The volume of energy crops needed to fuel a biomass boiler big enough to heat a school or other large building is beyond the scale of most individual farmers.
Not only are large acreages needed to keep such boilers running, but the capital cost of diversifying into this sector can be massive. It is not just crop volume that is needed, but processing capacity too.
Even farmers working together would be challenged to compete with the major power companies with interests in the biomass sector, so it is the local heat market that presents the ideal opportunity for farmers to get involved, says Lucy Hopwood, the National Non-Food Crops Centre‘s land and agricultural manager.
“There are large players in the biomass industry who have been very useful in setting a baseline in the market and increasing the volumes of supply but, for farmers, local heat markets are where the value is likely to be,” she says.
In Pembrokeshire, farmers have already recognised this potential and collaborated to fuel a 1.6MW boiler at the new Bluestone Holiday Village near Tenby.
PBE Bioenergy, a co-operative of 11 energy crop growers, harvests 69ha (170 acres) of miscanthus each year, as well as 15ha (37 acres) of short rotation willow coppice every three years. This provides 1000t of energy crops from local farms which are used as a proportion of the 4000t fuel requirement for the biomass boilers at Bluestone.
Steep learning curve
Three years after the crops were first planted some of those farmers are beginning to see a return on their investment.
But one of the investors responsible for getting this project up and running, farmer Graham Perkins, is the first to admit the learning curve has been a steep one.
Establishing the energy crops has been challenging and the confidence of some farmers has been shaken by poor yields.
The farmers who have succeeded in getting yields of about 12t/ha by the third year have tended to be arable growers, while livestock and permanent pasture farmers who lack a depth of knowledge about arable production have experienced the greatest problems, says Mr Perkins.
“Livestock farms don’t tend to have the best land for growing miscanthus because the high level of grassweeds sap the energy out of the ground and away from the young miscanthus rhizomes,” he adds. “Some farmers wish they had never heard of miscanthus, but others are getting yields of 12-14t/ha.”
The catalyst for the establishment of the PBE Bioenergy farmer co-operative was the development of the Bluestone Holiday Village by a former farmer, William NcNamara. He saw biomass as a means of getting farmers involved as well as using this environmental advantage to market Bluestone.
Some of the land on which the holiday village was built was farmed by Paul Ratcliffe. Mr McNamara commissioned him to explore the potential for his biomass project. “It was 2003 and biomass was still seen as being a bit quirky,” recalls Mr Perkins.
But he had seen examples in Germany of machinery rings providing the logistics, co-ordination and administrative hub for farmers tapping into the biomass sector and knew this model could work in Pembrokeshire.
“I had a parallel interest at the time because a study had been commissioned in Pembrokeshire to look at the potential of biomass being grown on farmland. In 2003, we didn’t even know if miscanthus would grow here,” says Mr Perkins.
Growing the project
Mr Ratcliffe grew trial crops of miscanthus, canary grass and willow while Mr Perkins sought funding to get the bioenergy project off the ground.
In Wales, there were no grants for establishing renewable energy crops; the Welsh Assembly Government was instead directing financial support towards the purchase of biomass boilers in the belief that this would encourage the industry to begin growing energy crops from a demand-led standpoint.
But Mr Perkins was able to secure £900/ha from the Welsh Development Agency towards the £1800/ha rhizome and establishment costs, as well as some money towards a miscanthus planter. With the grant in place, he was able to persuade farmers to plant the crop.
There have been many hurdles along the way. There has only been an average 60% success rate in establishing the crop and Mr Perkins puts some of this down to deterioration in the quality of rhizomes transported from Hereford.
“We need to start harvesting rhizomes in the county so that they can be harvested, sorted and replanted within the same day,” he says.
The dramatic increase in cereal prices has also left farmers questioning whether miscanthus is delivering acceptable returns.
Making the project work
The day-to-day running of PBE is the responsibility of Pembrokeshire Machinery Ring, the group that delivers the “back office” requirements for all the PBE biomass companies.
To make the project work, Mr Perkins and Mr Ratcliffe, both PBE directors, decided a hands-on approach to processing and burning the fuel was needed. In 2007 they established PBE Fuels and PBESCO.
PBE Fuels purchases the energy crops from PBE as bales of miscanthus. PBE Fuels also purchases woodchip to fulfil the 4000t demand for biomass fuel for the PBESCO biomass boilers that deliver heat to Bluestone. PBE Fuels processes all this fuel – storing, chopping, screening and drying – before delivering it to the boilers’ fuel hoppers, and ensuring the 24-hour operation.
Mr Perkins and Mr Ratcliffe invested more than £500,000 in building, equipping and operating the energy centre that sells heat to Bluestone.
Farmers are currently paid £40 per oven dried tonne for their miscanthus, higher than the base price of £35. But it is expensive to harvest, at about £13/t, and local contractors don’t necessarily have the right equipment adapted for miscanthus harvesting available in February.
“Fuel costs work out at around £65/t for chip going into the boiler, the equivalent of 2p/kW,” says Mr Perkins. “We think this is very competitively priced, even allowing for a further, fixed-charge element to cover the very high capital costs and general operating costs. We have told our farmers that we can become price setters rather than price takers by producing heat energy from crops, but we have to be competitive.”
Ray and Chris Passfield invested £3000 in growing two hectares of miscanthus on their farm near St David’s, but had problems establishing the crop. They have gaps where rhizomes didn’t grow and a drought in the planting year also had a detrimental effect.
The miscanthus is now yielding 8t/ha but the Passfields are unconvinced they are getting a good return on their outlay.
But Mr Ratcliffe doesn’t agree. He sees his 25ha crop as a 20-year project and reckons there is a five-year payback on the establishment costs. In his fourth year the crop is yielding up to 16/t ha.
To boost the viability of PBE Fuels and offset some of the fixed costs incurred in running the processing yard, a wood pellet distribution business has been established. About 5000t of UK manufactured wood pellets are distributed to schools, hospitals and other consumers. “The pellet side is important because it spreads the costs. We would have to process 12,000t of miscanthus and woodchip a year to break even. As we are currently only processing 4000t, wood pellet distribution is an important part of our business,” says Mr Perkins.
Latest figures from DEFRA show that in England alone 9,213ha of miscanthus was grown in 2009 across 384 registered farms.
The survey also shows 372 farms grew SRC in 2009, with a total area of 7,000ha.
But growing energy crops is not the only route to farmers getting involved in biomass.
Crop residues such as rape straw are ideal for burning but unsuitable for livestock bedding. Improving farm woodland provides another source of biomass, says the NNFCC’s Lucy Hopwood.
Benefit from renewable heat
Using biomass to produce renewable heat will be the focus of a series of regional workshops being held by the National Non-Food Crops Centre and Masstock.
The eight events, running in March, will help businesses understand how to make money from renewable heat and feature parallel workshops for suppliers and potential users of biomass, plus presentations from biomass experts relevant to the region.
“Local supply chains for biomass are crucial to meeting our renewable energy targets and the expected introduction of the Renewable Heat Incentive in June should make this a really attractive consideration,” says NNFCC bioenergy specialist, Lucy Hopwood. “This makes the timing ideal for willing suppliers to address demand from local users.”
The first event will be held in Leigh, near Manchester, on 2 March. Tickets cost £60 for biomass suppliers and £195 for end users. Reserve tickets at www.nnfcc.co.uk or from Tim Evans, 01904 435182, firstname.lastname@example.org