Biodiesel Production: Simulation & Economics
Biodiesel Production: Simulation & Economics
a b s t r a c t
Three continuous biodiesel processes with production capacity of 40,000 tonne/yr, including a conventional alkali-
catalyzed process using both fresh and waste vegetable oil and a supercritical methanol process using waste vegetable
oil as the raw material, were simulated in HYSYS. In order to improve the simulation accuracy, the properties of tri-
olein, a model compound of vegetable oil, were re-evaluated. The normal boiling point of triolein was experimentally
determined by thermogravimetric analysis and further incorporated in HYSYS simulation, which resulted in improve-
ments in the values of specific heat capacity, mass density, and viscosity. Process economics were analyzed using
Aspen In-Plant Cost Estimator. The alkali-catalyzed process using fresh vegetable oil had the lowest total capital
investment, but the supercritical process was the most economically feasible overall, providing a lower manufactur-
ing cost and higher net present value and a discounted cash flow rate of return. Sensitivity analyses of net present
value were conducted using four parameters including oil feedstock costs, glycerol credit, biodiesel selling prices,
and interest rates. Based on the analyses, prediction equations of net present value were developed.
© 2011 The Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.
Keywords: Supercritical biodiesel production; Process simulation; Triolein; Economic assessment; Waste vegetable
oil; Energy consumption
Abbreviations: ANOVA, analysis of variance; ASME, American society of mechanical engineering; B100, 100% pure biodiesel fuel; CCD,
central composite design; CSTR, continuous stirred tank reactor; DCFROR, discounted cash flow rate of return; DPP, discounted payback
period; EOS, equation of state; FFA, free fatty acid; FVO, fresh vegetable oil; G&A, general & administrative; MARR, minimum acceptable
rate of return; MOC, material of construction; NPV, net present value; NRTL, non-random two liquid model; PFR, plug flow reactor; Prob,
probability; RSM, response surface model; TGA, thermogravimetric analysis; UNIFAC, universal functional activity coefficient; WVO, waste
vegetable oil.
∗
Corresponding author. Tel.: +1 604 822 1243; fax: +1 604 822 6003.
E-mail addresses: [email protected] (S. Lee), [email protected] (D. Posarac), [email protected] (N. Ellis).
Received 26 September 2010; Received in revised form 28 April 2011; Accepted 22 May 2011
0263-8762/$ – see front matter © 2011 The Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.
doi:10.1016/j.cherd.2011.05.011
chemical engineering research and design 8 9 ( 2 0 1 1 ) 2626–2642 2627
Fig. 1 – The prices of vegetable oils from Oct 2000 to Jan 2010. * Average from October to the following September.
Source: USDA, 2010a.
2628 chemical engineering research and design 8 9 ( 2 0 1 1 ) 2626–2642
a
Estimated by the method of Dohrn and Brunner (1991, 1994).
b
Estimated by the method of Constantinou and Gani (1994), Constantinou et al. (1995).
c
Estimated by the method of Ambrose (1978) and Reid et al. (1987).
d
Estimated according to Han and Peng (1993).
In this study, the normal boiling point of triolein was spheric pressure. However, compared to the values listed in
estimated using both TGA and the group contribution meth- Table 1, the group contribution method estimated the boiling
ods, and the results were compared with those from the point much closer to the experimental results in this study.
literature and process simulators. The normal boiling point
obtained from the TGA was subsequently incorporated in
the process simulator, HYSYS, during the development of a 2.2. Properties of triolein
simulation model of a supercritical biodiesel production pro-
cess. The model was then economically assessed to estimate The experimental TGA boiling point was then used in HYSYS
total capital investment and manufacturing costs of biodiesel along with the molar mass (885.4 g/mol), ideal liquid density
and evaluate the profitability. To assist in determining the (916 kg/m3 ) and UNIFAC structure to estimate critical and ther-
desirability of the supercritical process, the results were also modynamic properties of triolein. Temperature dependent
compared with those of homogeneous alkali-catalyzed pro- properties such as vapour enthalpy, vapour pressure and Gibbs
cesses using both fresh and waste vegetable oils. All economic free energy were also estimated. This triolein was named
studies conducted in here were first done using Aspen In-Plant TGA Triolein to make distinction from the triolein built in
Cost Estimator. HYSYS component library, named HYSYS Triolein. There were
discrepancies observed between TGA and HYSYS Triolein, as
2. Triolein a model compound of vegetable shown in Table 3, in specific heat capacity, mass density and
oils viscosity.
