Welcome to the newest BULLER CENTRE BUSINESS
Who needs BIOMASS BROKERAGE?
- Biomass producers and processors wanting to sell
- Biomass users (and potential users) looking to buy
- Businesses wanting to process, ship and store biomass
- Biomass heating system designers, manufacturers, retailers and installers to find customers
- Businesses, homeowners, and institutions thinking about biomass heating.
This section of the website—like the business—is still in beta testing. That means we’re still in the Buller Centre Incubator, but we are alive and kicking. We now have a fully-functioning Access database listing the producers, consumers, processors, and shippers of biomass we know about in Manitoba, both current and potential. We are in the process of putting this database online. You can add your information to this database by filling out the form here. Adding your information entitles you to a free membership in BIOMASS BROKERAGE. Although the offline Access version is fully functioning, this online version is a work in progress. Although the focus of this project has been on Manitoba, the database is not limited by geography. We’re using Manitoba as a test-bed, to develop our business and work out the bugs. So, even if you’re not operating in Manitoba, feel free to join. Because shipping uses energy, we will be connecting buyers and sellers who are as close together as possible, but they can be anywhere in the world, and still use our services.
Biomass has the potential to be a significant source of energy in Manitoba, particularly for heating. Sourced primarily from “waste” by-products of current forestry and agricultural industries, biomass has the potential to take its place alongside natural gas, electricity, and geothermal exchange as a viable energy industry in our province. Currently, biomass is the least developed of Manitoba’s heating industries. A few commercial facilities, like Vanderveen’s Greenhouses in Morden, have been using biomass as a heating source. A significant number of home and cottage owners have been using pellet stoves for at least some of their heating requirements. However, as a viable option for heating on a commercial scale, biomass is roughly a decade behind geothermal exchange, and many decades behind electricity and natural gas. Significant steps have been taken, particularly over the past year, to move biomass from its current development stage into a commercialization stage. To mention only one of these steps, the Government of Manitoba announced a new Manitoba Biomass Energy Support Program in January 2012.
The Buller Centre for Business has been developing one of the essential elements of a viable biomass industry—a brokerage system to create and sustain a biomass energy infrastructure.
A Biomass Energy Infrastructure?
Every method of providing energy in Manitoba is built on a complex infrastructure. Natural gas, for example, is delivered through a physical storage and transmission system that took decades and millions of dollars to build, and requires more millions each year to maintain and operate. This system—like all energy systems—links together five processes: production, transportation, processing, storage, and consumption. A mature biomass system will also require an infrastructure to link together those processes. However, unlike natural gas, a biomass system will not require a physical infrastructure to link its components together. Instead, a biomass infrastructure will be virtual. Current and potential producers will need to be connected to current and potential consumers. Businesses and other organizations capable of transporting, processing, and storing biomass fuel will need to be connected to each other, and to the producers and consumers, in that system. Companies that can design, manufacture, install, or maintain biomass systems will also need to be able to connect to customers. Finally, a biomass infrastructure will require an element that other energy infrastructures do not—a method for dealing with the ash that biomass combustion produces. The infrastructure for biomass is, in some ways, more complex that the one for natural gas or electricity. There are multiple source materials. As well, when they are processed, they do not become a single commodity the way electricity or natural gas does. However, shipping and storage for biomass is, in some ways, simpler than for natural gas or electricity. First, it is a much safer fuel to handle. And, second, there is already a mature agricultural product handling industry, much of which can serve as double duty for biomass. Connecting all of these elements together will be simpler for biomass than it was for natural gas or electricity. Rather than pipes or wires, the elements of the biomass system can be connected by personal contact, phone, email, and the web. The best way to connect all of these elements together is though a brokerage.
At its most basic, a brokerage makes a market, linking buyers and sellers together. Brokerages are common in our society, although we don’t always notice them. The world-wide financial industry and the stock markets it contains are brokerages. Older businesses like Manitoba Buy & Sell, and new businesses like Kijiji and eBay are brokerages. Companies like Canadian Overseas Log & Lumber and Lumber Brokers Worldwide provide brokerage services for lumber producers and customers. Pellet Zone connects international wood pellet buyers and sellers together. The Manitoba Hay Listing Service connects hay and straw growers and consumers together. Brokerages vary in:
- How broadly or narrowly they focus.
- How much of a particular industry’s infrastructure they encompass.
Some serve only buyers and sellers. Others include shippers, storers, processors, and equipment suppliers.
- Who convenes them.
Some are privately managed (often under a significant regulatory apparatus), some are publicly managed, while others are public-private hybrids.
- How they generate their revenue.
There are essentially three options—a per-transaction fee, a membership fee (often in structured as a member cooperative), or a block-funded grant (often from a government or quasi-government entity). Our projection is that a per-transaction fee would be the most sustainable business model for us.
- In some markets, one entity is the sole broker in their industry; in other markets, there are multiple brokers who compete amongst themselves.
Despite these variations, all successful brokerages provide a consistent cluster of benefits to their participants:
- They reduce search costs and effort as buyers hunt for sellers and sellers hunt for buyers.
- They reduce transaction costs incurred by both buyers and sellers as they trade goods (or services).
- They reduce risk for participants, helping to increase the likelihood that the buyer will get the goods they desire, and sellers get the payments they depend on.
- They enable participants who initially don’t know each other to develop trust.
- Over time, they usually function to standardize expectations, contracts, products, and delivery processes.
- These effects tend to increase the efficiency of the market(s) in which they operate. These efficiencies show up in the market as:
- reduced administrative costs to the sellers
- reduced goods and services costs to the buyers
- growth in the scale of the industry
Having a brokerage provide these benefits to Manitoba’s biomass industry would:
- Speed up the adoption of biomass as a viable energy source because producers would have a simple, reliable way to reach customers, and potential consumers would know they had a reliable supply.
- Significantly improve the chances of the industry moving from its current development stage into commercialization.
- Drive economic development, particularly in rural Manitoba.
- Help Manitoba fulfill its intention to be a leader in biomass energy.
Although BIOMASS BROKERAGE is initially focused on Manitoba, once it’s up and running, the intention is to expand the reach as quickly as is feasible. The best way to use biomass is to ship it as little distance as possible, but that’s no reason that a brokerage can’t have a very broad reach.
Our Story So Far
In Spring 2011, as part of their Field Education, two business students began to develop a database of places in Manitoba that are producing biomass that could be suitable for producing heat and/or power. Business students in the 2012 Winter Semester added listings of all the places in Manitoba that can (or could) take this biomass and use it to the database. Business students in the 2012-13 academic year researched possible processors, storage sites, and shipping options throughout Manitoba, and added them all to the database.
- Visit each of the potential participants and assess their actual interests, needs, and capabilities.
- Put this information online.
- Expand the reach beyond Manitoba.
To take these steps requires a moderate amount of funding to staff the project and finish developing the online site.