Economic Analysis of Alternative Lignocelluloses Sources for

							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
Inhibitor/Enzymes Hydrogen/Chemicals Natural Gas Electricity Steam/Maint. Materials Cooling Water/ Misc. Costs

0.048
0.011 0.053 0.027 0.026 0.049 0.060

0.037
0.055 0.028 0.152 0.042 0.037 0.028

Labor
Administrative Cost Total variable cost/gal (excluding feedstock)

0.042
0.015 0.331

0.092
0.046 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 5 .0
Ne t Inc om e ($ 1,00 0 ,0 00 )

100

80

4 .0 60 3 .0 40 2 .0 1 .0 0 .0 2004 2006 2008 2010 2012 2014 F e e d G r a in 2016 2018 20

0

L ig n o c e llu lo s e s

Comparing the Ending Cash for the 30 MMGY Lignocellulose Plant and the 30 MMGY Feed Grain Plant
2 5 .0 100

2 0 .0
En ding Ca sh ($ 1 ,0 00 ,0 0 0)

80

1 5 .0

60

1 0 .0

40

5 .0

20

0 .0 2004 2006 2008 2010 2012 2014 2016 2018

0

L ig n o c e llu lo s e s

F e e d G r a in

Comparing the Real Net Worth for the 30 MMGY Lignocelluloses Plant and the 30 MMGY Feed Grain Plant
2 5 .0 100

Re al Ne t W o rth ($1 ,0 0 0,00 0)

2 0 .0

80

1 5 .0

60

1 0 .0

40

5 .0

20

0 .0 2004 2006 2008 2010 2012 2014 2016 2018

0

L ig n o c e llu lo s e s

F e e d G r a in

Conclusions
• Lignocellulosic Plant Has:
– Higher NCI, EC, RNW – Reduced probability of negative outcomes

• More Potential for Lignocellulosic Production • Highlights Importance of Risk Analysis