Economic Cost Analysis of Biodiesel Production: Case in Soybean Oil

Abstract

The economic costs of three biodiesel plants with capacities of 8000, 30 000, and 100 000 tons year−1 were analyzed and assessed. The plants employ continuous processes using an alkali catalyst and the raw material of soybean oil. Six major economic cost factors were computed and examined. These include the fixed capital cost (FCC), total capital investment cost (TCC), total manufacturing cost (TMC), net annual profit after taxes (NNP), after-tax rate of return (ARR), and biodiesel break-even price (BBP). The NNP and ARR of plants with capacities of 8000, 30 000, and 100 000 tons year−1 are −24 × 103, 1975 × 103, and 8879 × 103 U.S. dollars (USD), and −10.44, 40.23, and 67.38%, respectively. The values of BBP of the three plants are 862, 724, and 678 USD ton−1 (price in July 2007). The plant with a capacity of 100 000 tons year−1 is economically feasible, providing a higher NNP and more attractive ARR with a lower BBP. Among the system variables of the plants examined, plant capacity, price of feedstock o...