Modeling and Analysis

Economic analysis of bioethanol and

electricity production from sugarcane
in South Africa
Abdul M. Petersen, Willem A. Van der Westhuizen, Mohsen A. Mandegari and Johann F. Görgens,
Department of Process Engineering, University of Stellenbosch, Matieland, South Africa

Received April 18, 2017; revised September 19, 2017; accepted September 28, 2017
View online at November 24, 2017 Wiley Online Library (wileyonlinelibrary.com);
DOI: 10.1002/bbb.1833; Biofuels, Bioprod. Bioref. 12:224–238 (2018)

Abstract: An economic analysis for ethanol and electricity production in the sugarcane crushing indus-
try in South Africa through first- and second-generation technologies, and integration strategies was
carried out. The analysis included capital allowances to upgrade the energy efficiencies of existing
sugar mills, to allow co-production of electricity, production of second-generation ethanol from hemi-
cellulose, and export of lignocellulose residues from these facilities. Methodologies included mass
and energy balances in Aspen Plus® and economic models in MS Excel to determine the required
selling prices for electricity, sugarcane residues and ethanol, for these investments. The required sell-
ing price for electricity for the sugarcane crushing industry was US$ 97/MWhr, while that of bagasse
residues was US$ 90/ton. A first-generation ethanol plant with electricity co-generation from bagasse
has an ethanol selling price of US$ 0.84/l, which was highly dependent of the cane price, and reduced
significantly when second-generation production from hemicelluloses of bagasse and trash was
incorporated. The selling price of US$ 0.38/l for integrated second-generation ethanol at a sugar mill
was the lowest, but however, was highly dependent on technological efficiency. Standalone second-
generation ethanol was unfeasible due to the costs of the infrastructure needed to provide bagasse as
a feedstock. © 2017 Society of Chemical Industry and John Wiley & Sons, Ltd

Keywords: biofuels; renewable electricity; integrated ethanol production; bagasse export; ethanol
selling price

Introduction a biofuel industry would also provide socio-economic

benefits by creating job opportunities or by empower-
he development of a biofuel industry would pro- ing small scale farmers to grow energy crops or creating

T vide an effective solution to the current reliance

on fossil fuels for transportation, and with signifi-
cant electricity co-production, could lessen the effects
of global warming caused by fossil fuels.1,2 With spe-
cific regard to developing nations, the development of
income from the agricultural residues. 3,4 Furthermore,
the mechanisms of the Kyoto Protocol provide incen-
tives for developed nations to invest in renewable
energy schemes in developing nations5 to earn carbon
credits.6

Correspondence to: Johann F. Görgens, Department of Process Engineering, University of Stellenbosch, Private Bag X1,
Matieland, 7602, South Africa. E-mail: jgorgens@sun.ac.za

