commercialisation of biofuel process …...commercial biofuel production is agricultural crops) is...

Environmental & Process Systems Engineering GroupUniversity of Cape Town

Amigun Bamikole

Sigamoney RovaniHarro von Blottnitz

COMMERCIALISATION OF BIOFUEL PROCESS

INDUSTRY IN AFRICA


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


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


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


Resources limitation of fossil fuel

Oil & gasconcentration



Significant oil & gas



Gas but no oil



Coal reserves


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


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


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


Economics of biofuel production

Cropped

Cost A

Cost B

Biomass Provision

ProcessPlant

Fuel

Corresponding fossil fuel costCost (-ve or +ve)


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


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


EFFECT OF LABOUR MODEL ON COST OF BIODIESEL


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


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



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


Cos

t per

litr

e (R

and)

10 (R/1000Kg/Km) 15 (R/1000Kg/Km) 20 (R/1000Kg/Km)


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


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


A TYPICAL TWIN DIGESTER UNDER CONSTRUCTION


Biogas plant construction in Zimbabwe


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


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


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.


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$


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


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


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


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


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: ***


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


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.


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


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.


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.


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