As shown in Table 3, the specific heat capacity and viscos-
2.1. Thermogravimetric analysis ity of TGA Triolein were 12 and 19 times higher than HYSYS
Triolein, respectively. The mass density of TGA Triolein was
The details of the methods of thermogravimetric analysis of 58% of that of HYSYS Triolein. Overall, the properties of TGA
triglycerides are described in Goodrum and Geller (2002). Triolein were found to be much closer to the properties of
Fig. 2 shows a weight loss curve of a sample consisted of real canola oil. Especially, the mass density of triolein was
4.91 mg of triolein and 1.08 mg of alumina powder. The sam- much improved as considering the common knowledge of oil
ple weight remained constant until the temperature reached having lower density than water. These indicate that improve-
370 ◦ C, and then rapidly decreased after 400 ◦ C. After the evap- ments can be achieved in a process simulation by replacing
oration of triolein, a second constant line appeared at the HYSYS Triolein with TGA Triolein. As an example, the dif-
20% of the initial sample weight, indicating that only the alu- ference in specific heat capacity of triolein would affect the
mina powder added remained in the pan. All five replicate energy consumptions in a supercritical process where the raw
runs showed the same single rapid and definite weight-loss materials need to be heated up to high temperatures (>280 ◦ C).
curve without any secondary transition. This fact indicates In addition, due to the existence of unreacted triolein, the
that there was minimal thermal decomposition during heat- performance of the biodiesel purification steps may also be
ing since the weight curve would have had multiple transition altered.
points if the analyzed material were decomposed into small
molecules. The average normal boiling point obtained from
the replicate runs was 412.8 ◦ C with a standard deviation of 3. Process simulation
1.08 ◦ C. Table 2 summarizes the normal boiling points of tri-
olein and tripalmitin estimated experimentally and by the 3.1. Chemical components, thermodynamic model and
group contribution method. plant capacity
The boiling points of triolein and tripalmitin estimated by
the group contribution method were approximately 30–40 ◦ C HYSYS Version 2006.5 was used to conduct the simulation.
higher than the experimental results. The main reason for the TGA Triolein (C57 H98 O6 ) developed in Section 2 was used as a
differences appears to be generated from the characteristic of model compound to represent canola oil. Values for density,
the group contribution method itself. Since the group contri- boiling point, critical temperature, pressure, and volume were
bution method was developed to be used for a broad range of 916.0 kg/m3 , 412.8 ◦ C, 588.8 ◦ C, 1203 kPa, and 1.346 m3 /kmol,
fatty compounds, obtaining the boiling point of a particular respectively. Fresh canola oil was modeled as 100% TGA Tri-
compound may slightly deviate from the true value. Further- olein, and waste canola oil was modeled as a mixture of 94 wt%
more, the parameters in the method were obtained from the TGA Triolein and 6 wt% oleic acid (C18 H34 O2 ). Consequently,
regression of the experimental data in literature, which are methyl oleate (C19 H36 O2 ) was considered as the product of
very rare in case of the boiling point of triglycerides at atmo- esterification and transesterification reactions.
chemical engineering research and design 8 9 ( 2 0 1 1 ) 2626–2642 2629
Table 2 – Comparison of boiling point of tripalmitin and triolein obtained from TGA and group contribution method.
Compound TGA (◦ C) (this TGA (◦ C) (Goodrum and Group contribution method (◦ C)
study) Geller, 2002) (Ceriani and Meirelles, 2004)
Non-random two liquid (NRTL) model was selected as a process, named SC-WVO, was a supercritical process using
property package due to the presence of polar compounds. waste canola oil. The process flowsheet and operating con-
Some interaction parameter coefficients between components ditions for Alkali-FVO and Alkali-WVO processes referred to
were not available in HYSYS library. These parameters were those reported by Zhang et al. (2003) and West et al. (2008). The
estimated using UNIFAC LLE model. Since an activity coef- flowsheets and details of major material streams of the pro-
ficient based model such as NRTL is not recommended to cesses are presented in Figs. 3 and 4. The reaction conditions
be used at pressures greater than 1000 kPa, Peng-Robinson are summarized in Table 4.