224 © 2017 Society of Chemical Industry and John Wiley & Sons, Ltd
Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa
The conventional fi rst-generation technologies for bio-
fuel production are from raw materials such as starch,
sugar, and oils derived from existing food crops that are
relatively costly7 and may compete with agricultural
land for food production.8,9 The technically challenging
methods for producing biofuels from lower-value lig-
nocellulose materials, such as agricultural residues, are
classified as second-generation techniques.8 Substantial
amounts of electricity can be generated together with
fi rst- and second-generation biofuel production methods,
to improve the economic viability of the process, and
further reduce the effects of global warming by substitut-
ing electricity that would otherwise have been produced
from fossil fuels.10,11 The sugarcane crop has been identi-
fied as one of the primary sources for ethanol produc-
tion in sub-Saharan Africa,1 as it provides feedstock for
both fi rst- and second-generation ethanol and electricity
co-producion.12,13
As the biofuel production industry in South Africa
is in its infant stage, governmental policies are geared
for subsidizing first-generation production14 in order to
stimulate socio-economic development in rural areas,
as the demand for crops would encourage agricultural
development in previously disadvantaged communities.7
These socio-economics benefits are a key driver for fi nan-
cial support of biofuel production schemes by the South
African government. Subsidizing second-generation fuels,
however, would vastly improve the potential for biofuels
in an arid country like South Africa,1 improve the offset
of greenhouse gas (GHG) emissions,15 and encourage
technological advancement through the development and
improvement of second-generation biofuel production
processes.
To incorporate second-generation ethanol production
in the existing South African sugarcane industry, the
industry requires efficiency upgrades to the low efficiency
sugar mills that pre-dominate the industry, to liberate
cane residues for alternative uses.16,17 Currently, sugar
mills in South Africa generally consume 0.58 tonnes of
steam per tonne of cane (t/tc),16,18,19 due to inefficient
energy production and utilization process units. If a
sugar mill were to host an integrated bioenergy pro-
duction plant or were to export biomass to meet the
feedstock demands of a centralized standalone second-
generation facility that maximizes ethanol production,
the sugar mill must be modified so that steam consump-
tion is reduced to 0.4 t/tc16 with the electrical demands
at 40 kWhr/tc,17–19 to ensure sufficient energy supply to
the mill as well as feedstock availability for bioenergy
production.
© 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb
AM Petersen et al.
The production of second-generation ethanol can be
cost-effective, when integrated into existing facilities such
as sugar mills18,20 or autonomous distilleries (i.e., first-
generation ethanol plant), 21,22 by converting onsite resi-
dues to biofuels, and heat and electricity. This approach is
in contrast to the standalone second-generation approach
that is often considered, which implies a centralized facil-
ity to where lignocellulosic residues are exported, and
biofuels and electricity are co-produced.23 Such integra-
tion has been shown to reduce the selling prices of sec-
ond-generation ethanol, such as in the example reported
by Dias et al., 21 where the Internal Rate of Return (IRR) of
an integrated facility was 6.8% higher than the standalone
facility.
In integrated strategies, the extent to which the carbo-
hydrate fractions of the residues are converted to ethanol
is limited since the overall heat and power demands of
both the host facility and the second-generation ethanol
production processes are dependent on these residues
through combustion.18,23,24 It was previously shown
that the overall energy demands were only met if lignin
residuals from fermentation for energy generation were
directly supplemented with fresh residues or with biogas
produced from solubilized hemicellulose fractions;15,23,24
or if hemicelluloses were fermented to ethanol alone while
cellulose and lignin residuals were combusted.18,25 These
limitations did not exist with standalone strategies, since
only energy demand is that of the second-generation
processes, and therefore, ethanol yields can be maxi-
mized from hemicellulose, cellulose and all available
residues.26,27
Therefore, the sugarcane industry provides various
routes for producing ethanol such as first-generation
ethanol (i.e., autonomous distillery), standalone second-
generation ethanol from cellulose and hemicellulose,
second-generation ethanol integrated with sugar mills,
and combined first- and second-generation ethanol by
converting hemicellulose to ethanol.15 The aim of this
paper was to conduct an economic evaluation in order
to determine, compare, discuss and conduct sensitivity
analysis on the minimum ethanol selling prices (MESP) of
these scenarios, Since electricity is co-generated with eth-
anol, a fi xed minimum electricity selling prices (MELSP)
was applied, as determined for an upgraded sugar mill
with a combined heat and power (CHP) plant optimized
for the export of electricity.18,19 The MESP and MELSP
are determined with economic models based on techni-
cal inputs from process simulations in Aspen Plus®28 for
investments in these facilities to generated the required
investment returns.
225
AM Petersen et al. Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa
Feedstock logistics and process
description
Scales, logistics, and process scenarios
A typical sugar mill in South Africa (SA) has a design cane
crushing capacity of 300 tonnes of cane per hour (tc/hr),16
which has been applied as the average capacity of all exist-
ing sugar mill scenarios investigated in the present paper.
For heat and power generation, the bagasse available at this
crushing rate was augmented with a supply of the sugar-
cane harvesting residues, assuming that 50% of these resi-
dues would be collected and transported to the sugar mill.18
For the greenfields first-generation facility, with or with-
out integration of first- and second-generation ethanol,
a processing scale of 493 tc/hr12 was assumed, which is
a typical commercial scale for such facilities in Brazil.
Although, this scale (493 tc/hr) is relatively high in SA, the
advantage of economies of scale is taken by this capacity.
This scale equates to an annual demand of 3 million tonnes
and according to the South African Sugar Association
(SASA),29 the amount of sugarcane crushed in 2016 was
15 million tonnes whereas the capacity in 2014 was 20 mil-
lion tonnes – indicating that the agricultural capacity for
the demand currently exists.
For the standalone second-generation facility, a produc-
tion scale equivalent to a bagasse consumption of 113 dry
tonnes per hour, 600MW thermal input, was selected as it
previously shown to be an optimum processing size.11,26
For the standalone second-generation facility, bagasse is
the only feedstock since the referenced process model is
based on experimentally determined conditions and yield
data for bagasse only. If 52% of the bagasse generated at
mills with upgraded efficiency could be exported as feed-
stock,17,30 the average mill that processes 300 tc/hr will
export 23 tonne/hr of bagasse. Therefore, the demand of
the standalone plant (113 tonnes/hr) required the excess
bagasse yielded by crushing approximately 1500 tc/hr,
which was equivalent to the cane crashing capacity of 5
average-size sugar mills.
Thus, these logistics are to serve as a basis for the 7 pro-
cess scenarios that were studied, and the processes consid-
ered are summarized as:
- Existing sugar mills (producing raw sugar), upgraded
sugar mills with improvements to energy efficiency
of raw sugar production, and installation of a new
high-pressure CHP plant fed with bagasse and 50% of
the trash, to maximize the amount of export electric-
ity that can be generated. The required selling price
for electricity, for these investments to be viable, was
226 © 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb
termed as the competitive price, and subsequently
applied in all other scenarios (SM-E).
- Existing sugar mills, upgraded as it was to maximize
electricity production, except that 52% of the bagasse
is exported to could be sold to a centralized second-
generation facility (SM-B).
- Greenfields, standalone first-generation ethanol pro-
duction with CHP fed by bagasse only (1GE-base).
- Greenfields, standalone fi rst-generation ethanol
production with enlarged CHP fed by bagasse and
trash to maximize the electricity yield form cane
(1GE-MaxE).
- Greenfields, standalone first-generation ethanol with
incorporated second-generation ethanol production to
maximize ethanol yield from cane (1G-2G)
- Standalone second-generation ethanol production
(2G-StandA) fed by biomass exported by upgraded
