The plight of the biomass power generation industry in China – A supply chain risk perspective

Renewable and Sustainable Energy Reviews 49 (2015) 680–692

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Renewable and Sustainable Energy Reviews journal homepage: www.elsevier.com/locate/rser

The plight of the biomass power generation industry in China – A supply chain risk perspective Liwei Liu, Junhong Ye, Yufei Zhao, Erdong Zhao n School of Economics and Management, North China Electric Power University, Beijing 102206, China

art ic l e i nf o

a b s t r a c t

Article history: Received 22 November 2013 Received in revised form 16 January 2015 Accepted 23 April 2015

For the past several years, the biomass power generation industry in China has witnessed notably rapid development. However, many biomass power generation manufacturers in China are currently making small profits or suffering losses, and the entire biomass supply chain does not function well, which not only poses a challenge for the stable operation of enterprises but also may impact the smooth development of the biomass power industry. From the perspective of supply chain risk, this paper explores the reasons for the current plight and the future obstacles that the Chinese biomass power generation industry may face. Identifying such risks as market risk, production risk, technology risk, economic risk and management risk in the upstream, midstream and downstream of the biomass supply chain and ordering the degrees of risk controllability by the government and enterprises, it is determined that joint effort by both the Chinese Government and the biomass power generation enterprises is an ideal choice for risk control coming out of the plight. However, at present, more problems should go to the government for solutions than to the enterprises. To guide the healthy development of the industry, the Chinese government should play a more prominent role in promulgating supporting policies in each stage of the supply chain and strengthening the supervision and control of biomass projects. Last, specific measures taken by the Chinese Government and the enterprises are proposed. & 2015 Elsevier Ltd. All rights reserved.

Keywords: Biomass power generation industry Supply chain Risk

Contents 1. 2.

3.

n

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 681 Current situation of biomass power generation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 2.1. Installed capacity and power generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 2.2. Power source structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 2.3. Distribution of biomass power plants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684 2.4. Development plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685 2.5. Policy support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 686 Biomass supply chain risk analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 686 3.1. Upstream risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 687 3.1.1. Market risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 687 3.1.2. Production risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 687 3.1.3. Policy risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 687 3.1.4. Technology risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 687 3.2. Midstream risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 687 3.2.1. Economic risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 687 3.2.2. Management risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688 3.2.3. Policy risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688 3.2.4. Technology risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 688 3.3. Downstream risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 3.3.1. Policy and market risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690

Corresponding author. Tel.: þ 86 13911920560. E-mail address: [email protected] (E. Zhao).

http://dx.doi.org/10.1016/j.rser.2015.04.151 1364-0321/& 2015 Elsevier Ltd. All rights reserved.

L. Liu et al. / Renewable and Sustainable Energy Reviews 49 (2015) 680–692

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3.3.2. Management risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 Measures by the government and the enterprises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 4.1. Measures to be taken by the government . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 4.1.1. Perfecting the supporting policies and mechanisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 4.1.2. Strengthening the central government's supervision and control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 4.1.3. Speeding up technological innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 4.2. Measures to be taken by enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 4.2.1. Improving the internal management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 4.2.2. Transforming technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 4.2.3. Expanding financing channels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 4.2.4. Taking preventive measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 690 4.3. Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691 5. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691 Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691

4.

1. Introduction Released on Oct. 24, 2012, the White Paper “China's Energy Policy 2012” noted that the development of new energy and renewable energy is an important strategic measure to accelerate the diversified development of clean energy and cultivate strategic new industry [1]. In China's Mid- and Long-Term Renewable Energy Development Plan, a target for biomass power development has been put forward: By the end of 2020, the installed capacity of biomass power generation will reach 30 million kW [2]. According to the country's 12th Five-Year Plan (2011–2015), the installed capacity of biomass power generation will reach 13 million kW, an increase of 160% compared with 2010 [3]. Being strategically one of the most important new industries, the biomass power generation industry in China is facing unprecedented opportunity for development. However, the development of the biomass power generation industry has not been ideal. Since 2010, most of the power plants

have been running at a loss, approximately 10 million per year, and approximately 70% enterprises throughout the country have faced losses [4–9]. In 2009, 10 out of 12 straw power generation enterprises in Jiangsu Province, one of the areas where straw combustion power plants are concentrated, operated at a loss [10]. Biomass power generation manufacturers have encountered a series of difficulties in the production process, such as high fuel costs caused by the purchasing of straw, transportation and storage, production disruption due to unqualified biomass power generation equipment and technology and difficulty connecting with the grid. The supply chain of biomass power generation is more complicated compared with those of wind power and solar power generation. Biomass energy is complicated due to the bulky, distributed nature of biomass feed stocks and the high volumes of the relatively low energy density materials that have to be moved to the conversion equipment. In contrast, the energy resources of solar and wind energy are more straightforward and ‘delivered’ to the energy conversion technology by nature. The equipment captures

Table 1 Main patterns of the straw supply in the supply chain optimization of biomass power generation. Pattern Straw planting base pattern

Main features “Straw planting base þ Biomass collection and storage company”

   

“Power plant þ Baseþ Farmer”

 Farmers are employed by the straw base;  Farmers are motivated to produce more straw resources by the contracts with motivation;  The power plants encourage the bases to collect and support straw production by the

Literature

[26] Farmers are not employed; Farmers' lands are rented by the bases; The crops planted and straw obtained by the farmers would be retrieved by the power plants; By establishing biomass collection and storage companies by the biomass plants, the straw could be sent to the plants more effectively and efficiently. [27]

feedback/punishment contracts;

 The model could maximize the benefits of the three parties to assure the straw supply. Government intervention pattern

“Biomass power plants þ Intermediate buyerþ Farmers”

 Government plays an important role in incentive policies;  The sequential Nash equilibrium among biomass power plants, intermediate buyer and

[28,29]

farmers is achieved;

 The incentives provided by the government to the farmers could enhance the benefit of intermediate buyer and power plants as well as the farmers.

