Assessing the Business Viability of Biomass-Based Energy Systems

Business decision making can be defined as the process of sufficiently reducing uncertainty and doubt about alternatives to allow a reasonable choice to be made from among them. “In the art of business start-ups, survival and prosperity will be affected by a wide range of factors” (A. Thompson, 2003a). While many are associated with the commercial environment, some are linked to the personal qualities of the entrepreneur. For this reason, assessing business viability is largely a subjective process and will vary for each business venture under consideration.

Very few business decisions are made with absolute certainty, however “the greater the alignment of the decision making with the functional enterprise framework then the greater the probability the decision made are correct” (Gofton & Ness, 1997; A. Thompson, 2003a; J. L. Thompson, 1995; Zikmund, 1997). In order to appraise such alignment, it is not unusual for decision makers to rely upon multidimensional decision frameworks for guidance. Within the context of business viability evaluation, such frameworks try not only to “reflect the likelihood of the business venture succeeding, but also its ability to deliver the entrepreneurial objectives such as creating wealth” (see A. Thompson, 2003b; J. L. Thompson, 1995).

While the dimensions that can be explored by a decision framework can vary subjectively, in terms of definition and encompassment, a few are commonly adopted across the related business literature: 1) Market Viability, 2) Technical Viability, 3) Business Model Viability, 4) Management Model Viability, 5) Economic and Financial Model Viability, and 6) Exit Strategy Viability. Clearly, the study of the many dimensions that influence a business evaluation analysis ...

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...dustrialized countries, the share is even smaller: around 3% (Petroleum, 2009).

One of the most promising areas for biomass-based energy systems lies in the production of liquid transportation fuels (Fulton, Howes, & Hardy, 2004; Grahn, Azar, Lindgren, Berndes, & Gielen, 2007; Mastny, 2006; Searcy, Flynn, Ghafoori, & Kumar, 2007). While the transportation sector is currently one of the major consumers of fossil fuels and the biggest contributor to environmental pollution, biomass-based biofuels are a readily available “clean-energy alternative” (Speight, 2008; Scurlock, 2005) that can be used in conventional combustion engines (requiring only minor adjustments), and distributed through the already existent infrastructure.

Hence, there is presently a growing demand for REPs based on biomass-derived power and interest on the profitable business-potentials they hold.