Evaluation of economic feasibility under uncertainty of a thermochemical route for ethanol production in Brazil

Reynaldo L.N. Taylor-de-Lima, Arthur José Gerbasi da Silva, Luiz F.L. Legey and Alexandre Szklo

Energy, 2018, vol. 150, issue C, 363-376

Abstract: This paper assesses the economic feasibility of ethanol and higher alcohols production through a thermochemical route in Brazil. This route comprises mainly sugarcane bagasse gasification, syngas cleaning, and synthesis of alcohols. Ethanol production costs and associated risks are evaluated in different scenarios. A case study of a virtual plant to be located adjacent to a sugarcane mill, in the state of São Paulo, is presented with the objective of finding the minimum ethanol selling price (MESP) that makes the plant’s project economically feasible. The analysis utilizes first the traditional discounted cash flow method and then proceeds to use a stochastic approach, which is more suitable to study economic feasibility under uncertainty conditions. In the latter approach, prices of raw materials and products are modelled through a mean reverting stochastic process, and economic feasibility is analysed with the help of Monte Carlo simulations. Results are summarized via a histogram of the MESPs obtained for different simulated price scenarios. Finally, the project’s risk is evaluated by computing the number of instances in which the MESP is greater than the ethanol market price.

Keywords: Biomass conversion; Thermochemical ethanol; Economic feasibility; Uncertainty; Stochastic processes; Mean reverting process (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0360544218303529
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:150:y:2018:i:c:p:363-376

DOI: 10.1016/j.energy.2018.02.118

Access Statistics for this article

Energy is currently edited by Henrik Lund and Mark J. Kaiser

More articles in Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().