Cellulosic Ethanol and Power Plant Co-Location: Savings in Synergy
Feedstock sharing, cost savings and regulatory compliance are among the benefits in co-location.
One promising strategy for making cellulosic ethanol economically viable is the co-location of an ethanol facility and a coal-fired power plant. There are significant economic and environmental benefits for both industries when they are tied together in the same location in the form of feedstock sharing, cost savings and regulatory compliance.
When a power plant is co-located with a cellulosic ethanol facility, it can take advantage of co-firing lignin in its coal boilers to produce electricity. Lignin's clean-burning properties and high BTU levels make it an effective power source, one that results in much lower carbon emissions than those produced by burning coal. This environmental benefit is increasingly relevant in light of the current renewable portfolio standards (RPS) found in state regulations that could become part of federal policy in the future. An RPS requires electricity providers to produce a certain percentage of power from renewable energy sources within a set timeframe. There are currently 30 states, including the District of Columbia, with some form of RPS, with goals ranging from 10-50 percent of electricity produced from renewable sources within the next 20 years. Eligible sources of the renewable energy include hydro, wind, solar, geothermal and biomass. There are some clear benefits of RPS policies:
>Improved energy security
>Reliable energy delivery
>Protection against fossil fuel price and supply volatility
>Environmental effects—improved air, soil and water quality
Despite the fact that power plants moving towards increased "green electricity" production will pay more to purchase biomass than coal, an effective co-location setup can result in profit for both the electricity and ethanol producers (See Chart 1). Lignin—which is of significant value to the power plant—is basically a byproduct for the ethanol facility that must either be turned into landfill waste or burned into steam and electricity at a relatively high cost. A similar tradeoff occurs when the power plant's excess steam and electricity (which is currently wasted) is sold to the ethanol plant. This exchange allows the ethanol producer to realize a significant capital cost savings—up to one-third—by avoiding the need to invest in onsite cogeneration equipment, including a lignin-fueled boiler and turbine generator system.
Besides these environmental and economic advantages, other benefits to the power plant include the following:
>A more cost competitive power supply
>Capacity increments that meet load growth
>Increased local control of supply assets
Co-location is of significant value to the cellulosic ethanol plant both through direct cost savings and operational efficiency. In addition to the previously mentioned reduction in capital and equipment expenses, the plant can save in areas such as labor, warehousing, site development, and energy and fuel costs. There is also great potential for flow integration, value-added waste stream recovery, and the sharing of management and overhead expenses. Other benefits include additional industrial infrastructure and a market for the lignin byproduct. Furthermore, onsite generation results in a more reliable and affordable supply of both power and steam. Co-location also further reduces the carbon footprint of an ethanol plant and allows it to be more competitive via its decreased operating costs.
In addition to these synergies, co-location of ethanol and power plants contribute significant economic development to their community in the form of new jobs.
A recent Novozymes case study explored various co-firing and co-location production scenarios. (See Chart 2) Our process modeling showed that in situations where a green electricity premium of $30 per MWh is charged, an ethanol price of approximately $2.10 per gallon (before any ethanol subsidies) is the break-even point for a co-location producer. Ethanol prices above this amount will allow the producer to make more money producing ethanol from just the cellulose and hemicellulose (and burning the lignin separately for power) than by burning the whole biomass feedstock. This same model showed that when no green electricity premium is included, the break-even price for the cellulosic ethanol is approximately $2.35 per gallon (pre-subsidy).
With plans in place for a growing number of bio-electricity plants, there is some concern about competition for biomass feedstock between power and cellulosic ethanol producers. Experts at Novozymes are not subscribing to this theory. Cynthia Bryant, global business development manager, explains: "We don't see this as an either/or situation. Instead, we believe that it is feasible to optimize the feedstock to meet the needs of both the ethanol and electricity industries. When effective co-location strategies are put into place, any increase in startup costs is well worth the investment because of the higher return in the end." EP
Frances Williams is a communications specialist at Novozymes. Reach her at firstname.lastname@example.org or (919) 494-3048.