BioChain Project
Workpackage 1:
Value chain optimisation
DTU Management Engineering
June 19, 2013
Overal project relation
Input market
Output market
-Energy
Output market –
Fertilizer and
manure treatment
Environmental
impact
Logistics
Biomass
analysis
Logistics
2
DTU Management Engineering,
Technical University of Denmark
WP1
Scale effects
Logistics
Logistics
Scale effects
Input markets
Fertilizer and manure
treatment
3
DTU Management Engineering,
Technical University of Denmark
Energy markets
Certificates?
Optimisation Tool
Private
Socio Economic
Output markets
Output markets
Regulation and
financing
-
Ownership structures
-
Risk handling
-
Market structures
-
Choice of primary
output
-
Incentive regulation
-
Command & control
-
Optimal use of biomass
WP1 Value chain optimisation and modelling
Activities and present stage
• 2 PhD positions within value chain modelling and analysis
• 1 PhD modelling the value chain from an operational research background including
methods from stochastic programming
• 1 PhD modelling and analysing incentives, ownership structure and interaction with
national level energy model
Intensive collaboration between the 2 Phd’s on the model properties and integration
between plant level and national energy system level
• The positions are in the interview phase and will be filled from August 1.
• Last week an initial meeting with the Norwegian partner Østfoldforsking that will
contribute in the comparison of results from value chain optimisation under Danish and
Norwegian conditions/cases. Research exchange and supervision is also planned.
• A first optimisation model has been developed by a master student which will serve as
inspiration for the value chain modelling. This work used information and data from
visit at Måbjerg, Suppliers and Vinderup District Heating
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DTU Management Engineering,
Technical University of Denmark
Visit and sketch of BiogasChain Måbjerg
BioEnergy.
- Three parts of the chain
Måbjerg BioEnergy
Suppliers
Transporterer og leverer
valle fra Arla samt gylle
fra
• Svin
• Køer og
• Mink
5
DTU Management Engineering,
Technical University of Denmark
• Afgasser gyllen
• Renser gassen
• Forbehandler fibre
• Producerer varme
Vinderup heating
plant
Combined Heat and Power
plant
- Organisation and focus of value chain
Optimisation
Måbjerg BioEnergy
Suppliers
- Logistics
- Dry matter content
- Fertilizer value
phosphor content
- Incremental investments
- Supply obligations
- Insurance against stricter manure
regulation
Input markets
-
•Investment/financing/ ownership
•Risk hedging – input and outputs
•Regulation
•Logistics
•Choice of technology inputdependent (mink,
mesofilt)
•Number of treatment facilities – inputdependent (Arla)
•Public acceptance
Output markets
Energy markets
• Vinderup varmeværk
-
Output markets
Fertilizer and manure
treatment
6
DTU Management Engineering,
Technical University of Denmark
Valg af teknologi
Kvalitet af gas
Regulering og markeder
Forpligtigelse/ Risikoafdækning
Måbjerg BioEnergy and Vinderup District
Heating: Optimisation criteria vary and
flexibility on inputs conflicts with output/sales
risk to Måbjerg
Optimisation
Måbjerg BioEnergy
Suppliers
•Investment/financing/
ownership
•Risk hedging – input and
outputs
•Regulation
•Logistics
•Choice of technology input
dependent (mink, mesofilt)
•Number of treatment facilities
– input-dependent (Arla)
•Public acceptance
- Logistics
- Dry matter content
- Fertilizer value
- phosphor content
- Incremental
investments
- Supply obligations
- Insurance against
stricter manure regulation
Regulation and financing
Fertilizer and manure
treatment
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DTU Management Engineering,
Technical University of Denmark
- Choice of technology
- Quality of gas
- Regulation and
markets
Power price
fluctuations
- Heat supply
obligations
- Risk hedging
Output markets
Input markets
Output markets
Vinderup District
heating
-
Ownership structures
-
Risk handling
-
Market structures
-
Choice of primary output
-
Incentive regulation
-
Command & control
Energy markets
Risk and distribution of risk is an important
element for value and incentives
• Input costs – long term contracts for
supply (volume and price for manure)
(including treatment service)
• Input costs - flexible input mix of biomass
crops/waste (volume and price)
• Output biogas– long term contracts for
supply to CHP/upgrading plant or gas grid
(volume and/or price)
• Output biogas– long term alternative
option for use (access to variable volume local heat)
• Output – fertiliser (value) price will be
determined by competitive alternative
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DTU Management Engineering,
Technical University of Denmark
Risk reduction for risk averse
farmers and biogas plant
More flexible inputs
(technology+potentials) reduce
risk to biogas plant
Reduce risk to biogas plant if
price and volume risk covered –
risk reduction for CHP only for
price contract
Diverse distribution/use
channels reduce risk to biogas
plant
Risk reduction (volume) for
biogas plant
Organisation and incentives
Alternative organisational setup can change incentives and may reduce risks
- Assumption 3 independent entities – farmers – biogas plant – CHP/heat plant
• Integrated biogas plant – CHP
Måbjerg Vinderup
- optimise the use of the biogas resource (fixed flow)
Bioenergy Fjernvarme
- optimise a short term biogas storage with power prices
- reduce the volume risk for biogas demand (biogas plant part)
Måbjerg LeverandørBioenergy foreningen
• Integrated biogas plant – suppliers/farmers
- farmers and biogas plants eliminate the conflicting price incentive from the input
manure price
- volume risk for manure supply reduced
Måbjerg Leverandør- Vinderup
Bioenergy foreningen Fjernvarme
• Integrated biogas plant, farmers + local heating plant (district or CHP) demand
- reduce the price conflict between entities and reduce heat demand uncertainty
- reduce uncertainty on future heating supply costs
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DTU Management Engineering,
Technical University of Denmark
Scale effects – economies of scale
• Collection costs and density of resources
– trade off between distance and size of resource
• Scale of biogas plant
• Scale and costs of biogas storage
• Scale of upgrading facility and costs
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DTU Management Engineering,
Technical University of Denmark
Scale effects for biogas plant– possible
Excess supply
tradeoff
of biogas
Costs
locally/demand
risk
Expected
“flaring” costs
Average
production
costs
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DTU Management Engineering,
Technical University of Denmark
Scale of biogas
plant
Biogas plant
modelled costs and constraints
• Investments
–
–
–
–
–
–
–
Funktion af mængde
Type(meso/termofilt)
HRT(hydraulic retention time)
Varmeforbruget
Varmetab, varmegenanvendelse
Biogasproduktion antaget konstant
Høj investerings omkostning - lavt
varmeforbrug,
Lav investeringsomkostning – højt
varmeforbrug
• Operational costs
–
–
–
–
–
Varme
Elektricitet
Løn
Vedligeholdelse
Administration
• Biogasmotor(Inputmængde)
– Dække varmebehov
– Forbedre egen økonomi
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DTU Management Engineering,
Technical University of Denmark