Table 1 Summary of cases studied at North Carolina State University for industrial application of pulp mill technology to Biorefining
From: Integration of pulp and paper technology with bioethanol production
Main financial assumptions | |
|---|---|
Item | Rule |
General | Pro forma investment analysis based on either: (1) Greenfield project that starts with land acquisition in 2010, and includes all investments as negative cash flows; or (2) Repurposed Mill based on owner transferring assets at no cost to ethanol facility (justified by equality of asset scrap value versus site closure and environmental remediation costs). Production begins June 1, 2012 in all cases. |
Capital Investment | Case specific investments were developed for $2012, the startup year. Capital spending in each case was 30% in 2010, 50% in 2011, and 20% in 2012. |
Depreciation | Based on 7-year MACRS depreciation. |
Project Life | 15 years |
Terminal Value | 5 x EBITDA of the terminal year (2027) |
Replacement Asset Value (RAV) | Benchmark was calculated on the basis of the estimated cost of reproducing the assets each future year. Calculated by assuming 3% annual increase in the installation cost. Repurposed options include RAV on the same basis including only the assets that are reused. |
Reinvestment Capital | 1% of RAV reinvested as capital each year in order to maintain existing capability. |
Maintenance Expense | 2% of RAV included annually to account for maintenance labor and materials. |
Other Fixed Costs | 3% of annual sales |
Overhead Costs | 3% of annual sales |
Labor Costs | Based on technology-specific salaried, operating and administrative staff. |
Tax | 35% overall tax rate on profit, with tax losses accumulated and carried forward to offset profits made in future years. |
Working Capital | 10% of all Direct Costs + pre-subsidy (if any) ethanol revenue. |
Net Present Value | All Free Cash Flows (Cash Flows less new fixed capital and change in working capital) are discounted at 12% to the startup year. The ethanol revenue required to achieve Zero NPV (12% Internal Rate of Return) are used for Minimum Ethanol Revenue (MER). |
Biomass Cost | Case specific costs for 450,000 BDt deliveries were taken from the plantation economics sub-study (Gonzalez []. |
Pretreatment Yield | Pretreatment-specific yields were input from laboratory studies referenced earlier. |
Post Treatment Yield | Post treatment yields (including mechanical refining and oxygen delignification) were input from the laboratory studies referenced earlier. |
Enzyme Hydrolysis Yield | Enzyme Hydrolysis yield of monomeric sugars was input from laboratory studies. A dose of 5 FPU per gram of substrate was used in all cases. Cost of enzyme assumed to be $1.00 per Kg of Enzyme Product. |
Fermentation Yield | 80% fermentation of 5-carbon sugars and 95% fermentation of 6-carbon sugars. |
Raw Material Pricing | Raw Material pricing and indices input from chemical marketing and forecasts |
Improvement in Productivity / Inflation | Each component of cost was individually assigned an “annual productivity factor” based on Best Professional Judgment, and an annual escalation factor of the unit costs. These refinements have little impact on final outcome. Ethanol Revenue was calculated as above as Minimum Ethanol Revenue (MER), which was escalated at 3% per year, assuming the same rate generally considered for gasoline and crude oil. |