Should A Biodiesel Plant Add Esterification?

Nov. 11, 2009 - PRLog -- Especially in times of higher feedstock prices, one option considered by many transesterification based biodiesel plants is whether to add esterification capability.  Esterification gives the biodiesel plant owner the ability to convert the free fatty acids in feedstocks directly into biodiesel.  Given that adding esterification to a plant will obviously be a capital cost, there are three primary reasons that adding this capability might make financial sense.  First, it will allow the plant to use a lower cost feedstock.  Second, it will likely give the plant access to larger quantities of feedstock.  Finally, it will substantially increase the yield.

So, how does a producer evaluate whether the addition of esterification is justified?  We can use poultry fat, a currently common U.S. feedstock, as an example.  Let’s suppose the plant adds esterification.  It can probably purchase a higher FFA feedstock at $.04/lb less than the current feedstock .   And, because  the rendering process produces larger quantities of higher FFA feedstocks, the plant will have access to more suppliers and larger quantities from existing suppliers. Finally, adding esterification will increase the yield significantly (often to the point that the yield increase alone would be sufficient justification to add the process).

Let’s plug in some numbers to see how this might work.  Suppose we have a 5MMGPY plant and can buy 2% FFA poultry fat for $.26/lb.  However, we can purchase 10% FFA poultry fat for $ .22/lb.  Let’s also suppose that our current transesterification processes can only handle up to 2.5% FFA (maybe a bit higher if we have blending capability). We know that we will have some costs associated with operating a new esterification process, so let’s assume we only save a net $.02 (half of our $.04/lb feedstock cost savings) On our 5MMGPY plant in this example, this savings amounts to $760,000 yearly!  That might nicely amortize the capital expenditure of our new esterification unit.  And, guess what?  Our yield improvement on this new 10% FFA will be 20-25% as compared to blending! Now, it really makes sense.  

So is adding esterification right for every transesterification based biodiesel plant?  Absolutely not.  Should every plant run the numbers?  Absolutely.  Operational efficiency is always the goal.  Plant owners should always be looking for ways to save a penny or two per gallon.  In today’s market, the difference between the plants that are running and those that are idle, is operational efficiency.  

If you currently own a plant, or are considering purchasing one, the cost of having an experienced set of eyes evaluate the plant and its efficiency is so very small in the overall picture. Borrowing from the famous quote, “watch the costs and the profits will take care of themselves”.  

About Lee Enterprises. Lee Enterprises is a biodiesel consulting firm specializing in operational efficiency, project management, feasibility studies, business plans, and assistance with planning, market analysis, site evaluation, feedstock selection and procurement, process technology, evaluation, offtake distribution, financing, capital budgeting, and contract negotiations (for feedstock, off-take, transportation, construction, site purchase/lease, and plant management).  CEO Wayne Lee, also owns National Business Brokerage, Inc., a full service business brokerage firm specializing in the buying and selling of biodiesel plants. Lee Enterprises, 1503 East Kiehl Ave., Sherwood, AR 72120.  (501) 833-8511. www.lee-enterprises.com

About APInnovations.  AP Innovations is a full service design and engineering company. Mike Shook and Steve Danforth are engineers with 50 years of combined experience in oil processing. Biodiesel production is one division of APInnovations' business. AP Innovations has clients on six continents and are recognized experts in both the biodiesel and oilseed processing industries.  APInnovations, Inc., 1012 East 22nd Street, Stuttgart, AR 72160. (870.673.3030) www.apinnovations.com

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Lee Enterprises is a biodiesel consulting firm specializing in operational efficiency, project management, feasibility studies/business plans, planning, market analysis, site eval, feedstock, technology, offtake, financing & budgeting, and contract negotiations. (501) 833-8511