“Farmers þ Power stations þ Government”

[30]  The government works as a coordinator.  The government would charge the farmers a certain amount of deposit when they buy crop seeds. The deposit would be returned after they sell the straw to the biomass power plants.

 The government would urge the biomass power generation plants to purchase the straw from the famers by means of levying. Third party logistics (TPL) pattern

“Energy companies þTPL providersþ Farmers”

 More superior in the supply reliability.  Complete service, appropriate technological support, stable market and price, and solid cooperation relationship would promote willingness of the farmers to sell.

[31]

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L. Liu et al. / Renewable and Sustainable Energy Reviews 49 (2015) 680–692

natural energy in its immediate environment, converts it to electricity and then moves it to where it is needed via transmission lines [11]. Furthermore, biomass and fossil materials differ mainly in the fact that biomass remains a biologically living matter and is chemically active throughout the supply chain whereas fossil fuels can be considered biologically inert. This difference affects the risk during handling and storing [12]. More importantly, bioenergy production systems feature high levels of complexity, involving different market segments and supply chain actors [13]. Various segments of the biomass supply chain require unique sets of knowledge, technology and activity, including growing, harvesting, transporting, aggregating, storing and converting biomass. Depending on the biomass type and the conversion technology used, preprocessing may also be a necessary step along the pathway from the land to energy use. The various stages along the biomass supply chain are frequently interdependent and interconnected, with changes in productivity and technology in one stage affecting those in other stages [14]. The current operational plight occurring in Chinese biomass power plants reflects the dysfunction situation of the biomass supply chain as a whole. Each member in the chain is self-centered, as opposed to cooperative, lacking linking ties and coordinated mechanisms. Research on the development of the biomass power generation industry in China only started in recent years and has mainly focused on the technology, policy and industry environment; the status of industrial development; the driving forces of biomass power generation, etc. [15–23]. Some Chinese literature discusses the development of the biomass power generation industry from the perspective of supply chain optimization [24,25], mostly aiming at solving the issues of reliability and supply costs in the upstream. Three types of solution are discussed to ensure supply reliability, namely, the “straw planting base” pattern, the “government intervention” pattern and the “third party logistics” pattern (Table 1). In the “straw planting base pattern”, Qian and Tang [26] suggested “planting baseþ storage company”, an integrated supply chain system in which the biomass power plants, suppliers, service providers and demanders could form an organic integration and achieve overall optimization. Biomass power plants rent farmers' land and set up their own straw planting base, and the crops and straw planted by farmers are retrieved. The establishment of biomass collection and storage companies by biomass plants will be helpful for the effective and efficient delivery of straw. Huang and Zhang [27] also put forward the “planting base pattern,” but introducing new members. In the “power plantþbaseþfarmer” pattern, farmers are employed by the straw base and would be motivated to produce more straw resources by contracts with incentives. Power plants would encourage the bases to collect and support straw production

Fig. 1. Installed capacity and power generation of China's biomass power in 2005–2013. Sources: [33,34].

by feedback/punishment contracts. The model could maximize the benefits of the three parties to ensure the straw supply. In the government intervention model, the government is treated as an incentive provider or coordinator. Wang [28,29] used game theory methods to model the BSC quantitatively and obtained a sequential Nash equilibrium among biomass power plants, intermediate buyer and farmers. The incentives provided by the government to farmers could also enhance the benefits of intermediate buyer and power plants. The government plays an important role in the supply chain, and reasonable policies would directly influence the stable operation of biomass power plants. Xiang et al. [30] used game theory to analyze the actions of farmers, power stations and the government in the power generation of biomass straw fuel and found a pure strategy Nash equilibrium. In this pattern, the government worked as a coordinator. The farmers would be charged a certain amount of deposit by the government when they buy crop seeds. After they sell the straw to the biomass power plants, they can get the deposit back. At the same time, the government would urge biomass power generation plants to purchase straw from famers by means of levying. With regard to the third pattern, Pan et al. [31] proposed that the innovated supply logistics of “energy companiesþTPL providersþ farmers” was superior to “energy companyþfarmers” and “energy companiesþintermediatesþfarmers” in the aspect of supply reliability. Moreover, more complete service and appropriate technological support, a stable market and price and solid cooperation relationship would promote the willingness of farmers to sell straw. To minimize supply costs, Liang et al. [32] researched the performance evaluation of different biomass supply organizations based on system dynamics and found that the combination of

Fig. 2. Power source structure of China's biomass power in 2013. Source: [34].

