commercialisation of biofuel process …...commercial biofuel production is agricultural crops) is...
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Environmental & Process Systems Engineering GroupUniversity of Cape Town
Amigun Bamikole
Sigamoney RovaniHarro von Blottnitz
COMMERCIALISATION OF BIOFUEL PROCESS
INDUSTRY IN AFRICA
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Introduction to Africa
Africa is the second largest continent after Asia making up only 10% of the world’s population, equivalent to about 80% of India’s population
Population density varies due to, in part Sahara Desert
Africa is not only the poorest region in the world; it was the only major developing region with negative growth in income per capita during 1980-2000
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Energy in Africa
Access to energy = improvement of the quality of life (the engine of economic progress )
Provision of reliable high quality energy services is crucial for African countries in which most are struggling to meet present energy demands
The Millennium Development Goals (MDGs) can not be met without major improvement in the quality and magnitude of energy services in Africa
Environmental & Process Systems Engineering GroupUniversity of Cape Town
NEPAD OBJECTIVES ON ENERGY
Become a major player in global technology & economic progress
Increase African population access to affordable energy supply from 10% to 35% in 20 years
Improve reliability and lower the cost of energy to enable economic growth of 6 per cent per annum
Reverse environmental degradation
Reverse health impact associated with the use of traditional fuels
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Resources limitation of fossil fuel
Oil & gasconcentration
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Resources limitation of fossil fuel
Significant oil & gas
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Resources limitation of fossil fuel
Gas but no oil
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Resources limitation of fossil fuel
Coal reserves
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Understanding the economics of biofuel industry is crucial in realising eventual
commercialisation
Frank Freiman-The inventor of the Price model maintained that realistic estimating contributes to project success
Environmental & Process Systems Engineering GroupUniversity of Cape Town
The Freiman curve(Daschbach and Agpar,1988)
Overestimated-Under-utilised resources
-Excess capacity
-Un-competitive pricing
Underestimated-insufficient resources
-De-scope
-Credibility question
Fina
l Pro
gram
cos
t
Underestimation estimate
Overestimation estimate
Realistic estimate minimise final cost
Estimated cost
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Global Environment Facility (GEF)- US $ 2.5 million financed project in Tanzania (23,000 m3 of methane) generated by the process of anaerobic digestion.
Large-scale replication of the pilot GEF Tanzania biogas project could generate over 10% of the Tanzania's total electricity generating capacity
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Economics of biofuel production
Cropped
Cost A
Cost B
Biomass Provision
ProcessPlant
Fuel
Corresponding fossil fuel costCost (-ve or +ve)
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Biodiesel economics
We have investigated the working capital of a 200,000 Litres/day biodiesel
Working capital constitute 70% of the total production cost while raw material is 75% of the working capital
• Application of Nguyen and Prince, 1996 optimization model to biodiesel production data in South Africa:
–Optimum plant size of a biodiesel plant located in South Africa
–Effect of cost estimation variables on plant size examined are:
• Scale factor/ cost capacity factor (n), Labour cost model, Transport cost and Seed cost
Environmental & Process Systems Engineering GroupUniversity of Cape Town
EFFECT OF CAPACITY FACTOR ON COST OF BIODIESEL
Base case size
2.00
2.50
3.00
3.50
4.00
4.50
5.00
250 750 1250 1750 2250 2750 3250 3750 4250 4750
Plant capacity (kg/hr)
Cost
per
litr
e (R
and)
n = 0.4 n=0.7 (Nguyen model) n=0.9 n=1.0
Environmental & Process Systems Engineering GroupUniversity of Cape Town
EFFECT OF LABOUR MODEL ON COST OF BIODIESEL
Plant capacity (kg/hr)
2
2.5
3
3.5
4
4.5
5
250 750 1250 1750 2250 2750 3250 3750 4250 4750
Cos
t per
litr
e(R
and)
y = k (y1000) y = kx y=kx+0.1(y1000) y=k(x^0.7) y=k(x^0.7)+0.1(y1000)
Nguyen Labour model
Environmental & Process Systems Engineering GroupUniversity of Cape Town
EFFECT OF SEED COST USING NGUYEN LABOUR MODEL ON COST OF BIODIESEL
2.00
2.50
3.00
3.50
4.00
4.50
5.00
250 750 1250 1750 2250 2750 3250 3750 4250 4750
Cost
per
litre
(Ran
d)
0.56 R/Kg 0.40 R/Kg 0.75 R/Kg 1.0 R/Kg
Plant capacity (kg/hr)
Environmental & Process Systems Engineering GroupUniversity of Cape Town
EFFECT OF TRANSPORT COST ON COST OF BIODIESEL
2.00
2.50
3.00
3.50
4.00
4.50
5.00
250 750 1250 1750 2250 2750 3250 3750 4250 4750
Plant capacity (kg/hr)
Cos
t per
litr
e (R
and)
10 (R/1000Kg/Km) 15 (R/1000Kg/Km) 20 (R/1000Kg/Km)
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Summary of biodiesel optmisation
The results show that the optimal plant size can vary widely in the range explored (500 – 5000) kg/hr
and also shows the different sensitivities to variations in the various parameters e.g.
