Local Production Local Use
NDSU spearheads sugar beet-to-ethanol project
Salmon, Idaho Feasibility Brief
Briefing Paper for Non-food Sugar Beet to Ethanol
Voting People Helping People
Ethanol demand has been steadily increasing following passage of
Renewable Fuel Standard (RFS) and the Energy Independence and
Security Act of 2007 (EISA). EISA defines three classes of biofuels:
conventional, advanced, and cellulosic. They are differentiated
based on potential reduction of greenhouse gas (GHG) emissions of
20, 50, and 60 percent respectively. Two crops that uniquely qualify
as “advanced biofuels” under the EISA are sugar beets and sugarcane.
Advanced biofuel production of 15 billion gallons per year
will be required by 2022, creating a niche market opportunity, in
addition to local use of the ethanol.
Production of advanced biofuels using sugar beets as a feedstock in
Salmon, Idaho would have these comparative advantages:
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Low transportation, storage and processing costs of sugar beets in
the region due to close proximity to the resource, cool climate.
§
Local use of the ethanol eliminates the cost of shipping the ethanol
to market.
§
Because of their high sugar content (18% or higher at this
latitude), sugar beets can double ethanol production per acre as
compared to corn, which reduces land area requirements.
§
Unlike corn, sugar beets produce higher sugar in soils with minimal
nitrogen, a key contributor to GHG.
§
Salmon, Idaho has great potential to expand irrigated and
non-irrigated sugar beet production, minimizing land competition
with existing food crops.
§
The process of sugar-to-ethanol conversion is simpler than that of
corn-to-ethanol conversion and requires less capital and energy
resulting in lower production costs and lower GHG emissions.
§
Byproduct of sugar-based ethanol known as beet pulp will be used to
feed cattle, fostering the re-opening of a dairy
§
Small rocks will not pose a problem to sugar beet processing
equipment.
§
Irrigated sugar beet yield in Rupert, Idaho, with a similar climate,
is about 30 tons per acre.
§
Financial feasibility of producing sugar-beet based ethanol is
evaluated using sugar beet and corn-ethanol data published by USDA
in 2006. We adapt that
financial model to Salmon, Idaho. The size of the plant is assumed
to be 4 million gallons per year (MGY). Based on the initial
feasibility analysis, the key financial results are estimated below:
§
In order to allow some time to establish adequate production of new
sugar beets, initially, we will assume that only 25% of ethanol is
produced. In this case, the plant would require about 1200 acres at
883 gallons per acre.
§
Over time as sugar beet acres increase, we will gradually increase
production from 25% to 100%, which requires 4000 acres of sugar
beets. This will produce
about the quantity of gasoline that people in Lemhi Valley use in
one year, 3,660,800 gallons per year.
§
Total investment costs which include engineering and construction
costs, and development and start-up costs for the plant would be
about $4 million.
§
Feedstock costs account for as much as 66% (about $2.6 million) of
total expenses.
§
Average net income for the plant is
$1,258,481.58
per year at full
production.
§
Breakeven price for ethanol is about $1.65 per gallon.
§
Plant profitability is mildly sensitive to feedstock price changes.
§
Fluctuations in utility prices such as electricity and propane
prices are found to have little impact on profitability.
§
The most important determining factor for the future feasibility of
a sugar-beet-based ethanol plant in Salmon, Idaho is the price of
gasoline in Salmon. A
small amount of increase/decrease in ethanol price will have a large
positive/negative impact on profitability of the ethanol sold
outside Lemhi Valley. It
will have a small effect on the price of ethanol in Salmon.