L. Liu et al. / Renewable and Sustainable Energy Reviews 49 (2015) 680–692

“wheat stalk þcotton stalk” was better than “rice stalk þcotton stalk” in the supply of raw materials; further, suitable pretreatment could reduce the logistics cost. More specifically, the drying technology is applicable in the supply chain of biomass-based power generation. The “squeezing þdrying” pretreatment is more suitable for short distance transportation, and “compression þdrying” is more suitable for long distance transportation. The above-mentioned literature would help to solve the problems of straw collection, lower the supply cost and avoid the risks of regional fuel supply shortages in the upstream. However, there are several risks in the biomass power generation supply chain in China that have not been mentioned much in the literature. Literature from the perspective of supply chain risk identification, avoidance and control at each stage is relatively rare. Obviously, for the biomass power generation industry in China, a young and vulnerable industry, there are still several dangers and uncertainty

683

looming ahead. Therefore, the analysis on the supply chain risk is quite crucial for the industry development under the serious circumstances of the biomass power generation industry in China. This paper make the three following contributions: first, it systematically analyzes the reasons for the current operational plight of China's biomass power generation industry from the perspective of risk at each stage of the supply chain. Second, by identifying risks in the downstream, midstream and upstream, an overall picture of the risks in the process of fuel attainment, transportation, storage, production and grid feed-in is depicted. Third, the order of the degree of risk controllability by the government is almost opposite to that of enterprises, which implies that more risks should go to the government for solutions than to enterprises. Related authorities in the Chinese government should make responsive measures to help the industry come out of the current difficulties.

Fig. 3. Distribution of straw resources and straw direct combustion power generation plants.

Table 2 The installed capacity in different areas in China in 2009. Sources: [17]. Area

Province

Installed capacity (MW)

The percentage of installed capacity (%)

East China Middle China Northeast China North China Southwest China Northwest China Total

Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi, Shandong Henan, Hubei, Guangdong, Guangxi, Hainan Liaoning, Jilin, Heilongjiang Beijing, Tianjin, Hebei, Shanxi, Inner Mongolia Chongqing, Sichuan, Guizhou, Yunnan, Tibet Shanxi, Gansu, Qinghai, Ningxia, Xinjiang

2111 923 628 358 131 122 4273

49 22 15 8 3 3 100

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This paper is organized as follows: Section 2 introduces the status quo of the biomass power generation industry, aiming to present an integrated market and policy framework. Section 3 discusses the biomass power plants risks in the upstream, midstream and downstream of the supply chain. Section 4 offers control and prevention measures for biomass power plants supply chain risk for the government and enterprises. Section 5 presents the paper's conclusions.

2. Current situation of biomass power generation 2.1. Installed capacity and power generation Since the implementation of the Renewable Energy Law in 2006, China's biomass power industry has made significant progress, and the total installed capacity of biomass power generation has entered a period of rapid growth. According to statistics, the installed capacity increased from 2.0 GW in 2005 to 7.8 GW in 2013 [33,34]. The biomass power generation increased from 5.2 TW h in 2005 to 33.7 TW h in 2012 (Fig. 1) [34]. 2.2. Power source structure Direct combustion of straw is the main form of biomass power generation in China. In 2005, the National Development and Reform

Fig. 4. China's installed capacity of electric power to be achieved in 2015. Source: [35].

Fig. 5. China's policies on the targets of renewable energy from 2005 to 2013. Sources: [36].

Commission (NDRC) approved the first three projects, Rudong in Jiangsu Province (Jiangsu Guoxin Rudong Biomass Power Generation Co. Ltd.), Shanxian in Shandong Province (National Bioenergy Co. Ltd.) and Jinzhou in Hebei Province (China Guodian Corporation), which were preludes to the development of straw direct combustion power generation in China [17]. By the end of 2008, 39 straw direct combustion power generation projects, with a total installed capacity of 1284 MW, had been approved by the central and provincial government authorities [16]. In 2013, the total installed capacity of biomass power reached 7.8 GW, of which straw direct combustion power generation accounted for 4.2 GW, waste incineration power generation accounted for 3.4 GW and biogas power generation and the others accounted for 0.19 GW (Fig. 2) [34]. 2.3. Distribution of biomass power plants In China, the biomass power plants are concentrated in Eastern China, Middle China and Northeast China and are overly densely distributed in Jiangsu, Hubei and Shandong Provinces. The alreadyapproved straw direct combustion biomass power plants are sorted and shown in Fig. 3. The installed capacity of the eastern, middle and northeastern parts of China totaled 3662 MW in 2009, accounting for 86% of the total installed capacity in China (Table 2) [17]. One reason for this distribution pattern is mainly due to the distribution features of the endowment of biomass resources. In China, Eastern China,

L. Liu et al. / Renewable and Sustainable Energy Reviews 49 (2015) 680–692

Middle China and Northeast China abound in straw resources (Fig. 3). A lack of rational local planning and rapid project examination and approval by the local government may also contribute to the fast expansion and overly dense distribution of biomass power plants in the three above-mentioned provinces. The soaring increase in demand for fuels has resulted in excessive competition among plants. 2.4. Development plan To achieve China's long-term plan to cut carbon intensity by 40–45% by 2020 relative to 2005 level, renewable energy of all

685

forms will be expanded considerably according to the 12th FiveYear Plan. China intends to push the use of non-fossil fuels to 11.4% of the country's total energy use by 2015 and 15% by 2020. The power generated with renewable energy will occupy more than 20% of the total power generated by 2015. By the end of 2015, the installed capacity of biomass will reach 13 GW. China's energy structure will change significantly. The development of renewable energy such as biomass, wind and solar power generation and increased investment in renewable energy will be the trend of China's economy. Fig. 4 [35] shows the installed capacity to be achieved in 2015.

