Question

Your town is considering building a biodiesel power plant. Describe at least two advantages and two disadvantages of this project. Based on these factors would you recommend that they continue with the project or consider other options?

Answer 1

I don't know about your town, but mine is run by a town council that includes lawyers and general businessmen but no engineers at all. (That's hardly surprising, as engineers have busy jobs running engineering projects, and the council typically occupies itself making ordinances and interacting with state and county government.)

Consequently my city government know lots about law and nothing at all about running a power plant of any kind. The best advice I could give them would be to leave building power plants to people who know how to do it. In fact, if any member of the council actually did propose the city build a power plant itself, that would be good enough reason for me to oppose his re-election on the grounds that he didn't understand the scope of his job, and a person who doesn't know the limits of his competence is dangerous. (For example, the city of Harrisburg, Pa, has been forced to declare bankruptcy essentially because of an incinerator the city built and operated.)

I can give an opinion about the factors which engineers and investors would consider when deciding whether to build a power plant like this, however. First, they would consider historical and projected demand for the power (presumably electric). Is the region growing in population or business, or declining? How fast? How stably? Are there unusual businesses that require a lot of electricity? Second, how easy is it to tie the plant into the local power distribution grid? Will extensive new distribution lines need to be built? A lot of power is now sold and transported over great distances, so whether there are good connections to the state and regional grid also matters. Third, what is the regulatory climate? A great deal of the cost of a modern power plant is the cost of complying with Federal, state and local regulations, and coping with local reaction. What is the state's attitude toward power plants? Some states discourage them, make it expensive and hard, while others welcome them, making it easy and cheap. What is the local attitude? Is the plant going to face a bunch of lawsuits getting built, or will it be welcomed as a job- and energy-creator? Investors don't mind tying up their money for quite a while before some return occurs, but it has to be a pretty predictable time. You don't want to rely on your investment to start paying for your retirement at age 65 if you can't be sure the return won't even start until your 96. So how confident one can be of the timeline for construction and operation is important. Is all the technology well-known, or is some of it still new? Do any novel construction or operation problems need to be solved? How reliable is the timeline for approvals and licenses?

Finally, the price of fuel is moderately relevant, because once the plant is built the bulk of the operating cost will be the price of fuel. How well do we know the price of fuel, not just now but projecting into the future, over the lifetime of the plant? Is the price rising or falling? Does it hold steady or fluctuate wildly? Is there one source or serveral? Is it possible some new discovery could make the price fall a lot, or some new regulation make the price rise a lot?

From this point of view, the advantages of a biodiesel power plant are that the technology (essentially burning oil) is very well known and understood and predictable. The regulatory environment isn't great -- burning oil is dirtier than burning gas, but cleaner than burning coal -- but is fairly predictable, the pollution control mechanisms are well known and well testted, and the fact that it's not "fossil fuels" may be worth some good local public relations. The major disadvantage will probably be that the fuel is quite expensive (relative to natural gas, say), and difficult to collect. If it comes from waste food processing, it's produced in very tiny amounts in many separate locations, and requires extensive pre-processing that uses strong chemicals and leaves a lot of waste. If it comes from dedicated farming operations, it relies on few specialized suppliers, which leaves you vulnerable to disruptions if, say, oe of them goes out of business. One minor advantage may be that future technology (in particular bio-engineering) may bring down the cost of bulk farmed biodiesel, so you can hope for reductions in the price in the future. It may also be possible to make the plant "flex-fuel," so that it can use normal oil when biodiesel is scarce. But that's likely to upset people who want the plant precisely because it's using biodiesel, so that may be a PR disaster, even if it makes economic sense.

I don't actually recall much in the way of proposals to use biodiesel for power plants, probably because the fuel isn't competitive with natural gas. Usually you hear it proposed for transportation, i.e. to be burned in cars, trucks and railroad engines, because there it competes with gasoline and diesel already.