Integration of biofuel production into district heating – part I: an evaluation of biofuel production costs using four types of biofuel production plants as case studies

Abstract

This paper evaluates the effects on profitability of biofuel production if biofuel producers would sell the waste heat from the production to a local district heating system. All analyses have been performed considering four different technology cases for biofuel production. Two technology cases include ethanol production which is followed by by-production of raw biogas.This biogas can be upgraded and sold as biofuel (the first technology case) or directly used for combined heat and power production (the second technology case 2 market scenarios were considered. The sensitivity analyses of the discount rate were performed as well.In the case of energy market conditions, the profitability depends above all on the price ratio between biomass (used as the feedstock for biofuel production) and crude oil (used as the feedstock for fossil diesel and gasoline production). The reason for this is that the gate biofuel prices (the prices on which the biofuel would be sold) were calculated assuming that the final prices at the filling stations are the same as the prices of the replaced fossil fuel. The price ratios between biomass and district heating, and between biomass and electricity, also have an influence on the profitability, since higher district heating and electricity prices lead to higher revenues from the heat/electricity by-produced.Due to high biofuel (ethanol + biogas) efficiency, the ethanol production plant which produces upgraded biogas has the lowest biofuel production costs. Those costs would be lower than the biofuel gate prices even if the support for transportation fuel produced from renewable energy sources were not included. If the raw biogas that is by-produced would instead be used directly for combined heat and power production, the revenues from the electricity and heat would increase, but at the same time the biofuel efficiency would be lower, which would lead to higher production costs. On the other hand, due to the fact that it has the highest heat efficiency compared to the other technologies, the ethanol production in this plant shows a high sensitivity to the district heating price level, and the economic benefit from introducing such a plant into a district heating system is most obvious. Assuming a low discount rate (6 %), the introduction of such a plant into a district heating system would lead to between 28 % and 52 % (depending on the district heating price level and energy market scenario) lower biofuel production costs. Due to the lower revenues from the heat and electricity co-produced, and higher capital investments compared to the ethanol production 3 plants, Fischer-Tropsch diesel and dimethyl ether productions are shown to be profitable only if high support for transportation fuel produced from renewable energy sources is included.The results also show that an increase of the discount rate from 6 % to 10 % does not have a significant influence on the biofuel production costs. Depending on the biofuel production plant, and on the energy market and district heating cond...

Application of technology assessments to co-learning for regional transformation: a case study of biomass energy systems in Tanegashima

“…The relationships among these spheres were taken into account for co-learning by technology assessments based on research examples related to biomass-derived production. Economic aspects of technology implementation have been examined in technoeconomic analyses to clarify the relationships between the characteristics of technologies and various economic indicators, such as direct and indirect costs, fixed capital investment (e.g., Liew et al 2014), and product price (e.g., Ilic et al 2014). Socioeconomic analysis has also become an essential method for analyzing the impacts of technology and can be a driver for implementation (Domac et al 2005).…”

An Overview of Polygeneration as a Sustainable Energy Solution in the Future

“…The results of their research show that the new system can save about 6% energy than a system with a single product. The polygeneration system by producing biofuel by utilizing heat as one of the by-products can provide cooperation between the transportation sector and district heating [161,171]. DME and FTD productions are two technologies that can be used for biomass gasification.…”

Cost Efficiency of Bioenergy Industry and its Economic Determinants in EU-28: A Tobit Model Based on DEA Efficiency Scores

“…In one study (Ilic et al, 2014) the assets' input price for bio-fuel output in the Kingdom of Sweden could significantly impact the overall generation price of bio-fuel, the manufacturer's site efficiency and capability, and the release of CO2; thus, CE could create attractive products in the energy market. As pointed in a pertaining paper (Le Truong and Gustavsson, 2014) the capital input cost may affect the gross expense of output and CE of the output procedure in the thermal energy industry based on bio-mass factories in the Kingdom of Sweden.…”