Table 3 The main support policies for the biomass power generation industry in China. Document

Effective time

Policies on financial subsidy Interim Measures on Additional Income Allocation of Renewable Energy 2007/1/1 Electricity Price

Interim Measures on Additional Income Allocation of Renewable Energy 2007/1/1 Electricity Price

Interim Measures on the Management of Subsidy Funds For Bio energy and Bio Chemical Raw Material Base Interim Measures for Management on Subsidy of Energy-oriented Utilization of Straw

2007/9/ 20 2008/11

Notification on Call for Application for Subsidy Funds for Bioenergy and 2011/10/ Biochemical Raw Material Base 10 Tax preferential policies Implementation Regulations of Enterprise Income Tax Law of People's 2008/1 Republic of China Detailed Rules of the Implementation of the Provisional Regulations on 2009/1/1 Value-added Tax Notification on Adjusting and Improving the Value-added Tax Policies of 2011/8/1 the Products and Labor Services for Comprehensive Utilization of Resources Price subsidies policies Trial Implementation Measures on Renewable Energy Electricity Price and Expenses Allocation

2006/1/1

Notification on Improving Pricing Policies of Agricultural and Forestry Residues Power Generation

2010/7/ 18

Feed-in support policy Renewable energy law

2006/1/1

The Interim Measures for the Management of Distributed Power Generation

2013/7/ 18

Farmer

Main content

Subsidy beneficiary: Public independent electricity system with national investment or subsidies Subsidy amount: the part that operation and maintenance charge is higher than the locally provincial power grid average sales price. Subsidy beneficiary: Electricity price of renewable energy power generation ongrid projects; According to the line length, (0.001 Yuan/kW h o 50 km; 0.002 Yuan/kW h 50 km – 100 km; 0.003 Yuan/kW h 4100 km) Subsidies for the forestry raw material base: 3000 Yuan/ha Subsidies for the agricultural raw material base: 2700 Yuan/ha Subsidy beneficiary: Enterprises engaged in straw molding fuel, straw gasification, straw carbonization etc. Comprehensive subsidy will be provided by the central financial department according to a certain standard based on the categories and quantities of straw consumption. Application qualification was clarified.

Levy in 90% of tax rate Proportion of biomass Z 80% Offset input tax against output tax Proportion of biomass Z 80% Levy and refund totally

Benchmarking on-grid electricity price of coal desulfurization units in 2005 in each province (autonomous region, municipality directly under the central government)þsubsidies (0.25 Yuan/kW h) Benchmarking on-grid price is 0.75 Yuan/kW h.

Grid enterprises should sign feed-in agreements with those renewable energy power generation enterprises which have obtained administrative permission or submitted for record, should purchase on-grid electricity capacity of renewables of grid-connected renewable power generation projects, and should provide on-grid service. For distributed power generation of new energy, including biomass, power grid enterprises should provide efficient and network services based on its access methods, appropriate electricity scope. Related issues such as the way for gridconnection pricing are clarified. Subsidies on construction capital and generating capacity will be provided.

Fuel company Biomass power plant

Grid enterprises

Equipment company Upstream Fig. 6. The supply chain of biomass power generation industry. Source: [16].

Midstream

Downstream

End-user

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2.5. Policy support Since 2005, the Chinese government has issued several policies on the targets for renewable energy development (Fig. 5) [36]. The direct combustion biomass power generation industry in China is still in its infancy, with weak overall competitiveness and an inability to resist risk from the market. There are basically two types of supporting policies of biomass power generation (Table 3). One type is government policies to assure the total amount of grid-connected electricity from biomass power generation to be purchased. The other type involves economic stimulus policies on financial, tax and price subsidies. These policies, to a large extent, can promote the sustainable development of the biomass power generation industry [23].

3. Biomass supply chain risk analysis The first decades of the 21st century have seen a rapid expansion in biomass use for energy purposes in many countries and areas. Gold et al. [37] presented a literature review of articles published in English-speaking peer-reviewed journals from 2000 to 2009, which covered the interface of bioenergy production and issues of logistics and supply chain management. The issues and challenges of designing and operating biomass chains and securing stable and competitively priced feedstock supply for bioenergy plants were classified into (1) the operations of harvesting and collection, storage, transport, and pre-treatment techniques and (2) an overall supply system design. Allen et al. [38] presented the complex BSC (acronym for Biomass Supply Chain) system with inter-connected upstream and downstream supply chain decisions. Mohammad et al. [39] illustrated a number of logistics and technological challenges of biomass energy. Sharma et al. [40] studied BSC Equipment suppliers

modeling and identified key challenges. Liu et al. [41] mentioned that the biomass power generation industry chain in China was immature because of economic, technological, conceptual and a number of external factors. Dennis et al. [42] developed a framework for policy evaluation building on the supply chain steps. The risks in biomass power generation have been studied. These risks include those related to the quality and properties of biomass used during the biomass storage and the fluidization process itself [43]; technology issues in the exploitation and maintenance of equipment [44]; dryer types [45]; the multi-stage drying process [46,47,32]; technology-economics issues [48]; various environmental, technological and social challenges during biomass power generation [49]; policy issues such as feed-in tariff [50,51]; and government subsidies and biomass fuel price [52]. It is also widely acknowledged that to reduce risk, the overall supply chain design needs to be optimized [53]. Tools and technologies facilitating and improving the functioning of bioenergy supply chains relate to the areas logistics, conversion, biomass cultivation, and management [37]. López et al. [54] presented a new approach to determine the optimal supply area and location for biomass electric generation systems. Bojić et al. [55] used a mathematical model to determinate the capacity, type and location of solid biomass power plants by facilitating minimal

1 Direct acqusition 1

Farmer

2

Agents/groups

Collection stations 3

2

3 Indirect acqusition

Fig. 9. Straw purchasing patterns. Source: [66].

