Economic evaluation of biodiesel production based on prices sensitivity of methanol and glycerol

Biodiesel is a renewable energy source which is most widely used and proven for use as fuel. Biodiesel could be produced from biomass through esterification and transesterification processes, which typically require methanol as a supporting raw material. Besides producing biodiesel, this process also produces a by-product in the form of crude glycerol. As a result, the prices of related commodities like palm oil, methanol, biodiesel, and glycerol will have a significant impact on the biodiesel industry. This study examines the economic evaluation of biodiesel production in relation to methanol and glycerol prices. This study simulated the biodiesel production process using Aspen Plus V14 software, taking into account a plant capacity of 10,000-ton FAME per year. This research has studied the sensitivity of the methanol price and found that a higher methanol price results in a lower NPV. Methanol, at its highest price of $1,300 per ton, has a net present value (NPV) of $0. Additionally, the sensitivity of the glycerol price revealed that a higher glycerol price corresponds to a higher NPV. At a glycerol price of $0 per ton, the biodiesel production delivers a net present value (NPV) of $3.03 million. According to the studies, methanol price sensitivity has a greater impact on the biodiesel industry compared to glycerol prices. Therefore, when the price of methanol soars due to increasingly expensive natural gas prices, the potential for processing glycerol into methanol could become profitable.