If a machine could save you more than $300,000 in two years, would it be worth purchasing? Probably. With savings like that, you could likely convince your CFO to make the investment. Yet ethanol producers often lose out on savings of this magnitude because they overlook the lifetime cost of ownership of equipment they purchase, focusing instead on sticker price. While watching purchase price might help keep a product on budget, it can hurt the company’s bottom line for years.
With this in mind, make sure to research a machine’s dependability, maintenance requirements, and power requirements before buying it. All these things add to a machine’s lifetime cost. And don’t overlook seemingly small differences. Consider that a 5-horsepower electric motor will cost $4,000 more to operate during its life than a 2.5-horsepower motor in terms of its electricity consumption.1
Consider a more dramatic example. Many ethanol plants employ pneumatic conveyance systems to move grain and DDG/DDGS. Pneumatic systems require large amounts of power—250 horsepower is not uncommon. But say there was a conveyance system that could move product with 50 horsepower. That lower-horsepower system would bring significant savings.
Let’s assume we’re talking about an ethanol facility that produces 60MMgy of ethanol. The conveyors at the corn receiving station will run 8 or 9 hours per day, five days a week, so at least 2,080 hours a year. Of course, they aren’t running at 100 percent capacity. We’ll assume they run at an average 65 percent capacity.
A conveyor will also take corn from storage through grinding to where the corn dissolves in cook water. This conveyor runs 24 hours per day, 360 days per year—8,640 hours per year. We’ll assume it also runs at 65 percent capacity.
There is also a conveyor constantly moving DDGS from dryers to the storage building for another 8,640 hours a year of work at 80 percent capacity. And conveyors move DDGS from the storage building to trucks or rail cars about 40 hours a week, year-round for 2,080 hours per year at 80 percent capacity. Altogether, conveyors at this facility run 21,440 hours per year.
With that workload for 2 years, the 50-horsepower conveyors will require $79,083.52 worth of electricity. The 250-horsepower systems will require $386,819.34. That’s a difference of $307,735.82.2
Of course, we wouldn’t talk about energy costs unless we could deliver efficient performance. We can. The above example is a real-life estimate of what our conveyor system would take to operate compared to an existing pneumatic system at an ethanol plant.
Pay attention to power requirements and other long-term costs associated with machines. Lifetime costs will bite you if you don’t consider anything past what you pay for assembly and installation. And contact us to learn more about how we can increase efficiency of your plant.
1Numbers from a theoretical drag conveyor that moves material 100 feet on a level surface for 40 hours a week at 100 percent capacity.
1hp = 0.746kW
Average industrial kWh in May 2018: $0.0682
Estimated hours a week production time in which the conveyor will be used: 40
Equipment lifetime: 15 years
Basic calculation for lifetime electricity costs: (motor horsepower) x (0.746kW) x (hours per week) x (52 weeks) x (2 years) x ($0.0682 per kWh)
2.5hp motor at 40 hours a week = $3,969 per year
5hp motor at 40 hours a week = $7,937 per year
Difference = $3,968
2Horsepower numbers from real estimated requirements for ethanol plant installations.
1hp = 0.746kW
Average industrial kWh in May 2018: $0.0682
Estimated hours a year production time in which the conveyor will be used: 21,440
Average capacity of corn receiving and grinding conveyors: 65 percent
Average capacity of DDGS conveyors: 80 percent
Equipment lifetime: 15 years
Basic calculation for lifetime electricity costs: (motor horsepower) x (average capacity percentage of motor) x (0.746kW) x (15 years) x ($0.0682 per kWh)
50hp motor 3-year electricity cost = $79,083.52
250hp motor 3-year electricity cost = $386,819.34
Difference: $307,735.82
