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International Journal of Physical Distribution & Logistics Management

Logistics management and costs of biomass fuel supply


J. Allen M. Browne A. Hunter J. Boyd H. Palmer

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To cite this document:
J. Allen M. Browne A. Hunter J. Boyd H. Palmer, (1998),"Logistics management and costs of biomass fuel supply",
International Journal of Physical Distribution & Logistics Management, Vol. 28 Iss 6 pp. 463 - 477
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Eric Sandelands, (1997),"Strategic logistics management", International Journal of Physical Distribution & Logistics
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rni Halldrsson, Gyngyi Kovcs, (2010),"The sustainable agenda and energy efficiency: Logistics solutions and supply
chains in times of climate change", International Journal of Physical Distribution & Logistics Management, Vol. 40 Iss
1/2 pp. 5-13 http://dx.doi.org/10.1108/09600031011018019
rni Halldrsson, Martin Svanberg, (2013),"Energy resources: trajectories for supply chain management", Supply Chain
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Logistics management and


costs of biomass fuel supply

Costs of
biomass fuel
supply

J. Allen, M. Browne
Transport Studies Group, University of Westminster, London, UK, and

463

A. Hunter, J. Boyd and H. Palmer

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Scottish Agricultural College, Penicuik, Scotland, UK


Introduction
This paper addresses the supply chain considerations and costs of using
biomass fuel on a large scale for electricity generation at power stations. It is at
this scale of use that the logistics of biomass fuel supply are likely to be both
complex and potentially problematic, and logistics costs will have an important
bearing on the total delivered cost of biomass (i.e. the total cumulative cost of
biomass fuel at the point of delivery to a power station). It is important to
recognise that logistics costs and the integrated management of logistics
activities can be vital to the success or failure of a product or industry,
especially in the case of a fledgling industry (Ballou, 1992).
The work in this paper is based on a research project conducted by the
University of Westminster and the Scottish Agricultural College (Allen et al.,
1996). The aim of the project was to examine the options for supplying the end
user with biomass fuel of the right specification, in the right quantity at the
right time from resources which are typically diverse and often seasonally
dependent. It concentrated on the supply chain components from the point of
harvesting through to delivery at the power station. The study assessed
potential supply systems for the supply of fuel to power stations, calculated
the delivered costs of these supply chains, and identified the relative
advantages of the various systems and the environmental impacts of biomass
fuel supply.
The paper first addresses the reasons for the increase in interest in the use of
biomass fuel as an energy source, the activities involved in biomass fuel supply
and the importance of logistics planning and management in supplying
biomass fuel to power stations. It then concentrates on the approach used to
model the delivered costs of different supply chains for four biomass fuels. A
summary of the results for each of the biomass fuels is then presented, with a
comparison of delivered costs for all of these fuels[1]. The paper concludes by
discussing appropriate planning, management and operational approaches to
biomass fuel supply suggested by the research.
The authors wish to thank the Department of Trade and Industry for funding the project on
which this paper is based and ETSU for managing this project.

International Journal of Physical


Distribution & Logistics
Management, Vol. 28 No. 6, 1998,
pp. 463-477, MCB University Press,
0960-0035

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464

Biomass fuel and its use for electricity generation


Biomass is the living material produced on the planet by the process of
photosynthesis. Biomass has been used for thousands of years as a source of
energy and is today a major fuel in terms of the quantities used world-wide. In
fact, more people depend on biomass for energy world-wide than on any other
fuel (UN, 1991). Much of this biomass use is in very small- scale applications
including domestic cooking and heating. By contrast, biomass is still relatively
little used in electricity generation in Europe, not only in comparison to fossil
fuels and nuclear power, but also to other renewable sources including hydro,
wind and energy from waste.
A number of different primary fuels are often referred to as biomass and
these are often categorised in four groups:
(1) wood (such as forest fuel available from the felling of young trees and
thinning operations or from trees such as willow and poplar grown on a
short rotation basis specifically as a biomass fuel);
(2) crop residues such as cereal straw;
(3) energy crops grown specifically for biomass such as high energy
yielding grasses including miscanthus, spartina and reed canary grass;
(4) human and animal excrement including cow, pig and poultry slurry.
There are a range of conversion technologies available for making use of
biomass. The primary fuels can either be used directly (for example, burning
wood on a stove to produce heat) or can be converted into secondary fuels such
as liquid or gaseous fuels through the use of technologies such as gasification,
pyrolysis and anaerobic digestion. Both primary and secondary biomass fuels
can be used to produce heat, mechanical power or electricity (or a combination
of these).
In the developed world, biomass fuels are often used to produce both district
heating and electricity. In Scandinavia, district heating schemes providing heat
and hot water for numerous towns have existed for several decades. In addition,
some of these plants have the capability to produce combined heat and power
thereby also providing electricity.
In the UK, biomass has not been largely used as a source of energy in recent
decades. However, the UK government is currently making efforts and
providing funding arrangements with the intention of establishing electricitygenerating facilities fuelled by biomass fuel (Deprtment of Trade and Industry,
1994). There is a significant existing biomass resource base in the UK and this
could expand rapidly if agricultural land, taken out of food production as a
result of set-aside arrangements, is turned over to growing biomass (ETSU,
1994).
Research and demonstration schemes in which biomass fuels are used to
generate electricity already exist in the UK, however, most of these pilot
schemes are of an extremely small scale and use biomass produced on the farm
or in the forest in which they are located. However, within the next few years

