PROCESS ECONOMIC ANALYSIS OF BIO-OIL PRODUCTION FROM WOOD RESIDUE USING PYROLYSIS IN SOUTH-WESTERN NIGERIA

Due to the envisaged fossil fuel depletion as a result of increasing energy consumption per capital and environmental degradation resulting from its global warming, there is necessity for long-term alternative energy sources. This work investigated process economic analysis of bio-oil production from wood residue generated in major cities of south-western Nigeria. The basis of calculation was 2,316 Ton/day of wood residue generated from cities examined. The effects of bio-oil selling price, wood residue purchasing price, discount rate and annual electricity cost on IRR (Internal Return Rate) and NPV (Net Present Value) were examined. Internal rate of return increases periodically at any selling price of bio-oil for the first five years of operation examined. At fixed bio-oil selling price, NPV decreases with increasing discount rate. Negative NPV was observed at discount rate of 8%, 10% and 12% for fixed bio-oil selling price of ₦40. At fixed wood residue purchasing price and annual electricity cost, the internal return rate increases with increasing year of investment while NPV decreases with increasing discount rate. At constant discount rate, the NPV for this investment decreases with increasing wood residue purchasing price and annual electricity bill. However, for each year, increase in annual electricity bill and wood purchasing price reduce the internal return rate by magnitude of one (1). The results obtained were in good agreement with previous literatures. This indicates that this project will yield profit for the investor.