Ethanol: a brief economic evaluation

Technical Report · Mon Sep 01 00:00:00 EDT 1980

OSTI ID:6721218

Del Rio Farms, Inc. has a large farm in the Imperial Valley area of California, a known geothermal resource area. The 10 MW geothermal flash steam power plant, operated by Union Oil Company, is located on their property. Presently the owners have under consideration a 10 million gallon per year ethanol plant. The initial feed to the plant would be corn, with sugar beets as a possible alternate feed. The ultimate plan is to use waste products and biomass feed stocks. Geothermal water would provide the necessary process heat for the plant. An economic evaluation was performed to assist in the planning. Each of the following conclusions are based on an ethanol plant that produces 10 million gallons of ethanol per year. Over a 20 year period, the plant using a corn feed stock would generate a rate of return of +12% on a total equity capital investment of $33,000,000. Over a 15 year period, the plant using a corn feed stock is probably not economically feasible since it would have a rate of return less than 12% or a total equity capital investment of $33,000,000. A corn feed stock plant operates at a loss for the first seven years if 95% of the $33,000,000 cost is debt financed. The plant is economically feasible only if offsetting energy income from other profitable operation permits taking advantage of investment tax credits and depletion allowances that are available. If this is true, the project is highly feasible, paying back twice the 5% equity capital in the first year.

• Research Organization: Oregon Inst. of Tech., Klamath Falls (USA). Geo-Heat Utilization Center
• DOE Contract Number: FG06-79ET27256
• OSTI ID: 6721218
• Report Number(s): DOE/ET/27256-T7
• Country of Publication: United States
• Language: English

Related Subjects

09 BIOMASS FUELS
29 ENERGY PLANNING
POLICY AND ECONOMY
15 GEOTHERMAL ENERGY
BIOMASS CONVERSION PLANTS
FEASIBILITY STUDIES
GEOTHERMAL PROCESS HEAT
ETHANOL
PRODUCTION
CALIFORNIA
ECONOMIC ANALYSIS
FERMENTATION
FINANCIAL INCENTIVES
INCOME
INVESTMENT
MAIZE
PAYBACK PERIOD
SUGAR BEETS
ALCOHOLS
BEETS
BIOCONVERSION
CEREALS
ECONOMICS
ENERGY
FOOD
GRAMINEAE
GRASS
HEAT
HYDROXY COMPOUNDS
NORTH AMERICA
ORGANIC COMPOUNDS
PLANTS
PROCESS HEAT
USA
VEGETABLES
WESTERN REGION
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299003 - Energy Planning & Policy- Unconventional Sources & Power Generation- Other- (-1989)
151000 - Geothermal Energy- Direct Energy Utilization