Optimization of Biomass-to-Liquid Plant Setups and Capacity Using Nonlinear Programming (PDF)

Potentially rising oil prices caused by an increasing relative scarcity of mineral oil have farreaching
consequences for the transportation sector, the chemical industry and mineral oil
companies in particular. As national laws in Germany require biofuels to be mixed into
conventional fuel to an increasing extend (BioKraftQuG 2009), mineral oil companies need to
identify economically competitive as well as technically feasible biofuel production processes
to meet these requirements. A first generation of biofuels was introduced on a large scale but
has been criticized for competing with the agricultural production of food and for yielding
relatively modest quantities of fuel per hectare of agricultural land. For this reason, 2nd
generation biofuel production pathways such as Biomass-to-Liquid (BtL), which convert
lignocellulosic material into liquid hydrocarbons using Fischer-Tropsch synthesis, have been
developed. While 2nd generation biofuels are superior to their 1st generation counterparts
from a yield-per-hectare-perspective and cause less competition for agricultural soils, a
significant disadvantage is the considerable investment required for the construction of
Biomass-to-Liquid plants. The corresponding investment-related costs affect the
competitiveness of 2nd generation biofuels negatively, leaving it in doubt whether BtL fuels
could become an economically viable option. A frequently discussed way to improve specific
investment-related costs is to increase plant sizes to improve economies of scale. While this
improvement has been realized in several conventional kinds of plants like mineral oil
refineries, power plants and Coal-to-Liquid plants, the application on BtL plants is
complicated by the fact that larger plants are associated with higher specific biomass
transportation costs. This is because a higher biomass input requires biomass to be
transported over larger distances. The unresolved antagonism between economies of scale
and specific biomass transportation costs has so far hindered the realization of BtL plants.
The aim of this thesis is to develop a methodology to determine optimal BtL plant sizes by
taking nonlinear factors into account. The methodology is required to determine a
compromise between minimizing investment-related costs by applying economies of scale
and minimizing specific biomass transportation costs by keeping the required transportation
distances short. The optimal plant size is however influenced by a third influencing factor.
Whether it is advantageous to transport biomass over a certain distance also depends on the
value of a plant’s products. Biomass-to-Liquid plants can have a variety of product
compositions depending on the catalyst and reaction temperature used in the biofuel
synthesis reaction. Depending on which substances are produced and which are upgraded
for sale, converted into fuels or combusted for electricity generation, both the value of the
products and the required investment may differ considerably. While a number of processes,
including biomass treatment and gasification, as well as the Fischer-Tropsch synthesis itself,
are required for all considered plant setup alternatives, the choice of upgrading equipment
may result in very dissimilar plant setups. By making the capacities of the individual
upgrading processes the variables of the optimization model, economies of scale, specific
biomass transportation costs and the products’ value are considered simultaneously for the
first time.
The thesis primarily focuses on the implementation of an optimization model and its
application on a variety of scenarios. These scenarios are intended to represent different
plant setups and logistics concepts. In order to assess the scale of differences in profitability,
the essential influencing factors determining the profitability of BtL plants were included into
the model calculations. As the problem at hand is neither linear nor quadratic, it cannot be
solved reliably using established solvers for these two classes of problems. Instead, several
solvers designed to handle non-quadratic nonlinear multidimensional problems were applied
to find the most suitable way to approach the solution of the problem.
The objective function has been designed to maximize the annual profit resulting from plant
construction and operation. Maximizing this annual profit is subject to a number of primarily
technical constraints. These result from the mass balances of the plant, its electricity demand
and the specific requirements of individual processes. In addition to securing the validity of
the mass balances, these constraints also ensure that the entire Fischer-Tropsch product
stream undergoes some kind of upgrading, separation or combustion treatment. The sum of
all processes producing salable products is used to approximate the required capacity of the
plant as a whole. The total plant capacity then serves to calculate the investment required for
the other plant processes and the costs for the purchase and transportation of the required
input biomass.
Biomass transportation distances are approximated by the radius of an assumed circular
area from which biomass is supplied to the plant. Using cost functions that divide
transportation costs into fixed and variable parts makes it possible to approximate the effect
of rising specific biomass transportation costs in case of increasing plant capacities.
The investigated scenario calculations suggest that under the assumed circumstances, fuel
oriented low-temperature Fischer-Tropsch-based BtL plants are relatively competitive as long
as the tax exemptions in Germany are maintained, but become significantly less attractive
without them. By contrast, the combined production of both fuels and chemicals using hightemperature
Fischer-Tropsch synthesis appears to be a more promising alternative, as
chemicals are expected to earn a higher income in scenarios without tax exemptions. A third
option, the production of Substitute Natural Gas, appears to be relatively uncompetitive
unless methane prices rise significantly.
In addition to comparing the economic attractiveness of different potential product
distributions, a number of concepts have been investigated which are intended to improve
Biomass-to-Liquid economics. Decentralized pretreatment of biomass, e.g. through fastpyrolysis,
leads to larger optimal plant capacities, but the additional investment for the
pretreatment units appears to overcompensate the improved economies of scale. By
contrast, the combined use of train and road transportation was not assumed to be
associated with additional investments. If train transportation is indeed feasible for a given
plant location and specific biomass transportation costs are lower than for road
transportation, combined traffic concepts should be used whenever possible. The
construction of BtL plants in conjunction with mineral oil refineries is a way to reduce
investment-related costs instead of transportation costs. While the resulting savings are
significant for small BtL plants, they diminish if larger plant sizes are investigated. Cogasification
of biomass with another input material is another way to reduce the costly
transportation of biomass over large distances. Unless technical requirements significantly
increase the cost of the gasification equipment, co-gasification concepts can improve the
plant’s profitability even at relatively low quantities of a second fuel. The choice of fuels is
however restricted by the Renewable Energy Directive that needs to be abided by in order to
ensure the eligibility for tax exemptions. In case of lignite and hard coal, fossil CO2 emissions
further complicate the application of co-gasification, as Renewable Energy Directive also
limits the amount of fossil CO2 that biofuel production is allowed to cause. As savings caused
by such concepts depend on the relative inefficiency of the concept that they are applied on,
the effect of the implementation of several improvements diminishes if these address the
same cost item.
In this work, the nonlinear effects of economies of scale and biomass transportation costs for
increasing Biomass-to-Liquid plant capacities has been modeled on a product-upgradingprocess
basis for the first time. Potential investors and plant operators of Biomass-to-Liquid
plants are thus enabled to determine both the optimal plant size and the most promising
choice of products in order to maximize the prospective competitiveness of the plant.