Study of the economics and development potential of SRWC

Transcription

1 Study of the economics and development potential of SRWC 1. Introduction 1.1. European context At a European scale, it is clear that the countries where SRWC has taken off are those where there have been significant incentives. Despite these incentives, the expansion of SRWC remains modest compared with global energy production from biomass. With 16,000 hectares of willow crop, Sweden is the country with the most SRWC. In the 1990s low cereal prices and grants for planting SRWC led to rapid growth of SRWC on CAP setaside. But the reduction in setaside in 1996, combined with difficulties in starting up the SRWC sector, have slowed the expansion of this crop despite a substantial increase in the price of wood. Currently, SRWC represents 0.5% of agricultural land and 1% of fuel wood in Sweden (mainly used in heating networks and the industrial sector). The sector therefore remains marginal compared with other methods of producing fuel wood. Growth in the use of biomass is supported mainly by green certificates and by a tax system which penalises fossil fuels. Over 2500 hectares of SRWC have been planted in the UK (half of this since 2000) with establishment grants and a system of green certificates for electricity producers. The main outlet for willow is in power stations. In Denmark the lack of an adequate incentive has prevented a significant increase in the area of SRWC planted. The activities associated with willow are different: production of cuttings, development of mechanised equipment and non-fuel uses (live barriers, sound attenuation barriers, etc.) Reference points for assessment of the potential for expansion Under the Wilwater programme, the expectations of project owners with regard to SRWC are very different. Three main types of project can be distinguished, leading to three main planting systems: Plantations intended primarily for energy production, as is the case for some farmers involved in the programme, Plantations intended primarily for land application of sewage sludge Plantations intended for environmental protection, either to protect surface water systems by fertigating SRWC with pre-treated water or to protect a drinking water catchment area. For the first group, the alternative to SRWC is to plant a different food or non-food crop. The economic challenge is with regard to the level of gross margin achieved per hectare of SRWC. For the second group, the alternative to SRWC would be different systems of utilising sewage sludge. The challenge here is with regard to the cost of utilising sludge on SRWC and is linked to the amount of effluent that can be applied per hectare. For the last group, SRWC is a substitute for other tertiary treatment systems. Here, the challenge lies in the purification capacity of willows relative to the establishment costs. AILE Life environent Wilwater Study of the economics and development potential of SRWC November

2 The reasoning behind any assessment of the economic potential for expansion must also take into account the non-economic motivations which led the project owners to consider SRWC, in particular: Independence and security (own energy production, long-term effluent application plan, creating local utilisation networks) Local or regional relationships (creating partnerships, collaboration, learning) Image (communications, promoting business). These six strategic directions are represented in the diagram below: Collaboration - create partnerships, networks - closer relationships with local people Production - for own consumption - for sale Protection - natural environment from direct disposal - water catchment area SRWC Communication - municipalities set an example - for greater acceptance Development - local networks in the area - new activities and services Application - sewage sludge - livestock wastes Project sponsor Main motivation for the project Other motivations Reference solutions Farmer Wood production, often on a littleor under-used plot Reduce work load Contribute to an innovation network Apply effluents or sludge if plot is suitable Maize Grassland Oilseed rape Reference crop varies depending on the productivity of the plot Farmer Application of livestock wastes or irrigation with treated effluents with the aim of reducing application area compared with other crops Enhance the value of livestock farming Wood production On-farm application using a tanker Effluent irrigation on grassland Municipality Land application of sewage sludge in the municipality when farmers cannot or do not want to use it. As with livestock wastes, the expected aim was to reduce the areas to which sludge is applied Communication with the population: SRWC is a safe, transparent non-food application Wood production, getting closer to local farmers Application to agricultural land with partial drying of sludge and liming Sludge drying and export 2 AILE Life environent Wilwater Study of the economics and development potential of SRWC November 2007

