Biodiesel Cooperative for Tradesmen

8/8/2019 Biodiesel Cooperative for Tradesmen

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Feasibility Study for B.C.T. 1

Biodiesel Cooperative forTradesmen

Compiled by: Eric J. Nelson

Madison, WI

Feasibility Study for:


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Project Goals

The Feasibility Study for the Biodiesel Cooperative forTradesmen will explore a proposed system of biofuelproduction, transportation, and utilization for astartup business cooperative in the Madison, WIarea. With specified biodiesel production andtransportation equipment listed in the report, a

financial, environmental, and social analysis can beutilized by the potential cooperative in order todetermine weather the proposed system be worthyof investment.

The need for quality biodiesel fuel in Madison is arelevant concern for eco-conscious tradesmenattempting to lower their business related carbonfootprint. Currently there is negligible access to

locally produced Biodiesel in Madison due to thefluctuating costs of fossil fuel diesel and lack ofknowledge with biofuel production.

This study will be evaluated by the potential cooperativemembers to determine if the benefits will provide thenecessary incentive to move forward with the B.C.T.and begin promoting its future expansion inMadison.


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Background

Initial Cooperative members consist of a professional plastering team inMadison, WI under the business names of Divine Construction LLCand Artisan Exteriors LLC, along with another associate businesslocated in Mount Horeb, WI under the name Sign Art Studio. Each of

the members use diesel work vehicles and have interest in utilizing20% Biodiesel (B20) as a means to reduce their carbon footprint andtake advantage of the benefits biodiesel possess over #2 diesel.

The B.C.T. represents a path for Tradesmen in the Madison area to breakaway from dependence on imported fossil fuels and create a systemof sustainably produced biofuel that will impact not only theeconomics of each business but more importantly address theenvironmental concerns of each members fueling needs.

FOR MORE INFO...

Biodiesel Feasibility Study: An Evaluation of Biodiesel Feasibility in Wisconsin.http://www.aae.wisc.edu/pubs/sps/pdf/stpap481.pdf


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Current Diesel Fuel Systems

Business Member #1:

Divine Construction LLC

Madison, WI

Vehicle: 1986 Chevy Blazer:

Engine: 6.2 liter

Mileage: 70K

Average MPG: 19

Annual Use: 8K MilesFueling Needs: 420 Gallons/yr


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Business Member #2:

Artisan Exteriors LLC

Madison, WI

Vehicle: 1989 Ford Ambulance:

Engine: 7.3 liter

Mileage: 77K

Average MPG: 13

Annual Use: 8K MilesFueling Needs: 615 gallons/yr


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Business Member #3:

Sign Art Studio LLC

Mount Horeb, WI

Vehicle: 1972 GMC Stepvan:

Engine: 6.5 liter

Mileage: 70K Miles

Average MPG: 14

Annual Use: 3K MilesFueling Needs: 215 gallons/yr


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The Cooperative ModelA cooperative is a business organization owned and

operated by a group of individuals for their mutualbenefit. A cooperative may also be defined as abusiness owned and controlled equally by the peoplewho use its services or by the people who work there.

The members of the B.C.T. will mutually benefit under thecooperative model and be able to collectively share itsbenefits though joint startup capital, sharedresponsibilities, and limited business liability.

Initial fueling needs of B.C.T. vehicles:

3 vehicles: +/- 1250 gallons fuel/yr

B20 needs: +/- 250 gallons/yr

FOR MORE INFO...

Peoples Fuel Cooperative: http://www.peoplesfuel.org/index.html


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The Carbon Cycle & Biofuels

Biofuels are carbon neutral, even thoughburning them releases CO2. The carbon inthe biofuel comes from photosynthesis,where CO2 is captured from the atmosphereby a plant and turned into glucose. The

glucose can then be turned into morecomplicated molecules such as sugars,starches, oils and proteins. These oils can beconverted into biodiesel. Carbon is removedfrom the atmosphere, stored in plants for afew months, then released when the biofuelis burned. For every gram of CO2 released

by burning a biofuel, there was a gramremoved from the atmosphere byphotosynthesis just a few months ago. Thisperfect balance is why biofuels are carbonneutral.


