Biomass Use at Dry-Grind Ethanol Plants: Less Greenhouse Gases and More Profits

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Biomass Use at Dry-Grind Ethanol Plants: Less Greenhouse Gases and More Profits Douglas G. Tiffany University of Minnesota Adv. Biomass Energy Workshop W.C. Research and Outreach Ctr. University of Minnesota Morris January 15, 2009

Biomass as a Fuel for Dry-Grind Ethanol Plants Reduce energy costs, Improve ROR--$$$ Generate reliable power for the grid Improve Renewable Energy Ratio Defined as: Energy Out / Fossil Energy In Lower the overall greenhouse gas emissions from ethanol production

Project Objectives Determine Technical Feasibility of Using Biomass to Provide Process Heat and Electricity at Ethanol Plants Determine Economic Sensitivity of Using Biomass with Appropriate Technologies under Various Economic Conditions

Technical Analysis Followed by Economic Analysis 1. First performed technical analysis: - biomass characterization - emissions control standards, - modified Aspen Plus model developed by USDA A.R.S. to estimation of machine capacities for specific technology bundles using biomass 2. Capital Costs estimated by AMEC. 3. Spreadsheets predict ROI when using biomass fuels in dry-grind ethanol plants for technology bundles. 4. Sensitivity analysis of key variables was conducted.

3 Biomass Fuels 3 Levels of Intensity of Use Corn Stover Combusted in Fluidized Bed DDGS Gasified in Fluidized Bed Syrup + Stover Combusted in Fluidized Bed Process Heat Combined Heat and Power (CHP) CHP + Sales of Power to the Grid

Biomass Fuels Can Work Like NG and Purchased Electricity Grind bushel of corn (56 lb.), add water, make mash, cook to kill bacteria, expose starch Add enzymes for flow & to convert starch to sugar Introduce Yeasts in Batch Fermenters---- produce beer Products: ethanol (2.75 gal.) requires heat to distill DDGS- (17 lbs.) generally requires drying CO2-- ( 17 lbs. ) food grade 150 bushel corn yields 405 gallons of ethanol per acre and 2700 pounds of DDGS Doug D. G. Tiffany January U of Minnesota 15, 2009 6

Syrup + Stover-Level #1

Syrup + Stover-Level #2

Syrup + Stover-Level #3

Syrup & Corn Stover Combustion: Electricity Balance, 50 MMgal/yr MW e 18 16 14 12 10 8 6 4 2 0-2 -4-6 -8 Process Heat CHP CHP + Grid Elec. from Grid Renewable Elec. to Grid Renewable Elec. Used

Biomass Fuel Use (Wet Basis) 50 MMgal/yr 1,000 900 800 700 600 500 Combust Corn Stover Combust Syrup & Corn Stover Gasify DDGS 400 300 200 100 0 Process Heat CHP CHP + Grid

Syrup & Corn Stover Combustion: Fuel Use (Wet Basis) 50 MMgal/yr Tons / Day 1,000 900 800 700 600 500 400 300 200 100 Syrup Corn Sto 0 Process Heat CHP CHP + Grid

Renewable Energy Ratio (LHV) Ratio 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Corn Stover Combustion Syrup & Corn Stover Combustion DDGS Gasification Conventional 0.0 Conventional Process Heat CHP CHP + Grid

Establishing Baseline Assumptions

Biomass Has Costs Opportunity Costs as Feed, Bedding, or Soil Enhancer Procurement Costs Transportation Storage Handling Emissions Ash Disposal However----, reliable, well-located supplies Stover Baseline at $80 / Ton (densified)

Ethanol Prices at the Plant Approaches BTU substitute level plus Blenders Credit of $.51/ gallon Ethanol prices used to have a premium of $0.25 over the wholesale price of gasoline, but now trades as a BTU substitute and subject to RFS targets. Refiners Wholesale Ethanol Price Indicated Acquisition Gasoline as BTU substitute Cost $/Barrel 40 Price $/Gallon* 1.20 with VEETC of $.45/gal 1.25 50 1.49 1.44 60 1.78 1.63 70 2.07 1.83 80 2.36 2.02 90 2.65 2.21 100 2.94 2.41 110 3.23 2.60 120 3.52 2.80 130 3.81 2.99 140 4.10 3.18 *Wholesale price of Regular gasoline = $0.036 + $0.029(Price of Crude oil/bbl) Source: McCullough, Robert and Daniel Etra. When Farmers Outperform Sheiks: Why Adding Ethanol to the U.S. Fuel Mix Makes Sense. McCullough Research, Portland, Oregon, April, 2005, 12pp

Valuable Incentive: California s Low Carbon Fuel Standard Lower carbon intensity of fuels for passenger vehicles 10% by 2020 in grams of carbon emitted per BTU used. (LCA) Replace 20% of on-road gasoline with lower-carbon fuels Already using higher blends Goal of producing more biofuels in CA

Indirect Land Use Changes Contentious Issue Discussion spurred by two papers published in Science: Farigione et al. --- Carbon Debt Searchinger et al. Indirect Land Use Change What are the levels of GHG emissions associated with land conversion, especially in foreign lands if more grain production is directed toward biofuels production?

