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A Case Study for using the Cooperative business model for Biomass Aggregation

A Case Study for using the Cooperative business model for Biomass Aggregation Randy Kyle, CPA, MBT Kyle Consulting Group, Inc. Office – 608-280-7541 randy@kyleconsultinggroup.com.

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A Case Study for using the Cooperative business model for Biomass Aggregation

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  1. A Case Study for using the Cooperative business model for Biomass Aggregation Randy Kyle, CPA, MBT Kyle Consulting Group, Inc. Office – 608-280-7541 randy@kyleconsultinggroup.com

  2. We are on a path of discovery to explore the market potential of commercializing the aggregation and densification of fibrous, mostly non-woody, biomass for use in the commercial generation of electricity using the Cooperative business model.

  3. Where Cooperatives are/have been • Ethanol investment • Biodiesel investment • Soy Crush Plant • New opportunities with restructured ethanol plants • Biomass?????

  4. Biomass • Typically waste wood and wood bi-products • Likely high in moisture • Likely average to low in BTU value • Not products typically handled by Producer Cooperatives or its members • Other non-woody sources

  5. Why Consider getting into Biomass? • Micro economics – local nature • Access to the material • Does not compete with food uses • Producers have the equipment and experience • Additional source of revenue for producers • Carbon credit opportunity

  6. Why Consider the Cooperative Model? • Farmers dealing with farmers • Profits can be returned as patronage • Producer control • Membership/ownership can be tied to supply agreements • Familiar Structure • Trust

  7. BCAP is the Starting Point(Biomass Crop Assistance Program) • Defines eligible material • Sets a payment schedule • Establishes criteria for conversion facilities • Provides sample agreements • Administered by FSA • http://www.fsa.usda.gov/FSA/webapp? area=home&subject=ener&topic=bcap

  8. Fibrous Biomass Characteristics • 7,500 to 8,000 BTU per pound • Coal - 13,500 BTU per pound • When processed, fibrous biomass can be very consistent in energy content • Control of moisture content • Renewable – annual crops

  9. Financial Summary • Need to pay farmer $45 to $60 per ton • BCAP payment – additional $45 per ton • Possible patronage • 5-7 Tons/acre - $100/ton • Attract acres/aggregation????

  10. Operating Model • Rural location – accommodates delivery • Rail – accommodates shipping • Distributed storage and delivery of raw materials • Limited on-site storage • Local support for permitting and construction

  11. Off Take Agreements and Other Uses • Long-term vs. short-term • Fixed vs. variable • Mandates vs. lowest cost producer • Viability without BCAP • Carbon trading • Alternative uses for off take • It’s time to negotiate

  12. The following material is being used with the permission of Show Me Energy Cooperative • Show Me Energy Contacts • Steve Flick, Chairman of the Board • steveaflick@earthlink.net • Kurt Herman, CEO • kherman@goshowmeenergy.com • Office phone - 660-656-3780 • www.goshowmeenergy.com

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