Technoeconomic Analysis and Life Cycle Cost
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1 0 Technoeconomic Analysis and Life Cycle Cost Bob Wallace Booz | Allen | Hamilton July 27, 2011 1 Agenda Introduction to technoeconomic analysis Analysis tools Using technoeconomic analysis at different levels Key steps in performing technoeconomic analysis Sensitivity Analysis Translating Technoeconomic analysis to Life Cycle Costs
Transcript of Technoeconomic Analysis and Life Cycle Cost
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Technoeconomic Analysis and Life Cycle CostBob WallaceBooz | Allen | Hamilton
July 27, 2011
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Agenda
� Introduction to technoeconomic analysis
�Analysis tools
�Using technoeconomic analysis at different levels
�Key steps in performing technoeconomic analysis
�Sensitivity Analysis
�Translating Technoeconomic analysis to Life Cycle Costs
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Agenda
� Introduction to technoeconomic analysis
�Analysis tools
�Using technoeconomic analysis at different levels
�Key steps in performing technoeconomic analysis
�Sensitivity Analysis
�Translating Technoeconomic analysis to Life Cycle Costs
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Technoeconomic analysis combines process modeling and engineering design with economic evaluation…,
… to provide both quantitative and qualitatively understanding of the
impacts that technology and research breakthroughs have on the
financial viability of a conversion strategy
Source: NREL Stage Gate Process
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Technoeconomic analysis is an integral tool for both research and commercial project development
Technoeconomic analysis integrates well with the Stage Gate analysis process many private industry and R&D centers use for project development
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Agenda
� Introduction to technoeconomic analysis
�Analysis tools
�Using technoeconomic analysis at different levels
�Key steps in performing technoeconomic analysis
�Sensitivity Analysis
�Translating Technoeconomic analysis to Life Cycle Costs
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Different tool sets are needed depending on the depth of analysis that needs done
Risk/Uncertainty Spreadsheet Simulation Design
Systems Dynamics
Economics Aspen AutoCAD
Monte Carlo Mass Balance models
Chemcad
LP models
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Agenda
� Introduction to technoeconomic analysis
�Analysis tools
�Using technoeconomic analysis at different levels
�Key steps in performing technoeconomic analysis
�Sensitivity Analysis
�Translating Technoeconomic analysis to Life Cycle Costs
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Technoeconomic Analysis
Technoeconomic analysis can be used at different levels of rigor at all pre-commercial stages
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It is important to assess the level of analysis needed, as it should be complimentary to the depth of analysis at each stage
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
Early Stage Simple spreadsheets Simple cash flow analysis
Mid Stage Industry relevant process simulation
Discounted cash flow rate of return analysis
Advanced
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As a project moves down the commercialization pathway, technoeconomic analysis is used to determine process uncertainty
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Agenda
� Introduction to technoeconomic analysis
�Analysis tools
�Using technoeconomic analysis at different levels
�Key steps in performing technoeconomic analysis
�Sensitivity Analysis
�Translating Technoeconomic analysis to Life Cycle Costs
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The conceptual process begins at the high level with simple assumptions
Conceptual Process Design
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
• R&D based on alternative approaches to current product
• Ideas from literature searches
• High level discussions with engineering team
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The simple picture begins to take more shape as ‘back of the envelope’ calculations and simple rate of return calculations point to more effective process options
Conceptual Process Design
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
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A working set of process flow diagrams defining the problem and path forward need to be developed to get the green light to begin process modeling
Conceptual Process Design
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
• Major technical and economic hurdles have been identified
• Theoretical yields have been quantified
• Go/No Go decision based on process and economic projections
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Thermodynamic models to close material and energy balances are required to make sure process is feasible
Material and Energy Balances
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
Incorporating the latest R&D results at bench and pilot scales into models is critical to assess impact of hitting R&D targets
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Thermodynamic models to close material and energy balances are required to make sure process is feasible
Material and Energy Balances
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
Results will give heat and energy requirements,
yields and stream composition and thermodynamics
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Results from mass and energy balance models provide s the data required to spec equipment and calculate capital and operating costs
Capital andProject Cost
Estimates
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
Capital CostsFeed Handling $0Pretreatment $22,700,000Neutralization/Conditioning $9,400,000Saccharification & Fermentation $11,200,000Distillation and Solids Recovery $26,100,000Wastewater Treatment $3,700,000Storage $2,400,000Boiler/Turbogenerator $46,000,000Utilities $5,500,000
Total Installed Equipment Cost $127,000,000
Operating Costs ($/yr)
Feedstock $34,100,000
Biomass to Boiler $0
CSL $2,100,000
Cellulase $6,800,000
Other Raw Matl. Costs $3,700,000
Waste Disposal $2,700,000
Electricity -$7,400,000
Fixed Costs $8,700,000
Capital Depreciation $11,000,000
Average Income Tax $8,300,000
Average Return on Investment $19,800,000
Total Installed Equipment Cost $127,026,749 Warehouse $1,905,401 Site Development $6,244,787.76
Total Installed Cost (TIC) $135,176,938
Indirect CostsField Expenses $27,035,388 Home Office & Construction Fee $33,794,234 Project Contingency $4,055,308
Total Capital Investment (TCI) $200,061,868
Other Costs (Startup, Permits, etc.) $20,006,187
Total Project Investment $220,068,055
Ethanol Production (MM Gal. / Year) 69.3Ethanol Yield (Gal / Dry US Ton
Feedstock) 89.8Feedstock Cost $/Dry US Ton $44
Internal Rate of Return (After-Tax)10%Equity Percent of Total Investment100%
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Calculating a discounted cash flow rate of return will allow the user to identify additional barriers for R&D and analysis
Economic Analysis
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
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Agenda
� Introduction to technoeconomic analysis
�Analysis tools
�Using technoeconomic analysis at different levels
�Key steps in performing technoeconomic analysis
�Sensitivity Analysis
�Translating Technoeconomic analysis to Life Cycle Costs
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Sensitivity analysis allows for comparison of the magnitude of effects when changing process and economic parameters
Sensitivity Analysis
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
Sensitivity based on enzyme loadings in saccharification
Sensitivity based on Required rate of return on the minimum selling price
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Using probability distributions for inputs based on R&D allows ranges to be calculated instead of point estimates
Sensitivity Analysis
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
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Energy, carbon balances, GHG emissions , water balances and other critical data can be supplied to LCA from technoeconomic analysis
Environmental Analysis
R&D
Conceptual Process Design
Environmental Analysis
Economic Analysis
Capital andProject Cost
Estimates
Material and Energy Balances
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Agenda
� Introduction to technoeconomic analysis
�Analysis tools
�Using technoeconomic analysis at different levels
�Key steps in performing technoeconomic analysis
�Sensitivity Analysis
�Translating Technoeconomic analysis to Life Cycle Costs
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Technoeconomic analysis is a tool used to determine life cycle costs of a project
Life cycle
costs are the
total one time
and recurring
costs that
occur over the
life of a
project
Technoeconomic
analysis provides
the basis for life
cycle costs inside
the plant gate
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Bob WallaceAssociateBooz | Allen | [email protected]
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