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Financial Analysis of a Proposed Large-Scale Ethanol Cogeneration Project

Published online by Cambridge University Press:  28 April 2015

Gregory D. Hanson
Gregory D. Hanson*
Affiliation:
Economic Indicators Research and Income Forecasts, Economic Indicators Branch, Economic Research Service, USDA
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Abstract

Financial analysis of an ethanol/electricity cogeneration plant indicates a rapid payback of investment and a high internal rate of return. This is primarily because cogeneration of steam for generation of electricity and biomass conversion to ethanol results in increased engineering efficiency compared to alternative ethanol alone production processes. Economic sensitivity testing included alternative price levels, interest rates, capacities, costs, and a “stand alone” case with no federal government excise tax subsidies. Supply and price analyses suggest the procurement of locally produced feedstock in Alabama and surrounding states is feasible. The robustness of the economic analysis provides support for consideration of ethanol cogeneration as a currently feasible strategy to utilize excess agricultural production capacity.

Keywords

ethanolcogenerationfinancial analysisbiomass conversionexcise tax
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 17 , Issue 2 , December 1985 , pp. 67 - 76
Copyright
Copyright © Southern Agricultural Economics Association 1985

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