equation of state (EOS) was used in process streams and unit
operators wherever having pressures >1000 kPa. 3.2.1. SC-WVO process
The plant annual capacity was specified at 40,000 As stated previously, a supercritical process is not sensitive
tonne/year of biodiesel production based on 8000 operating to the presence of FFAs and water in feedstocks. Therefore,
hours per year. waste vegetable oil was chosen as the raw material for SC-
WVO process. SC-WVO process basically consisted of 4 steps:
3.2. Process design heating and pressurizing of raw materials, transesterification
and esterification reactions, methanol recovery and biodiesel
Three biodiesel production processes were simulated. The first purification. The flowsheets are presented in Fig. 5.
process, named Alkali-FVO, was an alkali-catalyzed process
using fresh canola oil as the feedstock. The second process, 3.2.2. Heating and pressurizing of raw materials
named Alkali-WVO, was an alkali-catalyzed process with an Methanol (stream 101) and WVO (stream 103) were pressur-
acid-catalyzed pre-treatment step of waste canola oil. The last ized to the reaction pressure (19 MPa) by P-101 and P-102,
Table 3 – Comparison of the properties of Hysys triolein, TGA triolein and canola oil.
Specific heat capacity (kJ/kg ◦ C) Mass density (kg/m3 ) Viscosity (cP)
a
HYSYS Triolein 0.131 1571 1.765
TGA Trioleina 1.58 909.8 33.19
Canola oilb 1.910–1.916 914–917 71.5–71.7
a
Properties at 25 ◦ C and 1 atm.
b
Przybylski (2008).
2630 chemical engineering research and design 8 9 ( 2 0 1 1 ) 2626–2642
respectively. Then each pressurized stream flowed through 3.2.4. Methanol recovery
heat exchangers (E-102 and E-101) where the heat of reac- A significant portion of methanol in the reactor effluent
tion product stream heated the waste oil to 293.9 ◦ C and then stream can be separated out as a vapour in a flash evaporator
the methanol to 211.0 ◦ C. The raw material streams were then (V-100) by adjusting the pressure or temperature. VLV-100 was
mixed together in a mixer (MIX-100) and brought to the desired used to depressurize stream 106B from 19 to 0.2 MPa so that
temperature (350 ◦ C) by E-103. most of methanol evaporates whereas the other components
remain mostly in the liquid phase. Using this procedure, 89.6%
of methanol in the feed stream was separated into stream 109.
3.2.3. Biodiesel production in a plug flow reactor (PFR)
Then, a distillation column with 4 theoretical stages was used
For continuous biodiesel production, a PFR was selected to
to further separate 99.93% of methanol in stream 108. The
carry out transesterification and esterification reactions. In
recovered methanol was then recycled and mixed with the
this study, the reaction conditions and biodiesel yield were
fresh methanol feed (stream 101).
obtained from Bunyakiat et al. (2006) where the reaction was
carried out in a continuous method using a 5.5 m in length
with 3/8-in. (9.525 mm) o.d. and 0.035-in. (0.889 mm) thickness
316SS tubing. By matching the experiment results shown in 3.2.5. Glycerol separation
Table 5, 96% conversion of triolein was simulated in the PFR at After methanol recovery in the flash drum and the distillation
350 ◦ C and 19 MPa with 800 s of reaction time. The molar ratio column, the bottom stream was cooled down to 25 ◦ C and fed
of methanol to oil was 24 and the reactor was considered to to a decanter. Two liquid phases were formed: a glycerol-rich
operate isothermally. phase and a methyl oleate-rich phase. The separation result
a
For triolein. The conversion of oleic acid is 100%.
chemical engineering research and design 8 9 ( 2 0 1 1 ) 2626–2642 2631
Fig. 4 – (a) Flow diagram and stream table of pre-treatment in Alkali-WVO process. (b) Flow diagram and stream table of
Alkali-WVO process after pre-treatment.
showed that 99.7% of glycerol in stream 109A was drained out ified in EN 14214, further purification of stream 204 in a
with the denser phase in this unit. distillation column was necessary. Since the normal boiling
temperature of methyl oleate is as high as 359 ◦ C, the pressure
3.2.6. Biodiesel purification inside T-102 was set at as low as 3.0–5.0 kPa in order to avoid
Stream 204 consisted of 96.2 wt% methyl oleate and the bal- thermal decompositions of methyl esters. The number of the-
ance was mostly triolein. To satisfy the requirement of the oretical stages used was 7. The distillate (stream 206) had a
maximum triglyceride content in biodiesel (≤0.20 wt%) spec- purity of 99.8 wt% methyl oleate.
