Potential Suppy and Cost of Biomass from Energy Crops in the TVA Region: Results Discussion, Conclusions
Potential Suppy and Cost of Biomass from Energy Crops in the TVA Region: Results Discussion, Conclusions |
Information on the yields, production costs, and farm-gate prices for both SRWC and switchgrass are presented in this section. They are discussed in the context of subregions and soil categories and from an agricultural rather than an energy perspective.
Some discussion of land rents is useful to this section because they strongly influence the projected farm-gate prices for both SRWC wood and switchgrass. Land rents, as calculated on the basis of conventional crop production and market prices, range from $0 to $182 per acre per year, with most land rents below $100 per acre (Table 1). With few exceptions, land rents are highest on the best cropland (category 1) or on wetter soils (category 2w). The North Alabama and Delta/Coastal Plain subregions have low land rents on all soil categories, whereas the Northwest subregion has notably higher land rents than the other subregions. Every subregion except the Northwest and Western Uplands subregions has at least one common soil category with a land rent below $10 per acre per year. These projected low land rent soils figure prominently in the supply maps presented in this section, and the validity of their valuation is worth discussing.
Evidence exists to support the projected low land rents. First, farmland in the TVA region has recently been shifting to pasture use, suggesting that conventional crops are not profitable on many soils. Second, the lowest land rents occur in subregions that have very little agricultural land, whereas the highest land rents occur in a subregion that has considerable agricultural land. Third, a previous projection of SRWC prices in East Tennessee found that inclusion of commodity payment programs increases the price of SRWC wood by $5 to $10 per (dry) ton (Graham et al. 1992), suggesting that existing commodity programs typically contribute $20 to $40 to land rent in East Tennessee. The same study estimates the average agricultural land rent to be around $60 per acre per year, with the inclusion of commodity payments (English, B. C., The University of Tennessee, Knoxville, unpublished data, June 1992). To summarize, the projected land rents appear to be realistic reflections of agricultural land values across the region. However, although the overall land rent patterns projected by the analysis are probably reliable, the specific land rent for any one soil category in any one subregion should be viewed with some skepticism.
3.1.1 SRWC
SRWC harvested yields are projected to range from 2.4 to 4.3 (dry) tons per acre per year. They vary by land use and soil category, but not by subregion (Table 2). SRWC yields on former pasture are assumed to be 80% of those on cropland of the same soil category and reflect yield losses due to the compaction and lower fertilizer levels associated with pastureland. The lack of variability across subregions reflects the paucity of SRWC field experience in this region; experts are reluctant to differentiate yields by both subregions and soil categories. SRWC experience in better-defined regions of the United States, such as the midwest, suggests that soil quality has significantly greater effects on SRWC yields than do subtle shifts in climate. Although specific SRWC yields used in the analysis do not vary by subregion, the average SRWC yield of a subregion does vary because the relative dominance of soil categories and land uses varies between subregions. Some subregions have more high-yielding land than others.
Per-acre yield and per-ton production costs vary by land use and soil category because SRWC management practices are soil and land-use specific (Table 2). On former cropland, SRWC production costs range from $29 to $46 per (dry) ton. Production costs on pastureland range from $44 to $63 per (dry) ton. The production costs on pastureland are higher than on cropland because of the additional site preparation associated with converting pasture to SRWC plantation and because lower SRWC yields are expected on former pastureland. Sweetgum production costs (soil categories 2e and 2s) are lower than those of other species because three rotations are assumed, whereas two are assumed for poplar and sycamore and one for black locust. Thus, establishment costs are distributed over considerably more tons of harvested wood for sweetgum than for the other species.
The profitability of conventional crop options, and thus the projected land rent, varies by subregion. Thus, farm-gate prices for SRWC wood do vary by subregion in addition to soil category and land use (Table 3). The lowest-cost SRWC biomass [$29 per (dry) ton] is associated with soil category 2e in the Nashville, North Alabama, and Delta/Coastal Plain subregions and soil category 2s in the Western Uplands subregion. The North Alabama and Delta/Coastal subregions have the lowest overall farm-gate prices for SRWC biomass, and the Northwest subregion has the highest. Increasing SRWC yields by 25% decreases farm-gate prices by 20%.
3.1.2 Switchgrass
Because projected switchgrass yields are derived by means of the EPIC crop simulation model, which includes weather variables specific to each subregion, they vary by subregion as well as soil category and land use (Table 4). Projected switchgrass yields are highest on soil categories 1 and 2w across all subregions, ranging from 5.8 to 8.8 tons per acre per year. The majority of the yields on other soil categories range from 5.5 to 6.0 (dry) tons per acre per year. However, yields as low as 4.3 (dry) tons per acre per year are projected for a few soil categories. The subregions do not display identical patterns of high and low yields. Half of the subregions have one or two soil categories that have significantly higher yields than their other soil categories, and half of the subregions have one or two soil categories that produce significantly lower yields than their other soil categories. Specifically, the Nashville, Plateau, Smokies, and Western Uplands subregions have higher yields on categories 1 or 2w, whereas the Northwest, Nashville, Plateau, Ridge and Valley, and North Alabama subregions have relatively low yields on category 4e and/or category 5+.