Well to Wheels Greenhouse Gas Emissions Changes by Fuel Ethanol Relative to Gasoline Source: Wang, Wu and Huo, Environmental Research Letters 2 (2007) 10% Coal 3% Coal + Wet DGS Current NG + Elect. NG & Syrup DDGS Biomass Cellulosic EtOH 0% -10% Percent of Gasoline -20% -30% -40% -50% -60% -18% -19% -36% -39% -52% -70% -80% -90% -86% -100%

Estimating Value of LCFS Premium Ethanol produced using biomass for process heat and electricity emits 3X less GHG than conventional. One gallon of ethanol produced using biomass fuel substitutes for three conventional gallons. The shipping cost of two gallons to California (or elsewhere) can be saved. The premium for California delivery could be $.40- $.50 per gallon of biomass-processed ethanol based on current shipping costs of $.20-$.25 per gallon. LCFS premium for CHP was assumed to be $.20 per gallon under baseline conditions.

Additional Capital Costs Installed Estimates by AMEC with escalation and contingency factors applied Biomass Handling, Storage Biomass Combustion Equipment Electrical Generator Emissions Control Equipment Ash Handling, Processing Equipment Capital Costs are higher than conventional Process Heat------- + 21-31% CHP ------ + 34-45% CHP with Sales to the Grid------ + 50 60%

Baseline--Revenue Gains / Cost Savings Reduced Natural Gas Purchases Reduced Electricity Purchases Maximum Premium for Low Carbon Ethanol Produced ($.20) per gallon Sales of Nutrients in Ash of 0-18-28 ($200/T.) Sale of Renewable Electricity to the Grid ($.06/KWH) Credit for Renewable Electricity of ($.02 /KWH) More Valuable DDG product without solubles (10% premium assumed)

Additional Operating Costs with Biomass DDGS is assumed at 80% of corn price on per Ton basis ($100 per Ton at baseline). Biomass Costs of $80 per delivered ton include: Procurement Activities for Corn Stover Drying of Corn Stover / DDGS before Storage or Use Densification of Stover for Transportation & Handling Storage of Biomass Additional Labor and Maintenance at Plant Use of Limestone for Sulfur Capture @ $25/T. Use of Ammonia to reduce NOx @ $700/T.

Key Baseline Assumptions $1.60 per gallon Netback Ethanol Price $3.50 per bushel Corn Price $100.00 per T. DDGS Price $7.00 per Decatherm Natural Gas Price $80.00 per Ton delivered cost of Stover $.06 per kwh Electricity Price $.20 Max. Premium- Low Carbon Fuel Std.

Baseline ROI s for 50 MM Gallon Plant Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid 50MM Gal Stov 3.66% 5.40% 5.97% 4.21% Stover Syrup + Stover 8.04% 7.80% 6.05% Syrup + Stover DDGS 6.25% 7.28% 5.79% DDGS Syrup + Nat. Gas 4.76% 3.64% Syrup + Nat. Gas 15.00% Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

Years to Payback at Baseline Years to Payback Additional Investment Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid 50MM Gal Not Applicable 9.6 9.7 19.9 Stover 3.9 5.5 9.7 Syrup + Stover 6.5 6.3 10.4 DDGS ****Years to Payback Are Highly Dependent on NG prices and Ethanol Margins

Natural Gas Rises from $7.00 to $10.00 per Decatherm Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid 50MM Gal Stov -1.67% 5.40% 5.97% 4.21% Stover Syrup + Stover 8.04% 7.80% 6.05% Syrup + Stover DDGS 6.25% 7.28% 5.79% DDGS Syrup + Nat. Gas 3.25% 1.69% Syrup + Nat. Gas 15.00% Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

DDGS Price Rises from $100 to $120 per Ton Corn stays constant at $3.50/ bu. baseline Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities 15.00% Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

Corn rises from $3.50 to $4.00/ bu DDGS rises from $100 to $120/ T. Ethanol rises from $1.60-$1.90/gal Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities 15.00% Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