2632 chemical engineering research and design 8 9 ( 2 0 1 1 ) 2626–2642
Table 5 – Raw materials, reaction conditions, yields and reactor types for supercritical biodiesel production.
Oil T (◦ C) P (MPa) Methanol/oila (min) B/Cb Yield (%) Ref.
a
Molar ratio.
b
B-batch or C-continuous.
3.3. Energy consumption than Alkali-FVO due to the high energy consumption of
the methanol distillation columns. For instance, the first
Energy consumptions of the three process simulations were methanol distillation column (T-100) in the pre-treatment
compared in Table 6. step in Fig. 4a consumes 2279 kW, nearly half of the total
Alkali-FVO had the lowest energy consumption among energy consumption. In comparison with the alkali-catalyzed
the three processes. Alkali-WVO consumed more energy processes, the supercritical processes had a large energy
requirement for pumping and heating raw material to achieve
the harsh reaction conditions. Despite this fact, the energy
Table 6 – Energy consumption (kW) of the three process
simulation models. consumption in SC-WVO process was less than that of the
Alkali-WVO process. Since a large portion of methanol was
Alkali-FVO Alkali-WVO SC-WVO
separated in the flash evaporator and the lower methanol
Pumps 1.043 1.688 87.73 to oil molar ratio was used in this process, the methanol
Heaters 83.45 34.05 1429 flow rate to the distillation column is lower, resulting in
Distillation columns (Reboiler) the total energy consumption comparable to the Alkali-FVO
Methanol 664 2279 (T − 100) 792.7 process.
recovery
873.8 (T − 101)
Table 7 – The general specifications for capital costs of the three biodiesel production processes.
Alkali-FVO Alkali-WVO SC-WVO
a
American Society of Mechanical Engineers, Section VIII, Division 1.
2007; You et al., 2008; West et al., 2008; Lim et al., 2009; Santana The specific types and the material of construction (MOC)
et al., 2010). These methods provide an approximate cost data of process equipments were defined and sized according to
and have relatively poor accuracies of estimation (Turton, principles outlined in the literatures (Luyben, 2002; Seider
2003). We were not able to find economic analysis of a biodiesel et al., 2004; Chopey, 2004). The details are shown in Tables 8–10.
plant using a software package process evaluation in the open
literature. As a result, we have decided to use Aspen In-Plant 4.1. Investment parameters
Cost Estimator, since it has been used for over 30 years in com-
mercial plants and engineering designs, and provides more The specified investment parameters are summarized in
accurate estimation (Seider et al., 2004). Aspen In-Plant Cost Table 11.
Estimator provides specifications for detailed design, estima- Table 12 gives the prices of raw materials and chemicals
tion and economic data, allowing quick modifications of the used in this study. The list of the utilities is shown in Table 13.
process equipment and sensitivity analysis. The general spec- Since the temperature of high-pressure saturated steam is not
ifications for capital costs used in this study are summarized sufficient to heat up the reactant streams to reaction temper-
in Table 7. ature (350 ◦ C) in SC-WVO process, hot temperature heating oil
was used to provide heat in the process wherever the operating and 75.4% of the total manufacturing costs of Alkali-FVO,
temperatures were greater than 254 ◦ C. Alkali-WVO, and SC-WVO processes, respectively. Due to the
usage of fresh vegetable oil feedstock, it was especially high
4.2. Project evaluation in Alkali-FVO process. The other two processes using waste
vegetable oil had approximately 42% lower oil feed costs.