sugar mills.
- Second-generation ethanol production integrated into
an existing, upgraded sugar mill (2G-Int-SM).
Process descriptions for simulation
models
Upgrading the existing sugar mills to export
power and bagasse
Improving the exporting potential of existent sugar mills
entails that (i) the mill itself be modified to require less
process energy and that (ii) the low-efficiency energy
generation process (i.e., CHP) be replaced with a high
efficiency, high-pressure CHP generation process.16,31
The strategies for upgrading the processing technol-
ogy of a sugar mill to reduce energy consumption have
been discussed in literature and are not simulated in
this study.16,31 Thus, the reported capital costs for such
upgrades to energy efficiency16,31 were added to the total
investment costs of a new CHP energy efficient process.
To maximize the potential to export electricity, it has
been reported that a reduction in the steam demand to
0.4 tonne/tc is sufficient16,18,19 to ensure processes that are
energy self-sufficient. In this scenario (i.e., SM-E), all the
bagasse and 50% of the trash is fed to an upgraded CHP
plant, making a combined feed of 65 tonnes per hour.
Otherwise, the consumption of bagasse for process energy
production can be limited to export 52% of the bagasse
generated 17,30 to a central facility (such as the standalone
second-generation plant). Thus, in the scenario (i.e., SM-B)
where biomass is exported, 48% of the bagasse and 50% of
the trash is combined that results in a combined feed of 44
tonnes per hour to the upgraded CHP plant.
Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa
In order to produce heat and power from biomass in an
upgraded CHP plant (Fig. 1), biomass is fed to a combus-
tor to generate steam at 86 bar in a high pressure boiler.18,19
Steam is expanded through a condensing extraction steam
turbine (CEST) till 4 bar, to provide live steam for the sugar
mill, and any remaining steam is expanded to an exhaust
pressure of 0.2 bar. The simulation of this energy generation
cycle was adopted from previous models, with the process-
ing details and unit specifications as reported previously.18,19
Greenfield, first-generation ethanol production
Process description
The process diagram of ethanol production from sugar
cane in an autonomous distillery is depicted in Fig. 2
Figure 1. Steam and electricity production.
Sugar cane
Cleaning and
Treatment Concentration
extraction M Juice H Juice
Co- Generation
Bagasse
Figure 2. Base case first-generation ethanol production from cane.
© 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb
AM Petersen et al.
and the corresponding specifications for unit operations
are given in Table 1. The cane is dry-cleaned, in order to
remove about 70% of the particulate impurities, before
size reduction.12,32 The crushed sugarcane is then leached
to extract the sucrose in a diff user with a 99% extraction
efficiency, 32 and the leached cane, or bagasse, goes to a
dewatering mill to reduce its moisture to 50% for heat and
power generation;32 bagasse is either fed to the CHP plant
by itself (1G-base) or combined with trash (1G-MaxE).15
The high efficiency heat and power generating (CHP) pro-
cess21,23 supplies the heat and steam demand of sugar mill
and exports surplus electricity to the grid, and is identical
to the high efficiency process presented in Fig. 1.18,19
The sucrose juice from the dewatering mill and diff user
is clarified through cyclones and screens, to remove large
particles, 12 and then the cleaned sucrose juice is treated
with phosphoric acid to precipitate metals and thereafter,
it is neutralized with lime in a neutralization reactor.33
The juice is then de-aerated before entering a clarifier to
remove the mud that is washed with water and fi ltered to
recover the residual sucrose, and the fi ltrate is recycled to
the neutralization reactor.
To optimize evaporation,12 a fraction of the clarified
overflow is split for concentration in a 5-stage multi-effect
evaporator to reach 65% sucrose concentration, and then
combined with the dilute fraction to reconstituted a stream
with a sucrose concentration of 22%.12 This juice is then
sterilized at 130oC 12 before being fermented with a recycled
yeast inoculum. After fermentation, the yeast is separated
from the beer using centrifuges12 and the vent gasses are
scrubbed to recover ethanol vapor.11,26 For the recovery and
Seed training
Seed in
Seed out Ethanol
Fermentaion
F Juice CO2
Separation
Beer
Water
Water
Bottoms
MPS returne
Water
LPS Returne Dehyadration H2O
Blow Down
227
AM Petersen et al. Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa
Table 1. Unit specification for first-generation ethanol production.
Unit
Diffuser
Acidification
Neutralization
Sucrose recovery form mud
5-Effect evaporator12
Sterilization
Fermentation
Purification and recovery
purification of ethanol from the fermentation product, a pro-
cess flow scheme as described previously 11,26 was adopted.
Energy demand calculations
The amount of steam needed by the first-generation
ethanol plant is calculated with the IChemE Pinch Point
Analysis34 spreadsheet, which requires thermal stream
data recorded from the Aspen Plus® simulations. Using
a minimum approach temperature of 15oC,11,35 the mini-
mum quantity of heat was determined in the spreadsheet,
and this amount was quantified as saturated steam at
4 bar. This steam (4 bar) was extracted from the CEST
and the simulation was iterated. Regarding the electric-
ity consumption of the ethanol production process, an
overall electricity demand of 22kWh/tc was assumed
and extracted from the gross amount of the generated
electricity. This was based on reported values of 28kWh/
tc for a distillery using a mill for sugar juice extraction
from cane,12 with a reduction of 6kWh/tc, when a mill is
replaced with diff user.36
Second-generation ethanol production from
sugarcane lignocelluloses
Standalone scenario (2G-StandA)
The technical data for second-generation ethanol produc-
tion in a standalone scenario (Fig. 3) were taken from
previous reports,11,26,30 where process flowsheets had been
optimized with pinch point analysis.11 From an overall
perspective, this model was based on the design elements
of both the NREL model 37 (for pre-treatment, hydrolysis,
fermentation, cell propagation, water recycle, combustion
and electricity production) and Macloon et al. 38 (distilla-
tion and purification). Published experimental data was
used as a basis for the process conditions and conversions,
which were adopted for the pre-treatment,39 hydrolysis,
and fermentation 40 of the bagasse substrate.
228 © 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb
Operating Specification and Parameters
Sucrose extraction = 99%, imbibition water = 360.8 kg/tonne cane32
Temperature = 70oC, Phosphoric Acid use = 0.07 kg/tc33
Temperature = 70oC, Lime use = 1.59 kg/tc33
Wash water = 31.5 kg/tc.33
Pressure range = 0.2–17 bar. Vapor bleeds used for heat integration.12
Temperature = 130oC, time =30 min12
Temperature = 32oC; Sugars -> ethanol =90.5%; Sugars -> biomass = 1.37%12
>99.5% Ethanol at 99.7% recovery11,26
Second-generation ethanol production
integrated into an existing, upgraded sugar
mill (2G-Int-SM)
The flowsheet (Fig. 4) and technical data for this scenario
was taken from a previous study18 based on the flowsheet
analysis of integrating ethanol production into sugar
mills in SA. The integrated second-generation scenario
differs from the standalone second-generation scenario,
in that the former considers conversion to ethanol of the
hemicellulose-portion of lignocelluloses only, while the
latter combined the conversion to ethanol of all carbohy-
drates in lignocelluloses. Thus, a combined feed of bagasse
and trash (1 kg bagasse: 0.58 kg trash18,21) was pre-treated
with steam explosion to form a hemicellulose hydrolysate,
which is separated from the cellulose-lignin solid residue,
and then treated by alkaline detoxification. The treated
hydrolysate is then fermented with a recombinant pentose
yeast,41 and the beer is purified via distillation columns
and molecular sieves. The cultivation of the yeasts was
done similar to what was previously described.11
The solid residues resulting from pre-treatment are
burnt through a high efficiency heat and power generation
section that is identical to the CHP process previously
described.18,19 As with the installation of high efficiency
electricity production at sugar mills, the integration of
ethanol production to an existing sugar mill requires that
the steam consumption of the mill be no more than 0.4
tonne/tc,16 and therefore, the capital costs for upgrading
the mill to achieve this energy efficiency are to be taken
into account as well.
Combined first- and second-generation
ethanol production
The combined first- and second-generation process consid-
ers integration of second-generation ethanol production
into the standalone first-generation distillery, in particular
Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa AM Petersen et al.

