Plant Size: Capital Cost Relationships in the Dry Mill Ethanol Industry
AbstractEstimates suggest that capital costs typically increase less than proportionately with plant capacity in the dry mill ethanol industry because the estimated power factor is 0.836. However, capital costs increase more rapidly for ethanol than for a typical processing enterprise, judging by the average 0.6 factor rule. Some estimates also suggest a phase of decreasing unit costs followed by a phase of increasing costs. Nonetheless dry mills could be somewhat larger than the current industry standard, unless other scarce factors limit capacity expansion. Despite the statistical significance of an average cost-size relationship, average capital cost for plant of a given size at a particular location is still highly variable due to costs associated with unique circumstances, possibly water availability, utility access and environmental compliance.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12306.
Date of creation: 01 May 2005
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Publication status: Published in Biomass and Bioenergy, May 2005, vol. 28, pp. 565-571
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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Web page: http://www.econ.iastate.edu
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