1 Land in: Other Uses In Transition In Switchgrass Crop Lifetime Net SG Addition Of Acres Acres in Switchgrass Yield from Ag R&D Ave Yield in Established Land Feedstock Price Feedstock Price Overall Yield/Acre Total Biomass Production State-of-the-art Yield/Acre Land Established in SG Land Converting to SG Land Reverting Total Residue Collected Land Allocation Land Use Ag R&D and Yield Biomass Production Ag & Forest Residue Collect Delivered Feedstock Cost Feedstock Price Influx, Turnover & Retrofit Fleet Size & Vehicle Efficiency Fuel Consumption Feedstock Price Individual Plant Feedstock Demand** Feedstock Price** Total Biomass Production & Residue Collection** Demand for Feedstock** Potential EtOH Demand from Fuel Usage** Vehicle Influx Time to Retirement Retrofitting Logic Fleet Size Average Vehicle Efficiency Retiring Total Fleet Size Fleet A & B Size Increase In Ag Output**

2 Agricultural & Forest Residue Collection Calculates the total Agricultural and Forest Residues available at different feedstock prices Total Biomass Production Feedstock Price Maximum Ag Yield Improvement = 25% Ag Residue Linear Annual Growth Rate = 1% Ag & Forest Residue Collection – 1

3 Agricultural & Forest Residue Collection Calculates the total Agricultural and Forest Residues available at different feedstock prices Forest Residue Availability is fixed and is only a function of offer price Forest Residue Collected (MM ton/yr) Feedstock Price Total Biomass Production Maximum Ag Yield Improvement = 25% Ag Residue Linear Annual Growth Rate = 1% Ag & Forest Residue Collection – 2

4 Agricultural & Forest Residue Collection Calculates the total Agricultural and Forest Residues available at different feedstock prices Forest Residue Availability is fixed and is only a function of offer price Total Biomass Production Forest Residue Collected (MM ton/yr) Ag Residue Collected (MM ton/yr) Feedstock Price Maximum Ag Yield Improvement = 25% Ag Residue Linear Annual Growth Rate = 1% Ag & Forest Residue Collection – 3 Ag Residue Availability is a function of offer price with 1% linear growth rate up to 25% growth from the 2005 quantity.

5 Agricultural & Forest Residue Collection Ag & Forest Residue Collection – 4 Actual STELLA Module Flowsheet

6 Crop Lifetime Net SG Addition of Acres Land Use Land in: Other Uses In Transition In Switchgrass Land Established in SG Land Converting to SG Land Reverting Calculates the amount of land that is being used for switchgrass production (acres) Two land types: Prime Marginal Switchgrass Maturation Time Land Use - 5

7 Land Use Calculates the amount of land that is being used for switchgrass production (acres) Crop Lifetime is calculated as a function of the economics of switchgrass compared to non-switchgrass land use as well as current switchgrass yields Crop Lifetime Net SG Addition of Acres Land in: Other Uses In Transition In Switchgrass Land Established in SG Land Converting to SG Land Reverting Impact of SG economics on Lifetime Revenue ($/acre) ratio for established land Switchgrass Maturation Time Land Use - 6

8 Land Use Calculates the amount of land that is being used for switchgrass production (acres) Addition of SG acres is also a function of the net revenue for switchgrass vs. other uses. Crop Lifetime Net SG Addition of Acres Land in: Other Uses In Transition In Switchgrass Switchgrass Maturation Time Land Established in SG Land Converting to SG Land Reverting Land Use - 7

9 Land Allocation The outcomes from this module are: Whether to plant land in switchgrass or other uses. Calculates the crop lifetime. Total Acres in Switchgrass Acres in Switchgrass Switchgrass Yield (ton/acre) Feedstock Price Crop Lifetime Net addition of Switchgrass Switchgrass Production (MM Acres) The land owner decides whether to plant acres in switchgrass or other uses depending on the revenue earned per acre per crop. $/acre Switchgrass vs. $/acre in other uses Nominal SG Crop Lifetime SG Maturation Time Export Scenario Constant SG Yield Option Land Allocation -1