Enzyme
production
Cellulase EtOH Prod.
A portion of liquid (8%)

SE
Solid
SSCF (EtOH) EtOH puri. & reco.
Pre-treatment broth Residue
Feedstock

Water
Fresh water
WWT
Stem Biorefinery demand Power and HHPS
Biorefinery demand Boiler
Steam gen. Waste
Condens.
Electtricity Waste water

Waste
Evaporation
To grid

Figure 3. Standalone second-generation ethanol production.

Table 2. Basic parameters and assumption for economic evaluation.

Parameter Description
Financial Period 20 years
Depreciation Straight line over an operational life of 25 years30 to salvage value of 20%. The plant value after
20 years was regarded as the terminal value.
Operational Hours 6470 h per annum (communication with experts)
Working Capital 5%30
Other Indices42 Company tax of 28% was charged on the net income, positive bank balances accrued interest at
8.7%, and dividends are paid at 25% of net cash income. therefore, the economic model mimics the
finance models previously constructed for ethanol production in South Africa.42
Capital Payment To simplify the analysis, it was assumed that the total investment costs would be fully paid after the
construction period of two years.
ZAR/US$ Exchange Average of 9.33 ZAR/US$ from 2007 till 2016 was assumed, in order to preserve the historical behavior
of commodity prices in SA.

through conversion to ethanol of only the hemicellulose
portion of the combined lignocellulosic residues (field
trash + bagasse from dewatering mill), which would oth-
erwise only be used for heat and power generation. Thus,
as for the integrated second-generation scenario described
earlier (and in previous literature18,25), the combined resi-
dues undergo hemicellulose extraction through steam
explosion to produce a hemicellulose hydrolysate that is
treated and fermented with a pentose fermenting yeast.
The pentose fermentation broth is then returned to the
first-generation process and combined with the broth of
the cane juice fermentation (i.e., first-generation broth),
prior to distillation and purification.
The solid cellu-lignin residue that results from pre-
treatment is used for heat and power production in a CHP
similar to that used in first-generation production. As with
the case of the first-generation scenarios, energy demands
are determined through Pinch Point Analysis.
Economic evaluation
Overall approach for evaluation
For all scenarios, detailed financial statements that cal-
culates IRR based on the firm value (i.e., discounted cash
values and discounted salvaging value)42 were constructed
based on simulated flows from Aspen Plus® and the associ-
ated capital and operating costs, estimated from literature
(Tables 3 and 4) . The parameters/assumptions which con-
textualize the economic analysis are reported in Table 2.
The economic model constructed for the SM-E was
used to calculate the MELSP, which was used in all other