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Basics on Biodiesel Fuel Biodiesel is a registered fuel under the US EPA (Environmental

Protection Agency) and is completely legal for us in anyconcentration with petroleum based diesel fuel. Biodiesel is adomestically produced, clean-burning, renewable substitute forpetroleum diesel. Using biodiesel as a vehicle fuel increases energy

security, improves public health and the environment, and providessafety benefits.

The United States imports more than 60% of its petroleum, two-thirds of which is used to fuel vehicles in the form of gasoline anddiesel. The demand for petroleum imports is increasing. With muchof the worldwide petroleum reserves located in politically volatilecountries, the United States is vulnerable to supply disruptions.

Biodiesel can be produced domestically and used in conventionaldiesel engines, directly substituting for or extending supplies oftraditional petroleum diesel. It also has an excellent energy balance:biodiesel contains 3.2 times the amount of energy it takes toproduce it.


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Processing Biodiesel

The fuel being considered in thisfeasibility study is an environmentallyfriendly alternative to standard #2diesel fuel that instead of being

derived from depleting fossil basedcrude oil, is derived from locallyavailable, sustainable natural oils.

Biodiesel is a motor fuel is madeessentially from vegetable oils such assoybean, canola, sunflower, orrecycled cooking oils. A chemicalprocess called transesterification isutilized to create biodiesel which issummarized in the adjacent chart.


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Advantages of Biodiesel Smoother Running Engine. Biodiesel has a much higher lubricity (i.e.,

lubricating quality) than diesel fuel. That means a smoother runningengine, cleaner fuel injection components and a longer engine life. Andwith a cetane rating that is substantially higher than petrol diesel, biodieselleaves minimal carbon deposits in vehicles engine.

Dramatic Cost Savings. Biodiesel produced by an individual costssubstantially less than petrol diesel fuel. Individuals who invest in thenecessary equipment to produce their own biodiesel, can see a return oninvestment in as little as three months.

Renewable Resource. Unlike fuel made from a finite resource such ascrude oil, biodiesel is made from renewable organic resources that can bere-grown, reproduced and reused. As such, it reduces our dependency oncrude oil.

Decreased Environmental Impact. Biodiesel is widely accepted as asuperior green alternative fuel. Because it burns significantly cleaner thanpetrol diesel, it is nearly carbon neutral and non-toxic, reducing carbonlifecycle emissions by 78%. Thats equivalent to removing 700,000 carsfrom the nations highways. Additionally, biodiesel reduces emissions ofcarbon monoxide, particulate matter (PM), and sulfates, as well ashydrocarbon and air toxics emissions.


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Proposed Production Facility1200ft - Example Small Shop/Warehouse

(917 Walsh Road, Madison)

Rental unit in a multi-tenant buildingconveniently located on the east side ofMadison near Hwys 30 and 51. Unit has two

10' x 10' offices, a 10' x 10' overhead garagedoor plus a private entrance. Common areamaintenance including snow plowing, trashservice and lawn mowing is included in therent. Utilities: gas & electric, are theresponsibility of the tenant. Each unit has itsown private restroom. Three marked parkingstalls are included with each unit. Theproperty is protected by fencing and securitycameras.

Accessory Heating Options:Master Heaters TA 106 100,000 BTU Kerosene/Diesel

Forced Air Heater. Runs on 8 fuels including B20.


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Mixing BiodieselMixing #2 diesel and Biodiesel in the same tank

If mixing pure biodiesel (B100) with traditional petroleum diesel, be aware of any limitsplaced on the final mix ratio by the engine or heating plant being used. Many enginemanufacturers recommend the final mix be no more than B20. Some others certify theirengines for only as much as B05; others up to B30.