Market risk Upstream

Biomass material suppliers

Technology risk

Production risk

Biomass power generation enterprises

Midstream

Grid enterprises

Downstream

Management risk

Economic risk Policy risk Fig. 7. Supply chain risk of biomass power generation industry.

Fig. 8. Total output of crop in China from 2006 to 2012.

Supply chain risk of biomass power generation enterprise

Biomass power generation enterprise

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electricity generation costs. Others [56–60] contributed to the cost optimization modeling with various methodologies. The supply chain of the biomass power generation industry consists of farmers, a fuel supply group, the power equipment supplier, the biomass power generation plant, the grid enterprise and the enduser. The fuel company and equipment company belong to the supply chain upstream, and the grid enterprises belong to the supply chain downstream (Fig. 6) [16]. In this paper, we will systematically summarize and discuss the risks in different segments of the biomass power industry supply chain in China in accordance with the classification of the upstream, midstream and downstream (Fig. 7).

3.1. Upstream risk 3.1.1. Market risk Market risk is the risk of losses in positions arising from fluctuations in market prices [61]. Generally speaking, biomass power generation manufacturers are met with the challenge of a regional supply shortage in straw resources because the distribution of biomass power plants does not match with that of biomass resources, which leads to regional fuel supply inadequacy and the price of straw soaring. In terms of the total amount of the fuel from straw resources, it is rich enough to meet the biomass power plant fuel demand for the entire country. Based on the calculated output of several grains (Fig. 8), the straw output in 2015 is forecasted. According to an average growth rate of 3% per year of the crop output from 2006 to 2012 and with a crop straw ratio of 1:1.2, by 2015, China's main crop production will reach 824 million tons, and the straw supply will reach approximately 989 million tons. Thus, in this sense, the total amount of fuel can basically meet biomass power plants' demand. However, even though straw resources are abundant from the perspective of quantity, for the reasons mentioned in the 2.3., the contradiction between the concentration of biomass power plants and the low density of straw leads to regional shortage of straw resources. In general, the ideal purchasing radius of straw is 50 km. However, currently, abundant fuel within 50 km is not available for biomass power plants [5]. In 2008, the NDRC conducted an investigation in Suqian County in Jiangsu Province, Changge County in Henan Province, and Weixian and Jinzhou County in Hebei Province and found that the collection radius for four biomass power plants exceeded 100 km; some even reached 200 km [62]. Taking Jiangsu Province as an example, various manufacturers even “bid” to buy fuel, and several main fuel prices soared quickly. From 2007 to 2009, the price for rice straw and wheat straw rose from USD 30.89 to USD 40.65 per ton and from USD 45.53 to USD 50.41 per ton, respectively. Some power plants had to shut down or run at a loss due to shortage of fuel [10].

Fig. 10. The composition of straw cost of a biomass power plant in 2013. Source: [67].

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3.1.2. Production risk China is rich in various straw biomass resources, such as rice straw, corn straw, cotton stalks and soybean straw. Since 2006, China's grain annual output has witnessed continuously rapid growth, excluding a slight decrease in 2009. The straw output has also risen very quickly. However, being a type of by-product, straw output is directly affected by crop production. With the seasonality of biomass supplies and large variability in sources caused by maturity periods, natural disasters, weather, climate conditions and geography, the supply uncertainty of straw production leads to some production risk to the continuous and steady operation of biomass power plants. 3.1.3. Policy risk At present, the Sloping Land Conversion Program in China may lead to a sudden shortage of the biomass power plant fuel supply [63]. In 2002, the State Council began to implement the policies of the Sloping Land Conversion Program, which is aimed at protecting and improving the ecological environment, step by step stopping the farming of hilly and arable land to curb soil erosion and land desertification. The reduction of agricultural land brought about by this policy may be a menace to the supply of biomass fuel in the future. 3.1.4. Technology risk Appropriate pre-treatment technologies, such as drying, shredding and pelletizing, are important to the energy density and energy utilization efficiency of woody and agricultural waste [64]. Many key technologies have not been possessed by Chinese fuel companies and equipment companies. Some technical challenges still remain in the biomass pretreatment process. On one hand, most plants have not broken through to some core technologies [65]. Bottlenecks such as soft straw crushing and feeding systems, the combustion efficiency of boiler equipment and high-temperature corrosion resistance have not been solved yet. On the other hand, biomass pre-treatment technologies have extra costs, which scattered farmers and smallscale fuel companies may not be able to afford. 3.2. Midstream risk 3.2.1. Economic risk Direct acquisition and indirect acquisition are the two main straw purchasing patterns. Fig. 9 [66] shows the two purchasing patterns. Route 1 is the direct pattern: Farmers-Collection stations-Biomass power generation plant. Routes 2 and 3 belong to the indirect pattern. Route 2 follows the “Farmers-Agent/groups-Collection stationsBiomass power generation plant” path, and Route 3 involves pretreatment (such as straw packing) by middlemen (agent/straw purchase group) and directly delivering the straw to the biomass power plants. There are three main types of economic risks in the midstream:

