass yield by genetic improvement probably offers the greatest opportunity to reduce delivered cost. Although truck capacity had the next greatest impact on delivered cost of switchgrass, increasing truck capacity requires densification by means of costly processing into pellets or cubes. Therefore, this approach is unlikely to be effective in decreasing delivered cost. Finally, diesel price and labor rate are market driven, and largely out of the control of biomass producers.