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
Outline of Presentation
•
•
•
•
Overview
Processes
Methodology
Results
Lignocellulose
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
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
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
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
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.
Comparing the Net Cash Income for the 30
MMGY Lignocelluloses Plant and the 30 MMGY
Feed Grain Plant
6.0
100
Net Income ($1,000,000)
5.0
80
4.0
60
3.0
40
2.0
20
1.0
0.0
0
2004
2006
2008
2010
2012
Lignocelluloses
2014
Feed Grain
2016
2018
Ending Cash ($1,000,000)
Comparing the Ending Cash for the 30 MMGY
Lignocellulose Plant and the 30 MMGY Feed
Grain Plant
25.0
100
20.0
80
15.0
60
10.0
40
5.0
20
0.0
0
2004
2006
2008
2010
2012
Lignocelluloses
2014
2016
Feed Grain
2018
Real Net Worth ($1,000,000)
Comparing the Real Net Worth for the 30 MMGY
Lignocelluloses Plant and the 30 MMGY Feed
Grain Plant
25.0
100
20.0
80
15.0
60
10.0
40
5.0
20
0.0
0
2004
2006
2008
2010
2012
Lignocelluloses
2014
2016
Feed Grain
2018
Conclusions
• Lignocellulosic Plant Has:
– Higher NCI, EC, RNW
– Reduced probability of negative outcomes
• More Potential for Lignocellulosic
Production
• Highlights Importance of Risk Analysis