10 Land Allocation The outcomes from this module are: Whether to plant land in switchgrass or other uses. Calculates the crop lifetime. Total Acres in Switchgrass The expected revenue for land in switchgrass is a product of the payment to the farmer ($/ton) and the yield (tons/acre) Crop Lifetime Net addition of Switchgrass Switchgrass Production (MM Acres) Acres in Switchgrass Switchgrass Yield (ton/acre) Feedstock Price Nominal SG Crop Lifetime SG Maturation Time Constant SG Yield Option Land Allocation -2

11 Land Allocation The outcomes from this module are: Whether to plant land in switchgrass or other uses. Calculates the crop lifetime. Total Acres in Switchgrass The value of land in other uses is a function of the demand for product. More land in switchgrass will drive the price for product from land in other uses higher due to land constraint issues. Crop Lifetime Net addition of Switchgrass Switchgrass Production (MM Acres) Acres in Switchgrass Switchgrass Yield (ton/acre) Feedstock Price Nominal SG Crop Lifetime SG Maturation Time Constant SG Yield Option Land Allocation -3

12 Land Allocation Land Allocation -4 Actual STELLA Module Flowsheet

13 Agricultural R&D and Yield The Yield from R&D is a function of the Investment made into the R&D program. Ag R&D Investment (MM$/yr) Switchgrass Yield from R&D BSM has a maximum effective Ag R&D of 10-MM$/yr. Any amount over that will have no effect on R&D yields. Fraction of Max YPA growth Obtained Ag Investment relative to Max Ag R&D Investment (MM$/yr) Year R&D Yield Growth is analogous to historical corn yields; exponential for a time period, then slowing to a linear growth rate Ag R&D and Yield – 5

14 Agricultural R&D and Yield Ag R&D and Yield – 6

15 Biomass Production Calculates the total Biomass Production for Ethanol Ag & Forest Production Switchgrass Land Dynamics Total Switchgrass Acres Switchgrass Yield (ton/acre) Biomass Production Switchgrass Yield (ton/acre) Calculates the overall switchgrass yield (ton/acre) Biomass Production to Industrial Capacity Module Biomass Production - 7

16 Biomass Production Calculates the total Biomass Production for Ethanol The total switchgrass production (volume basis) is the sum of the production from land in transition to switchgrass + the production from land established in switchgrass. Production from land in transition is defined as the product of acreage converting to SG and the yield based on ‘state of the art’ Ag research. Production from established land is defined as the product of mature SG acreage and the yield based on actual SG production. Calculates the overall switchgrass yield (ton/acre) Ag & Forest Production Switchgrass Land Dynamics Total Switchgrass Acres Switchgrass Yield (ton/acre) Biomass Production Switchgrass Yield (ton/acre) Biomass Production to Industrial Capacity Biomass Production - 8

17 Biomass Production The overall YPA is the total tonnage produced annually divided by the total acreage in switchgrass. Calculates the total Biomass Production for Ethanol Calculates the overall switchgrass yield (ton/acre) Ag & Forest Production Switchgrass Land Dynamics Total Switchgrass Acres Switchgrass Yield (ton/acre) Biomass Production Switchgrass Yield (ton/acre) Biomass Production to Industrial Capacity and Tracking Government Spending Modules Biomass Production - 9

18 Biomass Production Biomass Production - 10 Actual STELLA Module Flowsheet

19 Feedstock Price is Adjusted based on: 1.Ratio of Max Feedstock Supply to Demand 2.Ratio of Spot Inventory to Actual Demand 3.Responsiveness of Price to Change (Gain) Feedstock Price Number of Plants On- Line Feedstock Price Feedstock Supply Feedstock Demand Price Response to change (“gain”) Max Mature Yield Initial Feedstock Price = $20/bdt Constant Feedstock Price Option Feedstock Price -1

20 Feedstock Price Determine an impact on the Feedstock Price due to the ratio: Where Max Feedstock Demand is the sum of the capacity of all plants under const, starting up or online Fractional Change in Feedstock Price Feedstock Production Max Feedstock Demand Feedstock Price Number of Plants On- Line Feedstock Supply Feedstock Demand Price Response to change (“gain”) Max Mature Yield Initial Feedstock Price = $20/bdt Constant Feedstock Price Option Feedstock Price -2 Feedstock Production Max Feedstock Demand