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many more larger scale power stations are likely to be developed. While the
energy generated by these plants will initially be subsidised by government it
is intended that they would be producing electricity at commercially
competitive prices within 15 years (Department of Trade and Industry, 1994).
At present, however, producing electricity from biomass is far more
expensive than from other more traditional means such as coal and gas, partly
as a result of the logistics costs involved in fuel supply. Therefore a significant
amount of research and learning by experience will be necessary if biomass is
to prove competitive with fossil fuels in the longer term. One of the main
objectives of the project involved developing suitable supply strategies from the
point of production to point of utilisation for different types of biomass fuel
such as straw, forest fuel, short rotation coppice, high-energy yielding grasses
and animal waste that are both efficient and economic.
While there is a need for such supply systems to be economically efficient in
order to compete with other sources of electricity it is also necessary that the
environmental impacts of the proposed biomass supply chains are minimised.
This is very important as the rationale for using biomass fuel is that it is less
harmful to the environment than traditional fossil fuels for the following reasons:
it is a more sustainable form of fuel than fossil fuel;
the increased use of biomass fuel, together with reductions in the use of
fossil fuel, will help to reduce emissions of pollutant gases which
contribute to acid rain and greenhouse gas levels;
the role that forestry and coppice can play in encouraging wildlife.
However, it should be recognised that the production and use of biomass fuels
also result in some negative environmental impacts. These include:
that the introduction of novel agricultural crops on a large scale could have
serious ecological consequences in its own rights, and may be little better
than other intensive agricultural crops in terms of wildlife habitat; and
that many analysts view set aside land not as a waste of productive
space but as an important opportunity to mitigate the ecological damage
caused by intensive agriculture, which would be foregone in the event of
a straight substitution of non-food crops.
The biomass fuel supply chain
The biomass supply chain is made up of a range of different activities. These can
include ground preparation and planting, cultivation, harvesting, handling,
storage, in-field/forest transport, road transport and utilisation of the fuel at the
power station. Given the typical locations for biomass fuel sources (i.e. on farms
and in forests) the transport infrastructure is usually such that road transport
will be the only potential mode for collection of the fuel. Other factors that favour
the use of road transport include the distances over which the fuel is transported
(which tend to be relatively short) and the greater flexibility that road transport

Costs of
biomass fuel
supply
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466