Although the per-acre production costs of switchgrass vary only by land use ($188 per acre per year for cropland and $250 per acre for pastureland), per-ton costs vary by soil category and subregion because of variations in yield (Table 5). Switchgrass production costs range from $28 per (dry) ton to $64 per (dry) ton and are higher for pastureland than for cropland of the same soil category.
As with SRWC, switchgrass farm-gate prices vary by soil category, land use, and subregion (Table 6). Except for soil category 1 in the Northwest, Nashville, Smokies, and Plateau subregions, pasture farm-gate prices are higher than cropland farm-gate prices for the same soil categories. This is because the higher per-ton production costs on pastureland are not sufficiently outweighed by lower land rents. Cropland farm-gate prices are lowest in the Delta/Coastal Plain [$29 to $37 per (dry) ton] and Ridge and Valley subregions [$34 to $47 per (dry) ton] because the projected land rents are low and switchgrass yields are moderate. The farm-gate prices for cropland in the North Alabama subregion are also low [$32 to $45 per (dry) ton] primarily because of high switchgrass yields compared with low land rents. Although the Smokies and Western Uplands subregions have a few soil categories with low farm-gate prices, most of their soil categories have fairly high farm-gate prices [$47 to $52 per (dry) ton]. The Northwest, Nashville, and Plateau subregions generally have very high farm-gate prices as well as relatively high switchgrass yields.
As with SRWC, increasing switchgrass yields by 25% decreases farm-gate prices by nearly 20%. Consequently, the least-cost switchgrass supplies cost $21 to $24 per (dry) ton vs $26 to $29 per (dry) ton if yields are increased by 25%.
In considering the potential for biomass energy in the TVA region from a
power production standpoint, it is useful to characterize the potential supply
of biomass in terms of its energy content rather than its mass. Characterizing
price and supply in terms of energy content facilitates comparisons among
qualitatively different supplies such as coal, wood, and grass. For this
analysis, it is assumed that SRWC wood has an energy content of 17 MBtu per
(dry) ton (Wright et al. 1992b) and that
switchgrass has an energy content of 13 MBtu per (dry) ton [
It is important to recognize the influence of
subregion boundaries (Fig. 3) and county land use (Fig. 1) on these patterns
when interpreting the supply-cost patterns evident in these maps. Subregion
boundaries strongly influence projected farm-gate prices across the entire
region through their influence on determinants of land rent value of different
soil categories. The specific conventional crops grown, their production costs,
and their expected soil-specific yields are unique to each subregion. The
conventional crop yields on specific soil categories are particular to each
subregion because subregion-specific information is an input in the crop
simulation program (EPIC) used to project these yields. This information
includes management activities, soil names representing soil categories, and
climate. In the case of switchgrass, subregion boundaries also influence
farm-gate prices through their influence on switchgrass yield. However,
subregion boundaries do not affect all determinants of farm-gate price. Certain
elements, such as SRWC yields on different soil categories, per-acre production
costs for either SRWC or switchgrass, and crop market prices, are uniform
across the region.
The subregion boundaries also affect the potential amount of feedstock supply but to a lesser extent, especially for wood feedstock. Boundaries affect supply amount not only because they directly affect switchgrass yield but also because they are used to define the proportions of county cropland and pastureland acreage associated with each soil category. These proportions affect biomass supply because different biomass yields are expected on the nine soil categories.
The potential amount of biomass feedstock is most affected by the acreage of cropland and pastureland potentially available for growing biomass. Those values are, however, defined by county rather than subregion (Fig. 1). Thus, although the proportion of cropland or pastureland acreage in a particular soil category is uniform for all counties in that subregion, the actual acreage of that soil category is unique to a county as are the total cropland and pastureland acreages. Therefore, because the farm-gate price is unique to a soil category, the potential feedstock supply at a particular farm-gate price is unique to a county.
3.2.1 Projected SRWC Supplies at Current Biomass Yield Level
Assuming current technology and a farm-gate price of
less than $2.00/MBtu [$34 per harvested (dry) ton @ 17 MBtu per (dry) ton] the
potential supplies of SRWC wood are greatest in the North Alabama subregion,
far-western portions of the Delta/Coastal Plan subregion, and the eastern
portion of the Nashville subregion (Fig. 4). This level of production in these
counties is a consequence of subregion soil categories with low farm-gate
prices and relatively high densities of agricultural land. The Ridge and Valley
subregion also has a low-cost soil category; however, this does not influence
the regional supply pattern because none of the counties of this subregion have
much agricultural land.
At $2.50/MBtu (Fig. 4), the Western Uplands subregion is also projected to provide substantial SRWC wood supplies because of the availability of plentiful 2e soils with a farm-gate price of $2.28/MBtu. The Smokies subregion also has 2e land with a farm-gate price under $2.50/MBtu, but sparseness of agricultural land in that subregion results in small projected potential supply per county.
