182 Energy & Fuels 2008, 22, 182–189

Economic Cost Analysis of Biodiesel Production: Case in Soybean Oil†

Yii-Der You,‡ Je-Lueng Shie,*,§ Ching-Yuan Chang,‡ Sheng-Hsuan Huang,‡
Cheng-Yu Pai,§ Yue-Hwa Yu,‡ and Chungfang Ho Chang|
Graduate Institute of EnVironmental Engineering, National Taiwan UniVersity, Number 1, Section 4,
RooseVelt Road, Taipei 106, Taiwan, Department of EnVironmental Engineering, National I-Lan
UniVersity, Number 1, Section 1, Shen-Lung Road, I-Lan 260, Taiwan, and Department of International
Trade, Chung Yuan Christian UniVersity, Number 200, Chung-Pei Road, Chung-Li 320, Taiwan

ReceiVed May 28, 2007. ReVised Manuscript ReceiVed August 6, 2007

The economic costs of three biodiesel plants with capacities of 8000, 30 000, and 100 000 tons year-1 were
analyzed and assessed. The plants employ continuous processes using an alkali catalyst and the raw material
of soybean oil. Six major economic cost factors were computed and examined. These include the fixed capital
cost (FCC), total capital investment cost (TCC), total manufacturing cost (TMC), net annual profit after taxes
(NNP), after-tax rate of return (ARR), and biodiesel break-even price (BBP). The NNP and ARR of plants
with capacities of 8000, 30 000, and 100 000 tons year-1 are -24 × 103, 1975 × 103, and 8879 × 103 U.S.
dollars (USD), and -10.44, 40.23, and 67.38%, respectively. The values of BBP of the three plants are 862,
724, and 678 USD ton-1 (price in July 2007). The plant with a capacity of 100 000 tons year-1 is economically
feasible, providing a higher NNP and more attractive ARR with a lower BBP. Among the system variables of
the plants examined, plant capacity, price of feedstock oil and diesel, and yields of glycerine and biodiesel
were found to be the most significant variables affecting the economic viability of biodiesel manufacture. In
summary, this study aims at the need to obtain useful information for economic cost analysis and assessment
of the production process of biodiesel using soybean oil. It provides an appropriate indication for the promotion
of biodiesel in the future, targeting the reduction of the cost of feedstock oil with the increase of the yields of
valuable products with a reasonable plant capacity.

Introduction oils. Oils from algae, bacteria, and fungi also have been
investigated.1 The transesterification refers to a chemical reaction
Biodiesel has recently become more attractive in Taiwan
involving vegetable oil (containing mainly triglycerides) and
because of its environmental benefits and the fact that it is made
an alcohol to form esters and glycerol. A catalyst is usually
from renewable biological sources, such as vegetable oils and
used to improve the transesterification reaction rate and yield.
animal fats. Its commercial use as a diesel substitute began in
Glycerol is produced as a byproduct. Alcohols that can be used
Europe in the late 1980s. Continued and increasing use of
in the transesterification process include methanol, ethanol,
petroleum will intensify local air pollution and magnify the
propanol, butanol, and amyl alcohol.3 Methanol is the most
global warming problems caused by CO2.1 Combustion of
common alcohol employed because of its low cost. Thus, it is
petroleum diesel is a major source for emitting greenhouse gas
the alcohol of choice for the process examined in this study.
(GHG). Apart from these emissions, it is also a major source
Transesterification reactions can be alkali-, acid-, or enzyme-
for releasing other air contaminants, including NOx, SOx, CO,
catalyzed. If the contents of free fatty acid (FFA) and water in
particulate matter, and volatile organic compounds (VOCs).2
oil are <1 and <0.5 wt %, respectively, then an alkaline catalyst
Exploring new energy resources, such as biodiesel fuel, has been
is more suitable for the ester production. If the FFA content of
of growing importance in recent years. Biodiesel containing
oil is high (>1 wt %), then an acid catalyst is a good choice.4
mainly fatty acid methyl esters (FAMEs) is one of such
Alkali-catalyzed transesterification is much faster than acid-
alternative energy resources. It may be obtained via four primary
catalyzed transesterification, most often used commercially, and
ways: (1) direct use and blending of oils, (2) microemulsions
employed for the process of this study. Many studies of alkali-
of oil, (3) thermal cracking (pyrolysis of vegetable oil), and (4)
catalyzed transesterification on the laboratory scale have been
transesterification (alcoholysis of oil).3 The most commonly used
carried out. A reaction temperature near the boiling point of
method is transesterification of vegetable oils, such as soybean,
the alcohol and a range from 3:1 to 6:1 of the molar ratio of
rapeseed, sunflower, palm, coconut, tung, and waste cooking
alcohol/soybean oil were recommended.5,6 One limitation to the
† Presented at the International Conference on Bioenergy Outlook 2007, alkali-catalyzed process is its sensitivity to the purity of
Singapore, April 26–27, 2007. reactants. The process is very sensitive to both water and FFAs.
* To whom correspondence should be addressed. Telephone: +886-3- The presence of water may cause saponification of ester under
935-3563. Fax: +886-3-935-3563. E-mail: [email protected].
‡ National Taiwan University.
§ National I-Lan University. (4) Kulkarni, M. G.; Dalai, A. K. Ind. Eng. Chem. Res. 2006, 45, 2901–
| Chung Yuan Christian University. 2913.
(1) Shay, E. G. Biomass Bioenergy 1993, 4, 227–242. (5) Freedman, B.; Pryde, E. H.; Mounts, T. L. J. Am. Oil Soc. Chem.
(2) Klass, L. D. Biomass for Renewable Energy, Fuels and Chemicals; 1984, 61, 1638–1643.
Academic Press: New York, 1998; pp 1–2. (6) Noureddini, H.; Zhu, D. J. Am. Oil Soc. Chem. 1997, 74, 1457–
(3) Ma, F. R.; Hanna, M. A. Bioresour. Technol. 1999, 70, 1–15. 1463.