3 Municipality, industry Tertiary treatment of effluent to avoid disposal in the natural environment Communication with the population, enhance image: Wood production Storage of effluent during the summer Installation of one of the following systems: Infiltration beds, percolation through sand, surface application Municipality Protect the water catchment area Wood production Identify the catchment area through long-term planting Establishing grassland Forestation 2. Economic study 2.1. Crop stages Under the Wilwater programme, a well-managed system was established in Brittany with average costs as follows: Operation Soil preparation: Destruction of plant cover/ Ploughing/Surface soil cultivation Soil improvement Pest control Germination inhibitor (pre-emergence) Planting Plantation maintenance: inter-row weed cutting Field-scale post-emergence weed control Inter-row post-emergence weed control Cutback Effluent application Cost without development costs or plot edge Basic system Options 250 /ha 100 /ha 90 /ha 305 /ha /ha 85 /ha 140 /ha 70 /ha 60 /ha 3-4 /m 3-0 if made available /ha 400 /ha 2.2. Harvest Two harvesting methods were identified during the programme 1 : Rod harvester Forage harvester with special harvesting header 1 For more detail, see the specific report on equipment AILE Life environent Wilwater Study of the economics and development potential of SRWC November

4 Investment Maintenance Operation (hired equipment) Operation (fuel and labour) Other equipment Rod harvester Separate cutting and chopping, allowing more flexible planning and outdoor drying of rods ha/h Harvester costs 170,000 excl. tax A 70% subsidy may be granted under WILWATER, i.e. a residual annuity of 8350 over 7 years Maintenance is estimated at 5600 /year. Hire of 200HP tractor without driver (30 /h) 50l fuel oil per hectare 3-4 hours labour per hectare Distance of 1300 km/year (by comparison, chopping with a grab uses approx 150l fuel oil per hectare) Possibly, forestry skidder (with driver: /ha) Chopper (costs vary depending on type of chopper) Forage harvester with special harvesting header Cutting and chopping in one pass; silage-making process well known to farmers ha/h Header costs 85,000 excl. tax A 70% subsidy may be granted under WILWATER Forage harvester costs 160,000 and can be used for maize in the autumn and for willow in the winter, thus sharing the depreciation between the two crops. The residual annuity is 17,300 Maintenance is estimated at 10,000 /year, shared between maize and SRWC, plus 3,500 for fitting and removing headers 100l fuel oil per hectare 2-3 hours' labour per hectare Distance of 1300 km/year Trailers (2 or 3 depending on distance): 43 /h and per tractor-trailer pair Machines can harvest up to 250 hectares per season. Currently, with hectares per year, economic optimisation of harvest is a long way off: For harvesting of a small area the tractor-harvester pair is the most attractive option. But the cost of hiring the tractor, which is proportional to the area harvested, means that costs increase as the area increases. When the crop is harvested with the forage harvester, chopping of wet wood causes dry matter losses during storage: 10-15% losses. Given the climatic conditions in Brittany, it was considered wiser and more reliable to choose two-stage harvesting (harvesting of whole rods then chopping when dry). Planning of the harvest is more flexible: work can start once the sap starts to fall and can continue until several weeks after the start of re-growth. The margins for progress over the costs of harvesting and chopping are therefore as follows: Increasing the area planted will make it possible to distribute the fixed costs of the harvester Optimising the shape of plots to reduce the need for skidding within the plot 4 AILE Life environent Wilwater Study of the economics and development potential of SRWC November 2007

5 2.3. Key points for the simulations Soil preparation, planting, weed control, inter-row cutting, cutback Low hypothesis High hypothesis Planting SRWC excl tax/ha excl tax/ha Includes 1800 /ha planting costs (cuttings+planting) with soil improvement, pest control, post-emergence weed control Effluent application (1-2 times in 3 years) Harvesting of willow (every 3 years) ( excl tax/ha) 850 excl tax/ha excl tax/ha Harvesting (STEMSTER), chopping, transport to barn Optimised harvester utilisation over 200 hectares per year Current situation Annual cost of the crop over 20 years with effluent application 424 excl tax/ha/year 824 excl tax/ha/year without effluent application 370 excl tax/ha/year 680 excl tax/ha/year Cost of wood storage (25% m.c.) 6 /t 36 /t Agricultural barn for reprocessing New hub without subsidy Forecast yield (25% m.c.) 10,7 t/ha/year 13,3 t/ha/year The establishment costs are currently under control because of technical management of the planting conditions. The three parameters which determine the profitability of the crop are as follows: Effluent application: costs must be controlled as far as possible in terms of composition and dryness of the effluents. Harvest: this stage is the most difficult because control of costs is linked principally to crop development. Storage: control of storage costs is not specific to SRWC but is an important factor. 3. Methods of using the wood SRWC can be integrated into two methods of using the wood supply: - a multi-product system processing large quantities of wood from sawmill and forestry waste. The wood is collected at storage/drying hubs which can supply medium- to high-powered boilers. The fuel supplied is differentiated according to the characteristics of the boiler. - a local system, using local resources, particularly from the bocage. These local hubs, organised around a central barn or using the storage capacity of wood suppliers, are designed to supply small boilers. Willow stems may also be used to protect river banks, for landscaping of urban parks (live barriers) and in basketwork. AILE Life environent Wilwater Study of the economics and development potential of SRWC November