© 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb 229
AM Petersen et al. Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa
Figure 4. Integrated second-generation ethanol production.
scenarios as the applicable electricity selling price. The
price of bagasse was then calculated with an economic
model for the SM-B scenario, which provides bagasse as
feedstock for the standalone second-generation scenario.
The MELSP and bagasse price was determined for the
standard IRR of 17% (nominal), as set by the National
Energy Regulatory of SA (NERSA) for a reference facility
for Independent Power Producers (IPP). Thus, the meth-
odology set by NERSA to determine the price of electricity
generated from renewable sources was followed,43 with the
Sugarcane Crushing Industry functioning as an IPP and
the CHP annexed to a sugar mill as the reference facility.
For the calculating the MESPs from the ethanol eco-
nomic models, communications with experts in the South
African economy have advised that a required IRR of
15.4% be considered. Thus, the economy assists in produc-
ing ethanol through the subsidization of exported elec-
tricity43 and direct subsidization of the ethanol produc-
tion.44 The required subsidies are defi ned as the difference
between the MESP and MELSP, and the existing market
prices for the energy products to be replaced by bio-energy.
The fossil prices are 0.52 US$/l for ethanol (HHV equiva-
lent of average basic fuel price (BFP) from 2007 to 2016, in
2016 real values44) and 77 US$/MWh for electricity.45
Estimation of equipment and total
investment costs
Estimation of equipment costs was carried out using
Aspen Icarus®28 to size the generic equipment (column,
pumps, exchanger, etc.), while more specialized equip-
ment (cane-crushers, fermentation tanks, etc.) were scaled
from vendor-based costs or literature, as shown in Table
230 © 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb
3. Also, the total investment costs for the upgrading of
existing sugar mills, installation of a new CHP plant (heat
and power process) and integration of ethanol production
into sugar mills, are given in Table 3. The cost of auxilia-
ries (piping, instrumentation, warehouse, etc.) were esti-
mated as the Balance of Plant (BOP), as a function of the
combined installation costs of all processing equipment
considered.46 Finally, factors for contingency, engineering,
overheads, etc. were extracted from Aden et al.37 to calcu-
late the Total Investment Costs (TIC), or CAPEX.
Operating costs
The basic operating and maintenance costs for ethanol
production are listed in Table 4, based on estimates in
Richardson et al.42 The cost of operational chemicals is
given in Table 4 based on a liter of ethanol produced for
the first-generation, standalone second-generation, and
integrated second-generation scenarios. The enzyme cost
is determined by Humbird et al.27 by annualized the cost
of producing enzymes on-site. These costs were inflated
using the Producers Purchases Index (PPI) that is fore-
casted with historical data.47 Costs for cane were fore-
casted from historical data from the latest SASA report, 29
with an initial (2016) cost of US$ 50.5 per tonne.
Results
For clarity, Table 5 shows a qualitative summary of all pro-
cess scenarios simulated, in terms of the product types, and
whether the products were simulated in this study, or if it
were not simulated, due to being outside the scope consid-
ered in this study. Thus, Table 5 indicates that the actual
Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa AM Petersen et al.

Table 3. Estimates for capital costs (2016 US$).

Unit Scale Parameter Base Value Base Price USD Scale Factor Installation Source
Costs for units and processing sections
Steam explosion tonne/h wet biomass 83 65567000 0.60 1.50 Leibbrandt30
Detoxification reactor kg/hr Hydrolysate 268762 142041 0.71 1.40 Aden et al.37
Neutralization reactor kg/hr Hydrolysate 268762 142041 0.71 1.40 Aden et al.37
Filter press t/h solids 21 1823646 0.60 2.40 Aden et al.37
Seed fermenters’ coil Heat Duty 245 6692 0.83 1.20 Aden et al.37
Seed fermenters Volume m3 727 211826 0.51 1.20 Leibbrandt30
Seed holding tank Volume m3 872 249103 0.51 1.20 Leibbrandt30
Fermentation cooler Heat Duty 2800 4388 0.78 2.10 Aden et al.37
Fermentation tank Volume m3 3596 765702 0.51 1.20 Leibbrandt30
Water scrubber kg/h total feed 25325 181336 0.78 2.75 Leibbrandt30
Distillation columns t/h ethanol 29 3304143 0.60 2.40 Humbird et al.27
Molecular sieve t/h ethanol 22 2899142 0.60 1.80 Humbird et al.27
Boiler t/h steam 100 31026786 0.73 1.00 A
Heat exchangers Area m2 167 43884 0.68 2.86 Al-Riyami et al.54
Bag-house tonne/hr steam 187 2530729 0.58 1.50 Aden et al.37
Cane milling, extraction, and tonne/hr biomass 300 17321757 0.6 1.00 B
dewatering.
Surface condenser Heat Duty MW 498 46077944 0.68 1.00 Bailey55
Cooling water pump Flow kg/hr 12300000 478031 0.79 2.80 Aden et al.37
Cooling tower system Heat Duty 619000 2368174 0.78 1.20 Aden et al.37
Capital costs previously determined for sugar mill upgrades and annexed facilities (million US$)
Steam reduction at 0.4 Flow of cane tonne/hr 300 16.84 0.6 1 Wienese and
tonne/tc Purchase16
Advanced steam reduction Flow of cane tonne/hr 300 22.26 0.6 1 Wienese and
at 0.28 tonne/tc Purchase16;
Ogden et al.31
High efficiency heat and Flow of biomass dry 65 220.18 0.6 1 Petersen et al.18
power process tonne/hr
Integrated ethanol Flow of biomass dry 65 229.26 0.6 1 Petersen et al.18
production from tonne/hr
hemicellulose and heat
and power co-generation
A. Cost provided by industry. Price includes the boiler and associated units and piping.
B. Cost provided by Industry.

sugar mills producing raw sugar was not simulated, and
only the steam and power demands were considered as bur-
dens for the annexed facilities (SM-E, SM-B, 2G-Int-SM).
Analysis of Process Yields
Table 6 shows the specific production rates of ethanol,
power and biomass exports for all scenarios considered in
this study. In a previous study,19 it was shown that a CHP
in a sugar mill, which did not consider sugarcane trash
as additional fuel, had a biomass feed that was 37% lower
than the SM-E scenario in this study and consequently
had a yield of electricity that was 63% lower. However,
comparing the SM-B and the SM-E shows that the fuel
to the CHP plant in the SM-B scenario was decreased by
33% when 52% of the bagasse was diverted for export, and
consequently, the yield of export electricity decreased by
38%. This is because trash is a better combustible fuel than
bagasse, considering the lower intrinsic moisture content
of 15%,48 as compared to that of bagasse of 50%. Although
bagasse could be dehydrated to improve its calorific value,
it had previously been shown that the capital cost of a
biomass dryer was not justified at the scale considered;18
given that safety limit for bagasse drying is 35%.49 Thus,