10.1021/ef700295c CCC: $40.75  2008 American Chemical Society

Published on Web 10/02/2007
Economic Cost Analysis of Biodiesel Production Energy & Fuels, Vol. 22, No. 1, 2008 183

alkaline conditions.7,8 Thus, usages of a dehydrated vegetable cally. Canackci and Gerpen18 have developed a 190 L pilot plant
oil with less than 0.5 wt % FFA, an anhydrous alkali catalyst, using an acid-catalyzed pretreatment followed by an alkali-
and an anhydrous alcohol are necessary for commercially viable catalyzed transesterification. The estimated costs for biodiesel
alkali-catalyzed systems.5,8 This requirement is likely to be a from soybean oil, yellow grease with 9% FFA, and brown grease
significant limitation to the use of waste cooking oil as a low- with 40% FFA were 0.418, 0.317, and 0.241 USD L-1,
cost feedstock of biodiesel production. Usually, the level of FFA respectively. Also, from the same economic reason, Haas19 has
in waste cooking oil is greater than 2 wt %.9,10 The products investigated the production of biodiesel from soapstock (SS), a
formed during frying, such as FFA and some polymerized byproduct of edible oil refining that is substantially less
triglycerides, can affect the transesterification reaction and the expensive than edible-grade refined oils. An economic analysis
biodiesel properties. Apart from these phenomena, the biodiesel model using ASPEN PLUS software suggested that the produc-
obtained from waste cooking oil gives better engine performance tion costs of soapstock and soybean oil biodiesel would be
and less emission when tested on commercial diesel engines.4 approximately 0.41 and 0.53 USD L-1, respectively, a 25%
The two-step process (acid-catalyzed followed by alkali- reduction relative to the estimated cost of biodiesel produced
catalyzed) is one of the better alternatives for the production of from soybean oil. For the production cost of 0.53 USD L-1 of
biodiesel from waste cooking oil.9 However, a two-step method biodiesel from soybean oil, the single greatest contributor to
is not feasible, because it requires more steps, which make the this value was the cost of the oil feedstock, which accounted
biodiesel process costly.4 In contrast to the alkali-catalyzed for 88% of the total estimated production cost.20 Bender13 and
process, acid-catalyzed transesterification has received less Zhang et al.21 showed that the credit for the glycerol byproduct
attention because it has a relatively slow reaction rate. Neverthe- has a significant impact on the net value of the total manufactur-
less, it is insensitive to FFA in feedstock oil compared to the ing cost. The glycerol value led to a reduction in total production
alkali-catalyzed system. The typical acid catalyst used in the costs of 6 and 6.5% of biodiesel from Ethiopian mustard oil
reaction is sulfuric acid.8 and used olive oil, respectively. Therefore, the use of waste
A major obstacle in the commercialization of biodiesel, in cooking oil should greatly reduce the cost of biodiesel produc-
comparison to petroleum-based diesel fuel, is its high cost of tion because waste oil is available at a relatively low price.
manufacturing, primarily the raw material cost. Biodiesel usually However, the data on the requirements of diesel fuel and
costs over 0.5 U.S. dollars (USD) L-1. Its cost is approximately availability of waste cooking oil for the countries using diesel
1.5 times that of petroleum-based diesel depending upon fuel indicate that the biodiesel obtained from waste cooking oil
feedstock oils.11,12 Bender13 reviewed 12 reports concerning the may not replace diesel fuel completely,4 which is also reflected
economic feasibility of biodiesel production, involving several in Taiwan. Therefore, the Taiwan government plans to enable
feedstocks and operational scales. Calculated production costs, farmers to grow industrial oilseeds (e.g., sunflower seed, soybean
which included the costs of the feedstock and its conversion to seed, and rapeseed) to develop a share of 1–5% (B1–B5) of the
biodiesel, were 0.3, 0.32–0.37, 0.4, 0.63, and 0.69 USD L-1 biodiesel market for the fuels of public traffic vehicles, such as
for fuel produced from soybean oil,14 animal fats,15 canola oil, buses and garbage trucks.22 Bender13 and Van Dyne et al.23