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3.2.1.1. Direct purchasing pattern. In the direct purchasing pattern, farmers and biomass power plants do transactions directly. The farmer can directly deliver straw to the power plant, or the power plant can go directly to the farmers for purchasing. Two aspects of uncertainty and risks may occur in the direct purchasing process: The first is additional economic burdens in terms of land, infrastructure, facilities and labor. If new straw collection stations are needed, the plants will spend a lot on construction, including the purchasing of the pretreatment equipment such as straw transfers, handling and packaging arrangements, the cost of land and labor costs. Moreover, the overall distribution of straw resources in China is relatively dispersed, with an “island-like distribution” [20], which means the areas with straw resources are often independent of each other, and the straw output in each area is usually relatively small, even in areas abundant in straw resources. This feature objectively means that purchasing straw from scattered farmers by employing personnel will be an extra cost and investment. The second is uncertainty in farmers' intention to collect straw. Due to the low degree of agricultural mechanization and the difficulty of collecting a single variety of crop, it takes more manpower and material resources to bale, collect and transport straw. Usually, straw collection and rush in the harvest are always in the same period. Farmers tend to directly burn or leave straw to decay. In addition, straw resources can be used in many industries [24]. Fierce competition exists not only among the biomass power generation companies but also among the paper, chemical, wood, husbandry and other industries. If the purchase price offered by a biomass power plant is not attractive enough, farmers will be unwilling to trade with the biomass power plant. Some farmers even increase the price when there is a shortage of straw. In this case, biomass power manufacturers might have to accept this [29]. 3.2.1.2. Indirect purchasing pattern. The unstable agent/group is the key risk in the indirect purchasing process. In this pattern, there exists a third party between farmers and power plants. The strawpurchasing brokers or loose group can act as a third party playing the role of straw transfer. Straw goes from farmers through agents/ groups and collection stations and eventually reaches the biomass power plant (Fig. 9). Middlemen undertake the work of transferring and pretreating the straw. The straw-purchasing agent/group directly affects the supply of biomass fuels. An unstable agent/ group with profit making as its sole guidance will cause a certain risk to fuel supply. Usually, there are no longer term contracts between power generation plants and agents that clarify the fixed prices of straw resources within a certain period of time [32]. In particular, when straw is in short supply, some of the middlemen force up prices and make large profits, causing fuel costs to increase and difficulties in biomass power plant management [28]. 3.2.1.3. A high cost of straw. Straw has the characteristics of being large in size, low in density and easily perishable; thus, no matter what type of straw purchasing pattern plants may adopt, many costs will be involved in the process of straw collection, transfer and storage. Tan et al. [67], investigating one biomass power plant in Hebei Province (Fig. 10), found that the high cost of biomass power generation restricted the development of enterprises and straw collection costs accounted for 64% of the total cost of straw biomass power generation. Another study found that the price of straw increased by nearly 100% from purchase to eventually being put into the furnace [62]. 3.2.2. Management risk Biomass power plants in China in general are in the “early childhood” phase of the enterprise development cycle. Most of them are under six years old. In addition to the economic

environment and fierce competition within this industry, biomass power plants are also challenged by internal management difficulties brought about by the rapid development and expansion of plants. 3.2.2.1. Management lagging behind expansion. The rapid expansion of plants and insufficient personnel reserves represent internal management risks. Taking the Li Xian Biomass Power Plants owned by Hunan Li'ang Renewable Energy Power Co. Ltd. as an example, with the expansion of the straw purchasing radius, more straw collection stations needed to be established by plants. A raw material purchasing network covering six counties surrounding Li Xian was established, with more than 50 stations, 260 fuel suppliers and an annual supply of over 280,000 tons [68]. It was quite difficult to equip every station with suitable working and management staff in a short time. Due to loose management in the collection stations, some working staff colluded with farmers and made profits by cheating in terms of the straw weight and straw quality level, for example, mixing straw with water and sand. 3.2.2.2. Inadequate inspection and maintenance of the equipment. The biomass supply chain industry needs a large labor pool to support it. Because the majority of biomass power plants in China have been set up in recent years, the relevant technology personnel and professionals, such as personnel specializing in biomass power production, equipment operation and management, are insufficient [18]. Presently, the biomass power plant managers and operation personnel are mainly from thermal power plants and lack the experience needed regarding key technologies. Once equipment breaks down, reconditioning is often delayed. 3.2.3. Policy risk Biomass power generation in China is still in its initial stage. The policies issued to promote the development of biomass power generation still need to be improved. 3.2.3.1. Tax policies. Even though the “Renewable Energy Law” has been promulgated, the detailed implementation rules or regulations have not been published yet. The enterprises of biomass power generation enjoy preferential income taxes, which means the income tax for qualified enterprises will be exempted from the first year to the third year after they obtain operating income and the income taxes are levied in half for the next three years. Due to the income tax not being included in the cost of production, such preferential policies ultimately benefit only the generation companies and do not help reduce the cost of production. Moreover, biomass power generation plants do not enjoy value-added tax preference (except garbage power generation), that is, the policies of instant levy and instant refund. Government policy support is not enough in the VAT for biomass power generation [15,16,22]. 3.2.3.2. Financing policy. With regard to the financing policy of biomass power generation, there is no option of special preference. The Clean Development Mechanism (the Clean Development Mechanism or CDM) is one of the main financing channels of a company. Moreover, private investment is not permitted. Compared with renewable energy such as wind power, solar power and hydro power, biomass power generation is relatively smaller in scale, slower in development and with fewer financing channels [15,16]. 3.2.4. Technology risk The technology of the main and auxiliary equipment of biomass power generation is not yet mature. Risks are shown as follows:

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imports from foreign countries. However, due to the mismatch between domestic and foreign biomass power generation equipment, unplanned halts, a reduction of unit efficiency and even serious equipment accidents often occur [18]. For imported equipment that needs modification, due to immature domestic technology, the modification outcome is often not ideal [70].