highly sensitive to variations in the labour cost model used or to changes in the transport cost
but fairly insensitive to the oil feed cost or the depreciation allowance
The biodiesel cost is:
highly dependent on the oil feed cost
less sensitive to the labour cost model used or the depreciationallowance
fairly significant to the effect of capacity factor
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Biogas process description
25 daysAt 370C
700C
Mixing and storageOf delivery feedstock
Digestate storage Digester
Pasteurisationtank
Combined heat &power engine
Compressingunit
Fillingstation
Biogascleaning
Biogas upgrading
Biogas storage
250C
150C
CHP
500C200C
BIOGAS PROCESS DESCRIPTION
Environmental & Process Systems Engineering GroupUniversity of Cape Town
A TYPICAL TWIN DIGESTER UNDER CONSTRUCTION
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Biogas plant construction in Zimbabwe
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Benefits, application and usage of biogas
Biogas
Agricultural Waste System
Agro-Industrial Waste System
Municipal Waste System
•Biogas, as source of energy
• Biogas, protecting environment
• Biogas, as industrial raw material
Preventing increase in greenhouse
gas
Protecting forests & pastures
Removing weed seeds
MethaneCarbon dioxide
Dry ice Methanol acetylene
Chloro-methane
Solvent in chemical industries, organic insecticides, plastic industries
Electricity production
Thermal energy
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Fuel ethanol economics
The recent interest in ethanol production in Africa is driven partly by the increase in oil price and its low convertible currency earnings.
Ethanol is produced by both biological and physical process (fermentation of sugar with additional conversion step to fuel grade by distillation). It can be produced in two forms; hydrous (or hydrated) and anhydrous
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Fuel ethanol economics…
• There are different economic strategies for co producing sugar and ethanol. The main choice is whether to produce in fixed or flexible quantities. Fixed quantities production generally means reserving all of the economically extractable sugars for sugar production and using “C” molasses or “final molasses” for ethanol production
• Economies of scale have been shown to exist in construction costs of ethanol plants.