sunflower oil,14 and rapeseed oil,16 respectively. According to affirmed that biodiesel could compete with diesel fuel if
Nelson et al.,17 the significant factors that affect the cost of produced in agricultural cooperatives. According to Bender,13
biodiesel are feedstock cost, plant size, and value of the glycerine biodiesel from Ethiopian mustard oil can compete with diesel
byproduct. Waste cooking oil, which is much less expensive fuel only if tax exemption is applied, whereas biodiesel from
than pure vegetable oil, is a promising alternative to vegetable used olive oil could compete.
oil for biodiesel production. Restaurant waste oils and rendered The promotion of the production and usage of biodiesel in
animal fats are less expensive than food-grade canola and Taiwan is at its initial stage. The first Taiwanese factory
soybean oils.18 The production of biodiesel from waste cooking producing biodiesel of 3000 tons year–1 from waste cooking
oil is one of the better ways to use it efficiently and economi- oil was established in the Chiayi county of Taiwan in October
2004; however, the laws, standards of oil, and methods of testing
(7) Liu, K. S. J. Am. Oil Soc. Chem. 1994, 71, 1179–1187. were not standardized. Under the plan of the Nuclear-Free
(8) Zhang, Y.; Dubé, M. A.; McLean, D. D.; Kates, M. Bioresour.
Technol. 2003, 89, 1–16.
Homeland of Taiwan in 2005, over 700 garbage trucks in 13
(9) Lepper, H.; Friesenhagen, L. Process for the production of fatty acid counties of Taiwan were on track. It was the first extensive test
esters of short-chain aliphatic alcohols from fats and/or oils containing free on the use of biodiesel for diesel vehicles in Taiwan.24 In another
fatty acids. U.S. Patent 4,608,202, 1986. study, various processes for producing biodiesel from virgin
(10) Watanabe, Y.; Shimada, Y.; Sugihara, A.; Tominaya, Y. J. Am.
Oil Soc. Chem. 2001, 78, 703–707. vegetable oil via alkali-catalyzed transesterification were de-
(11) Lott, M. Personal communication. QSS Group, Inc., 4500 Forbes veloped.25 A comparison of processes using different sources
Boulevard, Suite 200, Lanham, MD 20706, 2002. of virgin vegetable oils was presented from the point of view
(12) Prokop, T. Personal communication. Imperial Western Products,
14970 Chandler Street, Coachella, CA, 2002.
(13) Bender, M. Bioresour. Technol. 1999, 70, 81–87. (19) Haas, M. J. Fuel Process. Technol. 2005, 86, 1087–1096.
(14) Weber, J. A. The economic feasibility of community-based biodiesel (20) Haas, M. J.; McAloon, A. J.; Yee, W. C.; Foglia, T. A. Bioresour.
plants. Master’s Thesis, University of Missouri, Columbia, MO, 1993. Technol. 2006, 97, 671–678.
(15) Nelson, R. G.; Schrock, M. D. Energetic and economic feasibility (21) Zhang, Y.; Dubé, M. A.; McLean, D. D.; Kates, M. Bioresour.
associated with the production, processing and conversion of beef tallow Technol. 2003, 90, 229–240.
to diesel fuel. Proceedings of the First Biomass Conference of the Americas: (22) Bureau of Energy, Ministry of Economy Affairs of Taiwan (BOET).
Energy, Environment, Agriculture, and Industry, National Renewable Energy http://www.moeaec.gov.tw (accessed 2007).
Laboratory (NREL), Golden, CO, 1993; Vol. 2, pp 848–862. (23) Van Dyne, D. L.; Weber, J. A.; Braschler, C. H. Bioresour. Technol.
(16) Noordam, M.; Withers, R. V. Producing biodiesel from canola in 1996, 56, 1–6.
the inland northwest: An economic feasibility study. Idaho Agricultural (24) Chuang, G. L. A study on the influences of biodiesel in use for
Experiment Station Bulletin Number 785, University of Idaho College of diesel vehicle on engine performance and characteristics of exhaust in
Agriculture, Moscow, ID, 1996; p 12. Taiwan. Master Thesis, Graduate Institute of Environmental Engineering,
(17) Nelson, R. G.; Hower, S. A.; Weber J. A. Potential feedstock supply National Taiwan University, Taiwan, 2007.
and costs for biodiesel production. Bioenergy 1994, Proceedings of the Sixth (25) Huang, S. H. A study on the production processes and costs of
National Bioenergy Conference, Reno/Sparks, NV, 1994. biodiesel. Master Thesis, Graduate Institute of Environmental Engineering,
(18) Canackci, M.; Gerpen, J. V. Trans. ASAE 2003, 46, 945–954. National Taiwan University, Taiwan, 2007.
184 Energy & Fuels, Vol. 22, No. 1, 2008 You et al.

