Originally Posted by Oregon-Mike
Don,
How does it work from an economics standpoint? If a farmer can sell the diesel for $2.38/gallon and, from what I gather (haven't actually got a "rountuit" yet on my BD processing), it's roughly $1/gallon to produce with free restaurant oil, that comes to $3.38ish per gallon of BD. For the offroad users, that $.50/gallon state incentive drops it down to $2.88 which is still higher than off-road diesel is (now that the on-road price has dropped below $2.90 most places around Eugene). You also have to recoup the cost of your processing plant (even if you only have to recoup 60% of the cost if you get the 40% grant).
Are there other incentives that factor in? What am I missing? Is your cost to produce substantially less with the methanol recovery you do?
On a side note, have you done any processing with ethanol? Do you have plans in the works to plant any crops that you could roll your own ethanol and do the entire process on site?
If I used my truck as a daily driver instead of just a horse hauler when we need it, I'd go through roughly 50 gallons/month. That's only 600 gallons per year. I'd only need a 3 acre plot of canola to drive all year on! That would be awesome.
Great job on the yields and good luck on your grant proposal!
Mike
I'll try and "splane" it to you.
The state is willing to give me a grant for 40% of the cost of the plant, the Fed's will kick in another 15-20 percent. The tax laws give me a 30% drop in state taxes. The State will pay me $.10 per gallon made, and the Fed's will give me another $1.10 per gallon.
My costs are very low because I buy my chemicals in bulk, and recover better than 40% of my methanol. My costs last month was $.62 per gallon.
I now grow my own canola. It cost me $12 per acre to produce the seed. My average was approximately 4,000 lbs per acre. The 4,000 lbs per acre will net me about 220 gallons per acre. My cost to produce this 220 gallons is $.0045 PER GALLON..........
If you add the cost to produce [$.0045] plus the cost of making the bio [$.62] it comes out to $.6245 PER GALLON . The rebate from the Fed, and State = $1.30. I've already made a profit of $.675 per gallon, AND I STILL HAVE THE BIODIESEL!!
My business plan calls for the sale of the biodiesel @ $.50 LESS than the local cost of off-road fuel, and the state sends the customer a $.50 rebate. SO MY CUSTOMERS BUY THEIR FUEL AT A DOLLER OFF PER GALLON!!!
Farm fuel is selling for $2.82 per gallon here right now. If I sell the biodiesel to my farm accounts at $ 2.32 per gallon, my potential profit is $2.99 per gallon...............................
Yes, I am looking into producing my own Ethanol "on site" and possibly switching over to an ethanol process. One problem is the price of wheat [ the main crop on my ranch] is over $6 a bushel, and it is worth more as wheat than ethanol....................