© 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb 231
AM Petersen et al. Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa

bagasse is more suitable for exporting as lignocellulosic fraction for ethanol production, and due to the additional
feedstock to a standalone second-generation ethanol pro- demand of the second-generation process for electrical
cess, which in any way, requires processing water to dilute requirements. Comparing the second-generation ethanol
the feedstock for further for biological processing.11,26 yields of integrated and standalone strategies, that of
Integration of second-generation ethanol production 2G-Int-SM scenario is 48% less because only the hemi-
with sugar mills decreased the yield of electricity by 57% cellulose fraction was converted to ethanol, while both
when compared to SM-E, due to the use of hemicellulose cellulose and hemicellulose fractions were converted in
the case of 2G-StandA. However, the yield of electric-
ity for the 2G-Int-SM scenario is also 20% less than that
Table 4. Operating costs.
of 2G-StandA because the yield of electricity from the
Quoted Cost
integrated scenario accounts for the demand of the host
  Unit Price (US$ - 2016) sugar mill, which amounted to 0.18MW/ton of residue.
General operating Regarding the first-generation scenarios, combining
costs for ethanol
second-generation with first- generation ethanol increased
production42A
the ethanol yield per ton of cane by 39% when compared
First-generation $/liter 0.054
to the first-generation BASE scenario. The yield of electric-
ethanol (1G)
ity with the second-generation/first-generation integration
2G - Integrated $/liter 0.061
also improved by 43%, because the calorific flow of residue
2G – standalone $/liter 0.067
from second-generation ethanol production as fuel for the
Chemical costs for 1GB $/liter 0.044
CHP is about 19% higher than untreated bagasse, since the
Chemical costs for $/liter 0.055
solid residue that resulted from the hemicellulose extrac-
Integrated 2G.B
tion had an enrichment in lignin content. It also had a
Chemical costs for $/liter 0.137
standalone 2GB
lower moisture content (i.e., 8% less), which then improved
the boiler efficiency. On the other hand, supplementing
Enzyme costs for $/liter 0.149
standalone 2G27 bagasse with the trash as fuel to the CHP (i.e., 1GE-MaxE)
Power plant $/kg dry biomass =36.7*B-1
improved the yield of electricity by 170%, owing to the
maintenance and dryness of the trash. Compared to sugarcane in Brazil,
operation56C that in South Africa has a reducing sugar content that is
Sugarcane post- $/dry ton 25.5 about 16% lower (12.9429 to 15.321), and hence, the yield
harvesting field of ethanol of the first-generation base was about 16% less
residue18 what it would be with Brazilian sugarcane.
A. General costs exclude chemical, raw material and power
operational and maintenance costs. The general costs for inte-
grated 2G is slightly more than 1G even though both plants have Standard Prices of electricity and
the four major processing sections. 2G has a level complexity residues
imposed by the specialized micro-organisms used. Standalone
2G has five major processing sections, therefore, these general Table 7 shows the competitive prices (i.e., for IRR=17%)
cost is scaled appropriately higher.
B. These are calculated from simulated flows of chemicals and determined for the electricity and export sugarcane resi-
commodity prices. due (i.e., bagasse), if considered as by-products for the
C. ‘B’ refers to flow of biomass to the CHP over 24 h in wet ton/day. Sugarcane Crushing Industry. It is seen that the required

Table 5. Summary of scenarios and simulated products.

Scenario Raw Sugar (not simulated) Ethanol (simulated) Electricity (simulated) Bagasse Exports (simulated)
SM-E √ √
SM-B √ √ √
2G-Int-SM √ √ √
2G-StandA √ √
1G-Base √ √
1G-MaxE √ √
1G-2G √ √

232 © 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb
Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa AM Petersen et al.

Table 6. Output rates of ethanol, electricity, and biomass export.

Technical Results Feedstock of interest Ethanol Output Electricity Output Biomass Export
A
  type ton/hr l/tf MW/tf ton/tf
SM-E mix residue 66 - 0.77 -
SM-B mix residue 66 - 0.48 0.33
2G-Int-SM mix residue 66 144 0.33 -
2G-StandA bagasse 110 276 0.41 -
1G Base cane 493 67 0.07 -
1G MaxE cane 493 67 0.19 -
1G-2G cane 493 94 0.10 -
A. Tf – tonne of biomass feed, either cane or residues