Table 1. Yields of Products from Different Production Steps of Table 3. Basic Conditions for the Economic Assessment of the
Biodiesel25 Process of This Study
soybean oil price per ton
(from Taiwan Sugar item specification (USD ton-1)
Corporation) (wt %)
1. chemicalsa
materials virgin soybean oil 100 diesel 517b (856)c
NaOH solution 11 calcium oxide 46d
methanol 10 glycerine 92 wt % 1380d
acetic acid 1.4 glycerine 85 wt % 863d
water 10 hexane USD 471d
middle product crude FAME 92.5 methanol 99.85% 201d
final products glycerol 27.5 phosphoric acid technical grade 391d
refined FAME 62.5 sodium hydroxide 4600d
char 18.3 sulfuric acid 98% 69d
others 11.8 virgin soybean oil 487d
2. utilities
cooling water 400 kPa, 6 °C 6.25 × 10-4
Table 2. Elemental Analyses of Virgin Soybean Oil, Glycerine, electricity 2.5 × 10-3
and Crude FAMEa low-pressure steam 450 kPa, 210 °C 6.8
virgin crude (superheated)
soybean oil glycerine FAME high-pressure steam 2700 kPa, 500 °C 10
(superheated)
C (wt %) 77.56 52.77 74.25 3. waste treatment
(0.177) (1.703) (3.87) liquid hazardous 150
H (wt %) 13.22 11.08 12.51 solid 40
(0.057) (0.051) (0.559) 4. plant capacity biodiesel of
N (wt %) 0.025 <0.0001 0.0005 M tons year-1
(0.007) (<0.0001) (0.0003) 5. thermodynamic model in NRTL or
S (wt %) <0.0001 <0.0001 process simulation UNIQUACe
(<0.0001) (<0.0001) 6. methanol recovery 94%
balance, O (wt %) 9.2 36.15 13.2395 7. FAME puritficationf 99.65 wt %
a Numbers in parentheses are standard deviations. 8. methanol recovery in the 94%
pretreatment unit
a Unless specified, all prices are in USD ton-1. Prices of chemicals
of their processing technology. Besides the evaluation of the
technology and product yield, economic feasibility is also of are from the National Biodiesel Board (2000), http://www.biodiesel.org,
Chemical Market Reporter (2000–2001), Vol. 258 (22) and Vol. 259 (9),
great importance in assessing the process viability. Thus, the and http://www.chemconnect.com, November 2000. Prices are based on
main objective of the present paper is to propose a simple the constant price in 2003. b Diesel price in Taiwan ) 15.12 NTD L-1
economic assessment method assisting the comparison of (2003) and 1 USD ) 34.41 NTD (2003). c Diesel price in Taiwan )
alternative production routes revealing which route can achieve 23.48 NTD L-1 (July 2007) and 1 USD ) 32.78 NTD (July 2007).
d Includes a 15% price increase with the shipping of materials from
a very desirable reduction in production costs. In this way, a
U.S.A. to Taiwan (2003). e NRTL, nonrandom two liquid; UNIQUAC,
better evaluation of the biodiesel production processes, including universal quasichemical theory. f FAME, fatty acid methyl ester.
feedstock, chemical process, and plant capacity and design, can
be achieved from both the technological and economic points another study.25 However, for the need of economic analysis, the
of view. yields of products from different production steps of biodiesel are
listed in Table 1. The yields of crude biodiesel, refined biodiesel,
Methodology and glycerol via transesterification were 92.5, 62.5, and 27.5 wt
%, respectively. The production process of biodiesel includes FAME
Economic Studies. Economic consideration is a key driving force distillation; therefore, the summation of products should not be 100
supporting the development of inexpensive feedstock and process wt %. The results indicate the necessity of refining FAME and
technology for biodiesel production. Although total costs of yielding glycerol of high price and FAME of high quality. The
biodiesel production depend heavily upon feedstock costs, there yield of biodiesel used in the cost analysis of this study was 62.5%
are some other considerations that must be taken into account. The of refined biodiesel. Table 2 shows the elemental analyses of virgin
main economic criteria noted in all of the cases cited above were soybean oil, glycerol, and crude FAME, indicating that the major
the total capital investment cost (TCC), total manufacturing cost elemental contents of these materials are C, H, and O. The increase
(TMC), and biodiesel break-even price (BBP). Different researchers of the oxygen content in crude FAME can assist its combustion
used different economic criteria emphasizing different points of efficiency.
view to assess the biodiesel production processes. In the present
paper, the economic criteria were based on TCC [including the fixed Results and Discussion
capital cost (FCC) and working capital cost (WCC)], TMC, after-
tax rate of return (ARR), and BBP for biodiesel production. The Zhang et al.8,21
designed and simulated four different continu-
total production cost (TPC) includes the direct operation cost ous processes for biodiesel production from virgin oil or waste
(DOC), indirect operation cost (IOC), general expense (GE), and cooking oil using alkaline or acidic catalysts via a designed tool
depreciation (DEPC). Therefore, TMC is equal to TPC minus the of HYSYS for the simulation of the flow rates and the chemicals
credits of byproducts of glycerine (CBP). involved. This study used the alkali-catalyzed process, economic
Reaction Process Studies. The way that biodiesel production assessment factors, and simulated model, which are similar to
was examined in this study was via transesterification, which refers
the previous studies,13,16,17,21 while employing the data of
to a catalyzed chemical reaction involving vegetable oil (triglyc-
erides) and an anhydrous alcohol to form FAME (biodiesel) and experiments using local vegetable oil conducted by Huang25 for
glycerol. The alkali catalyst used in this study was NaOH, and the the cost evaluation. The basis, scope of calculations, and the
virgin vegetable oil was soybean oil. The technology processes for factors of economic assessment are briefly described as follows.
producing biodiesel from various virgin vegetable oils by alkali- 1. Basis and Scope of Calculations. The cost evaluations
catalyzed transesterification were developed and discussed in of this study were based on the following assumptions: (1) The
Economic Cost Analysis of Biodiesel Production Energy & Fuels, Vol. 22, No. 1, 2008 185