4.2.1. Total capital investment The total manufacturing cost of Alkali-WVO process was
Table 14 shows the total capital costs for the three production $35.0 million, which was the second highest among the pro-
processes. Overall, the purchased equipment cost of SC-WVO cesses. Compared to Alkali-FVO, the cost for raw materials
was the highest. The supercritical process had the highest except for the oil feed was higher because of the usage of larger
costs of the reactor, pumps and heat exchangers due to the amount of methanol, sulphuric acid catalyst and glycerol for
high operating pressure and temperature. washing solution in the liquid–liquid extraction column in the
The total direct costs of Alkali-FVO, Alkali-WVO, and SC- pre-treatment process. The utility, maintenance and indirect
WVO processes were estimated as $3.594, $5.336, and $5.425 manufacturing costs of Alkali-WVO were also slightly higher
million, respectively. The largest number of pieces of equip- than Alkali-FVO due to the complexity of the process. How-
ment in Alkali-WVO process generated the highest costs for ever, using waste vegetable oil feedstock saved $10.8 million
equipment setting, civil, steel, instrumentation, electrical, per year in the total manufacturing cost of Alkali-WVO. SC-
insulation and paint. The total capital investment for Alkali- WVO process showed lower total manufacturing costs than
FVO was estimated as $11.1 million, which was the lowest the alkali-catalyzed processes. The glycerol credits in Alkali-
among the three processes. FVO and Alkali-WVO processes were $5.49 and $5.19 million,
respectively, which were higher than those in the supercritical
4.2.2. Total manufacturing cost processes due to the high purity of the glycerol.
The results of the total production costs of the three processes The revenue from the sales of biodiesel was $39.6 mil-
are shown in Table 15. The total production cost for Alkali-FVO lion per year in each process on the assumption that all the
was calculated to be $50.9 million, the highest among the pro- biodiesel products were sold in the market. Compared to the
cesses. The lowest total production cost was $25.9 million of total manufacturing costs, the revenue was large enough to
SC-WVO process. Fig. 6 shows the contributions of sub-items make profits in Alkali-WVO and SC-WVO processes. However,
to the total production costs. The oil feed cost was found to be the total manufacturing cost was $6.2 million dollars higher
the major contributor to the total biodiesel production cost in than the earnings from the biodiesel sales in Alkali-FVO pro-
all the processes. As shown in Fig. 6, it comprises 84.0%, 63.9%, cess, indicating that the process was in deficit.
chemical engineering research and design 8 9 ( 2 0 1 1 ) 2626–2642 2635
Type Float head Float head Float head Fixed head Float head
Area (m2 ) 24.67 11.53 65.54 53.99 38.04
MOC 316SS 316SS 316SS CS CS
Duty (kW) 992.2 707.3 1460.7 1533.6 514.7
Shell in (◦ C/kPa) 64.76/19000 41.94/19000 385/2533 69.23/101.5 170.8/106.5
Tube in (◦ C/kPa) 287.7/19000 350.0/19000 226.5/19000 35.00/344.98 35.00/344.98
Table 11 – Investment analysis parameters for the three biodiesel production processes.
Name Value Units
Escalation parameters
Project capital escalation 5 %/year
Products escalation 5 %/year
Raw material escalation 3.5 %/year
Operating and maintenance labour escalation 3 %/year
Utilities escalation 3 %/year
Table 12 – The prices of raw materials and products used Table 13 – The prices of utilities used in this study.
in this study.
Utility Price
Name Specification Price ($/tonne) a
Chilled water $1/tonne
Methanol – 268.71a Cooling watera $0.013/tonne
Fresh vegetable oil Canola oil 916b Circulating heating oil $0.4/tonne
Waste vegetable oil – 530c High-pressure steam (4201 kPa)b $16.64/tonne
Medium-pressure steam (1135 kPa)b $13.71/tonne
Glycerol Pharmaceutical 1322.77d
Low-pressure steam (690 kPa)b $12.68/tonne
grade
Vegetable glycerine 860d a
Seider et al. (2004).
b
Sodium hydroxide a
– 200 f Turton (2003).
