Economic evaluation of biodiesel plant design in Bontang, East Kalimantan, Indonesia

Biodiesel is an alternative fuel that was potential to be produced in Indonesia. Biodiesel can reduce dependence on fossil fuels so that large-scale biodiesel production was needed to encourage renewable energy application. In this research, plant design and economic evaluation of biodiesel plant will be carried out. The research aims to evaluate the economic of biodiesel plant design in Bontang, East Kalimantan, Indonesia at 2023. The designed of biodiesel plant had 68,000 tons/year capacity with Crude Palm Oil (CPO) and methanol as raw materials which will be built in 2026 at Bontang, East Kalimantan. Bontang was chosen by considering the industrial area, proximity to raw materials, ease of transportation and utility. The process technology used in biodiesel plant design was transesterification reaction with a liquid phase base catalyst. From profitability analysis showed that 53.17% Return of Investment (ROI), 2.35 years Payback Period (PBP), US$ 22,237,387 Net Present Value (NPV), and 33.5% Internal Rate of Return (IRR).


Introduction
Mono alkyl ester of C12 to C24 fatty acids chain from renewable sources of fat is Biodiesel [1].Biodiesel has the advantages of being an alternative fuel such as no effect on engine performance, non-toxic, can reduce motor vehicle exhaust emissions, biodegradable, and free of sulfur and minerals.Technically, cetane number in biodiesel exceeds the petroleum diesel [2].There are several types of biodiesels based on its generation such as first-generation biodiesel which used edible oil as raw material, secondgeneration biodiesel which used non-edible oil, alga-based biodiesel as the third-generation biodiesel, and fourth-generation biodiesel which produced from photo biochemical processes [3].
Biodiesel can be produced using the dilution process, microemulsion method, pyrolysis method and transesterification method.However, the most commonly used method for producing biodiesel was transesterification method [4].Transesterification of oil with a homogeneous base catalyst in the form of NaOH and KOH will produce biodiesel.In addition, biodiesel can also be produced using heterogeneous catalysts [5].Biodiesel raw materials can be obtained from vegetable oil, algae, microbial oil, and animal fats [3].Waste in the food industry such as used cooking oil can also be used as raw material for biodiesel [6,7].In the refining process, biodiesel will go through purification processes such as wet washing and dry washing.Wet washing method is a biodiesel purification using water or acid while the dry washing method is a purification method using adsorption or ion exchange [8].
Various studies have evaluated the economics of biodiesel production from vegetable oil raw materials.Used cooking oil are also widely used to produce biodiesel and have been evaluated for their economics [9][10][11].In addition, several studies have evaluated the economics of biodiesel production 1263 (2023) 012045 IOP Publishing doi:10.1088/1755-1315/1263/1/012045 2 using solid catalysts such as biochar [12] and hydroxyapatite [13].The economics of biodiesel production with case studies in various countries has also been carried out such as Iran [14], Hong Kong [15], Egypt [16] and Indonesia [17].Therefore, this research will examine the economic evaluation of biodiesel plant design in Bontang, East Kalimantan, Indonesia at 2023.

Equipment cost calculation
Determination of process equipment price was obtained from [18] and matches website [19].Equipment prices in 2026 were estimated using the linearization method of Chemical Engineering Plant Cost Index (CEPCI) that the CEPCI value used in 2026 was 679.

Raw materials and products price
Biodiesel price was taken from the Indonesia Ministry of Energy and Mineral Resources [20] while prices for methanol, sodium hydroxide and crude palm oil were taken from Alibaba (2023) [21][22][23][24] according to Table 1.

Total capital investment and total production cost calculation
Total capital investment and total production cost calculation can be seen in Table 2 and 3. Total Capital Investment was calculated according to [18] for Fluid-Processing Plants.While the economic parameters in calculating the Total Production Cost were taken from [18] with modifications.

Profit analysis
The feasibility of biodiesel plant design was determined from profit analysis which was calculated using Microsoft Excel.The calculated profit analysis includes Return on Investment (ROI), Payback Period (PBP), Net Present Value (NPV), and Internal Rate of Return (IRR).Return On Investment (ROI) was ratio of average profit (Np) to Total Capital Investment (TCI).Payback Period (PBP) as project time required for payback was the ratio of Fixed Capital Investment (FCI) to Annual Cash Flow (Aj).The Net Present Value (NPV) was total of present worth of all cash flows minus present worth of all capital investments, and Internal Rate of Return (IRR) was percent rate which makes the NPV value was zero.

Plant location
The location of biodiesel plant was set to be established in Bontang, East Kalimantan, Indonesia.The main consideration for selecting a biodiesel plant site are the availability of raw materials, transportation, and utilities.The availability of raw materials is one of the most important components in designing a plant.The main raw material for biodiesel plant was crude palm oil which was planned to be obtained from PT. Sinar Mas Argo.Meanwhile, methanol will be obtained from PT. Kaltim Metanol Indonesia.Bontang had sea transportation facilities, namely Bontang Port so that transportation for raw materials and products delivery can be by land or sea.The availability of utilities such as the availability of water can be obtained from the Bontang River and the electricity needs for this plant can be met by Perusahaan Listrik Negara (PLN) with back-up electricity using diesel generators.