Table 4. Equipment Sizes, Equipment Costs, and FCCs for the Processes of This Studya
8000 tons 30 000b tons 100 000b tons
type description year-1 year-1 year-1
reactor transesterification
size (D × L, m × m) 1.8 × 5.4 2.7 × 8.1 2.7 × 8.1
quantity (number) 1 1 3 (parallel)
cost (in 103 USD) 335 790 2371
reactor neutralization
size (D × L, m × m) 0.3 × 1 0.45 × 1.5 0.7 × 2.3
quantity (number) 1 1 1
cost (in 103 USD) 25 58 135
column washing column
size (D × H, m × m) 0.8 × 10 0.8 × 10 0.8 × 10
quantity (number) 1 4 (parallel) 12 (parallel)
cost (in 103 USD) 115 460 1380
column FAME distillation
size (D × H, m × m) 1.2 × 12 1.2 × 12 1.2 × 12
quantity (number) 1 4 (parallel) 12 (parallel)
cost (in 103 USD) 181 723 2170
column glycerine purification
size (D × H, m × m) N/A N/A N/A
cost (in 103 USD)
heat exchangers, cost (in 103 USD) 4 11 23
pumps, cost (in 103 USD) 53 122 266
others (separator and vacuum system), cost (in 103 USD) 52 124 271
total bare module capital cost (TBMCCc) (in 103 USD) 765 2288 6616
contingency fee (CFC) (in 103 USD) ) 0.18TBMCC 138 412 1191
total basic module cost (TBMC) (in 103 USD) ) TBMCC + CFC 903 2700 7807
auxiliary facility cost (AFC) (in 103 USD) ) 0.3TBMC 271 810 2342
fixed capital cost (FCC) (in 103 USD) ) TBMC + AFC 1174 3510 10 149
working capital (WCC) (in 103 USD) ) 0.15FCC 176 527 1522
total capital investment cost (TCC) (in 103 USD) ) FCC + WCC 1350 4037 11 671
a Includes a 15% price increase with the shipping of equipment from U.S.A. to Taiwan. Prices are based on the constant price in 2003. b Conversion

equation of capacity: costB ) costA(capacityB/capacityA)nc ) costA(sizeB/sizeA)ns; nc and ns ) 0.65. c TBMCC is the sum of the cost of each piece of
equipment in the process.

plant capacity of biodiesel production was assumed as M tons of land, installation of electrical and water systems, and
year-1. For the requirement of biodiesel in Taiwan, M can be construction of all internal roads. AFC is usually represented
simulated as 8000, 30 000, and 100 000 tons year-1. The 8000 as 30% of the total basic module cost (TBMC)27,28 where
tons year-1 plant capacity is consistent with the plant size
discussed by Zhang et al.8,21 (2) Operating hours were assumed CFC ) 0.18TBMCC (1)
to be T h year-1 (in general, T ) 8000 h year-1).21 (3) Virgin AFC ) 0.3TBMC (2)
soybean oil, used as the feedstock for biodiesel production, was
TBMC ) TBMCC + CFC (3)
free of water and any solid impurities. (4) In the simulation,
pump efficiency was assumed to be 70% and no spare pumps Therefore,
were taken into account. (5) The specifications and prices of
FCC ) TBMCC + CFC + AFC ) TBMC + AFC )
superheated, low- and high-pressure steams and water are as
1.3TBMC ) 1.3(TBMCC + CFC) ) 1.3(TBMCC +
listed in Table 3. (6) All chemical costs including raw materials,
0.18TBMCC) (4)
catalysts, solvent, and products are as given in Table 3. Further,
all of the prices of raw materials, chemicals, catalysts, and The computed results are listed in Table 4.
solvent included the transportation fee from U.S.A. to Taiwan, 2.2. Total Capital InVestment Cost (TCC). TCC is calculated
insurance, and tax, being assumed as 15% of the costs purchased by adding WCC to the FCC. WCC is usually estimated as a
in U.S.A. (7) The chemical engineering plant index26 was used certain percentage of the FCC (e.g., 15% as used in this
as the price index. study).21,27 Therefore,
2. Factors of Economic Assessment. Six major economic
TCC ) WCC + FCC ) 1.15FCC (5)
cost factors were computed and examined in this study. These
include FCC, TCC, TMC, net annual profit after taxes (NNP), FCC and TCC for the three plants with different capacities
ARR, and BBP. studied in this work are presented in Table 4.
2.1. Fixed Capital Cost (FCC). FCC represents the cost of 2.3. Total Manufacturing Cost (TMC). TMC refers to TPC
constructing a new plant (also called grassroots capital cost). subtracting CBP (i.e., TMC ) TPC – CBP). Therefore, TPC
Generally, FCC consists of three parts. The first part is the total can be calculated as the total operating cost (TOC) adding
bare module capital cost (TBMCC), which is the sum of the DEPC (i.e., TPC ) TOC + DEPC). TOC is the cost of the
cost of each piece of equipment in the process. Part 2 consists day-to-day operation of a plant and is usually divided into
of contingencies and fees (CFC), which are usually estimated three categories: DOC, IOC [or fixed operating cost (FOC)],
as a certain percentage of the TBMCC (e.g., 18% as used in and GE.27,28 DOC consists of raw material costs (soybean
the present study).21,27,28 Part 3 is associated with the costs of
auxiliary facilities (AFC), including items such as the purchase (27) Ulrich, G. D. A Guide to Chemical Engineering Process Design
and Economics; John Wiley and Sons: New York, 1984; Chapters 5 and 6.
(28) Turton, R.; Bailie, R. C.; Whiting, W. B.; Shaeiwitz, J. A. Analysis,
(26) Chemical Engineering (CE). Chemical Engineering Economic Synthesis, and Design of Chemical Processes; Prentice Hall PTR: Upper
Indicators, 2001; Vol. 108 (issue 7), p 138. Saddle River, NJ, 1998; Chapters 1–3.
186 Energy & Fuels, Vol. 22, No. 1, 2008 You et al.