Table 7. Prices determined for biomass and
electricity (2016).
Item Prices Premium on
Fossil Equivalent
Electricity from Cane Industry 97 25%
($/MWhr)
Competitive Residue Price ($/dry ton) 90 -16%
electricity price was 25% higher than the standard national
production price of electricity (77US$/MWhr). This
premium was within the band of premiums determined
for renewable electricity generated from wind and solar
sources, which were respectively from –14% to 77% on the
standard price.50 The competitive price for export biomass
on the other hand, was 16% below its corresponding fos-
sil price, which was the energy equivalent of the price of
South African steam coal of 5.4US$/GJ,51 determined as an
average of 10 years (2007–2016). Thus, renewable electric-
ity from sugar mills in SA is competitive with other forms,
while biomass exported for valorization is competitive
with its fossil equivalent.
Investment analysis
Discussion on first- and second-generation
scenarios
The CAPEX for the first-generation base scenario
(Fig. 5(a)) was US$ 372 million and its MESP obtained
was 0.84US$/l. Maximizing the cogeneration of electricity
(1GE-MaxE) increased the CAPEX by 16%, and the MESP
decreased by 15% since the specific OPEX decreased by
18% (Fig. 5(b)) due to the additional electricity exported.
For a similar sized plant in a Brazilian context, the
CAPEX determined by Dias et al.21 for the 1GE-MaxE sce-
nario was 35% lower. One reason is the CHP section that
was based on a 22 bar boiler considered by Dias et al.21
and the 86 bar boiler considered here, which could have
up to double the CAPEX of a 22bar boiler CHP19. Else, the
cost of the ethanol processing equipment based on vendor
quotes in Brazil was 32% lower than that of this study,
which was based on vendor quotes in SA and literature.
Thus, the MESPs of the first-generation scenarios is based
on CAPEX estimates that is not competitive internation-
ally, and therefore, a sensitivity analysis will be carried out
to determine the effects of lower CAPEX on the MESPs.
To compare MESPs in this study against literature, a
time-scaling index was needed, by recalculating the MESPs
for 2011 US$. Then with the 2016 MESPs (Fig. 5(a)), a vir-
tual inflation index for MESPs from 2011 to 2016 of 1.5%
was obtained. Thus, citing literature based on sugarcane
bagasse, Dias et al.21 obtained an IRR of 10% with a 2016
selling price of 0.65 US$/l at plant scale of 273MWth while
Seabra et al.52 determined a 2016 MESP of 0.48 US$/l for
an IRR of 12% at a plant scale of 221 MWth. Considering
relationships between plant capacity and MESP established
in literature,53 the price determined by Dias et al.21 adjusts
to 0.54 US$/l for a plant scale of 600MWth, while that
of Seabra et al.52 adjusts to 0.36 US$/l. The target IRR in
the financial models in this study were adjusted to 11% in
order to compare with the values in these literatures, then
the calculated MESP for the standalone 2G adjusts to 0.64
US$/l, which shows that the selling price determined in
this study is in good agreement with literature.
While the specific CAPEX and OPEX of the 1G MaxE
is less than the 2G-StandA, the ethanol yield is 77% less
(Table 6), and hence ranks less preferable by MESP in Fig.
5(a). This comparison is contrary to the outcomes of Dias et
al.21 primarily because the CAPEX estimation of the first-
generation scenario by Dias et al.21 was 35% lower than that
of this study, which leads to a lower estimation of first-gen-
eration production costs. Furthermore, the price of cane in
this study was 54% higher than that used by Dias et al.,21
and also, the scale of the standalone second-generation

© 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb 233
AM Petersen et al. Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa

(a)

(b)

Figure 5. (a) Total capital expenditure, operating expenses and MESP; (b) Specific
operating and capital costs (2016 US$).

production was 56% higher than studied case by Dias et
al.21 Thus, these differences in cost assumptions, scales, and
cane prices led to contradictory conclusions.
Discussion on the integration of second-
generation fuel with sugar mills and first-
generation ethanol distilleries
A peculiar feature of Fig. 5(a) is the MESP of 0.38 US$/l
for the 2G-Int-SM scenario, which is 26% lower than the
equivalent price of fossil gasoline in SA (i.e., HHV equiva-
lent of BFP). This is due to the negligible cost associated
with obtaining bagasse in integrated setups (capital
required for upgrading sugar mills amortizes to 6.32 US$/
tonne bagasse converted18) and no enzyme costs, since
only hemicellulose is solubilized for fermentation. Specific
capital and operating costs are compared in Fig. 5(b) and
it is seen that the integration strategy reduces the opera-
tional costs by about 95%, due the absence of feedstock
and enzyme costs.
Compared to Macrelli et al.22 (time scale adjustment
index = 1.5%) where integrated second-generation etha-
nol is produced from the cellulose fraction of sugarcane
residues at a price of 0.75 US$/l , the selling price of the
2G-Int-SM scenario is about 45% less. The objective of
Macrelli et al.,22 however, was to compare the specific

234 © 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb
Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa AM Petersen et al.

costs of cellulosic ethanol against the wholesale genera-

tion of electricity from sugarcane residues and therefore,
a penalty of 0.17 US$/l for the reduction in the amount

Variation in MESP (%)

2G-Int-SM
of electricity exported compared to the exclusive genera-
tion of electricity from residues was included. Also, the 1G-2G
revenue of 0.07 US$/l earned by exporting electricity as a
by-product from second-generation production was not 1G-MaxE

accounted for. Thus, if the economic models is corrobo-

rated with this study, the production cost of integrated 1G Base

second-generation ethanol for Macrelli et al.22 adjusts to

-15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
0.51 US$/l, and then to 0.38 US$/l if the enzyme cost of Hemicellulose process +10% CAPEX Hemicellulose Ethanol Yield -10%
0.13 US$/l is also accounted for. Hence, the adjusted MESP Cane Price -10% 1G CAPEX reduction

