Equipment company has strong biomass knowledge-base

AGCO is well-equipped to aid the first U.S. cellulosic ethanol plants in devising efficient and effective feedstock supply chain models. This article is titled "From Blueprint to Baler" in the October issue of EPM.
By Anna Simet | September 11, 2015

Name the crop, and AGCO has baled it. Extensive work with kenaf, hemp, miscanthus, energy sorghum, energy cane, switchgrass and corn stalks—nearly all nonwoody biomass—has allowed the company to build a tremendous knowledge base of how to treat each material and bring success to a project, says Glenn Farris, AGCO North American biomass and industrials segment strategy manager.  “We can bale it all, but we’ll just say some are certainly more challenging than others,” he quips.

It hasn’t come without trial and error, but that’s the name of the game in this burgeoning industry, according to Farris. Of late, the focus has been on corn stover, and on what he dubs the Big Three—Abengoa’s, DuPont’s and Poet-DSM’s commercial-scale cellulosic ethanol plants in Hugoton, Kansas; Nevada, Iowa; and Emmetsburg, Iowa, respectively. At Abengoa, Pacific Ag does 100 percent of the feedstock supply, and uses AGCO balers exclusively. Investment for the machines needed to complete the feedstock supply chain amount to much more than one might think—a typical-size, 25 to 30 MMgy cellulosic ethanol plant requires around 350,000 dry tons of stover per year, which equates to as many as 60 balers and windrowers when the project is fully open, and a total of around 350 pieces of equipment. Therefore, on top of the roughly $200 million cost to build a plant, an additional $40 million investment is required for machines alone.

Right now, the market for large square balers in this industry is around 1,600 units, Farris says, but potential is vast. If cellulosic fuel production projections are achieved—1 billion gallons by 2023—that could ratchet up the market to roughly 4,000 balers, for corn stover specifically. “That’s more than two and a half times the existing market, including the other uses the balers are used for,” Farris says.

With corn stover in mind, the company’s 2200 Series large square baler has a simplistic, robust design, with high throughput and density. AGCO’s WR9870 windrower with biomass attachments has a Twin Max double conditioning system, which Kyle Kitt, marketing manager of hay cutting, preparation and forage, says no other player in the market offers. But regardless of a machine’s capability or reliability, if the operator isn’t well-trained, overall efficiencies can plummet. “No matter how great a product is, if you don’t have the knowledge to make it shine, it will only get you so far,” Kitt says.

Practice Makes Perfect
AGCO has developed a service and training coaching model that has served the company and its customers well. “Two years ago, we had 100 new operators at a project, and of those 100, approximately 82 of them had never participated in a baling activity before,” Farris says. “Out of those 82, 56 had never sat in a tractor before. Within three weeks of the start, they were doing an outstanding job and achieved every goal that was set for them.”

“We don’t have 30-year veterans running this equipment, and that’s why technology is so important—it allows these companies to monitor performance and see efficiencies improve over time,” Kitt adds.

For example, in 2012, AGCO spent time analyzing what was going on with several of the projects it was involved in, and found its baler performance to be right on, but the learning curve was how to optimize them in each environment. “That’s what generated all of our training—we believed our piece of the puzzle was very good, but it has to start at the operator and their understanding—we’ve found that less than 30 percent of the issues are on equipment,” Kitt says.

And despite many years of preparation, even beyond operator performance, learn-as-they-go is the only way to perfect operations, as there is no point of reference to look back on. “They don’t have what the corn starch ethanol industry had—a system already in place, a commodities market, storage areas, the logistical chain. It all already existed, it just needed to expand for the new demand for supply,” Farris says. “When these project developers are planning, they can’t sit down and look at a historical price and predict what they think it will be; there is nowhere they can pick up a phone and ask if someone can send 100,000 tons of corn stover next month.”

And that’s where the biggest challenge lies—the development of a system, which couldn’t be done in earlier project development stages, when the focus was elsewhere. “When you look at how the industry has evolved, for years they [cellulosic ethanol companies] spent all of their time on their technology, and rightly so, as they are technology companies to a great degree,” Farris says. “So they solved problems there first.”

Now, with the Big Three all underway, the preferred feedstock system is in the making, and may or may not be one-size-fits-all. “We don’t know which is going to be ‘the one’, but we’re really getting into the knowledge of spare parts, the consumables, ways to keep costs down and how to optimize the machines,” Farris says.

Though AGCO has been wheels-deep in stover logistics, its work with biomass continues to expand beyond that crop and the U.S. market.

Other Markets, Road Ahead
One developing and two operational power projects in Chile and sugarcane baling in Brazil and Argentina are some examples of AGCO’s latest global biomass sector involvement, offers Ken Wagenbach, senior marketing specialist. Also attracting the company’s attention are developments in China, where the company already has operations and sees significant growth opportunity, and the EU, where AGCO is a major market force.

Opportunities abroad and outside the U.S. border are vast, but AGCO is still keeping a close eye on new and developing markets in the U.S. “I think there will continue to be a significant amount of growth in the pellet industry, not just for export, but for home and district heating,” Farris says. “A lot of that is woody biomass, but you might see ag waste and purpose-grown crops become a robust part of that market. There is a different set of economics around that, and it’s fairly compelling. I think another thing we’re starting to hear rumblings about is the use of wheat straw and miscanthus for pulping material.”

Although a watchful eye is kept on the renewable fuel standard (RFS), business doesn’t start or end there for AGCO, as the reality is that for them, growth will continue to happen, regardless of policy direction.  “I think [liquid] fuels will continue to grow, but each one of these companies is devoting a lot of their resources into the chemical areas, too, things that are used for building blocks for plastics, cosmetics and other higher-value products with large markets, so I think we’ll start seeing more of that in the near future,” Wagenbach says.

There are many more pieces to the puzzle than just fuel, from his perspective. “It’s also about agronomics and sustainability,” he says. “We’re not just totally interested in it for fuels; I think we’re looking at this as residue management from major cropping sources, as yields increase and crop genetics change.

Farris points out corn yields are steadily rising and current national averages hover around 175-plus bushels per acre, with forecasts to reach 200 within the next 15 years. “Yields for wheat are in the mid-40s; when you see them hit 65 to 70, there will be a need to take it off because it will be a detriment to yields.”

Therefore, the once-heavily debated argument surrounding crop residue removal will become nearly obsolete, and the concept will move from a potential detriment to an extra revenue stream. “All of a sudden, it’s going to go beyond a niche market for one company,” Kitt adds. “It will become every corn farmer’s opportunity.”
Author: Anna Simet
Managing Editor, Biomass Magazine