Table 5. Total Manufacturing and Operating Costs and After-Tax Rate of Return for the Processes of This Study (in 103 USD)
1. capacity (tons year-1) 8000 30 000 100 000
2. direct operating cost (DOC)
2.1. oil feedstock (soybean) a 6234 23 376 77 920
2.2. methanol 196 732 2443
2.3. catalyst and solvent 368 1382 4606
2.4. operating labor 564 733b 953c
2.5. supervisory and clerical labor: 15% of operating labor 85 110 143
2.6. utilities
low-pressure steam 30 113 375
high-pressure steam 60 225 750
electricity 20 75 250
cooling water 5 19 63
2.7. waste disposal
liquid 9 34 113
solid 4 15 50
2.8. maintenance and repairs: 6% of FCC 70 211 609
2.9. operating supplies: 15% of maintenance and repairs 11 32 91
2.10. laboratory charges: 15% of operating labors 85 110 143
2.11. patents and royalties: 3% of total manufacturing cost (TMC) 207 621 1,940
subtotal, DOC 7948 27 788 90 449
3. indirect operating cost (IOC)
3.1. overhead, packaging, and storage: 60% of the sum of operating 431 632 1023
labor, supervision, and maintenance
3.2. local taxes: 1.5% of FCC 18 53 152
3.3. insurance: 0.5% of FCC 6 18 51
subtotal, IOC 455 703 1226
4. depreciation (DEPC): 10% of FCC 117 351 1015
5. general expenses (GE)
5.1. administrative costs: 25% of overhead 108 158 256
5.2. distribution and selling cost: 10% of total manufacturing cost ) 658 2072 6468
0.1TMC
5.3. research and development: 5% of total manufacturing cost ) 329 1036 3234
0.05TMC
subtotal 1094 3265 9957
6. total production cost (TPC) ) DOC + IOC + GE + DEPC 9614 32 108 102 648
7. glycerine credita (CBP) 3038d 11 392d 37 972d
(3185)e (11 943)e (39 807)e
8. total manufacturing cost (TMC) ) TPC – CBP 6576d 20 716d 64 676d
(6894)e (21 717)e (67 802)e
9. revenue from refined biodiesel (RPB) 4136d 15 508d 51 695d
(6845)e (25 668)e (85 561)e
10. net annual profit (NAP) ) RPB – TMC -2440d -5208d -12 981d
(-49)e (3951)e (17 759)e
11. income taxes (IT): 50% of NAP -1220d -2604d -6491d
(-25)e (1976)e (8880)e
12. net annual profit after taxes (NNP) ) NAP – IT -1220d -2604d -6491d
(-24)e (1975)e (8879)e
13. after-tax rate of return (ARR) ) (NNP – DEPC)/TCC (%) -99.04d -73.2d -64.31d
(-10.44)e (40.23)e (67.38)e
14. break-even price of biodiesel (BBP) (USD ton-1) 822d 691d 647d
(862)e (724)e (678)e
15. BBP as USD L-1 0.699d 0.587d 0.550d
(0.733)e (0.615)e (0.576)e
16. BBP as NTD L-1 24.04d 19.15d 17.94d
(24.03)e (20.16)e (18.88)e
a Yields of refined biodiesel and glycerine (85 wt % purity of glycerine) relative to input soybean oil are 62.5 and 27.5 wt % in this study,

respectively. b Operating labor cost of 30 000 tons year-1 is 1.3 times of that of 8000 tons year-1.17,21 c Operating labor cost of 100 000 tons year-1 is
1.3 times of that of 30 000 tons year-1.17,21 d Price in 2003 [diesel price in Taiwan ) 15.12 NTD L-1 (2003), 1 USD ) 34.41 NTD (2003), and 1 L )
0.85 kg (biodiesel)]. e Price in July 2007 [diesel price in Taiwan ) 23.48 NTD L-1 (July 2007) and 1 USD ) 32.78 NTD (July 2007)]. Consumer price
index (CPI) equation of cost: cost(July 2007) ) cost2003(CPI(July 2007)/CPI2003), where CPI2003 ) 99.52 and CPI(July 2007) ) 104.33 (in Taiwan).