from Macrelli et al.22 corroborates with the price obtained

Figure 6. Sensitivity analysis on selling prices.
for the 2G-Int-SM scenario in this study.
Thus, second-generation integration by hemicellulose
1G MaxE, and 1G-2G) by 2–3%, which implies that the
conversion is the cheapest form of ethanol production in
costs of first-generation ethanol production lies primar-
this study, primarily due to the absence of enzyme costs
ily in the operational costs. Thus, when the cane price is
and the negligible feedstock costs. Therefore, incorporating
reduced by just 10%, the production price of the first-gen-
hemicellulose-based second-generation ethanol production
eration scenarios is reduced by 8–10%, resulting with the
with first-generation ethanol production to improve etha-
1G-MaxE and the 1G-2G processes becoming competitive
nol production (1G-2G) shows that the MESP was reduced
with 2G-StandA. Thus, first-generation ethanol produc-
by 25%, which was similar to what was previously shown.25
tion from cane in SA is dependent primarily on the cost
Even though the specific CAPEX and OPEX rose by 15%
of cane and in the implementation of advanced processing
and 4%, (Fig. 5(b)) for incorporating second-generation eth-
schemes where either ethanol or electricity is maximized
anol production with first-generation production, respec-
through processing of post-harvest residues. Considering
tively, the yield improved by 40%. This result opposes the
that the cost of cane in Brazil21 is about 54% lower than it
conclusion reached in studies where the cellulose fraction is
is SA, it is likely a reduction in the cost of cane can occur,
used for ethanol production in integrated 1G-2G scenarios,
and hence, the competitiveness of first-generation ethanol.
which resulted in the ‘pure’ first-generation ethanol being
Regarding the efficiency of second-generation technol-
cheaper.15,23 The CAPEX of the 1G-MaxE scenario is also
ogy in integrated schemes (i.e., hemicellulose extraction
slightly higher than that of the 1G-2G scenario, which also
and fermentation), reducing the overall yield of ethanol
differs from previous findings21,23 because those studies
from lignocellulose by 10% increased the ethanol selling
considered additional second-generation processing steps
price of the 1G-2G by 2%, since the contribution from the
such as alkaline delignification, enzymatic hydrolysis and
second-generation processing is only 28% of the total etha-
biodigestion steps for unfermented hydrolyzates. Hence, the
nol yield. However, since such a reduction in yield affects
MESP of 1G-2G was lower than that of 1G-MaxE.
ethanol produced in the case of the 2G-Int-SM in its full
Sensitivity analysis proportion, the selling price increased significantly by 12%.
Thus, 2G-Int production in practice requires careful pro-
Figure 6 depicts the sensitivity of MESPs of certain sce-
cess monitoring and optimization to ensure that the selling
narios to parameters that have uncertainty or cause for
price is minimized. Furthermore, since the hemicellulose
variation, which were the first-generation ethanol process
conversion technology is not a mature technologically, a
equipment CAPEX because of ethanol plants in Brazil
sensitivity analysis on the CAPEX was accomplished. The
costing 35% less; the cane price since the 2016 price was
result shows that the MESP of 2G-Int can increase by 9%,
on average 16% higher than the prices of the preceding 9
if the capital costs had been underestimated by 10%.
years; and the ethanol yield from hemicellulose from sug-
arcane residues in integrated second-generation produc-
Implications of standalone
tion and integrated second-generation capital estimates.
The reduction in CAPEX of the first-generation ethanol
second-generation production
process equipment by 35% is shown to only reduce the As the feedstock supply of a standalone second-generation
production costs of the first-generation scenarios (1G base, plant unit requires an infrastructure consisting of 5 mills

© 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb 235
AM Petersen et al. Modeling and Analysis: Economic analysis of bioethanol and electricity production from sugarcane in South Africa
that are upgraded to export bagasse, a capital of 990
million US$ is required to develop this infrastructure.
Furthermore, the electricity sold by these mills require
subsidy (Table 7) in order to be financially competitive and
therefore, a yearly cost of 20 million US$ is required to sus-
tain these mills. Thus, while the selling price of 2G-StandA
ethanol in the sugarcane industry seems favorable when
compared to first-generation ethanol, it has intensive finan-
cial demands for the development and maintenance of the
infrastructure required for feedstock supply.
Conclusions
This paper studied the potential of ethanol production,
and by extension, electricity generation through various
technological routes in the sugarcane crushing industry
in SA. A competitive price of US$ 97/MWhr for electricity
was determined from sugar mills upgraded for exporting
of electricity was determined, and was shown to be com-
pare well within the range of renewable electricity prices
in SA. The price of bagasse at 90US$/ton exported from
sugar mills was determined, and was shown to be com-
petitive with the fossil equivalent.
If first-generation ethanol is considered with electricity
cogenerated from bagasse only, the competitive price of
ethanol was US$ 0.84/l, which decreased by 15 and 25% if
the electricity yield was maximized by feeding the energy
generation section with trash or if the ethanol yield was
maximized by combining second-generation production
with first-generation, respectively. A large-scale central-
ized standalone second-generation plant fed by bagasse
had an ethanol selling price of US$ 0.66/l, which was more
competitive than the first-generation scenarios. However,
a sensitivity analysis had shown that the selling prices of
first-generation scenarios were highly dependent on the
cost of cane, as thus, first-generation ethanol becomes
more competitive if the cost of cane is reduced by 10%.
A second-generation plant integrated with a sugar mill
had a selling price of US$ 0.38/l, and therefore, the inte-
grated first-generation plant with a sugar mill was best
from the perspective of an investment analysis, while it
also had the lowest capital. However, the cost is highly
sensitive to the performances of second-generation etha-
nol technology, such as hemicellulose extraction and the
fermentation of hemicellulose hydrolyzates.
This study had also comprehensively shown that stan-
dalone second-generation ethanol production in the sugar-
cane crushing industry is generally unfeasible, due to the
development and subsiding the sugar mill units required
to supply bagasse as feedstock.
236 © 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb
Acknowledgments
We acknowledge the Department of Science and Technology
of South Africa for providing the funds to carry out this
research, through the National Research Foundation. We
also acknowledge Alan Fraser of the PGBI Group, for pro-
viding cost estimates for sugarcane processing equipment.
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Abdul M. Petersen
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and holds a PhD degree in Chemical
Engineering. He specializes in process
simulations, techno-economics, and
environmental impacts of biorefineries.

238 © 2017 Society of Chemical Industry and John Wiley & Sons, Ltd | Biofuels, Bioprod. Bioref. 12:224–238 (2018); DOI: 10.1002/bbb