At $3.00/MBtu (Fig. 4), all counties are projected to have some potential for supplying SRWC wood, but the potential supply is greatest in the western and southwestern counties of the region where agriculture is the dominant land use. The far-western counties in the Delta/Coastal Plain subregion are projected to be able to supply millions of tons of SRWC wood. Although the counties of the Northwest subregion are also dominated by agriculture, many of the subregion's soil categories have projected farm-gate prices exceeding $3.00/MBtu because conventional crops have high yields in that subregion.
3.2.2 Projected Switchgrass Supplies at Current Biomass Yield Level
Assuming current technology and a farm-gate price of less than
$2.00/MBtu [$26 per (dry) ton[3]),
switchgrass production is not projected for any county (Fig. 5). At $2.50/MBtu,
potential switchgrass production was mainly relegated to those counties in
which land with low returns from conventional crops (low land rent) can produce
moderate to high yields of switchgrass (Fig. 5). The potential supplies of
switchgrass in counties in the Northwest and Smokies subregions are due to a
single uncommon soil category (4e in the Northwest subregion and 3-4s in the
Smokies subregion) with a low projected land rent and moderate switchgrass
yield. Potential supplies are projected to be fairly abundant in the
Delta/Coastal Plain subregion because all the cropland soil categories except
for the wet-soil categories 2w and 3-4w have farm-gate prices under $2.50/MBtu,
largely because of very low land rents in this subregion. The wet-soil
categories have higher land rents and consequently higher farm-gate prices for
biomass. The higher supply in the western counties of Delta/Coastal Plain
subregion reflects the greater abundance of agricultural land in that portion
of the subregion. Unlike the subregions with potential switchgrass supplies
caused by low land rents, the Western Uplands subregion has a fairly high
supply because one of its common soil categories has a very high switchgrass
yield [8.5 (dry) tons per acre], which creates a low farm-gate price, even
though the net returns for conventional crops on that soil are moderate to high
(about $80 per acre). Four subregions (Nashville, Plateau, Ridge and Valley,
and North Alabama) show no supply at a farm-gate price of $2.50/MBtu or less
because switchgrass yields are low on the soil categories with projected low
land rent.
At $3.00/MBtu (Fig. 5), all counties in all subregions can potentially supply some switchgrass. Most of the counties in the Delta/Coastal Plain and Western Uplands subregions are capable of supplying large quantities of switchgrass, especially in the far western counties of Missouri, Arkansas, and Tennessee. At this farm-gate price, the Ridge and Valley subregion becomes a much more significant potential source of switchgrass feedstock because of its abundance of land with moderate switchgrass yields, low land rents, and farm-gate prices between $2.50/MBtu and $3.00/MBtu. In contrast, raising the farm-gate price from $2.50/MBtu to $3.00/MBtu does not increase potential switchgrass supplies in the Smokies subregion because of relatively low amounts of agricultural land in that subregion, much of which is pastureland with high switchgrass production costs. The lack of switchgrass supply in the Nashville subregion is due to very low switchgrass yields projected for most of the soil categories.
3.2.3 Projected SRWC and Switchgrass Supplies at a 25% Higher Yield Level
A 25% increase in biomass yields, as might be expected with future
production technology, decreases farm-gate price by nearly 20%.
Figures 8 and
Assuming all determinants of supply (e.g., market price, land
rent, and production costs) are held constant and that all crop and pasture
acreage in the region can be converted to SRWC or switchgrass, the agricultural
crop and pastureland in the TVA region can produce 1.26 × 10(9)
MBtu of SRWC wood or 2.08 × 10(9) MBtu of switchgrass. Increasing
energy crop yields per acre by 25% increases total potential by supply 25% and
lowers the price of the supply by nearly 20%. Figures 10 and 11 show the same
supply curves in $/(dry) ton and millions of (dry) tons of biomass.
Agricultural land in the TVA region can potentially support 18 GW if wood is the sole fuel and 30 GW if switchgrass is the sole fuel. (This projection assumes an efficiency of 10,000 Btu of biomass per kilowatt hour, an efficiency achievable with existing technology.) Farm-gate prices in the range of $40 to $50 per ton for wood or $35 to $45 per ton for switchgrass are needed to ensure landowners of profits commensurate with current land use. Although switchgrass farm-gate prices are lower than those of SRWC, switchgrass is a slightly more expensive fuel because of its lower energy content.
From a regional perspective, energy crop supplies are projected to be greatest in the western portion of the region, largely because of the high density of agricultural land combined with low land rents. However, there are clusters of counties elsewhere that can produce supplies sufficient to support production of 100 or 200 MW of power.
This is a regional analysis of potential biomass supplies. Caution is required when interpreting the study results at the county scale because of the aggregation and generalization used in the analysis. In particular, the definition of subregion boundaries play a critical role in determining the spatial pattern of biomass supplies. For energy crop demonstration or individual plant site studies, the approach developed in this regional analysis can be used if finer and more localized data on soils, land use, and crops were used.
File created: October 21, 1996; Last updated: |