can offer in comparison with other modes. In order to supply biomass from its
point of production to a power station the following activities are necessary:
Harvesting of the biomass in the field/forest.
In-field/forest handling and transport to move the biomass to a point
where road transport vehicles can be used.
Storage of the biomass. Many types of biomass will be harvested at a
specific time of year but will be required at the power station on a yearround basis, it will therefore be necessary to store them. The storage
point can be located on the farm/forest, at the power station or at an
intermediate site.
Loading and unloading road transport vehicles. Once the biomass has
been moved to the roadside it will need to be transferred to road
transport vehicles for conveyance to the power station. At the power
station the biomass will need to be unloaded from the vehicles.
Transport by road transport vehicle. Using heavy goods vehicles (rather
than agricultural or forestry equipment) for transport to the power
station is likely to be essential due to the average distance from farms to
power station, and the carrying capacity and road speed of such vehicles.
Processing of the biomass to improve its handling efficiency and the
quantity that can be transported. This can involve increasing the bulk
density of the biomass (e.g. processing forest fuel or coppice stems into
wood chips) or unitising the biomass (e.g. processing straw or
miscanthus in the swath into bales). Processing can occur at any stage in
the supply chain but will often precede road transport and is generally
cheapest when integrated with the harvesting.
Management and planning of the biomass fuel supply chain
The activities that take place in biomass fuel supply chains are highly
interconnected. While this point is often referred to in logistics and supply chain
literature, it is often difficult to appreciate (for instance, see Ballou, 1992;
Christopher, 1987; Cooper, 1993). The biomass supply chain is very transparent
and it is easy to understand how upstream decision-making affects later
activities in the chain. For instance, trees grown on farmland on a short rotation
coppice basis can either be harvested as five metre whole sticks or cut and
immediately processed into wood chips. Different harvesting machinery is
required for each of these harvesting systems. However, this is only the
beginning of differences in the supply chain. While sticks can be stored on the
edge of fields without experiencing decomposition, chips need to be stored on at
least a hard standing, and in a covered environment if decomposition is to be
prevented. Therefore, the storage requirements for the two products are very
different. Similarly, sticks and chips require very different transport systems in
terms of both handling (i.e. loading and unloading vehicles) and suitable
transport vehicle bodies for carrying them (see Figure 1).

Costs of
biomass fuel
supply

ON-FARM
STORAGE

DIRECT CUT
& CHIP
HARVESTING

IN-FIELD
CHIP
TRANSPORT

ROAD
TRANSPORT OF
CHIPS TO
INTERMEDIATE
STORE

UNLOAD
STICKS IN
FIELD

IN-FIELD
STICK
TRANSPORT

UNLOAD
STICKS ON
HEADLAND

STORAGE
ON
HEADLAND

ROAD
TRANSPORT
OF CHIPS TO
POWER STATION
INTERMEDIATE
STRORAGE

ON-FARM
STORAGE

ROAD
TRANSPORT
OF STICKS TO
POWER STATION

CENTRALISED
CHIPPING AT
POWER
STATION

ON-FARM
CHIPPING

ROAD
TRANSPORT
OF CHIPS TO
POWER STATION

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STICK
HARVESTING
CHIP ON
HEADLAND

IN-FIELD CHIP
TRANSPORT

IN-FIELD STICK
TRANSPORT TO
ACCESS POINT

ON-FARM
CHIPPING

ROAD
TRANSPORT
OF CHIPS TO
POWER STATION

ROAD
TRANSPORT
OF STICKS TO
POWER STATION

From this one simple example it is possible to understand the degree of


interconnection between the different activities and thereby appreciate the need to
take a total supply chain perspective when planning any single activity in the
chain rather than considering that activity in isolation. The easiest and most costeffective harvesting system can result in the need for expensive storage systems
and can even lead to an inability to supply fuel of the desired quality to the power
station. Therefore the harvesting approach fundamentally affects the storage,
handling and transport requirements in the supply chain. Similarly, if planning
the supply system from the other end of the chain as is common, the choice of
power station technology, size and location will dictate how all the upstream
activities are to be conducted so that biomass arrives at the power station at the
correct time, in the correct quantity, and in the desired shape, size and quality.
This interconnectedness is also true of environmental impacts in the biomass
fuel supply chain. For instance, as previously discussed, the harvesting system
will determine the type of storage and transport system that has to be used. Even
if an alternative approach to storage and transport is known to be less harmful
to the environment, the chosen harvesting system can preclude its selection. For
example, there are concerns about the possible health implications for workers
and the public of spores produced by coppice wood chips stored in piles. Storage
of the coppice as whole sticks would reduce these risks. However if the coppice
has been chipped at the point of harvest, storage in stick form is not possible.
The environmental impact of biomass fuel supply is of great importance as
the rationale driving the use of biomass fuel is that it is less harmful to the
environment than traditional fossil fuels. The activities that occur in the biomass

