Modeling Methodology

The renewable energy conversion technologies used in the analysis and as modeling inputs for IMPLAN are discussed in this section of the report. Studies existing in the literature which provide sufficient cost data for each technology were used in allocating expenditures to the appropriate IMPLAN sectors. A summary of the conversion technologies, facility size, total industry output, employees, and cost information sources is presented in Table 1, while the detailed examples for each conversion technology are presented in Appendix A. At the top of each table in Appendix A, the conversion technology is listed, along with the total industry output for a particular type and size of facility and the number of employees. The source from which the expenditure data are constructed is also provided. Total Industry Output (TIO), an IMPLAN term, represents the annual dollar value of production of an industry. It is calculated simply as price x quantity (for example, price of ethanol per gallon x the gallon capacity of the plant).

Each table provides information regarding expenditures on investment, operating, depreciation, and byproducts. The IMPLAN sector in which the expenditure would be made to produce the particular type of energy and the sector description are provided in each table. In the far right hand column of each table, the dollar amount of the expenditure in a given sector is shown. The allocation of expenditures to each of the sectors listed is based on engineering cost data provided from the studies sourced at the top of each table. Expenditures for value added (employee compensation, proprietary income, other property income, and indirect business taxes) vary by state and are excluded from the tables.

Using the conversion technologies presented, for illustrative purposes the prices per gallon for ethanol and biodiesel were $2.11/gallon and $2.52/gallon, respectively. State averages of ethanol and biodiesel were developed from several sources. For ethanol, where splash prices were available, the state average price per gallon was used. For states where the average was not available, the average of the states in the region is used. For regions where data were not available, the average of nearby regions is used. For states where the spot was available but not rack, the spot is multiplied by 1.04, which is the average ratio of rack to spot prices for certain available cities (OPIS, 2005). The same procedure was used for estimating state-by-state wholesale prices for B-100.

Feedstock costs for ethanol from cellulosic materials are for corn stover. This value would change depending on the feedstock used to produce ethanol (dedicated energy crop, rice straw, and/or wheat straw). Likewise, for co-firing of cellulosic residues with coal, the feedstock cost is for corn stover and would change if wheat straw, dedicated energy crops, or forest, mill, and urban residues were used. The state level prices of feedstocks from dedicated crops, crop residues, and forestry resides will be recalculated by POLYSYS, but in this set of tables are assumed to be $30/dry ton.

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