21 Feedstock Price Spot Inventory Actual Feedstock Demand Fractional Change in Feedstock Price Determine an impact on the Feedstock Price due to the ratio: Where, Spot Inventory is the difference in actual demand and production Actual demand is the operating capacity (actual yield) of online plants Spot Inventory Actual Feedstock Demand Feedstock Price Number of Plants On- Line Feedstock Supply Feedstock Demand Price Response to change (“gain”) Max Mature Yield Initial Feedstock Price = $20/bdt Constant Feedstock Price Option Feedstock Price -3

22 Feedstock Price Calculate the Change in Feedstock Price as: Change in Feedstock Price = Old Feedstock Price x Spot Inventory Ratio Factor x Max Demand Ratio Factor x Price Response to Change (0 to 2) Feedstock Price Number of Plants On- Line Feedstock Supply Feedstock Demand Price Response to change (“gain”) Max Mature Yield Initial Feedstock Price = $20/bdt Constant Feedstock Price Option Feedstock Price -4

23 Feedstock Price Feedstock Price -5 Actual STELLA Module Flowsheet

24 Delivered Feedstock Cost This module calculates the cost for feedstock at the plant gate. The plant gate feedstock cost is the largest operating cost for a conversion facility The minimum ethanol selling price (MESP) calculated from this cost is compared to gasoline and dry mill selling prices Feedstock Price Feedstock Cost Yield (ton/acre) Individual plant feedstock capacity The delivered feedstock cost is calculated in three sections: Feedstock Quantity in area of plant (distance from the plant) Calculating the transportation charge and any options, and Adding the feedstock price and including any subsidy for the grower Feedstock subsidy for Farmer Fraction of SG in Surrounding land to plant Free Captive Feedstock Option Free Feedstock Option for Demo & Pioneer Delivered Feedstock Cost -6

25 Delivered Feedstock Cost This module calculates the cost for feedstock at the plant gate. The distance from the feedstock to the plant gate is calculated by using the equation below; Where the plant size is in the numerator and the denominator consists of the yield and the fraction of the feedstock in the surrounding area of the plant. Feedstock Cost Feedstock Price Yield (ton/acre) Individual plant feedstock capacity Feedstock subsidy for Farmer Fraction of SG in Surrounding land to plant Free Captive Feedstock Option Free Feedstock Option for Demo & Pioneer Delivered Feedstock Cost -7

26 Delivered Feedstock Cost This module calculates the cost for feedstock at the plant gate. Transport Cost = ($/ton-mile * Winding Factor * Miles to Plant) + Fixed Transport $/ton The user has an option to allow feedstock quantities under 200,000 ton/yr to be free for a demo plant. This quantity is assumed to be the fiber that comes along with the corn and is already accounted for in the price of the delivered corn Feedstock Cost Feedstock Price Yield (ton/acre) Individual plant feedstock capacity Feedstock subsidy for Farmer Fraction of SG in Surrounding land to plant Free Captive Feedstock Option Free Feedstock Option for Demo & Pioneer Delivered Feedstock Cost -8

27 Delivered Feedstock Cost This module calculates the cost for feedstock at the plant gate. The delivered feedstock cost = Transportation cost + The cost to the grower – User inputted feedstock subsidy The user has the option to make feedstock quantities for demo and pioneer plants (< 2-million tons/yr) free for the plant operator Feedstock Cost Feedstock Price Yield (ton/acre) Individual plant feedstock capacity Feedstock subsidy for Farmer Fraction of SG in Surrounding land to plant Free Captive Feedstock Option Free Feedstock Option for Demo & Pioneer Delivered Feedstock Cost -9

28 Delivered Feedstock Cost Delivered Feedstock Cost -10 Actual STELLA Module Flowsheet

29 Influx, Turnover and Retrofit Logic This module calculates The influx of new vehicles, The time to retirement, and The retrofitting of fleet vehicles Each vehicle type is separated into three sub-fleets based on vehicle age. The time in each sub-fleet is 1/3 of each vehicle type’s lifetime (time to retirement). Fleet Growth Rate (%) New Vehicle Distribution Average miles/yr per vehicle Average Miles to Retirement Accelerated Vehicle Turnover Fraction of Fleet retrofitted/yr Retiring Total Fleet Size Fleet A & B size Vehicle Influx Logic Time to Retirement Retrofitting Logic Influx, Turnover and Retrofit -1 User has option to choose between ‘Baseline’ and Union of Concerned Scientists (UCS) Fleet Assumptions