467

Figure 1.
Supply chain options
for shore rotation
coppice

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468

supply chain can be responsible for a number of environmental impacts; these


can include noise, fossil fuel use and emissions, visual intrusion, health and
safety issues, water pollution and traffic generation. It is of fundamental
importance that the environmental benefits and energy production that results
from using biomass fuel outweighs the environmental impacts and resource
consumption that their growth and supply incur. The most logistically efficient
supply chain or the one producing the lowest delivered costs will not necessarily
provide the best benefit to cost ratio in environmental terms.
The biomass supply chain is made up of a range of different parties
including farmers, forest owners, agricultural and forestry contractors,
transport and distribution companies, fuel suppliers (i.e. organisations taking
the risk and responsibility for supplying fuel to power stations), and power
station operators. Given the large number of different organisations involved it
is essential that they work closely together in planning and co-ordinating fuel
supply if the correct quantity and specification of biomass is to arrive in a
timely manner at the power station. These supply chain parties differ in a
number of respects including their outlooks, priorities and scale of operation.
These complications make it even more necessary to take a supply chain view.
Logistics requirements in biomass supply
Biomass power stations are small in terms of generating capacity in
comparison with fossil fuel powered stations; biomass stations will typically be
5-20 megawatts (MW) compared with, say, 2,000MW for a coal power station.
However, they require significant quantities of biomass fuel; in the case of straw,
for example, a 20MW plant will require approximately 150,000 tonnes of straw
annually. This is explained by the low calorific value of biomass compared to
coal or oil. The low bulk density of most biomass fuels means that the volume
occupied by a given tonnage will far exceed that occupied by the same tonnage
of fossil fuel, thereby resulting in the need for a much larger number of lorry
movements. This creates logistical problems in terms of the volume of biomass
that has to be handled, stored and transported. Table I shows the annual
biomass requirement and hence the quantity of fuel that has to be handled and
the number of road transport vehicle deliveries that would typically be
necessary at a 20MW straw-fired power station and a 10MW coppice station.
Type and size
of power station
20MW straw-fired
10MW coppice-fired

Annual biomass
requirement (wet tonnes)

Road transport vehicle


deliveries per daya

150,000
135,000

40
24

Table I.
Note:
Typical fuel requirements a assumes the use of a 35 tonnes gross weight flatbed lorry for straw bale transport and a 38
for biomass power station tonne gross weight tipping lorry for coppice chip transport

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The relatively low economic and calorific values and low bulk densities of
biomass fuels result in the transport and logistics arrangements (including
storage, handling, loading and unloading) involved in biomass supply from
farms and forests to power stations being responsible for a significant
proportion of total delivered fuel cost. It is therefore of great importance that
biomass fuel supply is conducted in an efficient manner so as to control the
logistics costs, and hence delivered costs of the fuel.
Biomass transport
Transport is an important element in the supply of biomass fuel to the power
station, linking together all the activities that have to take place between the
point of production through to the point of use at the power station and the
locations at which they occur. As already explained, road transport is likely to
be the chosen mode for moving biomass from farms/forests to power stations
(due to the typically rural location of the biomass fuel and the relatively short
distances over which the fuel is moved).
The catchment area for the biomass resource and hence the transport
distance over which biomass will have to be moved between point of
production, storage and power station will depend on a number of factors.
These include the size of the power station and the conversion technology used,
and hence the quantity of biomass fuel required; the crop yield that is achieved;
the planting density around the power station and the availability of the
material for biomass resource (e.g. straw has competing uses and therefore only
a proportion of the total produced will be available for use in biomass schemes).
Biomass storage
Most electricity generating stations to which the biomass fuels are supplied will
have very limited on-site storage facilities. This is due to the space and facilities
required to hold stock and the physical and financial costs of holding stock. In the
case of biomass that is harvested over a relatively short period of the year, such as
straw and short rotation coppice, large quantities will have to be stored in order
that the supply of fuel is spread evenly over the course of a year. This will require
storage facilities either where the fuel is produced or at intermediate points.
The size of the storage facility at the power station will also affect the
transport arrangements. A power station with a relatively small on-site stock
level (e.g. a few days supply) will require more regular, evenly spread deliveries
than a plant with a large storage capacity. Low levels of stockholding at the
power station will increase the importance of reliable and flexible transport.
Reducing the environmental impacts of biomass transport and storage
Transport and storage components of the supply chain for biomass fuels can be
responsible for a significant proportion of the total energy use and
environmental impacts that arise in the biomass supply chain, including traffic
generation, vehicle emissions, vehicle noise, visual intrusion, water pollution
and the health and safety of workers and the public.