3.2.4.1. Immature domestic technologies. The majority of Chinese straw power generation projects use domestic R&D technologies, most of which have not been tested for operation [69]. In pursuit of project progress and profit, many power generation plants usually directly use these immature technologies to start production. 3.2.4.2. Low adaptability of imported technologies. Imported foreign technology is not suitable for the Chinese situation. For example, due to the diversification of China's biomass power generation fuel, with rice husk straw, corn straw, bagasse, straw, sorghum straw, cotton straw, etc., boilers imported from abroad, which are designed based on a single type of fuel, cannot satisfy the requirements of China's biomass power generation. False bottom feeding bin technology, which is only suitable for gray straw, as opposed to yellow straw, is also employed in some power plants [19].

3.2.4.4. Low equipment efficiency and stability. Unexpected halts occasionally occur in biomass power plant during operation, and cause great losses and risk to the operation of power plants. Short equipment running hours and unplanned halts often occur in the crushing and feeding system during fuel pre-processing. Such phenomena as uneven broken fuel, high energy consumption, heavy wear and low generation are particularly serious in soft straw feeding systems. Currently, spiral feeding devices are widely used in domestic plants. This type of arrangement can guarantee sealing but is likely to wear due to the strong fiber strength and toughness that biomass fuels

3.2.4.3. Mismatch between domestic and foreign equipment. At present, key biomass power generation equipment depends on Table 4 Risks in the biomass power generation industry supply chain in China. Market risk Upstream

Production risk

Regional fuel Instability of fuel supply shortage supply due to fluctuation in crop output

Policy risk

Technology risk

Reduction of arable land by Sloping Land Conversion Program

Lack of key pretreatment technologies

 Immature

 Tax

Midstream

 

Only income tax preference No enough support in VAT

 Finance  Only CDM as the main finance channel  Limitation in private investment







domestic technologies Low adaptability of imported technologies Mismatch between domestic and foreign equipment Low equipment operating efficiency and stability

Economic risk

 Direct purchasing  Additional economic burden in land, infrastructure, facility and labor  Uncertainty in the farmers' intention to collect straw

 Management lagging behind expansion

 Inadequate inspection and maintenance of the equipment

 Indirect purchasing. The unstable agent/ group  High cost of straw

Lack of detailed supporting policies

Downstream Feed-in price on grid is lower than the cost.

Management risk

Network connection equipment management such as transmission line and equipment maintenance

Risk controllable degree Policy risk in whole supply chain

Economic risk in mid stream Market risk in up and down stream Technology risk in up and mid stream

Management risk in mid and down stream

Fig. 11. Supply chain risk controllable degree by different subjects.

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have. Inevitably, fuel between the helical blade and shell is likely to cause jams, affecting normal operation [71]. 3.3. Downstream risk 3.3.1. Policy and market risk The national policy on biomass power plays a decisive role on the biomass power feed-in tariff. The “Renewable Energy Law” serves only as a policy guidance and framework; its effective implementation must rely on a complete set of specific administrative rules and regulations and technology specifications [23]. Studies show that the unit investment of straw power generation ranges from 10,000 to 11,000 Yuan/kW, much higher than that of coal power projects. The per kW h cost of biomass power generation ranges from 0.80 to 1.0 Yuan. However, 0.75 Yuan/kW h consists of a benchmark price of 0.65 Yuan/kW h plus a subsidy of 0.1 Yuan/kW h. In accordance with the existing tariff levels, the projects still operate at a loss [17]. 3.3.2. Management risk Power generation plants are responsible for the network connection equipment management to ensure grid feed-in. Transmission lines, especially lines along the edge of the network, need to be constructed by biomass power plants themselves. When problems appear, the power generation plant must pay grid enterprises for maintenance [72]. Technology risk, management risk, market risk, production risk, economic risk and policy risk in the upstream, middle stream and downstream are summarized and shown in Table 4.

4. Measures by the government and the enterprises Risk analysis is the prerequisite for risk management. Risk controllability and uncontrollability is also a method to study supply chain risk management [73]. In this paper, enterprises and government are regarded as risk prevention subjects. According to the degree of risk controllability, the orders of risk control by the government and the biomass power generation plants are shown in Fig. 11. This figure demonstrates that the order of risk control by the government is almost opposite that of biomass power generation enterprises. The risks that are very difficult for the enterprise to control are very easy for the government, implying that controlling those risks should fall under the authority of the government, and more risks can go to the government than to enterprises. Therefore, the focal point for helping enterprises out of difficulties and steering the healthy development of biomass power generation development is government intervention in risk avoidance and control in fields such as policy adjustment, guidance and support in market supervising and regulating, preferential policy stipulating, technology innovation, professional personnel planning and training. 4.1. Measures to be taken by the government 4.1.1. Perfecting the supporting policies and mechanisms Firstly, to ensure the supply of fuel, some related mechanisms and policies for straw purchasing and straw pricing that can encourage and motivate farmers should be perfected. The relevant fiscal policy needs to be improved as soon as possible, e.g., with a preferential income tax rate of 90% for biomass power generation, VAT tax preference and subsidy policies. In addition, preferential loans for biomass power enterprises should be considered by the government. The implementation of a renewable energy quota system would help biomass power plants well prepared for fuel purchasing and production.

