Predicting the costs of biodiesel production in Africa: learning from Germany

Abstract

Germany's existing biodiesel production plants had a total annual biodiesel capacity of more than 3 million tonnes (Mt) in 2006, while most of the countries in Africa have just initiated a first phase of biodiesel development. Commercial viability of manufacture of biodiesel for use in transportation can be facilitated in Africa through a better understanding of the economic and other factors that have contributed to the success of Germany's biodiesel industry. A cost-capacity factor n = 0.89 was obtained for biodiesel plants in some EU countries, indicating that capital costs increase more rapidly for biodiesel than for a typical processing enterprise, judging by the average 0.6 rule. The average personnel requirement (integral number of operators) for a stand-alone biodiesel plant is E ∝ Q 0.5 , where Q is plant capacity, indicating significant economies of scale for labour in biodiesel plants over the range of plants investigated. The net cost of biodiesel for four different system boundaries, representing a cross-section of installed biodiesel plants, (1) agricultural (oil-mill based) biodiesel plant, (2) industrial biodiesel plant (integrated with oil mill), (3) industrial biodiesel plant (stand-alone), and (4) industrial multi-feedstock plant, are Euro 0.65/l, 0.62/l, 0.73/l and 0.49/l respectively. Biodiesel production is thus not economically feasible and it will still require continued government support over time on a price basis for it to be sustainable, unless yields or petroleum prices increase considerably. Biodiesel production costs are mainly driven by the cost of raw materials, ranging from 66% for biodiesel based on yellow grease up to 85%for a large-scale standalone plant, while the “fixed” operating and capital costs comprise about 15% of the total cost. As a result, evaluation of the cost of the feedstock in any location including Africa should provide some insight into potential competitiveness of biodiesel production. It appears that small-scale plants capable of being allied to a source of feedstock or seed-oil-processing plant, with standards satisfactory to engine manufacturers, could be a feasible option for encouraging the development of a biodiesel industry in Africa as they keep more resources within the local communities.