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While other activities in the supply chain also result in environmental


impacts (for example, fuel use, emissions and noise from farm and forest
harvesting equipment) there is relatively little scope to reorganise these
activities in such a way as to reduce their environmental effects. However, in the
case of transport and storage activities there are a number of steps and
decisions that can be taken in planning and operating the supply chain to
reduce environmental impacts. These include factors such as:
vehicle selection;
vehicle routeing and scheduling;
storage and depot location;
landscaping;
load protection and security.
The lorry movements required to move biomass from farms and forests to the
power stations are likely to be more visible to local residents and to impose
environmental impacts on a wider group of locals than any other activities in
the biomass supply chain. The manner in which transport activities are
conducted will have an important impact on the publics perception of the
supply chain. Public perception often proves to be a significant factor in the
acceptability and future development of an industrial or commercial activity
and can influence locational choices and land-use and transport planning
decisions. Transport activities should therefore be conducted as efficiently as
possible in order to minimise their environmental impacts (this may well have
the added incentive of producing lower transport costs).
In contrasting the environmental impacts of transport activity in biomass
fuel with that of fossil fuels, it should be recognised that the road-based biomass
supply chains have to be set against the rail or pipeline-based systems which
are often available for coal and oil/gas supplies, respectively, and which in
themselves are more fuel efficient and less environmentally damaging.
Modelling the delivered costs of biomass supply chains
In order to explore the total delivered costs of biomass fuel associated with
different supply systems and to be able to make cost comparisons between
systems for one fuel and between different biomass fuel types, it was necessary
to develop what we have referred to as supply chain option models. These
models assist in building up an overall understanding of the logistics costs of
supplying fuel from a farm or forest to a power station through a detailed
analysis of where costs arise in the supply system and the relative importance
of different cost components and activities. The supply chain option models can
be used to obtain an understanding of the delivered cost of different supply
chain options for each biomass fuel and to compare the delivered costs
produced by different supply systems for each fuel. The models also make it
possible to compare supply chain options and the associated costs for different
biomass fuels. The supply chain option models take account of the all activities

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from harvesting through to delivery at the power station and the unloading of
the transport vehicle. The modelling was undertaken using a spreadsheet
package; these tools are extremely useful for decision support systems, scenario
modelling and sensitivity analysis (Coles and Rowley, 1996).
Cost calculations used in the model are based on the cost of supplying one
tonne of dry matter to a power station[2]. This cost is based on the time that any
necessary supply activity takes to complete (and from this it is possible to
calculate the cost of that activity given the hourly operating cost of equipment
used and the cost of labour required) together with other input costs that go to
make up the delivered cost (e.g. the cost of purchasing/growing biomass fuel). It
is then possible to derive the cost per tonne of dry matter for that particular
activity. The delivered costs produced by the models refer to the costs of
supplying the fuel on a dry matter basis; they do not therefore include profit
margins for contractors (forestry, agricultural and transport contractors).
The supply systems modelled for each fuel were intended to represent
efficient and cost-effective ways of supplying biomass fuel to power stations in
schemes in which the fuel is used to generate electricity. Power stations will
require year-round supply of large quantities of biomass on a regular and
timely basis. Rather than being supplied to the power station from a market,
the biomass will be supplied directly by contracted farmers, foresters and fuel
suppliers. For these reasons, biomass fuel supply is best thought of as an
industrial process rather than as a traditional agricultural or forestry
operation.
In order to be cost-effective these supply systems will need to exhibit several
features. First, they will make use of capital-intensive, high productivity
machinery. Second, efforts will be made to minimise the downtime of expensive
equipment and hence maximise equipment productivity. Third, for the
purposes of fuel supply they will make use of the expertise of specialist
contractors (agricultural, forestry and transport) rather than farmers and
small-scale forest owners (there are, however, opportunities for the latter to be
involved in growing fuels and making fuel resources and/or land available).
Fourth, the supply systems will be planned using an entire supply chain
perspective from point of harvest through to delivery at the power station; the
fuel supplier will therefore need to take account of all activities necessary to
achieve fuel supply and integrate the necessary supply chain activities in a
smooth and co-ordinated manner.
It is important to note that the supply chains modelled for biomass fuels do
not currently exist. Therefore in order to conduct this work and collect suitable
data it was necessary to draw on data from existing operations carried out for
other purposes (e.g. straw supplied to other markets), published data from trials
(e.g. forestry and coppice harvesting trials), and to carry out interviews and
discussions with people with recognised expertise with respect to each of the
different biomass fuels or the activities or equipment associated with their
supply. In addition, the project team had to use their own expertise and best
judgement to determine suitable parameters[3].

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Results of the supply chain option modelling


The results from the modelling of delivered costs for a range of supply systems
for forest fuel, short rotation coppice, straw and miscanthus are summarised
below and the comparison of delivered costs calculated for all of the fuels is
discussed.