4.1.2. Strengthening the central government's supervision and control To avoid the risk brought about by the blindness and chaos of setting up biomass power plants, the central government should create unified and scientific planning of the construction of biomass power plants in accordance with the general situation and stipulate strict regulations on the examination and approval of biomass power plants as a constraint to abuses from the local government. More importantly, the performance of biomass straw power plants should be strictly supervised and controlled. 4.1.3. Speeding up technological innovation The Chinese government may invest and set up a biomass innovation center or engineering technology center in large stateowned enterprises to carry out applied research and system integration, which would be helpful to the industrialization of scientific and technological achievements. Moreover, the related governmental authorities can stipulate and improve the technology innovation policies, which would encourage collaboration between universities and colleges in China and enterprises. 4.2. Measures to be taken by enterprises 4.2.1. Improving the internal management For biomass power plants with collection centers, strict standards on straw-purchasing quality, including moisture capacity and degree of dryness of straw, should be clearly formulated, and cheating in the purchasing process by the collection center staff should be punished. It is also imperative to set up a team of professional staff with experience in both technology and management. 4.2.2. Transforming technology Production risk can be reduced through technological transformation and fixed-term equipment maintenance. Firstly, corresponding adaptive modification should be done in the early stage of equipment installation according to the actual situation of a power plant; Secondly, equipment preventive maintenance can effectively prevent machine wear and aging so that unplanned machine halt losses are reduced. 4.2.3. Expanding financing channels Biomass power plants should turn to internal and external financing channels to help themselves come out of the plight. Internal financing by means of strengthening internal management and cutting the cost of operations and management plays an important role for those plants during difficulties. In addition, these plants could also make use of their own advantages, actively seeking investment from the government, initial public offerings, privately owned enterprises and organizations and absorbing a variety of funds to meet the capital need. 4.2.4. Taking preventive measures Currently, making a straw-purchasing plan in advance and selecting the proper straw purchasing pattern are better ways to ensure the supply of straw. There is a contradiction between rigid, fixed and regular demand for biomass fuel and the seasonal supply of fuel. The biomass power plants should monitor and evaluate the influence of the raw material market change in terms of supply quantity, time, quality and long-term stability, and take competitive measures. In addition, different constraints of the purchase price, transportation costs, storage costs and the availability of biomass feedstock should also be analyzed [25]. In addition, biomass power plants could cultivate and stabilize their own agent teams by signing contracts with fixed prices within a certain period of time. A longer term contract between a

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purchasing agency or individual and the enterprise will ensure ontime and good quality supply. Of course, biomass power generation enterprises can also consider adopting third-party logistics. 4.3. Challenges Since 2003, investment decentralization has been implemented in China, following decentralization (1980–1993) and recentralization (1994–2002), given that an overemphasis on the centralization of authority is not good for fully utilizing the enthusiasm of local governments. Decentralization strongly stimulates the vigor of local economies [74]. Currently, the provincial government has the examination and approval authority of biomass power generation projects. Based on the requirements of the State Council, NDRC is discussing further delegating the examination and approval authority of renewable energy projects, including wind power, photovoltaic, hydropower and biomass power, to local governments [75,76]. Moreover, according to the development goal of the “12th Five-Year Plan”, some local governments may start a new round of large-scale construction. In 2012, the nine provinces intensively launched biomass power generation projects, and many provinces such as Jiangsu, Shandong and Sichuan also planned to build straw power plants in the next 3–5 years [4]. It can be expected that another round of repetitive investment, disorderly construction and blind expansion in biomass power generation projects may occur, due to which the surplus of production capacity will be more serious. Another challenge may lie in the strengthening of the central government's supervision and control over biomass projects. At present, there is no specific department to supervise and control biomass power projects. Some limited supervision and control do exist, but in the various individual and separate departments at different levels of the government. In pursuit of local economic development, biomass projects sometimes will be supported and protected by the local government, even if the laws and regulations are violated. In addition, the Chinese government still lacks sufficient capacity, skill and personnel to assess, supervise and control the performance, legitimacy, economic benefits and social benefits of state-owned biomass power generation projects. In fact, the supervision of state-owned enterprises is becoming an important issue, now paid attention to by the Chinese central government. The third challenge may be the expansion of financing channels by enterprises. According to the investors' risk-sharing mechanism, banks often invest in programs that have low risk and high profit. Biomass power generation programs are often faced with high risk and may not yield profits in the short term. It may be difficult to obtain funding from IPOs and banks [77].

5. Conclusions China is rich in biomass resources, and the biomass power industry has a bright future for utilization under the supporting policies of the Chinese government. However, because the industry is still in the initial stage of development and many Chinese straw biomass direct combustion power plants are facing operational difficulties, the industry is seeing multiple risks. In the upstream, the development of the biomass power generation supply chain is greatly influenced by market risk as regional supply shortages, policy risk brought about by the Sloping Land Conversion Program and technology risk. In the midstream, the technology risks seriously impact normal production and operation, which is mainly presented as immature domestic technologies and a mismatch between domestic and foreign equipment. In addition, the policy risks attributed to tax and financing policies, the economic risks in direct and indirect fuel purchasing and the management risk manifested in the shortage of experienced

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management staff and detailed management procedures all limit the healthy operation of the supply chain. The downstream is menaced by the risk that the power generated cannot be sold and the price on the grid is lower than the cost. The measures taken by enterprises to control risks are closely related to that of the government. The government should play a leading and dominant role in the health recovering and health building of the supply chain in the biomass power generation industry. Measures taken by the government can effectively compliment and strongly enhance the risk resistance and control capability of biomass power generation enterprises as well as the industry itself. The government should perfect the regulations and policies in tax, financing and the raw material market of biomass power. The central government's supervision and control of projects need to be strengthened. The speed of technological innovation needs to increase, and the feed-in of power generated by biomass must be reinforced. Biomass power generation enterprises need to strengthen their own internal management and learn how to make good plans for raw materials in advance to overcome these risks as soon as possible.

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