Design of a Small-Scale Biodiesel Production System

The city of Fredericksburg is located in central Virginia and is home to 592 farms covering 16% of the total land area. Farms in this region have experienced declining profits from an average of $555 per farm in 1997 to -$14,931 per farm in 2007. One of the ways to reduce operating costs and return to profitability is to significantly reduce diesel costs. An alternative to purchasing diesel is to produce biodiesel from vegetable oil extracted from crops grown on the farm and sell the excess biodiesel that is not used. The goal of this paper is to design the process and evaluate the financial feasibility of converting farm crops into biodiesel using a small-scale biodiesel production facility on a farm. Five crops were selected as design alternatives based on regional availability, productivity, and cost criteria: Canola, Corn, Peanut, Soybean, and Sunflower. These alternatives were evaluated using two Monte Carlo models: (1) a Biodiesel Production Model to simulate the amount of biodiesel and other byproducts produced and (2) a Business Model to simulate the net present value of each alternative after 15 years. The biodiesel production model inputs are: (i) expected crop yield, (ii) oil content percentage, and (iii) oil press efficiency percentage. The outputs of this model are: (i) biodiesel yield, (ii) meal yield, (iii) glycerin yield, and (iv) net energy ratio; each of the yield outputs is an input for the financial model. Other inputs for the financial model include meal revenue, equipment costs, chemical expenses, planting and harvesting costs, lost profit cost, and biodiesel sales. The output is the net present value of each crop alternative at the end of 15 years. Utility of each crop alternative from first to last is as follows: Peanut (1.0), Sunflower (0.68), Canola (0.55), Soybean (0.52), and Corn (0.45). Plotting utility against net present value shows that Canola is the most cost-effective alternative and the recommended crop type.