Operating cost is classified into two: fixed operating cost and variable operating cost. 5.3.1 Variable Operating Cost
Variable operating cost are those cost items whose value are directly dependent on the operating capacity/operating rate of the plant at any given time period (Peters and Timmerhaus, 2003). They include cost for raw materials, charges relating to waste handling and treatment, by-product credits, utilities and chemicals and credits from product sales.
For this study, a fixed bagasse feed rate of 81 ton/h (50% moisture) was assumed for all the economic models. Products and by-products rates and utility usage were determined through mass and energy balances developed in Aspen Plus®. Table 20 lists the cost associated with the raw material, products and by-products streams as used in this study for the economic evaluation.
350.0 400.0 450.0 500.0 550.0 600.0 1985 1990 1995 2000 2005 2010 2015 2020 Index Year
93 Table 20: Cost Data for Feedstock, Products and By-products
Stream Cost
Bagasse 56 $/dry ton
Electricity 0.248 $/kWh
Biochar 120 $/ton
Bio-oil 170 $/ton
The bagasse price was estimated using the formula developed by Jenkins (1997) and assuming a 50 km radius travelling distance to and from the mill for delivery (Botha and Blottnitz, 2006). The formula taken from the work of Pippo et al. (2009) assumes that bagasse cost can be estimated through the cost of fuel oil since it is used as a substitute for #6 fuel oil in boilers. However, in the context of South Africa, mills usually use coal as an alternative fuel in place of bagasse. Hence the formula was modified to accommodate the properties (LHV and price) of coal instead of those of #6 fuel oil and the cost of bagasse determined as the value of coal of equivalent energy content. The price of $56/dry ton (28/wet ton) obtained compares very well with values quoted in literature for biomass cost. Pippo et al. (2009) obtained a bagasse price of $27.7/wet ton (50% moisture) in their study. Similarly Humbird et al. (2011) estimated a feedstock price of $58.5/dry ton for corn stover, which is an agricultural residue with similar properties as sugar cane bagasse. In energy terms, the $56/dry ton price translates to approximately $7.47/GJ which is also similar to the $7.7/GJ used by the National Energy Regulator of South Africa (NERSA, 2011)) to estimate the Levelised Cost of Electricity (LCOE) for cogenerated electricity using sugar cane bagasse as fuel.
The electricity cost was assumed to be the same as the LCOE estimated by NERSA for bagasse derived electricity in consultation with the SMRI. It was assumed that biochar will replace coal as boiler fuel. By comparing the energy value of char 24.65 MJ/kg (Hugo, 2010) to the energy value of export grade bituminous coal 24.7-26 MJ/kg (Eberhard, 2011), it is seen that biochar is equivalent to coal on energy basis hence its price was set to be the same as that of coal which, sold for an average price of $120/ton between July 2011-December, 2011 (www.indexmundi.com). A similar assumption was made by Leibbrandt (2010).
Since the bio-oil in this study will be used as combustion fuel, it was also assumed that it will replace #6 fuel oil, a commonly used industrial heating fuel. However, due to the lack of a readily established market for bio-oil, its price was assumed to be 70% of that of #6 fuel oil. Fuel oil #6 sold for $2.159/gal ($13.375/GJ) in 2011 (Energy information Administration, 2012). Given the soaring increases in crude oil price over the past years, it is not envisioned that the price of #6 fuel oil (a derivative from crude oil) will drop significantly below the 2011 price level, thus the price of
94 $2.159/gal ($13.375/GJ) was used which translates into a bio-oil price of $170/ton and used in this study for the economic modelling.
5.3.2 Fixed Operating Cost
Fixed operating costs are not related directly to the production rate of the plant and therefore are incurred fully irrespective of the production rate of the plant (Peters and Timmerhaus, 2003). They include cost for labour, maintenance, operating charges, general and administration (G and A) expenses and other plant overhead items. In all the economic models, labour costs were estimated by Aspen Process Economic Analyzer. The required workforce to operate and supervise the plant per shift (hours) was determined and then adjusted to account for the total number of hours the plant operates for each period and then multiplied with the respective unit labour cost to obtained the total labour cost. System default values/percentages (see Table 21) consistent with those specified by Peters and Timmerhaus (2003) were accepted for operating charges, overheads and G and A expenses. The operating charges expressed as percentage of total operating labour include cost for operating supplies and laboratory. Plant overheads (% labour and maintain cost) include cost for services, payroll overhead, facilities, etc incurred during production. G and A expenses consist of general and administrative cost associated with R&D, product distribution, sales cost and salaries/expenses incurred during production (Peters and Timmerhuas, 2003). G and A expense is expressed as a percentage of subtotal operating cost (Aspen Technology, Inc., 2009).
Table 21: Operating Cost Input Parameters used in Aspen Process Economic Analyser
General
Plant Overhead 50 (%/yr)
Operating Charges 25 (%/yr)
G and A Expenses 8 (%/yr)
Unit Labour Cost
Operator 20 ($/person/hour)
Supervisor 35 ($/person/hour)