The primary reason for these limits is that the "bio" portion of biodiesel can break downrubber seals over time. You may be able to get around these limitations many times byreplacing the rubber seals for synthetic.

Be aware that biodiesel has a cleansing effect on most tanks. It dissolves the sludgebuildup found in the bottom of some older tanks. This sudden release of sludge from thetank can clog fuel filters. Therefore, it is best to introduce biodiesel slowly to an older tank.If your goal is to reach a B20 mix then start with a B05 and slowly build up to a B20 overseveral fills of the tank.

Be aware that the temperature of the two fuels being mixed is important. It is notadvisable to add small amounts of B100 that are at 55 degrees (F) with large amounts ofcold petroleum diesel that has been stored outside in winter at 10 degrees (F). This willcause the B100 to congeal almost instantly.

If the temperatures of the two fuels are relatively warm 50 degrees (F) and higher they willmix quite well in whatever ratio can be tolerated by your engine or heating plant.


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Equipment for Production Safety Gear: Safety goggles, gloves, protective apron and boots are essential. Chemicals: The biodiesel fuel-making process requires methanol, sulfuric acid and

catalyst along with air-tight storage containers for each.

Biodiesel Processor: The processor converts the oil into biodiesel fuel. Fuel Filter: The fuel filter works to filter and remove water from the fuel. Because

initial use of biodiesel can release deposits previously accumulated on tank walls andpipes, its recommended that the fuel filter be changed after the first tank ofbiodiesel.

Fuel Pump: Provides safe, efficient transfer of the fuel to your engine. Heavy dutymodels with thermal overload protection, strainer and automatic nozzle provide easyfuel transfer.

Fuel Pre-heaters: A biodiesel fuel can sometimes gel, either due to coldtemperatures or because its been produced from heavily saturated fats such aswaste oil from restaurants. Fuel pre-heaters work to effectively keep biodiesel from

solidifying. Biocides: Biocides are an additive designed to stop the growth of microorganisms in

your fuel, thus helping preserve the life of stored biodiesel.

Synthetic Polymer Fuel Lines: The solvent properties of biodiesel can result in aslow degradation of rubber fuel lines over the course of months and sometimesyears. Therefore, it is beneficial to use Synthetic Polymer Fuel Lines when it comestime for replacement if considering the use of fuel mixtures beyond B20.


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ProcessingBiodiesel can be produced using a variety of

esterification technologies. The oils andfats are filtered and preprocessed toremove water and contaminants. If freefatty acids are present, they can beremoved or transformed into biodiesel

using special pretreatment technologies.The pretreated oils and fats are then mixed

with an alcohol (usually methanol) and acatalyst (usually sodium hydroxide orpotassium hydroxide). The oil molecules(triglycerides) are broken apart andreformed into methyl esters and glycerin,

which are then separated from each otherand purified.

Roughly speaking, 100 pounds of oil or fat arereacted with 10 pounds of a short-chainalcohol (usually methanol) with a catalystto form 100 pounds of biodiesel and 10pounds of glycerin.


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NWRAlternative Fuels Biodiesel Processor

Proposed Unit for the B.C.T.

40-Gallon, Model# Liberty

Compact NWR AlternativeFuels Liberty 40-gallon uniteasily converts vegetable oilinto biodiesel fuel that can berun in any diesel engine withlittle or no modifications.Features all steel piping, digitalcontrolled timing system andquality components. U.S.A.


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Key Processor Specifications

Capacity (gal.)40

Oil Type: New or waste vegetable oil

Oil Reservoir (gal.)55

Methanol (gal.)15

Catalyst/Chemicals KOH or NaOH

Power Requirements15 Amp / 110 Volt

Pump 1 HP, 720 GPM

Manufacturer Warranty: 12 months limited parts / No labor

Typically requires less than 2 hours of hands-on time per batch


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Fuel Aggregation

Waste Veggie Oil (unfiltered)

Madison Hours: surplus of veggie oil for

use in diesel engines (or soap making or

other use). Oil comes in 5 gallon containers,

unfiltered. Glass Nickel Pizza: WVO collection

facility with limited access

Sanimax: Deforest Facility: Madisons

largest WVO collection corporation.