30 Influx, Turnover and Retrofit Logic This module calculates The influx of new vehicles, The time to retirement, and The retrofitting of fleet vehicles Fleet Growth Rate (%) New Vehicle Distribution Average miles/yr per vehicle Average Miles to Retirement Accelerated Vehicle Turnover Fraction of Fleet retrofitted/yr Retiring Total Fleet Size Fleet A & B size Vehicle Influx Logic Time to Retirement Retrofitting Logic New Vehicle Influx Vehicle Influx Logic = total Vehicle influx * influx distribution [Type] Total Vehicle Influx = influx for fleet growth + influx to replace retirement Influx for Fleet Growth = Total Fleet * Fleet Growth Rate (%) Influx, Turnover and Retrofit -2

31 Influx, Turnover and Retrofit Logic This module calculates The influx of new vehicles, The time to retirement, and The retrofitting of fleet vehicles Fleet Growth Rate (%) New Vehicle Distribution Average miles/yr per vehicle Average Miles to Retirement Accelerated Vehicle Turnover Fraction of Fleet retrofitted/yr Retiring Total Fleet Size Fleet A & B size Vehicle Influx Logic Time to Retirement Retrofitting Logic Vehicle Turnover The time to retirement for vehicles = average miles to retirement average miles per vehicle per year. There is an option to double the turnover rate, thereby reducing the time to retirement by a factor of two. Influx, Turnover and Retrofit -3

32 Influx, Turnover and Retrofit Logic This module calculates The influx of new vehicles, The time to retirement, and The retrofitting of fleet vehicles Fleet Growth Rate (%) New Vehicle Distribution Average miles/yr per vehicle Average Miles to Retirement Accelerated Vehicle Turnover Fraction of Fleet retrofitted/yr Retiring Total Fleet Size Fleet A & B size Vehicle Influx Logic Time to Retirement Retrofitting Logic Vehicle Retrofitting Retrofitting is the act of modifying conventional gasoline vehicles to become a flex-fuel vehicles The fraction of fleet vehicles retrofitted per year drives this module. Vehicle in Fleets A & B can be retrofitted Influx, Turnover and Retrofit -4

33 Influx, Turnover and Retrofit Logic Influx, Turnover and Retrofit -5 Actual STELLA Module Flowsheet

34 Fleet Size and Vehicle Efficiency Tracking This module tracks the number of vehicles and the efficiency of vehicles of each fuel type. There is a complimentary module to calculate the total fleet and both the average and aggregate efficiency of each vehicle type Fleet EfficienciesFleet Volumes Efficiency of incoming vehicles (mpg) Vehicle Influx Logic Time to Retirement Retrofitting Logic Fleet Size Average Vehicle Efficiency (mpg) Retiring Total Fleet Size Fleet A & B size Fleet Size & Vehicle Efficiency -6

35 Fleet Size and Vehicle Efficiency Tracking Fleet Size & Vehicle Efficiency -7

36 Fuel Consumption Logic This module calculates the potential ethanol demand for total, E85 and E10 vehicles The total demand is compared to the total current production in the Plant Addition Logic module to measure the attractiveness for investors to build additional plants There are also calculations for E85 and E10 potential Fleet Size Average Vehicle Efficiency (mpg) Maximum Potential EtOH Consumption (MM-gal/yr) To: Plant Addition Logic Module Average miles/yr per vehicle Fuel Consumption -8

37 Fuel Consumption Logic This module calculates the potential ethanol demand for total, E85 and E10 vehicles The total demand is compared to the total current production in the Plant Addition Logic module to measure the attractiveness for investors to build additional plants Fleet Size Average Vehicle Efficiency (mpg) Maximum Potential EtOH Consumption (MM-gal/yr) The module on the right calculates the fraction of the E85 and E10 markets filled by actual ethanol production. Average miles/yr per vehicle Fuel Consumption -9

38 Fuel Consumption Logic Fuel Consumption -10 Actual STELLA Module Flowsheet