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Forest fuel
Five systems for supplying forest fuel from the forest to a power station were
modelled. It was assumed that, except in the case of young trees extracted to
help the remaining trees grow, only the brash from the trees is used for energy
production; the stem of a mature tree is used in higher value wood industries.
Four of the systems modelled involve either cutting down the whole tree or just
the brash and then extracting this to the forest landing (a cleared area in the
forest that can be accessed by road vehicles). In the case of whole tree
harvesting, the brash has to be separated from the stem at the landing. The
forest fuel can then either be chipped at the landing and transported to the
power station, or transported unchipped (and then processed at the power
station using a centralised chipper it has to be chipped before it can be used
at the power station). The use of intermediate storage, in addition to storage at
the forest landing, was also modelled. The fifth supply system examined
involves chipping the forest fuel at the time of harvesting. In this system the
material is chipped at the tree stump by a forward-mounted chipper and
transported directly to demountable containers at the roadside which are
collected by a road transport vehicle and then stored at an intermediate point
before being transported by road to the power station.
The difference between the costs of the forest fuel supply systems modelled
were less than between the supply systems for the other biomass fuels
considered in the study (ranging from 32 to 37 per dry tonne for forest fuel).
The fifth supply system produced the highest delivered cost of all the systems
considered. This is due to the two road transport stages and doubling handling
of the wood chips that is necessary when intermediate storage is used.
Short rotation coppice
Five supply systems were modelled for the supply of short rotation coppice
supply from the field to the power station. Two involve direct cut and chip
harvesting (one using on-farm storage of the chips and the other intermediate
storage before delivery to the power station). The other three systems examined
are stick harvesting systems in which the sticks (four to five metre stems of
willow and poplar) are stored on-farm until required for delivery to the station.
The sticks would then either be chipped and transported or transported as whole
sticks. The difference in delivered cost between the cheapest and most expensive
supply systems modelled for coppice was not very large. Delivered costs in the
cheapest system were only 13 per cent lower than the most expensive system.
The results indicate that the delivered cost of fuel produced using a direct cut
and chip harvesting supply systems and stick harvesting supply systems are

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broadly similar. However, if decomposition of chips during storage can be


reduced then direct cut and chip systems would be able to achieve lower
delivered costs than stick harvesting systems.
Straw
Five supply systems were modelled for straw supply. As well as supply systems
for large Hesston rectangular bales which are commonly used in biomass fuel
supply systems in Denmark (measuring 2.4 metres 1.2 metres 1.2 metres
and weighing approximately 500 kilograms each), supply systems for small
rectangular bales and roll bales were also modelled.
The results of the modelling show that straw supply systems producing
large Hesston bales have substantially lower delivered costs than systems
involving the production of small rectangular bales or roll bales. The modelling
suggests that intermediate storage of large Hesston bales (i.e. two road
transport movements and double handling) will have delivered costs that are
approximately 10 per cent higher than systems involving on-farm storage and
then direct road transport to the power station.
Miscanthus
Miscanthus, a perennial tall grass, has received a significant degree of attention
in relation to its use in biomass fuel systems due to its high theoretical crop
yield potential. However, there has been very little research into the potential
supply systems for miscanthus if it was used to produce electricity at power
stations. Therefore, in developing strategies for miscanthus it was necessary to
devise supply systems that it was felt could be established. Two miscanthus
supply systems were modelled. One involves direct cutting and chopping of the
miscanthus (similar to that for short rotation coppice) using a modified forage
harvester. After storage on the farm the chopped material would be transported
to the power station.
The second system involves producing bales from miscanthus. The
miscanthus would be mechanically cut and left in the field. Baling machines as
used in straw bale production, would then be used to produce large rectangular
Hesston-sized miscanthus bales. After stacking and storage, the bales would be
transported to the power station.
The modelling indicates that a supply system producing baled miscanthus is
likely to have lower delivered costs than a direct cut and chop system. In the
modelling, the delivered costs per tonne of dry matter are approximately 20 per
cent lower for baled miscanthus than for chopped material.
Comparison of delivered costs of biomass fuels
The results of supply chain option modelling suggest that the total delivered
costs and the breakdown of these costs between activities are, as would be
expected, significantly different from one biomass fuel to another. The range of
delivered costs produced by the supply systems modelled for each biomass fuel
are shown in Figure 2.

