Economic Risk Assessment of Early Stage Designs for Glycerol Valorization in Biorefinery Concepts

Abstract

A systematic methodology to critically assess and screen among early stage design alternatives was developed for the use of glycerol. Through deterministic sensitivity analysis it was found that variations in the product and feedstock prices, total production cost, fixed capital investment, and discount rate, among others, have high impact on the project’s profitability analysis. Therefore, the profitability was tested under uncertainties by using NPV and MSP as economic metrics. The robust ranking of solutions is presented with respect to minimum economic risk of the project being nonprofitable (failure to achieve a positive NPV times the consequential profit loss). It was found that the best potential options for glycerol valorization is through the the production of either (i) lactic acid (9 MM$ economic risk with 63% probability of failure to achieve a positive NPV); (ii) succinic acid (14 MM$ economic risk with 76% probability of failure to achieve a positive NPV); or finally, (iii) 1,2-propanediol (16 MM$ economic risk with 68% probability of failure to achieve a positive NPV). As a risk reduction strategy, a multiproduct biorefinery is suggested which is capable of switching between the production of lactic acid and succinic acid. This solution comes with increased capital investment; however, it leads to more robust NPV and decreased economic risk by approximately 20%, therefore creating a production plant that can continuously adapt to market forces and thus optimize profitability.

A framework for techno-economic & environmental sustainability analysis by risk assessment for conceptual process evaluation

“…The proposed framework is based on the combination of two previously presented methodologies, where a methodology for environmental assessment under uncertainty was proposed [27] and an algorithm for the techno-economic assessment under uncertainty was presented [28]. These two methodologies are now combined, and the analysis is taken a step further by incorporating a quantitative and qualitative sustainability analysis by risk assessment.…”

“…As discussed in earlier work [28], for the project evaluation, the economic model used is the discounted cash-flow rate of return (DCFROR) which considers the time value of money. By setting a target discount rate (aka internal rate of return), this model enables the calculation of the net present value (NPV), and the minimum selling price.…”

“…To this end, all the input data required for the calculation of Eqs. 2 to 9 [28], such as input parameters, have already been collected (e.g. market prices of products and raw materials, see Table 3) or estimated (e.g.…”

Model‐based analysis and optimization of a full‐scale industrial high‐rate anaerobic bioreactor

“…The implementation of a new potential technology should be properly evaluated using rigorous metrics, such as net present value and internal rate of return (Gebrezgabher, Meuwissen, Prins, & Lansink, 2010). These calculations should also capture uncertainty factors, such as the price of chemicals and operation, as well as unforeseen costs (Gargalo, Cheali, Posada, Gernaey, & Sin, 2016). Finally, the price of electricity and heat mentioned in Section 2.7 is assumed to be constant.…”

Perspectives on Resource Recovery from Bio-Based Production Processes: From Concept to Implementation

“…For example, in [94] a techno-economic approach has been adapted to carry out an analysis in bio-diesel production taking into account the market fluctuations. Others have also used techno-economics for evaluation purposes [95,96]. However, most of this techno-economic analysis has been focused on assessing the economic variability and uncertainty of prices while not considering the economic implications to production due to failure of novel technology that might be developed.…”