Biomass feedstocks are in abundant supply, and the reduction in CO2 emissions – up to 90% compared to gasoline – is impossible to ignore, as is the potential of cellulosic ethanol to boost energy independence and create jobs.
One promising strategy is the co-location of an ethanol facility and a coal-fired power plant. Both industries can enjoy significant economic and environmental benefits, including feedstock sharing, cost savings, and regulatory compliance.
When a power plant is co-located with a cellulosic ethanol facility, it can co-fire lignin in its coal boilers to produce electricity. Clean burning lignin is an effective power source with lower carbon emissions than coal. This environmental benefit is increasingly relevant in light of current Renewable Portfolio Standard (RPS) state regulations that could become federal policy in the future. An RPS requires electricity providers to produce a certain percentage of power from renewable energy sources. Thirty states currently have some form of RPS, with goals ranging from 10% - 50% of electricity produced from renewable sources within the next 20 years.
Despite the fact that power plants will pay more to purchase biomass than coal, co-location can still be profitable. Lignin – which is of significant value to the power plant – is basically a by-product for the ethanol facility that must either be turned into landfill waste or burned into steam and electricity at a relatively high cost. Likewise, the power plant’s excess steam and electricity can be sold to the ethanol plant to heat tanks and evaporators. This allows the ethanol producer to realize a significant capital cost savings by avoiding the need to invest in onsite cogeneration equipment. Other benefits to the power plant include a cost competitive power supply, capacity increments that meet load growth, portfolio diversity, and increased local control of supply assets.
Co-location adds value to the cellulosic ethanol plant through direct cost savings and operation efficiency. Besides reduced capital expenses, the plant also saves on labor, warehousing, site development, and energy costs. There is also potential for flow integration, waste stream recovery, and shared of management and overhead expenses. Other benefits include additional industrial infrastructure and a market for the lignin by-product. Furthermore, onsite generation results in a more reliable and affordable supply of both power and steam. Co-location also further reduces the carbon footprint of an ethanol plant and allows it to be more competitive via its decreased operating costs. In addition to these synergies, co-location of ethanol and power plants contribute significant economic development to their community in the form of new jobs.
Our process model shows that when a Green Electricity premium of $30 per MWh is charged, an ethanol price of $2.10 per gallon (before subsidies) is the break-even point for a co-location producer. Higher ethanol prices allow the producer to make more money producing ethanol from just the cellulose and hemicellulose (and burning the lignin separately for power) than by burning the whole biomass feedstock. Without a Green Electricity premium, the pre-subsidy break-even price for the cellulosic ethanol is approximately $2.35 per gallon.
With more bio-electricity plants planned, there is concern about competition for biomass feedstock between power and cellulosic ethanol producers. Experts at Novozymes are not worried. Cynthia Bryant, Global Business Development Manager, explains: “We don’t see this as an ‘either/or’ situation. We believe that the feedstock can be used to meet the needs of both the ethanol and electricity industries. When effective co-location strategies are put into place, any increase in startup costs is well worth the investment because of the higher return in the end.”