Costs of
biomass fuel
supply
473

IJPDLM
28,6

Figure 2.
The range of delivered
cost for biomass supply
systems

65
60
/tonne dry matter

474

70

55
50
45
40
35
30
25
20

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Forest Fuel

Coppice

Straw

Miscanthus

The modelling work indicates that the delivered cost per tonne of dry matter for
large rectangular Hesston bale straw systems are lower than the costs of other
biomass fuel supply systems. This is due to two key factors: first, straw is a
waste by-product and its growing costs are allocated to the cost of the crop
produced, and second, that such straw supply systems already exist
commercially, serving markets such as the animal feed and bedding and the
mushroom composting industry. Therefore these supply systems have been
subject to a long period of supply chain planning and machinery developments
in order to make them as efficient as possible. The same is not true (or at least
not to the same degree) of the supply chains for other biomass fuels.
Forest fuel supply systems produced the next lowest delivered costs per
tonne of dry matter at the power station in the modelling. Centralised chipping
of forest residues at the power station has operational advantages in
comparison with chipping in the forest that could make it an attractive forest
fuel supply system to the power station operator. It gives the power station
operator far greater control over the chipping process and hence the size
distribution of the chips. The size and quality of the chips that are fed into the
boiler may, depending on the conversion technology used, be critical to
generation efficiency and the smooth running of the power station.
The delivered costs for the short rotation coppice supply systems modelled
were, on average, approximately 50 per cent greater than the delivered costs of
forest fuel supply systems. This cost difference is due to a number of factors,
but the main difference between these two fuels is that coppice has to be grown
specifically for biomass supply and therefore the costs of this are all
attributable to the biomass supply system (this is also true of miscanthus),
whereas forestry material for energy production is a waste by-product and the
costs of growing this material are not attributable to the biomass industry.
For all biomass fuels in which the use of intermediate storage systems have
been modelled, this supply system, in which the fuel will have to be transported
twice by road transport vehicle (first from farm/forest to intermediate store and
then after storage from store to power station), will result in a higher delivered
cost than a system in which there is only one road transport movement (direct

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from farm/forest store to power station). Use of an intermediate store will add
in the region of 10 per cent to 20 per cent to delivered costs, as a result of the
additional transport and handling costs incurred.
Figure 3 illustrates the proportion of total delivered cost accounted for by
each of the activity cost components for the cheapest supply system modelled
for each biomass fuel, assuming that the fuel is transported 40 kilometres to the
power station. It can be seen that the importance of these cost components vary
substantially from one biomass fuel to another; significant variations in the
relative importance of cost components also exist between one supply system
and another for each fuel.

Costs of
biomass fuel
supply
475

Conclusion
By taking an entire supply chain perspective of biomass supply from point of
harvest through to delivery at the power station, as in this work, it is possible to
consider the interrelationship between all the activities necessary in order to
deliver fuel in an efficient manner and the delivered costs of different supply
systems.
The work has shown that logistics costs represent a significant proportion of
total delivered cost in biomass supply. The cost of transporting and handling
biomass fuel from its point of availability (in the field in the case of straw,
miscanthus and coppice and in the forest for forest fuel) to its point of utilisation at
a power station are activity cost categories that are of great importance in all
biomass fuel supply systems. These two activity costs are likely to represent about
50 per cent or more of delivered straw costs, approximately 50 per cent of delivered
cost in forest fuel supply, 35 per cent or more of delivered costs for coppice and 20
per cent to 40 per cent of delivered cost in miscanthus supply systems.
While the transport costs of supplying biomass fuels to power stations are
related to the number of lorry movements required, other important factors also
affect transport costs (such as the distance over which the fuel has to be moved

Key

Forest Fuel

Storage
Transport
Coppice
Handling
Harvesting/
chipping/balin
Purchase

Straw

Miscanthus

0%

20%

40%

Percentage of delivered cost

60%

80%

100%

Figure 3.
The proportions of
delivered cost accounted
for by each activity for
the lowest cost supply
system for each
biomass fuel