Plant process
Biodiesel plant used crude palm oil and methanol as raw materials and react them using transesterification with sodium hydroxide as catalyst.The purity of biodiesel in this process was 98%.Biodiesel production (Figure 1) used crude palm oil (CPO) and methanol as raw materials with a ratio of 1:6.Methanol and sodium hydroxide was stored in storage tanks which are T-103 and T-102.The temperature and pressure of each raw material was 30˚C and 1 atm in the liquid phase.Before entering the stirred tank reactor (R-201), methanol, sodium hydroxide, and recycle flow from accumulator (V-303) were mixed in the mixing tank (M-101).After that the mixture was heated to 60˚C using a heater (E-101).CPO stored in a storage tank (T-101) was heated to 60 o C using heater (E-102).The output stream from E-101 and E-102 then flowed to the two step reactors (R-201 and R202).R-201 and R-202 was equipped with a cooling jacket because of its exothermic reaction with 98% conversion.The output products from R-202 were sodium hydroxide, triglycerides, methanol, water, glycerol and biodiesel.These products then enter the cooler (E-301) to cool the product from 60˚C to 30˚C which then enters the washing tank (V-301).The methyl ester washing step was carried out at 30˚C and 1.5 atm.After exiting the washing tank (V-301), the solution was fed to the decanter (V-302) to separate organic and inorganic compounds based on their solubility and density.The heavy phase in the decanter (V-302) in the form of methanol, triglycerides, soap, water, glycerol and sodium hydroxide pumped to the waste processing unit.The light phases, namely methyl esters, methanol and water were flowed into the evaporator (EV-301) to separate methanol and water at a temperature of 65˚C.The top product from the evaporator (EV-301) was methanol and water while the bottom product from the evaporator was biodiesel.The top product from the evaporator in the form of steam was flowed to the condenser (E-302) and accumulator (V-303) which was then recycled to the mixer (M-101).While the bottom product of the evaporator in the form of biodiesel was pumped to the cooler (E-303) to be cooled which then pumped to the product storage tank (T-301).

Constant variables for economic evaluation
The constant variables used in the economic calculation of plant were: 1. Plant capacity was 68,000 tons/year.2. The age of the plant used in economic calculations was 20 years.
3. The currency used to evaluate the economy was the US dollar with 1 US$ was Rp. 14,559.4. The bank interest rate was 10% compound interest.5. Depreciation was MACRS with 15 years depreciation period.6. 25% tax was used.Total cost of equipment based on Figure 1 was $2,130,729.This cost was used to calculated Total Capital Investment according to Table 4.
Calculation of raw material costs and total revenue was calculated based on Table 5 and Table 6 where the demand and production values are obtained from mass balance calculations.Data from  5, it was known that crude palm oil was expensive raw material for producing biodiesel.The high price of crude palm oil can increase raw material costs and operational costs.Therefore, to increase factory profits, using alternative materials such as used cooking oil can be used to reduce operational costs at this factory.Research on the economic evaluation of biodiesel production from used cooking oil has been widely carried out [9][10][11].On the other hand, although used cooking oil can be used as raw material for biodiesel production, a pretreatment process was needed to make used cooking oil suitable for biodiesel raw material.This pretreatment process requires additional costs in total capital investment and even operational costs.
Another way that can be done to improve the economics of a biodiesel factory is to use the interesterification process.Interesterification process in biodiesel production can produce triacetin as by-product without the presence of glycerol.Triacetin produced in this process is more expensive than glycerol and has a function as a fuel additive [25].

Conclusion
Biodiesel plant with 68,000 tons/year capacity was planned to be built in 2026 at Bontang area, Kalimantan Timur, Indonesia.Bontang was chosen with consideration of being close to raw materials, ease of transportation, close to utility and industrial area.The process technology used to design biodiesel plant was using transesterification reaction.This process occurs in the liquid phase and high product purity.The results of the economic evaluation from this biodiesel plant such as ROI, PBP, NPV and IRR was 31.94%,2.35 years, US$ 22,237,387, and 33.5%.

Table 1 .
Raw materials and products price.

Table 2 .
Total capital investment calculation.

Table 3 .
Total production cost calculation

Table 5 and
6 were then used to calculate Total Production Cost according to Table 7. Next, from Table 4 and 7, plant profit analysis was calculated based on Table 8.Profit analysis that obtained from biodiesel plant which ROI, PBP, NPV and IRR were 31.94%,2.35 years, US$ 22,237,387, and 33.5%.1263 (2023) 012045 5Based on Table

Table 4 .
Biodiesel plant total capital investment

Table 5 .
Total raw materials cost