We summarise our findings on the delivered cost of paddy residue, optimum distance, and different forms of crop residue used for transit in the following. To calculate the delivered cost of biomass for the end-user, we divided the supply chain into two parts: farm to straw bank and straw bank to end-user (Table ES1).

Farm to straw bank

For computing expenses incurred for residue transportation from farm to the straw bank, we consider the rental cost of machinery (such as chopper/cutter-cum-spreader, baler, and raker), labour, and fuel required for cutting and baling of paddy residue, loading and unloading cost of bales at farm and straw bank, and transportation charges for carrying bales from farm to straw bank (Table ES1).

• The transit of paddy residue in the form of bales for a distance of 15 km from farm to straw bank typically costs INR 1,330 per tonne of bale (Figure ES1). Out of this, the cost associated with the cutting and baling of residue entails 50 per cent of the procurement cost. 
• In most cases, SCM entities offer support by providing customised farm implements like raker and baler, needed for residue collection, as individual farmers do not maintain an inventory of such implements needed for ex-situ management. A few entities make use of an ‘on-demand’ model to locally source the farm implements from custom hiring centres (CHCs) or large farmers and provide those implements ‘on demand’ to individual farmers.

Figure ES1 Raking and baling cost is the highest in the aggregation of crop residue from farm to the straw bank

Source: Authors’ analysis

*An optimum distance of 15 km between farm and straw bank is considered.

Straw bank to end-user

For costs incurred to transport farm residue from straw bank to end-user, we consider biomass conversion cost (briquetting and pelleting cost), loading and unloading cost at the straw bank and end-user, respectively, and transportation charges. We take into account three forms of biomass transported to the end-user — bales, briquettes and pellets. Both briquettes and pellets can be used in boilers and stoves. But considering their different sizes, briquettes are preferred in large and medium-scale boilers, while pellets are widely used in small-sized devices, such as pellet stove, furnace, and cooking range (The AGICO 2020). As briquette and pellets are preferred over bales because of their increased energy content in industries and power plants, we also estimate and compare the delivered cost per 5,000 Mcal of bales with briquettes and pellets.

Table ES2 Delivered cost of biomass per tonne to the enduser located at a distance of 50 km

Source: Authors’ analysis

*About 1.3 tonne of residue is required to produce 1 tonne of briquette/ pellet. Additional cost of collection, transportation and storage of 0.3 tonnes of residue for every tonne of briquette and pellets has been added to briquettes and pellets resulting in the variation of collection, first mile transportation and storage cost between the three forms of biomass.

• Interim storage of the crop residue in straw banks assumes importance, given the limited span of 15–20 days available for sowing the next crop. A typical straw bank is spread over an area of 10–15 acres and can hold up to 10,000–15,000 tonnes of paddy residue. The storing cost constitutes 20–30 per cent of the total delivered cost of biomass.
• Transporting baled residue to the end-user beyond 50 km entails a high delivered cost, which may not be viable for companies engaged in the supply chain. Dispatching bales over a distance of 50 km incurs a total delivered cost of INR 2,950 per tonne of bale (Table ES2). 
• Several studies have identified that densifying biomass in the form of briquettes or pellets would decrease the transportation cost (Balingbing et al. 2020; Possidônio et al. 2016). However, our analysis indicates that the high cost paid for briquetting and pelletising significantly eats into the benefits of reduced transportation cost of the densified residue.
• Dispatching briquettes over a distance of 50 km costs INR 4,320 per tonne delivered. But dispatching pellets over the same distance works out to a total delivered cost of INR 4,720 per tonne (Table ES2).
• The high cost of pelleting makes transporting pelletised residue the costliest among all the options available. Supply chain entities concur with this observation. In most cases, SCM entities prefer to transport residue in the form of bales to avoid the high investment needed for biomass processing. However, biomass bales have limited end-use applications. They are used as packaging material, as raw material in cardboard and paper industries, in animal bedding, and in biochar and biogas production. For other end uses that require densified biomass, the end-user needs to invest in processing bales to briquettes or pellets.
• Co-firing 10 per cent of biomass pellets with coal in coal-fired power plants in Punjab2 would require 1.47 million tonnes of paddy residue annually, which would account for nearly 7.4 per cent of paddy residue generated in Punjab. The delivered cost of biomass pellets per 5,000 Mcal within a radius of 50 km of the power plant is economical compared to coal. Beyond 50 km, the cost increases significantly. 
• The delivered cost of briquettes per 5,000 Mcal is economical up to a distance of 145 km. Industries that consume coal for heating applications should explore the prospect of locally sourcing biomass briquettes within the state, as it will reduce their operating cost.