Economic Analysis of Alternative Lignocelluloses Sources for Ethanol Production

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Economic Analysis of Alternative Lignocelluloses
Sources for Ethanol Production

• Agriculture as a Producer and Consumer of Energy
  Conference
• Washington, DC
• June 24, 2004
• David P. Anderson, Joe L. Outlaw, Brian K.
  Herbst, Steven L. Klose, and Mark Holtzapple

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Outline of Presentation

• Overview
• Processes
• Methodology
• Results

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Overview

• Began as Ethanol Feasibility Research in Texas
• Corn, sorghum, obvious feedstock issues
• Branched Out Into Broader Biomass Definitions
• Broader Definitions of Outputs
• Chemical industry much like petroleum industry
• Need for Economic Analysis of Alternatives

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Processes

• Grain Ethanol
• Standard dry grind plant
• Lignocellulosic Ethanol
• Whole plant, many potential sources
• Tree trimmings, etc
• Based on work by Mark Holtzapple
• Pilot plant in operation today

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Methodology

• Simulation Modeling
• Risk analysis
• Probability of Outcomes
• Capital Budgets
• Stochastic Variables
• Input and output prices
• MVE Distribution
• Reflects historical distribution of prices
• Maintains historical correlation of variables

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Assumptions

• 30 MMGY Production Plant
• 93 Gal. Per Ton of Feedstock
• 3 Levels of Investment 20, 40, 60 Mil.
• Feedstock Conversion Rate Held Constant
• Assumed no increased efficiency

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Comparison of Lignocellulosic and Grain Ethanol
Variable Costs
  Lignocelluloses Feed Grain
Lime/Denaturant 0.048 0.037
Inhibitor/Enzymes 0.011 0.055
Hydrogen/Chemicals 0.053 0.028
Natural Gas 0.027 0.152
Electricity 0.026 0.042
Steam/Maint. Materials 0.049 0.037
Cooling Water/ Misc. Costs 0.060 0.028
Labor 0.042 0.092
Administrative Cost 0.015 0.046
Total variable cost/gal (excluding feedstock) 0.331 0.517
Feedstock costs are 0.53 for lignocellulose
and 0.79 for grain.
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Comparing the Net Cash Income for the 30 MMGY
Lignocelluloses Plant and the 30 MMGY Feed Grain
Plant
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Comparing the Ending Cash for the 30 MMGY
Lignocellulose Plant and the 30 MMGY Feed Grain
Plant
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Comparing the Real Net Worth for the 30 MMGY
Lignocelluloses Plant and the 30 MMGY Feed Grain
Plant
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Conclusions

• Lignocellulosic Plant Has
• Higher NCI, EC, RNW
• Reduced probability of negative outcomes
• More Potential for Lignocellulosic Production
• Highlights Importance of Risk Analysis