Ecuadorian National Planning and Development Department, has determined a new energetic matrix where it is established the use of 5% ethanol in regular gasoline to be used in vehicles until 2020 in the whole country [29].

To accomplish this endeavor, in 2010 Ecuador’s fuel ethanol needs were 32’187,903 gallons; nonetheless, the ethanol production reached was just 1’195,427 gallons [30]. This is, only 3.71% of the national requirements were fulfilled, which demonstrates that there exists a huge unsatisfied demand of fuel ethanol, representing an interesting market for ethanol producers as seen on Figure 5.

ETHANOL PRODUCTION IN ECUADOR IN 2010

The price of ethanol per liter has been fixed in 0.76 Dollars by the Ecuadorian Government. This is a very competitive price that the sugar mills are interested in producing this
renewable fuel using molasses as feedstock; molasses are byproducts rich in sugars that represent a valuable source of energy in animal husbandry.

The RESETA Project (the acronym of Sustainable Sources for Ethanol) studies the second generation ethanol production from lignocellulosic materials as well as leftovers and industrial effluents. One of the objectives of such project is the development of a financial model based on a baseline survey on lignocellulosic materials in Ecuador [31]. By means of the data obtained in such survey, it was possible to determine that there are three candidate raw materials taken into account its amount, localization and availability. The sources are banana stems, sugar cane bagasse and empty fruit bunches form oil palm.

Laboratory analysis demonstrated that the high level of moisture in banana stems, as well as the final disposition of the biomass, which is very dispersed in the field, makes its use an unfeasible task in terms of economy. On the other hand, sugar cane bagasse is already been used by sugar cane mills to generate power, thus, just a few biomass of this kind is really available. Finally, empty fruit bunch from oil palms present good characteristics for being used as feedstock in an industrial scale biorefinery. Empty fruit bunches account for about 45% cellulose dry weigh; which is enough to provide the raw material to run about 22% gasoline cars in Ecuador (Table 1).

One of the key factors influencing the feasibility studies to install a biorefinery is the price of the raw materials. Currently, the lignocellulosic residues represent a big environmental problem in Ecuador as well as an unsolved trouble to farmers and industries. One of the most common fates for lignocellulosics is the composting or decomposition on soil to provide organic matter for cultures and as mulch in a number of crops. The uncontrolled decomposition generates lixiviates, as well as greenhouse gases that finally are disposed in the subsoil and the atmosphere [31]. It is necessary to provoke a change in the current situation that makes a real shift in terms of the use of the lignocellulosics. One strategy proposed by the RESETA project is pushing to the creation of a market for the lignocellulosics in sustainable and fair conditions for the owners of the biomass as well as for the biorefinery project to be successful. The establishment of companies where the owners of the biomass can participate as shareholders is one of the strategies proposed by our study.

In these terms, we have designed a financial analysis based on the data obtained by laboratory and field surveys. The factors taken into account were:

a. The implementation zone would be in La Concordia town (Latitude -0.000017°; Longitude — 79,383563°), which is located in a strategic point for its big oil palm production and oil mill concentration.

b. The raw material in terms of empty fruit bunch is about 640 MT per day.

c. Enzymes, chemicals, yeasts, are calculated in 0.62 Dollars/Gal of ethanol.

d. Other costs are about 0.45 Dollars/Gal, as it is detailed in Table 5. Additionally, it has been established an income per by products commercialization. These by products are represented by liquid and solid fertilizers.

e. Another issue to be taken into account is the energy savings by means of the use of power co-generated using biogas from the biorefinery’s processes.

A similar European project (i. e. PERESEO project from Spain) establishes that the cost for the construction of a biorefinery plant for 500 MT of biomass per day is about 12 to 15 million Euros. In terms of the RESETA project, we may need to process about 640 MT/day. The criteria for building up a biorefinery are to consider a future growth, so the capacity must be overestimated in about 30% [32]. Then, the investments may overcome in about 1.6 times those of the European PERSEO project. In terms of Dollars, the total investment is among 24.96 to 31.2 million Dollars. We will use the highest number for our calculations.

It has been determined the cost per liter ethanol from lignocellulosics from empty fruit bunch of oil palm in 0,49 Dollars, which is shown in Table 6.

In this calculation it has been taken into account a 1% growth in costs and incomes with the aim of using the whole installed capacity at the end of the project. Following in Table 7, it is shown the cash flow of the project, where the initial investment (31,2 million Dollars), the investment recovery period; the IRR and NPV are shown. Table 8 is a resume of such values.

With such calculations and with a discount rate of 13.76%, calculated in basis to the established formula shown next, we have attained an IRR biggest than the discount rate.

Discount Rate = Rf+ p(Rm — Rf) + Rp,

Rf: Risk of the treasure founds bonus in the USA. p: Sensitivity or risk of the Project in the market Rm: Stock market index.

Rp: Country-risk

This Project exhibits a positive NPV, combined with a reasonable IRR value; both values can be interpreted as indicators of a feasible project. This financial study doesn’t consider the externalities and the social benefits a biorefinery can give the surrounding populations and environment.