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Biomass Energy: Cost of Production
Combustion and Gasification Facilities
 
Using conventional combustion technology without cogeneration, the estimated cost to generate electricity from biomass ranges from 5.2 to 6.7 cents per kilowatt-hour in Oregon and the Pacific Northwest. Actual costs would vary depending on financing, location, system design and fuel cost. In the future, new gasification technologies may lower the cost of generating electric power from waste wood and other biomass fuels. In contrast, the estimated cost of generating electricity from a new natural gas-fired, combined-cycle power plant is 2.8 cents per kilowatt-hour.
 
For biomass-fueled power plants, reliance on variable supplies of forest and agricultural residues means that a continuous supply of fuel may be uncertain. Generation of electric power requires large quantities of biomass. Fuel transportation, storage and handling costs are a significant part of the costs of biomass energy production. One strategy to deal with fuel supply uncertainty is to design the facility to handle multiple biomass fuel types. Future expansion of the biomass power market may require the development of a feedstock supply system based on large-scale production of biomass fuel from energy crops.
 
Heat is a byproduct of producing electric power using biomass. Steam produced in a biomass-fired boiler can both generate electric power and supply industrial process heat. Cogeneration is the combined production of electricity and process heat. In a cogeneration power plant, sale of steam to an industrial user can offset the cost of producing electric power from biomass.
 
Biogas Facilities
 
Naturally-occurring anaerobic digestion in solid waste landfills produces methane, which can be used to generate electricity. In Oregon, generating electricity from landfill gas is cost-competitive with natural gas power generation. The estimated cost is 2.9 to 3.6 cents per kilowatt-hour. Sale of power generated from landfill gas can offset the cost of equipment needed otherwise to collect and flare methane produced in landfills.
 
At wastewater treatment plants that use anaerobic digesters as part of the treatment system, methane is a by-product of the treatment process. Wastewater treatment plants can use digester gas to generate electricity and offset the cost of buying power from the local utility. Because treatment plants receive revenue for treating wastewater, these plants have a negative feedstock cost for power generation from their methane gas.
 
The estimated cost of producing electric power from anaerobic digestion of animal manure is 3.7 to 5.4 cents per kilowatt-hour. Digester technology can be part of an integrated facility that produces electricity and heat, eliminates waste disposal and odor problems and helps to protect the environment.
 
The cost of a farm-site manure digester depends on local site conditions and the number of animals on the farm. A plug-flow digester designed to process the manure of 500 dairy cows will have capital costs in the range of $230,000 to $260,000. Electricity and heat generated from digester gas reduce farm energy costs. Liquid and fiber digester residues have value as fertilizers and soil amendments. The costs of building and operating the digester can be recovered from sales of these products and from energy cost savings.
 
Dairy farm runoff presents an environmental hazard from poorly managed animal manure. Runoff can pollute local streams and spread disease. Anaerobic digestion protects surface streams from contamination because the process destroys harmful microorganisms that are carried in manure. Although it is expensive to construct a manure digester, there is also a cost for alternative manure management and cleanup measures that produce no income for the dairy operator.
 
Ethanol Production
 
The cost of producing ethanol varies with the cost of the feedstock used and the scale of production. Approximately 85 percent of ethanol production capacity in the United States relies on corn feedstock. The cost of producing ethanol from corn is estimated to be about $1.10 per gallon. Although there is currently no commercial production of ethanol from cellulosic feedstocks such as agricultural wastes, grasses and wood, the estimated production cost using these feedstocks is $1.15 to $1.43 per gallon.
 
Because a gallon of ethanol contains less energy than a gallon of gasoline, the production cost of ethanol must be multiplied by a factor of 1.5 to make an energy-cost comparison with gasoline. This means that if ethanol costs $1.10 per gallon to produce, then the effective cost per gallon to equal the energy contained in a gallon of gasoline is $1.65. In contrast, the current wholesale price of gasoline is about 90 cents per gallon.
 
The federal motor fuel excise tax on gasohol, a blended fuel of 10-percent ethanol and 90-percent gasoline, is 5.4 cents less per gallon than the tax on straight gasoline. In other words, the federal subsidy is 54 cents per gallon of ethanol when the ethanol is blended with gasoline. The subsidy makes ethanol-blended fuel competitive in the marketplace and stimulates the growth of an ethanol production and distribution infrastructure.
 
Biodiesel Production
 
A major hurdle facing commercial biodiesel production is the cost of producing the fuel. Vegetable oil seed procurement, transport, storage and oil extraction accounts for at least 75 percent of the cost of producing biodiesel. The cost varies depending on the feedstock used. For example, based on the market price for industrial rapeseed grown in Washington and Idaho, the estimated cost of producing biodiesel is $2.56 per gallon of rapeseed methyl ester. Recent estimates put the cost of production in the range of $1.30 per gallon (using waste grease feedstock) to $2.00 or more per gallon using soybean oil.
 
A blended fuel of 20-percent biodiesel and 80-percent petroleum diesel could reduce the production cost to about $1.10 per gallon, assuming a petroleum diesel cost of 90 cents per gallon and a soybean biodiesel cost of $1.80. Use of lower-cost organic oil feedstock, such as waste food-processing oil or tallow, would further reduce the production cost of biodiesel and biodiesel-blended fuel.