Trying to enter the market with ag-based biomass pellets isn’t for the uninformed. An AURI-sponsored evaluation examined the challenges and competitive disadvantages that entrepreneurs and new businesses marketing ag-based biomass pellets could face.
AURI has seen a great deal of interest from people who want to produce biomass pellets for home-heating or industrial applications. However, there are some real challenges with trying to enter the market with a product that has to compete with corn or even wood pellets.
AURI has produced a guide that includes all the variables to be considered before someone purchases equipment or builds buildings with the intention of going into business. The guide isn’t a business feasibility study, rather a reference document that contains technical and financial information, cost estimates, industry data and other relevant information for a commercial enterprise with a stand-alone pellet plant.
While many businesses are interested in such facilities, the pellet market is limited. A number of residential and small industrial pellet stoves and industrial boilers can burn biomass pellets. Currently no companies are selling large quantities of biomass pellets to those markets, but there also doesn’t appear to be great demand.
The fuel-pellet industry is emerging, but future growth is not a certainty, the study found. Economics will always drive the viability of opportunities like biomass pelleting for energy.
The evaluation also assessed permitting processes, technical feasibility, plant requirements and capital costs, project financing and the political environment. We know it is technically feasible to make biomass pellets from corn stover, processing waste, grasses or other sources, but they have to compete economically with things like coal, natural gas or electricity.
Other areas assessed in the 120-page evaluation include permitting processes, technical feasibility, plant requirements and capital costs, project financing and political environment. It also assesses issues surrounding various agricultural feedstocks.