The raw materials needed for the production of biodiesel need comefrom various forms of vegetable oil. In terms of this study, theproposed raw material will come from waste vegetable oil which is asurplus waste produced at local Madison resturants and is free to smallscale biodiesel entrepreneurs in the area through multiple sources.


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Means of TransportationThe proposed system of transportation for the B100 fuel after production

is based upon the delivery of biofuel for each coop member in orderto obtain a ratio to mix B20 in their tanks while at the pump.Delivery of B100 will be sustained on a monthly basis with the use ofDOT approved fuel carriers. Each coop member will need to invest invarious sized fuel totes and storage containers in order to top off theirrigs with B100 after fueling up at the diesel station. Requiredamounts of biodiesel to diesel ratios will be assessed according to sizeof fuel tanks in each coop members vehicle and biofuel ratio desired.


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Energy Output of Fuels

FOR MORE INFO...

Energy Output Comparison BTU /gal Cetane #

#2 Diesel 140,000 48

B100 130,000 55

B20 138,000 50

Net Energy

Fuel Ratio % Gain/Loss

#2 Diesel .89 -11%B100 3.20 220%

U.S. Dept of Energy: Energy Efficiency and Renewable Energy

http://www1.eere.energy.gov/cleancities/


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Emissions Comparison


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Startup Costs for B.C.T.*Essential Equipment for year #1:

1. 40 gallon biofuel processor: $2650.002. Waste Vegetable Oil: $ 0.003. Methanol: 55 gallon drums (1): $ 180.004. Red Hot Devil Lye: 5 gallon (1): $ 70.00

5. Transfer Fuel Pump System: $ 350.006. Pre-filters for WVO: $ 50.007. Storage Tanks/totes: $ 190.00

$3850.00

*Annual Materials Cost:

1. Methanol: 55 gallon drums (1): $ 180.00

2. Red Hot Devil Lye: 5 gallon (1): $ 70.003. Pre-filters for WVO/accessories: $ 50.00$ 300.00

*(based on the amount of the initial B.C.T. needs = 250 gallons Biodiesel annually)


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Financial Analysis of B.C.T.

Initial investment for members of the B.C.T. is being proposed at $200/member.With this investment into the cooperative, each member will be reimbursedwith monthly B100 deliveries based on individual fueling needs once thefacility is up and running. Once $200 in diesel fuel offsets has beenreached, a monthly production charge of $2.00/gallon for B100 will beinitiated for cooperative members.

The estimated operational lifespan of the specified biodiesel processor andrelated equipment is 15 years with light maintenance and potentialupgrades as decided upon by the cooperative.

InitialB.C.T. BusinessMembers B100 Needs

(gallons/mo.)

Dieseloffset

($/mo.)

1. Divine ConstructionLLC 7 $22.05

2. ArtisanExteriorsLLC 10.25 $32.29

3. SignArtStudio 3.6 $11.35


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RETscreen Energy Model


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RETscreen/ Analysis

Alternative Fuel infrastructure Tax Credit Details:A tax credit is available for the cost of installing alternative fueling equipment placed into service after December

31, 2005. Qualified alternative fuels are natural gas, liquefied petroleum gas, hydrogen, electricity, E85, ordiesel fuel blends containing a minimum of 20% biodiesel. The credit amount is up to 50% not to exceed$50,000, for equipment placed into service on or after January 1, 2009.