Low Carbon Premium Rises from $.20 to $.27/Gal. Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities 15.00% Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

Low Carbon Premium Falls from $.20 to $.13/Gal. Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities 15.00% Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

Stover Price Rises from $80 to $100 per Ton Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities 15.00% Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

Stover Price Drops from $80 to $60 per Ton Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities 15.00% Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

Electricity: Sale of Net Power Price Rises from $.06 to $.10/KWH Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities 15.00% Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

Electricity: Sell-all Production @ $.10/kWh Buy-all Needs @ $.06/kWh 15% Percent Rate of Return 10% 5% 0% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

Corn Price Rises from $3.50 to $4.00/ bu. DDGS Price Rises from $100 to $120/ T. Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid 50MM Gal Stov -2.40% 1.44% 2.47% 1.04% Stover Syrup + Stover 2.88% 3.22% 1.93% Syrup + Stover DDGS 0.43% 1.71% 0.39% DDGS Syrup + Nat. Gas -0.50% -1.04% Syrup + Nat. Gas 15.00% Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

IMPROVED BREAKEVENS WITH BIOMASS Q: How High Can Corn and DDGS Prices Rise with a Biomass Case Still Breaking Even? A: Corn @$4.28,DDGS @$123.33 for (Syrup+Stover CHP) Q: How much money would the 50 MM gallon conventional plant lose at those prices? A: $8,270,588 per year (-7.35% ROI)

Multiple Factors: N.G. $7 to $10 / dcth DDGS $100 to $80/T. Corn steady @ $3.50/bu. Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid 50MM Gal Stov -5.12% 3.14% 3.97% 2.41% Stover Syrup + Stover 6.45% 6.39% 4.78% Syrup + Stover DDGS 5.52% 6.93% 5.79% DDGS Syrup + Nat. Gas 1.63% 0.25% Syrup + Nat. Gas 15.00% Rates of Return on Investment for 50 MM Gal. Dry-Grind Plants: Conventional Plants versus those Using Stover or Syrup + Stover or DDGS at Various Intensities Percent Rate of Return 10.00% 5.00% 0.00% Conventional Plant #1 Proc. Heat #2 CHP #3 CHP + Grid Stover Syrup + Stover DDGS

Use of Biomass at Ethanol Plants Technically feasible and fiscally prudent, especially when policies favoring low carbon fuel standards are adopted. Improves energy balance and drastically reduces the carbon footprint of ethanol produced from corn. Each 1 Billion gallons of ethanol capacity can produce 300 MWe for the grid, probably 600 MWe for IGCC. Use of biomass as a fuel at ethanol plants can be a bridge technology to other technologies for biofuels production. Expect more fractionation technologies to enhance feed attributes and segregate cellulose for further processing

Existing and Potential Improvements for Corn Dry-Grind Ethanol Production Technology GHG Reduction 1 Cumulative GHG Reduction Cumulative Value 2, $/gallon Natural gas with DDGS 30 to 45% 30 to 45% $0.22 to $0.34 Biomass CHP 30 to 35% 60 to 80% $0.45 to $0.60 Electricity to Grid 30 to 50% 90 to 130% $0.67 to $0.97 Nitrogen Fertilizer from 5% 95 to 135% $0.71 to $1.00 Sequester Fermentation CO2 35 to 40% 130 to 175% $0.97 to $1.30 1 Percent lifecycle greenhouse gas (GHG) reduction compared to gasoline for equivalent energy content (MJ or BTU). The reference for lifecycle GHG for gasoline is 93 g CO 2 e/mj. 2 Cumulative value of GHG reduction based on a CO 2 price of $100/metric ton.

Documenting GHG Reductions for Ethanol Production Using LCA Adam Liska, U of Nebraska-Lincoln team developed BESS model. Documents GHG emissions on a lifecycle basis 60-80% of GHG emitted at biorefinery 20-40% of GHG emitted at field GHG equivalencies: CO2--------- 1 CH4--------- 25 N2O---------298 Website: www.bess.unl.edu Doug D. G. Tiffany January U of Minnesota 15, 2009 42

Related Research Efforts Comparing Economics of Densification Technologies, especially roll-press briquettes and corncobs Analyzing the Economics of Using Biomass in IGCC--doubling the electrical output to the grid.

Thanks!! Please Check our Website www.biomasschpethanol.umn.edu / Acknowledgement This is a product of work supported by a grant entitled Generating Electricity with Biomass Fuels at Ethanol Plants funded by the Xcel Energy Renewable Development Fund. More information can be found at the project website: www.biomasschpethanol.umn.edu