6 Profitability Fuel properties Local system Direct consumption in individual boilers on farms Small to medium-sized municipal boiler via local hub or local storage Farmers have on-site storage and handling equipment no need to create an underground bunker Care must be taken with chip size, storage conditions and moisture content Wood has higher value after drying (up to 75 /t) Care must be taken with storage and removal costs. Investigate whether it is possible to use existing barns. Care must be taken re: costs of a boiler project with a heating network Small chips 25% m.c. Fine to medium sized chips 25-35% m.c. Multiproduct system All sizes of boiler via regional hub Industrial or municipal boiler using wet chips (45%) Regular application, no storage. May be possible to transport whole stems by lorry Low recovery cost (e.g. 28 /t as wet chips probably around 20 /t as wet stems) Regular application, no drying Low recovery cost to be negotiated directly All types of fuel Large chips 45-60% m.c. 4. Economic comparisons and factors for success The figures are calculated for 6 harvesting cycles over 20 years, based on current harvesting costs and optimised harvesting costs (200 ha per year without skidding), and should therefore be regarded as attainable in the medium term. Yield 150 m 3 /ha Optimised harvest cost 5.6 /m 3 Current harvest cost 12 /m 3 Price of wet chips 28 /t Price of dry chips (excluding delivery) 78 /t Cost of agricultural drying 2 /m 3 Cost of platform drying 6 /m 3 6 AILE Life environent Wilwater Study of the economics and development potential of SRWC November 2007

7 4.1. Aim: fuel production It is vital to be able to mechanise the crop and if possible retain the option of applying effluents. Little land availability Plot not suitable for mechanisation or sludge application (slope, too wet) Land available on the farm alongside animal production Plot with good load-bearing capacity and suitable for waste application Livestock waste available Effluents provided free of charge by municipality, industry or neighbouring farmer Own consumption or sale to local hub Willow growing also helps to reduce work peaks, particularly in the spring (no soil cultivation or drilling) from the third year. On the farm, the planting and harvesting costs are lower (no labour costs). Gross margin per hectare Optimised harvest Currently No effluent application *, sale of wet chips /ha/year No effluent application *, own consumption /ha/year With effluent application, sale of wet chips /ha/year With effluent application, own consumption /ha/year Reference solution: Grassland - maize /ha/year * yield not guaranteed in the long term 4.2. Aim: purification of livestock wastes when there is a surplus The fertiliser applied must be balanced in terms of the three elements (N, P, K) Unbalanced effluents (e.g. very high phosphorus or potassium content) Effluent with low content (rinse and washdown "white" and "green" water) utilises evapotranspiration capacity Direct incorporation of slurry Own consumption or sale to local hub SRWC does not reduce the area to which effluents are applied and is therefore of little benefit unless the wood is utilised Aim: reliable land application of sewage sludge The benefit of SRWC is that it allows a reliable application plan and provides a transparent application for sludge on a non-food crop Insufficient land available Local partnership for this work Problem of finding local applications for sludge (market garden crops) Own consumption, sale to a local hub or to neighbouring farmers However, SRWC does not reduce the area to which sludge is applied compared with traditional agricultural crops. Furthermore, the rapid growth of willow means that there are restrictions on sludge application: application is impossible during the third year after harvest, and in the second year application must take place early in the season and with precautions to avoid damaging the equipment or the willows. AILE Life environent Wilwater Study of the economics and development potential of SRWC November

