A linear programming model is used to analyze cost competiveness of biomass fuels in agricultural applications for the projected year 1990. with all else held constant, the prices of conventional fuels are increased and analytically compared to prices for biomass fuel products across a variety of end users. Potential penetration of biomass fuels is measured as the share of each conventional fuel for which cost savings could be realized by substituting biomass fuels.
This study examines the cost competitiveness of biomass fuels produced on farms, relative to conventional fuels (diesel, gasoline, natural gas, LPG, fuel oil, and electricity), as the prices of conventional fuels change. The study is targeted at the year 1990 and considers only fuel use in the agricultural sector.
The method of analysis is to project fuel demands for ten farm operations in the year 1990 and to match these with biomass fuel substitutes from ten feedstock and nine process alternatives. In all, 61 feedstock/process combinations are possible. The matching of fuel demands and biomass fuels occurs in a linear programming model that seeks to meet fuel demands at minimum cost. A complete description of demand projections, technologies, and the model appears in Bjornstad et al. (1982).
The model is solved for a series of real conventional fuel price increases, holding costs of biomass fuel substitutes constant, to determine the relative increases in central fuel prices necessary to bring about biomass fuel penetration. For each assumed rate of price increase, the model is run once under the assumption that penetration may be limited by projected feedstock availability and construction leadtimes, and a second time without these limits to estimate maximum penetration rates.
Two types of biomass fuel facilities are considered, assuming a decentralized fuel distribution system. The first includes onfarm production units such as oil presses, low-Bru gasifiers, biogas digestors and direct combustion units. The second type of facility would be run by a farm co-operative; it would capture some economies of scale but would by more costly than the large centralized facilities now used to produce vegetable oils for food or chemical industries. The primary data describing the biomass technologies are cost per unit output, where costs are calculated expenses, less any by-products of value. All costs assume commercial purchase of equipment. Homemade or makeshift installations are not considered.