Sulfuric acida – 60f
Phosphoric acida – 340f
Biodiesel (B100) Qualified to meet EN 990c, g
selling biodiesel product is the same as total manufacturing
14214 and ASTM D
cost (Zhang et al., 2003). Since Table 16 shows before-tax val-
6751
ues, taxes are not applied to the break-even prices.
a
McGinn (2009). The net present values (NPVs) were positive except for
b
USDA (2010a). Alkali-FVO process. SC-WVO process showed much higher
c
USDA (2010b). NPV than the alkali-catalyzed processes due to the lower total
d
Lefebvre (2009).
f
manufacturing costs. For Alkali-FVO process, the margin from
West et al. (2008).
g biodiesel and glycerol sales was not high enough to calcu-
Density of 870.5 kg/m3 was assumed.
late the discounted payback period (DPP) and discounted cash
flow rate of return (DCFROR). The DCFROR were 22.4% and
4.2.3. Profitability analysis 49.6% for Alkali-WVO and SC-WVO processes, respectively.
Table 16 shows the profitability measures for the three Since these values were higher than the minimum accept-
processes including break-even prices of biodiesel. The break- able rate of return (MARR) which was set at 20% and the NPVs
even price was defined as the price at which the revenue from were greater than zero, the two processes were considered
Table 14 – Total capital investment for biodiesel production processes at the capacity of 40,000 tonne/yr ($ millions).
Type Description Alkali-FVO Alkali-WVO SC-WVO
Direct items
Reactor Esterification – 0.255 –
Transesterification 0.252 0.249 0.726
Neutralization 0.080 0.080 –
a
Includes the costs for a distillation column, condenser, distillate accumulator, reflux pump and reboiler.
b
Indicates a pre-treatment process.
c
This item is the total of the following costs: design, engineering, and procurement costs, material charges (freight and taxes) and construction
field indirect costs (fringe benefits, burdens, consumables/small tolls, insurance, equipment rental, field services, field office construction
supervision, and plant start-up).
chemical engineering research and design 8 9 ( 2 0 1 1 ) 2626–2642 2637
Table 15 – Total manufacturing cost, glycerol credit and revenues from biodiesel sales in the three processes at the
capacity of 40,000 tonne of biodiesel production/yr ($ millions).
Process Alkali-FVO Alkali-WVO SC-WVO
economically profitable. Overall, SC-WVO was evaluated as the absolute value of the percentage of the oil price in Fig. 8 is
the most favourable process, followed by Alkali-WVO. Alkali- higher in Alkali-FVO than the other processes due to the high
FVO was considered to be an unacceptable project. price of the fresh vegetable oil. Alkali-FVO process was, how-
ever, more sensitive to the oil price than any other processes
4.3. Sensitivity analysis on net present value even when the same absolute values of the changes in oil price
were considered. The slopes of the trend lines of each process
Sensitivity analyses for the three biodiesel production pro- were evaluated and shown in Fig. 7.
cesses were conducted to investigate sensitivity of the NPVs Fig. 8 shows the effect of changes in glycerol price on the
to changes in a variety of parameters. Five parameters were NPV of each process. The results indicated that an increase
investigated: price of oil feed; glycerol credit; biodiesel selling of $0.89 million in NPV of SC-WVO could be caused by an
price; interest rate; and the life of a plant. The prices of oil feed, increase of $0.086/kg in the price of crude glycerol. An increase
glycerol and biodiesel were varied by ±10, 20, 30 and 40% from of $0.132/kg in the price of pharmaceutical grade glycerol
the original values shown in Table 13. The interest rate varied resulted in an increase of $2.1 and $1.31 million in the NPV
from 10% to 40%. The expected life of the plant was prolonged of Alkali-FVO and Alkali-WVO, respectively. For Alkali-WVO
to 15 and 20 years. process, the NPV turned to negative value as the glycerol
The sensitivity analysis results of the oil prices are shown price was decreased by 15%. Overall, the influence of glyc-
in Fig. 7. The NPVs of the three processes were significantly erol credit is much less than the influence of the prices of oil
changed by the change in the prices of oil feed. The results feed.
showed that every 10% increase in the oil price approximately The sensitivity analysis results of biodiesel selling price are
decreased the NPV by $15, $6.8, and $6.4 million in Alkali-FVO, shown in Fig. 9. The ±10% changes in the price of biodiesel
Alkali-WVO, and SC-WVO, respectively. It should be noted that ($0.099/kg) changed the NPVs of Alkali-FVO, Alkali-WVO, and
a
Density of 870.5 kg/m3 was used.
