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Economic Feasibility of a Woody Biomass- Based Ethanol Plant in Central Appalachia

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  • Wu, Jinzhuo
  • Sperow, Mark
  • Wang, Jingxin

Abstract

A mixed-integer programming model is developed to assess the economic feasibility of siting a woody biomass-based ethanol facility in the central Appalachian hardwood region. The model maximizes the net present value (NPV) of a facility over its economic life. Model inputs include biomass availability, biomass handling system type, plant investment and capacity, transportation logistics, feedstock and product pricing, project financing, and taxes. Four alternative woody biomass handling systems, which include all processes from stand to plant, are considered. Eleven possible plant locations were identified based on site selection requirements. Results showed that the optimal plant location was in Buckhannon, West Virginia. The NPV of the plant with a demand of 2,000 dry tons of woody biomass per day varied from $68.11 million to $84.51 million among the systems over a 20-year plant life. Internal rate of return (IRR) of the facility averaged 18.67% for the base case scenario. Average ethanol production costs were approximately $2.02 to $2.08 per gallon. Production costs were most impacted by biomass availability, mill residue purchase price, plant investment and capacity, ethanol yield, and financing. Findings suggest that a woody biomass-based ethanol facility in central Appalachia could be economically feasible under certain operational scenarios.

Suggested Citation

  • Wu, Jinzhuo & Sperow, Mark & Wang, Jingxin, 2010. "Economic Feasibility of a Woody Biomass- Based Ethanol Plant in Central Appalachia," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(3), pages 1-23, December.
    • Handle: RePEc:ags:jlaare:99118
    DOI: 10.22004/ag.econ.99118
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    Cited by:

    1. Wang, Yuxi & Wang, Jingxin & Schuler, Jamie & Hartley, Damon & Volk, Timothy & Eisenbies, Mark, 2020. "Optimization of harvest and logistics for multiple lignocellulosic biomass feedstocks in the northeastern United States," Energy, Elsevier, vol. 197(C).
    2. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Comparison of the investment behavior of Kazakhstani and German farmers: An experimental approach," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124650, Agricultural and Applied Economics Association.
    3. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Comparison of the Investment Behavior of German and Kazakhstani Farmers: an Experimental Approach," GlobalFood Discussion Papers 122422, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    4. Osmani, Atif & Zhang, Jun, 2014. "Economic and environmental optimization of a large scale sustainable dual feedstock lignocellulosic-based bioethanol supply chain in a stochastic environment," Applied Energy, Elsevier, vol. 114(C), pages 572-587.
    5. Tubetov, Dulat & Maart, Syster Christin & Musshoff, Oliver, 2012. "Experimental examination of land investment decisions with volatile returns A comparison between Kazakhstani and German farmers," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122454, European Association of Agricultural Economists.
    6. Haque, Mohua & Biermacher, Jon T. & Guretzky, John A. & Kering, Maru K., 2012. "Does Soil Nutrient and Remobilization Affect Harvest Strategy and Nutrient Management Decisions for Switchgrass Feedstock?," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124985, Agricultural and Applied Economics Association.
    7. Ramli, Nurul Nadia & Epplin, Francis, 2017. "Cost of Procuring Invasive Eastern Red Cedar Biomass for use as a Biobased Product Feedstock," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252525, Southern Agricultural Economics Association.

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