Link: http://www.afdc.energy.gov/afdc/laws/law/US/351

Wisconsin taxation and inspection of biodiesel being produced on any scale is a concern to be addressed by theB.C.T. Currently all blends of biodiesel are subject to Wisconsin motor vehicle fuel tax and petroleum

inspection fees. Current exercise tax rates on motor vehicle fuel is 30.9 cents per gallon. Issues ofWisconsin taxation and fuel licensing can be further reviewed under the Wisconsin Guide to BuildingBiofuels Facilities

Link: http://www.energyindependence.wi.gov

*Because of the economic burdens presented by biofuel taxation and inspection processes, thisstudy has left out potential tax credits available on state and federal levels when estimatingfinancial viability and analysis of the cooperative.

Return On Investment (ROI):The summarized RETscreen financial analysis projects the cooperatives simple payback period to be 7.9

years when a loan is secured for 50% of the initial startup costs at 5% interest. The amount of the initialloan is variable and dependent upon the number of cooperative members and their beginning investmentsinto the B.C.T. One other important factor not addressed directly in this study is the cost of utilities at theproposed production facility. These factors will need to be evaluated upon further analysis of this preliminaryfeasibility report.


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Emissions Analysis:Regulated Emissions: w/ diesel as baseline B100 B20

Total Unburned Hydrocarbons -93% -30%

Particulate Matter -30% -22%

NOx +13% +2%Ozone Potential of Speciated HC -50% -10%

Results from GREET Fleet Footprint Calculator:

B.C.T. fleet fuel: 1250 gallons/yr Equivalent Barrels of Oil GHC Emissions

#2 Diesel 32.2 barrels 17.5 short tons

B20 25.8 barrels 14.7 short tons

B100 2.2 barrels 4.1 short tons


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The Bottem Line

Key benefits of using BiodieselA healthier, cleaner-burning fuel topetrol diesel

Can be produced from recycled and

organic ingredients

Can be used interchangeably in anydiesel application, with little or nomodifications

Biodiesel is a non toxic, non flammable,biodegradable product unlike dirty

dieselEnables sustainable local economicgrowth and eases our dependence onforeign oil


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Conclusion

By securing adequate financing for the startup costs associated with the BiodieselCooperative for Tradesmen, the cooperatives feasibility outlook is justified. The promotionof the B.C.T. is a key element to its creation due to its need for greater membership input.The three businesses listed within the report create a need when running B20 that ismarginal when considering the economics of the B.C.T. project. With a greater need forbiodiesel production due to increased membership, the economics of the biofuelcooperative is improved. A study on utilizing increased ratios of biodiesel beyond B20 inthe same business work vehicles as well as expanding its use to other diesel fuel equipmentwill next be evaluated as a means to potentially increase the economic value of the B.C.T.to its members.

A marketing plan will be fashioned to entice future cooperative members in the Madisonarea but only after further investigation be taken with the ramifications of taxation andinspection enforcement within Wisconsin on small scale biofuel production.

Submit questions concerning the B.C.T. to:

Contact: Eric J. Nelson

Email: [email protected]

Phone: 608.516-5540


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References Biodiesel Feasibility Study: An Evaluation of Biodiesel Feasibility in Wisconsin.

http://www.aae.wisc.edu/pubs/sps/pdf/stpap481.pdf

Biodiesel Handling and Use Guide: 4th Edition: National Renewable Energy Laboratory:http://www.osti.gov/bridge

National Biodiesel Board

www.biodiesel.org/

U.S. Dept of Energy: Energy Efficiency and Renewable Energyhttp://www1.eere.energy.gov/cleancities/

Advanced Energy Research Project Grants

http://www.afdc.energy.gov/afdc/laws/

GREET Fleet Footprint Calculator

http://www.transportation.anl.gov/modeling_simulation/GREET/footprint_calculator.html

RETScreen International

http://www.retscreen.net/ang/home.php

PrairieFire BioFuels Education Foundation PFBFEFhttp://www.pfbfef.org

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Biodiesel Cooperative for Tradesmen

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