8 The alternatives to application of sewage sludge to SRWC are: Agricultural application of slurries (additional liming may be necessary Agricultural application of partially dried and limed sludge More intensive drying followed by disposal at a landfill site Drying followed by incineration However, these last two options are not suitable for small municipalities because of the investment required. Cost per m 3 of sludge applied * Optimised harvest Currently Wood sold wet 1,3 9,9 /m 3 Wood used by farmers -9,7-1,1 /m 3 Wood used locally -4,3 4,3 /m 3 Reference solution: Agricultural application of slurries ** 3 /m 3 * 100 m 3 over three years on SRWC and 80m 3 over three years on agricultural land ** Application with tanker + trailing hose spreader in one pass at 80m 3 /ha Negative costs indicate revenue for the municipality If the wood is sold at a good price, the application and harvesting costs are compensated by the sale. Follow-up costs (sludge and soil analyses) are not included Agricultural application is the preferred solution. Application to SRWC does not provide an increase in the application rate per unit of area and therefore constitutes an additional cost to the municipality. In general, farmers are happy to accept sludge when supplementary liming is offered Aim: preventing or reducing disposal in aquatic environments Complete transparency with regard to the population, opportunity for local networks. Unbalanced effluents Discharge prohibited at low-water periods Availability of land around the treatment plant Own consumption, sale to a local hub or to neighbouring farmers Purification processes which can be used instead of fertigation on SRWC and can limit or even prevent discharge of effluents into watercourses: Surface application in a system of ridges, Infiltration/percolation through sand. Costs per hectare equivalent to 100 EQH Optimised harvest Currently Sale of wet chips /ha/year * Exchange with farmer /ha/year * Reference solution: Surface application Reference solution: Infiltration beds/percolation through sand Used locally /ha/year * 3200 /an/100 EQH ** 2700 /an/100 EQH *** * Includes 850 depreciation of the irrigation system (17,000 over 20 years) and 750 system maintenance ** Includes 1700 depreciation of the system (17,000 over 10 years) and 1500 system maintenance *** Includes 1800 system depreciation (72,400 over 10 years for 400 EQH) and 925 system maintenance 8 AILE Life environent Wilwater Study of the economics and development potential of SRWC November 2007

9 As for the two other systems proposed, installation of fertigation on SRWC requires the availability of sufficient land close to the main water treatment plant. Tertiary effluent treatment by SRWC is therefore an extensive method which is most suited to small, rural municipalities Aim: protection of drinking water catchment areas For the public, it is also important to mark the distinctive character of land in the water catchment area. The main benefit of SRWC, which offers permanent cover, is to trap runoff and nitrates. Plots which are difficult to access, sloping or wet, or water table too high Little opportunity for grass and difficulties in planting woodland (landscape, legislation, reluctance to change soil use, maintaining agricultural activity in the catchment area) Own consumption, sale to a local hub or to neighbouring farmers The main question for systems without fertiliser application is the expected yield in the long term. The success of weed control without chemicals is debatable. Gross margin per hectare Optimised harvest Currently Sale of wet chips /ha/year Exchange with farmers (harvest for use of chips) /ha/year Use by hub /ha/year Without sludge application, yields are not guaranteed in the long term 5. Factors for success by type of manager 5.1. Farmer Lower establishment and harvesting costs (no labour costs). Easy to organise harvesting, chopping, etc. On-farm storage and availability of handling equipment lower storage costs, sturdier boiler Currently, low profitability compared with food crops. Opportunity to reduce costs: Effluent application by a municipality, industry or neighbour in the application plan Municipalities and industry Irrigation with pre-treated waste water is profitable provided that the SRWC is well suited as a treatment system. There are several non-economic benefits for municipalities: partnerships, collaboration within the municipality, transparency on waste treatment, etc. Labour must be paid for, no opportunity to reduce costs. Difficult to organise storage or sale Opportunity to reduce costs: form partnerships with farmers (harvest against wood/storage in farm buildings) 5.3. Other possible applications SRWC could play a new role as an intermediary and complement to hedges: By reinforcing the role of some hedges as an ecological corridor, increasing the reserve potential of some wooded areas in the bocage. Utilising its purification capacity and establishing it along watercourses or at the break in a slope. AILE Life environent Wilwater Study of the economics and development potential of SRWC November