2638 chemical engineering research and design 8 9 ( 2 0 1 1 ) 2626–2642
Fig. 6 – The proportions of subitems in the total manufacturing cost of biodiesel of the three processes.
Fig. 7 – Sensitivities of the NPVs of the three processes to the price of oil feeds.
Fig. 8 – Sensitivities of the NPVs of the three processes to the price of glycerol by-product.
chemical engineering research and design 8 9 ( 2 0 1 1 ) 2626–2642 2639
Fig. 9 – Sensitivities of the NPVs of the three processes to the price of biodiesel product.
SC-WVO by ±$13.7, $11.1, and $10.3 million, respectively. The research findings on the effect of multiple parameters on the
results also indicate that the NPV of Alkali-WVO and SC-WVO profitability of biodiesel production processes. Therefore, in
processes are more strongly influenced by biodiesel selling order to investigate the effects of simultaneous changes in the
prices than the oil feed prices. For Alkali-FVO process, the parameters statistical analysis using design of experiments
effect of the oil price was more significant than the biodiesel was performed.
price, playing the most important role in the profitability of The method selected was Response Surface Method (RSM)
Alkali-FVO. coupled with Central Composite Design (CCD) using JMP 8
The sensitivity analysis of the interest rate is shown in software (SAS Institute Inc.). Table 17 shows the four param-
Fig. 10. The results indicated that the NPVs of the three eters and their five different levels (−˛, −1, 0, +1, +˛) used in
processes were very sensitive to the interest rate used for the analysis. After experimental tables were made for each of
discounting cash flows. Since cash flows are discounted to the processes, the NPV was calculated using IPE accordingly.
time 0, the cash flows closer to the end of the project are Table 18 shows the results of the Analysis of Variance (ANOVA)
heavily discounted. Therefore, as the interest rate increases, of Alkali-FVO process. The parameters with Prob >F (p-value)
the revenues from biodiesel sales near the end of the project less than 0.05 were considered significant and marked with an
are heavily discounted, whereas the capital investment at asterisk. Coefficients of each term in a regression equation to
time 0 remains constant. As a result, the NPVs of Alkali- calculate NPV are shown as “Estimate”.
WVO, and SC-WVO decreased as the interest rate increases. The predicted formula for NPV was derived from the
On the other hand, the deficit financing in Alkali-FVO over linear combination of the parameters and the values of
the life of the project became heavily discounted as the inter- their corresponding estimates after eliminating insignificant
est rate increases and it resulted in the increases in the parameters, Eq. (1):
NPVs.
In reality, however, most of the parameters simultaneously NPV ($ million) = −26.697 + 57.9212A − 63.9471B + 8.4131C
and continuously change over time in an irregular way and the
+ 7.3551D+12.7501AB − 24.8585AD + 26.084BD − 5.6084A2
actual values of these parameters are occasionally unknown
at the time of evaluation. Nevertheless, there are not sufficient −6.2336B2 (1)
Table 17 – The four parameters in central composite design to investigate NPVs of Alkali-FVO, Alkali-WVO, and SC-WVO
processes.
Variables Specification Unit Level
−2 (−˛) −1 0 +1 +2 (+˛)
Oil feed price FVO $/kg 0.1832 0.5496 0.916 1.2824 1.6488
WVO 0.106 0.318 0.53 0.742 0.954
Interest rate – % 0 10 20 30 40
Table 18 – Analysis of variance and effect tests for each parameter of Alkali-FVO process.
Analysis of variance
Source Degree of Freedom Sum of Squares Mean Square F ratio Prob >F
Effect tests
process:
For SC-WVO process:
NPV ($ million) = 1.6884 + 50.8435A − 34.1184B + 6.3613C
−8.8331D + 7.3361AB − 21.776AD + 14.3841BD − 4.7346A2 NPV ($ million) = 19.587 + 49.4227A − 31.3785B + 4.2480C′
−2.4894B2 + 4.1646D2 (2) −17.4959D − 20.7246AD + 6.0322AB + 13.0959BD − 4.3212A2
+ 6.5714D2 (3)
5. Conclusion
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