Plant size: Capital cost relationships in the dry mill ethanol industry

• Published in: Biomass & bioenergy Vol. 28; no. 6; pp. 565 - 571
• Main Authors: Gallagher, Paul W., Brubaker, Heather, Shapouri, Hosein
• Format: Journal Article
• Language: English
• Published: Oxford Elsevier Ltd 01.01.2005; Elsevier
• Subjects: Alcohols: methanol, ethanol, etc; Alternative fuels. Production and utilization; Applied sciences; Drymill; Economies of scale; Energy; Ethanol; Exact sciences and technology; Fuels; Plant capacity; Plant cost; Economies of scale; Plant capacity; Drymill; Ethanol; Plant cost; Industry; Production capacity; Cost lowering; Capital cost
• ISSN: 0961-9534; 1873-2909
• DOI: 10.1016/j.biombioe.2005.01.001

Estimates suggest that capital costs typically increase less than proportionately with plant capacity in the dry mill ethanol industry because the estimated power factor is 0.836. However, capital costs increase more rapidly for ethanol than for a typical processing enterprise, judging by the average 0.6 factor rule. Some estimates also suggest a phase of decreasing unit costs followed by a phase of increasing costs. Nonetheless dry mills could be somewhat larger than the current industry standard, unless other scarce factors limit capacity expansion. Despite the statistical significance of an average cost-size relationship, average capital cost for plant of a given size at a particular location is still highly variable due to costs associated with unique circumstances, possibly water availability, utility access and environmental compliance.