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Scale economies in ethanol industry
y = 0.821x + 1.5818R2 = 0.8915
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50
Plant size (USG)
Cap
ital c
ost (
adju
sted
to E
NR
200
4) U
S$
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Lang Factor (fL) in Africa
Values of Lang factor for plant can reflect:-
-The type of project
-The characteristics of the process
-The predominant phase processed (solid, liquid, gas)
-The average cost of the equipment items used and
hence, -Plant capacity-Location
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Inside & outside battery limits investmentUtilities generation facilities
Electricity
Refrigeration
SteamCoolingwater Fuel
Water
Effluenttreatment
Storage and handling of
Raw material &finished products
Processing plant
canteen
R & D Lab
Office
Maintenance& workshop
Analytical Lab
Buildings/service facilities
Battery limits
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Lang Factor (fL)
Delivered Equipment cost X3.10 for solid process plant3.60 for solid-fluid plants4.70 for fluid process plants
= Total Estimated plant costs
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Multiplication Factors Estimating Cost1 Direct Manufacturing CostA Raw material CRM
B Utilities CUT
C Operating Labour COL
D Direct supervisory and clerical labour 0.63COL
E Maintenance and repair 0.2FCIF Laboratory Charge 0.2COL
Total Direct manufacturing costs: CRM + CUT + 1.83COL + 0.002FCI
2 Fixed Manufacturing costG Depreciation 0.04FCIH Local Taxes and Insurance 0.001FCII plant overhead (cost of safety) 0.03(Line 1C + Line 1D + Line 1E)
Total Fixed manufacturing costs 0.05COL + 0.021 FCI3 General Manufacturing Expenses 0.11(Line 1C + Line 1D + Line 1E)J Ethanol departmental cost (Admin cost)K Distribution and selling cost 0.014COMTotal General Manufacturing costs 0.18COL + 0.024FCI + 0.014COM43 Byproduct cost(s) CBP
Cost of manufacturing (COM) = CRM + CWT CUT + 2.06COL + 0.041FCI + 0.014COM – CBP
= CRM + CWT + CUT + 2.215COL+ 0.246FCI + 0.190COM
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Other constraints to biofuel commercialisation in Africa
******************Type D
****************Type C
************Type B
*********Type A
Capacity hurdle
Information hurdle
Financial hurdle
Economic hurdle
Technical hurdle
Institutional/policy hurdle
Low: * Medium:** High: ***
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Policy, institutional and legal hurdles
Ghana established the National Energy Board (NEB) in 1983 with one of its mandate to develop and demonstrate renewable energy in the country. The NEB ceased to operate in 1991 and the renewable energy activities were later taken on by the Energy Sector Development programme (ESDP) established in 1996. The ESDP closed down in 2002 and has in its place the DANIDA supported National Renewable Energy Strategy
Lack of positive legislation
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Financial limitation
The high initial cost of production of biofuels and inadequate financing arrangements
Some of the factors contributing to the formation of this barrier are:
– Lack of available credit facility with low interest rate;– Bias against biomass energy and lack of adequate
information of the potentials of biofuels project; – The perceived risks of biomass energy projects also act
as a major barrier to investments;– Unfavourable government policies.
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Technical/Infrastructure hurdles
The supply of feedstock (feedstock currently used for commercial biofuel production is agricultural crops) is crucial to the success of biofuel industry
To supply 30% by volume of the petrol used in South Africa would require of the order of 5 million tons of maize
Only industrialised countries (including the BRIC countries-Brazil, Russia, India and China) have the technological base, the capital, infrastructure required to push large scale new development in the energy sector
Infrastructure availability
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Information hurdles
Lack of awareness and limited information on the national renewable
energy resource base, economic and environmental benefit.
The fact that the stakeholders and the consumers are not sensitised to the potentials of biomass energy is another issue. This will probably affect the
view of investing as risky.
Poor telecommunications infrastructure – Reduction of travel cost: in many cases telecommunications can be substituted for travel,
resulting in savings in personnel time and travel costs. – Energy savings: telecommunications can be used to increase the efficiency of shipping so
that trips are not wasted and consumption of fuel is minimized. – Decentralization: availability of telecommunications can help attract industries to rural
areas, and allow decentralization of economic activities away from major urban areas.
Environmental & Process Systems Engineering GroupUniversity of Cape Town
Capacity/manpower hurdles
The limited availability of correctly trained and skilled manpower is one of the most critical requirements to the development and market penetration of biofuels in Africa.
By a way of example, Africa as a whole counts only 3.6% scientists of the world total and its share in the world’s scientific output has fallen from 0.5% to 0.3% as it continues to suffer the brain drain of scientists, engineers and technologists.
• The increased number of this exodus attributed to the deteriorated political, economic, and social conditions in Africa reduces the availability of skilled manpower.
Environmental & Process Systems Engineering GroupUniversity of Cape Town
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