oil price of U.S.A.), catalyst and solvent costs, operating labor Table 6. Fraction of Total Production Cost, Cost of Oil
Feedstock (Virgin Soybean Oil), and Glycerine Credit for the
fees, supervisory and clerical labor fees, utilities (including Processes of This Study (in Percentages)a
waste disposal), maintenance and repairs, operating supplies,
laboratory charges, and expenses for patents and royalties. capacity (tons year-1) 8000 30 000 100 000
In brief, all charges related to materials and labors belong to total production cost 100 100 100
this category21 and are listed in Tables 3 and 5. The operating glycerine credit 31.6 35.5 37.0
cost of oil feedstock (virgin soybean oil) 64.8 72.8 75.9
labor fee was obtained from operation requirements for
a Yields of refined biodiesel and glycerine (85 wt % purity of
various pieces of process equipment.28 Turton et al.28 assumed
that an operator worked on average 49 week year-1 and that glycerine) relative to input virgin soybean oil are 62.5 and 27.5 wt % in
this study, respectively.
there were three shifts a day for a continuously running plant.
The computation of Zhang et al.21 gave an operator’s fee of Considering the difference of labor fee between U.S.A. and
24 USD h-1 and total operating labor fee of 141 120 USD Taiwan, we assumed an operator fee of 12 USD h-1 and total
year-1 for three labors a day (one shift for one labor). operating labor fee of 564 480 USD year-1 for 24 labors a
 Table 7. Economic Evaluations for Biodiesel Production Plants or Processes from the References and This Study
Nelson et al. Noordam and Withers Bender Zhang et al. this work this work this work
plant capacitya (tons year-1) 100 000 7800 10 560 8000 8000 30 000 100 000
process type alkali-catalyzed alkali-catalyzed alkali-catalyzed process I: alkali-catalyzed alkali-catalyzed alkali-catalyzed alkali-catalyzed
continuous process batch process continuous process process using virgin vegetable oil continuous process continuous process continuous process
Economic Cost Analysis of Biodiesel Production

process II: alkali-catalyzed

process using waste cooking oil
process III: acid-catalyzed
process using waste cooking oil
process IV: acid-catalyzed
process using hexane extraction
raw material beef tallow canola oil animal fats virgin vegetable oil soybean oil soybean oil soybean oil
and waste cooking oil
FCC (in 106 USD) not reported not reported not reported process I: 1.17 process III: 2.21 1.17 3.51 10.15
process II: 2.33 process IV: 2.77
TCC (in 106 USD) 12 not reported 3.12 process I: 1.34 process III: 2.55 1.35 4.04 11.67
process II: 2.68 process IV: 3.19
TMC (in 106 USD year-1) 34 5.95 not reported process I: 6.86 process III: 5.15 6.89 21.72 67.8
process II: 7.08 process IV: 5.62
NNP (in 106 USD) not reported not reported not reported process I: –1.03 process III: –0.18 -0.024 1.975 8.879
process II: –1.14 process IV: –0.41
ARR (in %) not reported not reported not reported process I: –85.27 process III: –15.63 -10.44 40.23 67.38
process II: –51.18 process IV: –21.48
BBP (in USD ton-1) 340 763 420 process I: 857 process III: 644 862 724 678
process II: 884 process IV: 702
glycerine credit (in 106 USD) 6 0.9 1.2 for technical-grade process I: 0.73 process III: 0.77 3.19 11.94 39.81
glycerine process II: 0.68 process IV: 0.73
a In terms of biodiesel production.
Energy & Fuels, Vol. 22, No. 1, 2008 187
188 Energy & Fuels, Vol. 22, No. 1, 2008 You et al.

