Sustainable Biodiesel Production in Singapore: Flexible Designs and Decentralized Siting in an Urban Context

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1 Sustainable Biodiesel Production in Singapore: Flexible Designs and Decentralized Siting in an Urban Context Kamal SOUNDARARAJAN, Anton FINENKO Cities, Energy and Climate Change Mitigation conference University of Leeds, 10 July 2014

2 2 Biodiesel infrastructure in Singapore Several (small) companies are currently exploring possibilities of converting waste cooking oil from commercial establishments in Singapore into economically valuable biodiesel A centralized biodiesel power plant has been opened in Singapore in 2011 In 2013, a partnership between Alpha Biofuels and The Westin Singapore has been established. The hotel s luxury limousine fleet will be partly powered with biodiesel converted from recycled cooking oil The project involves an installation of a micro-refinery in the hotel building. This will help to reduce logistics and operations costs

3 3 Biodiesel infrastructure in Singapore Another micro-refinery installed in MBS recycles all waste vegetable from the financial district and powers a construction project with clean fuel Biodiesel is not considered by the transport policies of the Singapore s Land Transport Authority Shortcoming of other transport policies Alpha Biodiesel 2014

4 4 Motivation for using biodiesel Biodiesel helps to address high domestic oil prices It is beneficial for the long-term energy security Biodiesel helps to mitigate air pollution and to abate greenhouse gas emissions It creates additional markets for organic waste

5 5 Centralized vs decentralized biodiesel production in Singapore

6 6 Why decentralized Singapore is a densely populated island with a well-developed infrastructure A large number of restaurants and food centers are distributed across the island Biodiesel can be produced in micro-refineries attached to existing petrol station and distributed together with conventional fuels Economic analysis performed in this study favors decentralized biodiesel production compared to centralized

7 Google Maps

8 Singapore infrastructure 8

9 9 Petrol stations Google Earth 2014 Petrol station

10 10 Restaurants and hawker centres Google Earth 2014 Food center

11 11 Cost analysis of decentralized waste oil collection and biodiesel distribution (flexible design)

12 System Description

13 13 Methodology 1. Construct a base case cash flow model that represents centralized biodiesel production model (one refinery) 2. Add a flexibility option into a base case cash flow model (decentralized micro-refineries ) 3. Evaluate and compare 1. and 2.

14 14 Base case: Single biodiesel production facility Build a deterministic cash-flow model Determine key parameters such as CAPEX and OPEX EQUITY IRR 14.7% NPV $ 4,8 million SGD DISC PAYBACK 3.5 years FUTURE WORTH $ 45 million SGD Conduct sensitivity analysis on key parameters Feedstock Quantity, Biodiesel Prices SGD

15 15 Base case: centralized, single biodiesel production facility Conduct uncertainty analysis on biodiesel prices and feedstock quantity Historical prices of diesel and basic information gathering from a small sample of hawkers were used as proxies to estimate the distributions for these two uncertain quantities. Stochastic analysis was carried out 500 values of NPV was calculated (Monte-Carlo type)

16 Flexible Design: decentralized, phased implementation of 10 micro-refineries Incorporating flexibility IF (Next Year Projected FQ>Deterministic FQ, BUILD, DEFER) and IF(Next Year Projected price>deterministic price, BUILD, DEFER) Build a flexible cash-flow model incorporating the uncertainty analysis and stochastic analysis Similar approach as in the base model

17 19 CDF of base and flexible design 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% NPVflexi Mean NPVflexi NPVbase Mean NPVbase SGD

18 20 Conclusions Decentralized biodiesel production from waste cooking oil is favorable for the Singapore s densely-populated urban area The economics of biodiesel production are predominantly determined by feedstock quantity and biodiesel prices From the financial point of view, a decentralized deployment shows a higher NPV and lower risks of negative NPVs as compared to the centralized production Challenges for decentralized biodiesel production include Quality proof of biodiesel standards Uncertainties with feedstock collection

19 21 Thank you! Energy Studies Institute 29 Heng Mui Keng Terrace Block A, #10-01 Singapore For enquiries: Ms Jan Lui Tel: (65) Fax: (65)