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Biofuels Module

This Stochastic Energy Deployment System (SEDS) module projects the production of biofuels, such as ethanol, from biomass. It includes modeling of biochemical production of ethanol from lignocellulosic biomass and corn ethanol production.

The biofuels module calculates the price of ethanol, using the price of biomass from the biomass supply module, and the expert estimated capital costs, yield (efficiency), and operating costs of the plant. It also computes the total cellulosic ethanol capacity, which is an input into the liquid fuels module. It can use average cost or marginal cost pricing methods. It takes as inputs the demand for biofuels from the vehicles modules, via the liquid fuels module.

Hydrogen from biomass is modeled in the hydrogen module.

Focus of Analyses

The initial focus is to develop an explicit probabilistic analysis of the cost of biofuels and examine what conditions will give rise to biofuels achieving sufficient market penetration to displace a significant fraction of imported oil—contributing both to reduction in greenhouse gas emissions and increase in energy security.

Conditions of interest include:

  • The capital cost and yield (efficiency) of cellulosic ethanol (and other) biofuels production plant
  • R&D funding by the U.S. Department of Energy to accelerate reduction in costs of cellulosic ethanol
  • The availability and cost of cellulosic biomass
  • The price of oil and hence of gasoline
  • Carbon tax or cost of emissions permits that affect cost of fossil fuels
  • Subsidies or renewable fuel standard (RFS) that affect demand for biofuels.

Limitations of Analyses

  • Treats the U.S. as a single region, so it ignores regional variations in biomass costs, production costs, biofuels demand, and distribution of biofuels.
  • Currently treats only biochemical cellulosic ethanol production, not thermochemical cellulosic ethanol, biodiesel, biogas, biocoal, black liquor, and other pathways from biomass to automotive fuels.
  • Corn ethanol is treated as a fixed production model with exogenous inputs for supply and pricing.

Technologies of Interest

  • Production of cellulosic ethanol
  • Corn ethanol (not allowed to compete for new capacity)
  • Potentially other biofuels production technologies including biomass to liquids and pyrolysis (currently not being modeled)

Overview of Methodology

Given the input demand for biofuels from the vehicles module, the biofuels sector module simulates the addition of needed capacity (difference between desired capacity and actual current capacity) by total energy cycle (TEC). It allocates new capacity among TECs (currently just cellulosic ethanol production) according to a logit function using levelized costs, subject to available capacity of each TEC (ignores any constraints on fuel availability). It also includes constraints on the maximum increment in capacity that can be added per year as a percent of previous years total capacity. This is based on available industrial capacity to build new capacity for cellulosic ethanol production. The model by default uses the historic capacity additions to constrain the maximum amount that capacity additions can grow compared to past additions.

The levelized cost module, a sub module in the biofuels module, calculates the levelized cost of energy (LCOE) per unit of output (gallon of ethanol). In particular, the model estimates the LCOE (excluding cost of resource fuel or feedstock) averaged over all current capacity, weighted by capacity added for each vintage period, which is then used to calculate a single cellulosic ethanol price using average cost pricing methods (the option to use marginal cost pricing is also made available). This module includes exogenous inputs for corn ethanol supply and pricing (with and without subsidies). The corn ethanol supply projection is based on the RFS mandate while the price is a static input. The key outputs from the biofuels module to other SEDS modules include the price of cellulosic ethanol, capacity for cellulosic ethanol production, total bio-electricity production, corn ethanol supply and pricing, and a demand for biomass.

Major Assumptions

Expert risk assessments of performance for biochemical cellulosic ethanol production:

  • Pilot risk assessment were conducted in Spring 2008 by Bob Wallace
  • A combination of expert assessments on trusted platform modules (TPMs) were combined from four experts and 27 runs of ASPEN+ on model of production plant for yield and costs.
  • Goals years defined for the project were 2030 and 2050.
  • Learning by doing was zero.
  • Due to inconsistencies between programs, we estimate Target and Overtarget programs as reaching performance of Base program 2 and 4 years earlier, respectively.

Portfolio Decision Support Inputs

Currently, it uses risk distributions for the production of cellulosic ethanol for these TPMs:

  • Capital cost ($/
  • Operating cost (as a percentage of capital cost)
  • Yield (galls ethanol per dry ton of biomass)
  • Electricity Credit (kWh/gallon)

Stochastic Inputs

The biofuels module has several stochastic inputs related to cost and performance of cellulosic ethanol production technology including:

  • Capital cost ($/
  • Operating cost (as a percentage of capital cost)
  • Yield (galls ethanol per dry ton of biomass)
  • Electricity Credit (kWh/gallon)

Key Inputs from Other Modules

  • The price of biomass fuel
  • The demand for cellulosic ethanol
  • Subsidy for cellulosic ethanol
  • Subsidy for corn ethanol
  • Electricity price for industrial sector

Key Outputs to Other Modules

  • Price of cellulosic ethanol
  • Capacity for cellulosic ethanol production
  • Demand for biomass
  • Capacity for corn ethanol production
  • Price of corn ethanol
  • Bio-electricity production

Attachments

Biomass, Biofuels, and Hydrogen Modules: SEDS Review - May 2009

Authors

Max Henrion, Lumina Decision Systems, Inc.

Surya Swamy, Lumina Decision Systems, Inc.