IJPDLM
28,6

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476

and the terminal time i.e. the time spent loading and unloading vehicles).
Biomass fuels with relatively high bulk densities (such as coppice and forestry
residue chips) are likely to require fewer lorry movements to deliver a specified
tonnage to a power station than biomass with lower bulk densities (such as
miscanthus and straw). The local traffic impacts generated by this transport
activity will vary from one biomass scheme to another and will depend on the
abundance of biomass fuel in the area and the existing road infrastructure.
However, as shown in Table I, the number of daily transport deliveries to the
power station are unlikely to be greater than for many other industrial activities.
In short rotation coppice and miscanthus supply systems the major cost
component is likely to be the purchase/growing cost of the fuel (this can account
for up to approximately 50 per cent of delivered cost per dry tonne). There may be
relatively little scope to alter this cost and it is therefore essential that attention is
focused on the efficiency of activities such as transport and handling (together
with harvesting technology and operation) if delivered costs are to be reduced in
the future. Mature supply systems such as those already operated in straw
supplied for mushroom composting and animal feed and bedding have proved
that organising and managing the supply chain efficiently can result in relatively
low delivered costs. In these straw supply systems a major straw supplier either
personally carries out, or works closely with contractors to undertake, all the
activities from baling through to delivery to final customer on several hundred
farms within a straw-producing region of the UK. This can involve the supply of
tens of thousands of tonnes of straw per year and, given this throughput, allows
the contractor to utilise high productivity specialist machinery. Therefore efforts
should be placed on trying to achieve similar efficiency in transport and logistics
activities in other less established biomass supply chains.
In devising a supply strategy for a power station, it is likely to be necessary
to operate a range of different systems in order to ensure that biomass supply
can be maintained all year round. For example, a fuel supplier supplying straw
will probably have to make use of an intermediate store supply system as well
as a farm store supply system. Although according to the result of the
modelling the farm store system would be preferable to intermediate storage in
terms of delivered cost, it is unlikely that farm stores could be accessed by road
transport vehicles during wet winter periods and therefore intermediate stores
would also have to be available.
The management of biomass fuel supply chains will have to be organised in a
co-ordinated and thoroughly planned manner if the fuel is to be delivered to the
power station at the times required each day and at the correct fuel specification
on a year-round basis. Rather than each activity in the chain being planned and
conducted in isolation, it is extremely important that the supply chain (from
point of production through to supply to a power station) is viewed as a whole.
Only in this way will it be possible to achieve integration between activities and
hence efficiency in the supply of biomass fuels. Given the number of different
parties involved in the supply of fuel, and their different perspectives and scale,
the supply chain management will be of the utmost importance.

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All parties need a detailed knowledge of upstream and downstream


activities in the supply chain when determining how best to conduct their own
work and responsibilities. Partnerships and working alliances need to be
established and encouraged as supply chain efficiency in both economic and
environmental terms requires the active involvement and efforts of all parties.

Costs of
biomass fuel
supply

Notes
1. It is beyond the scope of this paper to discuss in detail the supply chain modelling of each
of the biomass fuels included in the project. The full report, listed in the references (Allen
et al., 1996), and available from ETSU, contains this information.
2. The cost of supplying fuel to the power station, calculated per tonne of dry matter. This is
not to suggest that oven dry biomass is supplied to the power station; wet biomass is
supplied but our cost calculations are based on the dry matter present in the biomass.
3. A number of biomass fuel-specific assumptions were made with respect to the
characteristics of each biomass fuel, the equipment and facilities used in its supply and the
operating costs and productivity rates. These assumptions are too numerous to list here
and anyone interested in these should refer to Allen et al. (1996), in which they are fully
documented. However, a number of important assumptions were made in the modelling
that were common to all biomass fuel supply systems, including: (i) the road transport
distance from the farm or forest to the power station was set at 40 kilometres; (ii) the
delivered costs are based on round trip distances as the lorries will be travelling from
farms/forests to the power station and back again in biomass supply systems (i.e. 80
kilometres); (iii) wherever possible use is made of the largest road transport vehicles
possible (in terms of volume and/or gross vehicle weight) in order to minimise the unit
costs of road transport; (iv) the fuel storage period has been set as six months, as the
biomass will generally be harvested at a specific time of year but will have to be supplied
to power stations in constant quantities on a regular, year-round basis; (v) biomass will be
stored in the open air (i.e. no use will be made of covered buildings and/or ventilated
systems) due to the high cost of these options; (vii) in chip storage systems dry matter
losses are assumed to occur at a constant rate of 4 per cent per month and in bale storage
systems the entire top layer is assumed to be unsuitable for supply; (viii) the delivered cost
calculations do not include a profit element for contractors or the fuel supplier.

477

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Biomass Fuels: Volume 1 Supply Chain Options for Biomass Fuels, (Report No.
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