day for three shits (one shift for eight labors) in this work. a more attractive ARR. As shown in Table 7, the value of
Other expenses, such as supervisory and clerical labor fees, BBP of the plant with a capacity of 100 000 tons year-1 of
maintenance and repair expenses, and operating supplies this study (647 USD ton-1) is close to that of the acid-
charges were calculated individually and multiplied by related catalyzed process using waste cooking oil proposed by Zhang
factors,21,28 as shown in Table 5. IOC includes overhead, et al.21 (678 USD ton-1). It implies that the increase in the
packaging, storage, local taxes, insurance, and depreciation. plant capacity with soybean oil has the same economic
All of the items in this category are independent of the feasibility as using waste cooking oil as feedstock. Nelson
production rate in a plant.21,27,28 The last category, GE, et al.17 also evaluated the economic feasibility of a plant
includes administrative costs, distribution and selling costs, producing approximately 100 000 tons year-1 of biodiesel.
and research and development charges.21,27,28 The above items The feedstock of beef tallow was transesterified with
are also obtained via multiplication with various constant
methanol in the presence of an alkali catalyst, yielding a low
factors as shown in Table 5.
BBP of 340 USD ton-1 (Table 7). However, the beef tallow
2.4. Net Annual Profit after Taxes (NNP) and After-Tax is not easily available in any country. Thus, from the point
Rate of Return (ARR). ARR is a general economic performance of view of easy feedstock, a plant with a reasonably large
criterion for the preliminary evaluation of a plant and is defined capacity with an alkali-catalyzed continuous process is eco-
as the ratio of NNP relative to the TCC. NNP is equal to the nomically feasible, as illustrated in this study using soybean oil as
net annual profit (NAP) subtracting income taxes (IT) (i.e., NNP
feedstock. The proposed process of this work having a large plant
) NAP - IT).21,27 ARR was also chosen as the response
capacity has the same economic potential as that using the low-
variable and objective function in the economic assessment of
cost feedstock of waste cooking oil.
this study. The results are shown in Table 5.
2.5. Biodiesel Break-EVen Price (BBP). >BBP is the price
of biodiesel when the revenue from biodiesel product (RPB)
Conclusions
is equal to TMC of a plant. The values of BBP are expressed
as USD and New Taiwan dollars (NTD) in this study and
Among the system variables of the plant examined, plant
are shown in Table 5 for biodiesel plants with different
capacity, price of feedstock oil, and yields of glycerine and biodiesel
capacities.
were found to be the most significant variables affecting the
Factors for Economic Assessment. The economic costs of
three biodiesel plants with capacities of 8000, 30 000, and economic viability of biodiesel manufacture. A plant with capacity
100 000 tons year-1 were computed as presented in Tables of 100 000 tons year-1 assessed in this study is economically
4 and 5. The fractions of total production cost, cost of oil feasible, yielding higher NNP and ARR with a lower BBP.
feedstock (virgin soybean oil), and glycerine credit are listed Increasing the plant capacity using a feedstock of soybean oil has
in Table 6. From Table 6, the fractions of the cost of oil the same economic feasibility as employing waste cooking oil as
feedstock and glycerine credit increase with the increase of feedstock. In summary, this study aims at the need to obtain useful
the capacity of the biodiesel plant. The total production cost information for the cost analysis and assessment of the production
decreases with the increase of the glycerine credit and the process of biodiesel using soybean oil. The results provide an
decrease of the cost of the oil feedstock. A comparison of appropriate indication for the promotion of biodiesel production
the results of factors for economic assessment obtained in the future, targeting the reduction of the cost of feedstock oil
in the literature and this work is given in Table 7. In this with the increase of the yields of valuable products with a
study, the plants employ continuous processes using an alkali reasonably large plant capacity.
catalyst and the raw material of soybean oil. Six major
economic cost factors were examined and compared. These Acknowledgment. The authors acknowledge the support from
include FCC, TCC, TMC, NNP, ARR, and BBP. The values the Council of Agriculture of Taiwan.
of NNP and ARR (Table 5) of plants with capacities of 8000,
30 000, and 100 000 tons year-1 are -24 × 103, 1975 ×
Nomenclature
103, and 8879 × 103 USD and -10.44, 40.23, and 67.38%,
DEPC ) Depreciation
respectively. Therefore, both NNP and ARR turn from
negative to positive when the plant capacity increases. The AFC ) Costs associated with auxiliary facilities
values of BBP of the three plants are 862, 724, and 678 USD ARR ) After-tax rate of return
ton-1 or 0.733, 0.615, and 0.576 USD L-1, respectively (price BBP ) Biodiesel break-even price
in July 2007). From Table 5, NNP and ARR of 2003 are all CBP ) Credits of byproducts of glycerine
negative values because the biodiesel price in 2003 (Taiwan) CFC ) Contingencies and fees
is so low (15.12 NTD L-1). However, with the increase of DOC ) Direct operation cost
the price of diesel from 2003 (15.12 NTD L-1) to July 2007 FAME ) Fatty acid methyl ester
(23.48 NTD L-1) in Taiwan, NNP and ARR increase and FCC ) Fixed capital cost
turn from negative to positive. The plant with a capacity of FFA ) Free fatty acid
100 000 tons year-1 in this study is economically feasible, FOC ) Fixed operating cost
providing a higher NNP and more attractive ARR with a GE ) General expense
lower BBP. Zhang et al.21 proposed four different continuous GHG ) Greenhouse gas
processes for biodiesel production from virgin oil or waste IOC ) Indirect operation cost
vegetable oil using alkaline or acidic conditions. The values IT ) Income taxes
of BBP of these four processes are 857, 884, 644, and 702 M ) Plant capacity in term of biodiesel production
USD ton-1 as listed in Table 7. Therefore, the third process NAP ) Net annual profit
of the acid-catalyzed process using waste cooking oil was NNP ) Net annual profit after taxes
more economically feasible, giving lower TMC and BBP with RPB ) Revenue from refined biodiesel product
Economic Cost Analysis of Biodiesel Production Energy & Fuels, Vol. 22, No. 1, 2008 189

TBMC ) Total basic module cost TPC ) Total production cost

TBMCC ) Total bare module capital cost VOC ) Volatile organic compound
TCC ) Total capital investment cost WCC ) Working capital cost
TMC ) Total manufacturing cost
TOC ) Total operating cost EF700295C