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Bioenergy is unique in comparison to other classes of energy in that much of the risk associated with new investment falls on the supply of feedstock rather than in the other parts of the chain (conversion, transport, distribution, end-use). The following questions are relevant in assessing the feedstock risk:

Location – where is the expected biomass feed-stock supply located in relation to the processing facilities?

Homogeneity – is the expected feedstock of a homogenous quality (e.g. a specific variety of tree) or is it heterogeneous (e.g. collection of different residues)?

Alternative buyers – are there alternative buyers, either existing or potential, for the feedstock?

Climate – is the availability of the feedstock subject to climatic, seasonal or other (non-price) fluctuations? Pre-processing – will the feedstock require pre-processing (and if so, can it potentially be done at a separate location?) or if not strictly required, will there be significant economic benefits to incorporating pre-processing?

Measurement – is it difficult and/or costly to measure the quality or quantity of feedstock? Procurement – are there non-price limitations or conditions on the type of procurement or contracting that can be used to obtain the feedstock from the supplier?

Experience – Does the operator of the facility that will use the feedstock have previous experience with the specific type of biomass that will be supplied?

Figure 3: Conversion routes for the most common choices of feedstocks, conversion technologies and energy carriers

FEEDSTOCK*

Oil crops (rape, sunflower, etc.), waste oils, and animal fats

Sugar and starch crops

Ligno-cellulosic biomass (wood, straw energy crop, MSW, etc.)

Biodegradable MSW, sewage sludge, manure, wet wastes (farm and food waste), microalgae

Photosynthetic micro-organisms (e.g. microalgae and bacteria)

*Parts of each feedstock, e.g. crop residues could also be used on other routes

*Each route also gives co-products

CONVERSION ROUTE*

(Pre-treatment) + Combustion

Transesterification or hydrogenation

(Hydrolysis) + Fermentation

Gasification + Secondary process

Pyrolysis + Secondary process

Other biological/ chemical routes

Anaerobic digestion

Bio-photochemical routes

HEAT AND/OR POWER

FUELS

Biodiesel

Bioethanol

FT Diesel

Methanol, DME, Biomethane

Other fuels and fuel additives

Hydrogen

(Source: IEA, 2009)

Project Level Consideration: Investment risks associated with feedstock supply

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