Processing Cost Analysis of the African Biofuels Industry with Special Reference to Capital Cost Estimation Techniques
Keywords:
Engine fuels, biogas, ethanol, cost analysis, capital costs, production costs, biofuel, biodiesel, bioethanol, AfricaSynopsis
Access to energy, in the form of electricity and fuels, is a necessary condition for development. There are several reasons for biofuels to be considered important in many African countries. They include energy security, environmental concerns, foreign exchange savings and socio-economic opportunities for the rural population. Biofuels such as biogas, biodiesel and bioethanol may be easier to commercialise than other alternatives to crude-oil derived fuels, considering performance, infrastructure and other factors. Biofuels are in use in a number of developing countries (including some African ones for example, Mauritius, South Africa, Kenya), and have been commercialised in several OECD countries, as well as Brazil and China. A good understanding of the production cost of biofuels, and the availability of robust and indigenous cost estimation models is essential to their eventual commercialization. However, available process engineering cost estimation relationships and factors are based on plant costs from developed countries, and thus have limited applicability and unknown accuracy when applied to African installations. The need to develop indigenous cost prediction relationships, which is central to economic feasibility studies, is driven not only by the limitations in terms of current data bases and methodologies for the generation of such. There is also a requirement for a more systematic presentation of cost data in equation forms, which will ensure easier and more rapid use of the data in numerical and economic models, and in preliminary design and plant optimisation in a time and cost effective manner, providing decision-makers with key information in the early design stages of a project. It is these shortcomings and challenges that this dissertation attempts to address, through an analysis of the economic input factors, and the development of more robust, indigenous cost estimation relationships for both capital and operating costs for the biofuels process industry in Africa. The conceptual approach developed within this thesis addresses the current data gaps and deficiencies through analyses of establishment and operating costs of existing biofuels plants both on the continent and elsewhere. It aims to determine which factors most influence the production cost, and then proceed to modify known cost estimation tools for both capital and operating costs specifically for African biomass-to-biofuel conversion plants as a function of plant size, feedstock, location, exchange rates, and other site-specific variables. Shortcomings in the use of existing cost estimation models are addressed with the aid of a literature study, supported by the analysis of African biofuels plant establishment (biogas and bio-ethanol) and operating (bio-ethanol) costs‡. Plant establishment costs are analysed at two different levels of detail, corresponding to the concept development and pre-feasibility phases in the project planning cycle.
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