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Economy of Scale for Biomass Refineries: Bulk Densities, Transportation Cost, and Producer Incentives

Published by the American Society of Agricultural and Biological Engineers, St. Joseph, Michigan

Citation:  Transactions of the ASABE. 57(1): 85-91. (doi: 10.13031/trans.57.10252) @2014
Authors:   Shaochun Ma, Steven R. Eckhoff
Keywords:   Bulk densities, Economy of scale, Producer incentives, Transportation cost, Unit ethanol production cost.

A Microsoft Excel facilitated SuperPro model was developed to analyze the economy of scale of biomass refineries. Economic analysis, using the model, showed that the unit ethanol production cost (UEPC) of fuel ethanol is affected by the bulk density of the feedstock, transportation cost coefficients, and producer incentives. The UEPC decreases as the feedstock bulk density increases. The UEPC is more sensitive to variable cost (VC) than fixed cost (FC), and incentives can attract more producers to participate in a contract program but will increase the UEPC. The bulk density and transportation cost coefficients have significant impacts on the optimal plant size of biorefineries. Producer incentives do not have an effect on the economy of scale for refineries since the optimal plant size is constant no matter how much incentive is paid to farmers.

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