Engineering-economic System Models for Rural Ethanol Production Facilities
From BioMASS Laboratory Wiki
Executive Summary
Illinois plays a major role in contributing to the U.S. production capacity of ethanol. The state of Illinois is ranked second in U.S. corn production with more than two billion bushels produced annually in 2004 [Buchheit, 2002]. Illinois currently has five ethanol plants and investment by the ethanol industry exceeds one billion dollars. Corn grown in Illinois is used to produce 40% of the ethanol used in the US.
There is no doubt that the rural economy is bolstered by the explosion of profitable dry grind ethanol facilities in the size range of 35-70 million gallons per year. This size is popular with producer owned cooperatives because of favorable tax incentives, which are intended to help offset the natural economy of scale. However, following the recent rapid increase in number of these small to moderate size dry grind facilities there has been a flurry of announcements of large expansions and new plants, including wet mills, by major commercial entities. With the addition of a new competitor to the environment, extra care is required to confidently design and implement a sustainable ethanol production facility over the long term. The development of an integrated engineering-economic system model would be useful to equip the various stakeholders in rural ethanol production with the information necessary to make effective decisions for the management of the system.
Several pressures have been identified which can have significant impact on the performance of rural ethanol production. Apart from the competition from the large wet mill these pressures include the variability in the amount and quality of input materials the facility, the potential changes to tax incentives or environmental regulations. In contrast, several opportunities are available for the dry grind facilities as opposed to wet mills including the refinement of co-products as an additional revenue stream. This may have the effect of reducing the economies of scale while not significantly changing capital requirements. Currently, one of the advantages of smaller dry grind plants is their apparently benign environmental impact. However, will modified dry grind plants (those implementing new technology to recover more co-products) retain this characteristic and how does size affect the environmental impact?
A new model is proposed which captures each of these aspects at the facility level and integrates them in a package capable of assisting decision making at two key levels: 1) decision making for a cooperative board members will be facilitated when determining which technologies to implement including several potential co-product streams; 2) decision making at the legislative level will be facilitated when determining what tax incentives to offer and what rules may be necessary for the handling of various potential gaseous and liquid pollutants.
At the core of the system will be a previously developed model by ERRC-ARS-USDA which determines plant production of primary and co-products and any potential pollutants based on the quality and quantity of input corn and the technologies selected. Technologies would be selected based on the anticipated costs of inputs, capital costs, and production costs. To this a set of economic models will determine the likely values and ranges of these costs based upon the state of the economic and political environment. The environment will vary based upon inputs such as the inherent variability in harvest quantity and quality, variability in production, and the perception of the impact upon the socio-ecological environment surrounding the facility. The anticipation is that this will have a direct effect upon legislative policies.
Presentation of the results will be made at the Ethanol Workshop held yearly, published in the scientific literature, and summarized in a written report published by UIUC and emailed directly to ethanol producers. Such a model could also be implemented via a website available to a wider community interested in the implementation of ethanol production.
