Biofuel production system with operation flexibility: Evaluation of economic and environmental performance under external disturbance

Nannan Kou, Purdue University

Abstract

Biomass derived liquid hydrocarbon fuel (biofuel) has been accepted as an effective way to mitigate the reliance on petroleum and reduce the greenhouse gas emissions. An increasing demand for second generation biofuels, produced from ligno-cellulosic feedstock and compatible with current infrastructure and vehicle technologies, addresses two major challenges faced by the current US transportation sector: energy security and global warming. However, biofuel production is subject to internal disturbances (feedstock supply and commodity market) and external factors (energy market). The biofuel industry has also heavily relied on government subsidy during the early development stages. In this dissertation, I investigate how to improve the economic and environmental performance of biorefineries (and biofuel plant), as well as enhance its survivability under the external disturbances. Three types of disturbance are considered: (1) energy market fluctuation, (2) subsidy policy uncertainty, and (3) extreme weather conditions. All three factors are basically volatile, dynamic, and even unpredictable, which makes them difficult to model and have been largely ignored to date. Instead, biofuel industry and biofuel research are intensively focused on improving feedstock conversion efficiency and capital cost efficiency while assuming these advancements alone will successfully generate higher profit and thus foster the biofuel industry. The collapse of the largest corn ethanol biofuel company, Verasun Energy, in 2008 calls into question this efficiency-driven approach. A detailed analysis has revealed that although the corn ethanol plants operated by Verasun adopted the more efficient (i.e. higher ethanol yield per bushel of corn and lower capital cost) dry-mill technology, they could not maintain a fair profit margin under fluctuating market condition which made ethanol production unprofitable. This is because dry-mill plant converts a single type of biomass feedstock (corn grain) into a single primary product (ethanol). The traditional lower efficient (i.e. lower ethanol yield per bushel of corn and higher capital cost) wet-mill plant has a more diverse and adjustable product portfolio i.e. corn syrup, starch, and ethanol. The fact that only the dry-mill corn ethanol plants have bankrupted while the wet-mill corn ethanol plants have survived the late 2000s economy recession suggests that the higher conversion efficiency achieved by the dry-mill production mode has jeopardized operational flexibility, a design operational feature I agree that is indispensable for the biofuel plant’s long term profit and viability. Based on the analysis of corn ethanol production, operational flexibility has been proposed as a key strategy for the next generation biofuel plants to improve its lifetime economic performance, as well as to enhance its survivability under external disturbances. This strategy requires the biofuel plant to adopt a flexible feedstock management, making it possible to utilize alternative types of biomass feedstock when the primary feedstock supply is disturbed. Biofuel plants also need to produce a wider range of final products that could meet the preference variation that either comes from the energy market or from the subsidy policy. Aspen Plus model based numerical simulations have been carried out for a thermochemical ethanol plant and a Fischer Tropsch plant (both are assumed to be located in southwest Indiana) to test this strategy under the external disturbances of extreme weather impact, different energy price projections and various subsidy policy combinations. For the thermochemical ethanol plant, effects of extreme weather conditions are mainly evaluated. It has been shown that this strategy could effectively increase the net present value of the biofuel plant and significantly decrease the GHG emission comparing with the traditional single-feedstock strategy, when the extreme weather conditions are considered. It has also been demonstrated that this strategy could significantly decrease the possibility for the biofuel plant to bankrupt. For the Fischer Tropsch diesel plant, all the three external disturbances have been examined. It has been learned that operational flexibility through full capacity power co-generation, flexible feedstock management and hydrogen production by natural gas autothermal reforming could maximize the net present value under the influence of the external disturbances. Thus it is suggested that the future biofuel plant should adopt operational flexibility to increase the lifetime economic performance and to enhance the survivability under the influence of external disturbance.

Degree

Ph.D.

Advisors

Zhao, Purdue University.

Subject Area

Alternative Energy|Environmental economics|Energy

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