1. A Case Study for using the Cooperative business model for Biomass Aggregation Randy Kyle, CPA, MBT Kyle Consulting Group, Inc. Office – 608-280-7541 randy@kyleconsultinggroup.com

2. We are on a path of discovery to explore the market potential of commercializing the aggregation and densification of fibrous, mostly non- woody, biomass for use in the commercial generation of electricity using the Cooperative business model.

3. Where Cooperatives are/have been Ethanol investment Biodiesel investment Soy Crush Plant New opportunities with restructured ethanol plants Biomass?????

4. Biomass Typically waste wood and wood bi-products Likely high in moisture Likely average to low in BTU value Not products typically handled by Producer Cooperatives or its members Other non-woody sources

5. Why Consider getting into Biomass? Micro economics – local nature Access to the material Does not compete with food uses Producers have the equipment and experience Additional source of revenue for producers Carbon credit opportunity

6. Why Consider the Cooperative Model? Farmers dealing with farmers Profits can be returned as patronage Producer control Membership/ownership can be tied to supply agreements Familiar Structure Trust

7. BCAP is the Starting Point (Biomass Crop Assistance Program) Defines eligible material Sets a payment schedule Establishes criteria for conversion facilities Provides sample agreements Administered by FSA http://www.fsa.usda.gov/FSA/webapp? area=home&subject=ener&topic=bcap

8. Fibrous Biomass Characteristics 7,500 to 8,000 BTU per pound Coal - 13,500 BTU per pound When processed, fibrous biomass can be very consistent in energy content Control of moisture content Renewable – annual crops

9. Financial Summary Need to pay farmer $45 to $60 per ton BCAP payment – additional $45 per ton Possible patronage 5-7 Tons/acre - $100/ton Attract acres/aggregation????

10. Operating Model Rural location – accommodates delivery Rail – accommodates shipping Distributed storage and delivery of raw materials Limited on-site storage Local support for permitting and construction

11. Off Take Agreements and Other Uses Long-term vs. short-term Fixed vs. variable Mandates vs. lowest cost producer Viability without BCAP Carbon trading Alternative uses for off take It’s time to negotiate

12. The following material is being used with the permission of Show Me Energy Cooperative Show Me Energy Contacts –Steve Flick, Chairman of the Board steveaflick@earthlink.net –Kurt Herman, CEO kherman@goshowmeenergy.com –Office phone - 660-656-3780 –www.goshowmeenergy.com