1.3 Technoeconomic Analysis Approach

Starting from the general process flow diagram (PFD) shown in Figure 1 and the more detailed PFDs contained in Appendix E, a process simulation is developed using Aspen Plus software. This process model computes thermodynamically-rigorous material and energy balances for each unit operation in this conceptual biorefinery.

The material and energy balance data from the Aspen simulation are next used to assist in determining the number and size of capital equipment items. As process conditions and flows change, baseline equipment costs are automatically adjusted in an Excel spreadsheet using a scaling exponent. These baseline costs come from vendor quotes (favored for larger or non-standard unit operations and packaged or skid-mounted subsystems) or from Harris Group’s proprietary cost database (for secondary equipment such as tanks, pumps, and heat exchangers). Final equipment costs for this report are tabulated in Appendix A.

Once equipment costs are determined, direct and indirect overhead cost factors (e.g., installation costs and project contingency) are applied to determine a total capital investment (TCI). The TCI, along with the plant operating expenses (also developed using flow rates from the Aspen model), is used in a discounted cash flow rate of return (DCFROR) analysis to determine a plant-gate price for ethanol for a given discount rate. This plant-gate price is also called the minimum ethanol selling price (MESP, $/gallon) required to obtain a net present value (NPV) of zero for a 10% internal rate of return (IRR) after taxes.

The product of the analysis described above is a technoeconomic model that reasonably estimates a product price for a pre-commercial process. The resultant MESP is unique for the set of process conditions simulated and it should be emphasized that a certain percentage of uncertainty always exists around these chosen conditions, as well as around the assumptions made for capital and raw material costs. Without a detailed understanding of the basis behind it, the absolute computed MESP has limited relevance. While the MESP can be used to assess the marketplace competiveness of a given process, it is best suited for comparing technological variations against one another or for performing sensitivity analyses that indicate where economic or process performance improvements are needed.

1.4 About nth-Plant Assumptions

The technoeconomic analysis reported here uses what are known as “n^th-plant” economics. The key assumption implied by n^th-plant economics is that our analysis does not describe a pioneer plant; instead, several plants using the same technology have already been built and are operating. In other words, it reflects a mature future in which a successful industry of n plants has been established. Because the technoeconomic model is primarily a tool for studying new process technologies or integration schemes in order to comment on their comparative economic impact, we feel it is prudent to ignore artificial inflation of project costs associated with risk financing, longer start-ups, equipment overdesign, and other costs associated with first-of-a-kind or pioneer plants, lest these overshadow the real economic impact of research advances in conversion or process integration. At the very least, these n^th-plant economics should help to provide justification and support for early technology adopters and pioneer plants.

In previous design reports that targeted 2012 technology, many of the n^th-plant assumptions also applied to key 2012 research targets in conversion, e.g., 90% conversion of xylan to xylose, which in 2002 had not yet been experimentally demonstrated. This report will show that through research progress, current conversion performance is approaching the targets set in 2002 and that the 2012 performance targets should no longer be considered speculative. Assumptions in the previous model also extended to enzyme costs and some equipment costs, particularly those items that were not commercially available at the time (e.g., the pretreatment reactor). In the present design report, enzyme and equipment costs are considerably more well-defined.

The remaining n^th-plant assumptions in the present model therefore apply primarily to the factored cost model used to determine the total capital investment from the purchased equipment cost and to the choices made in plant financing. The n^th-plant assumption also applies to some operating parameters, such as process uptime of 96%. These assumptions were agreed upon by NREL and DOE for this report and reflect our best estimates at the time of publication. It should be emphasized, however, that these assumptions carry a large uncertainty and are subject to refinement.