Biodiesel from Waste Oil

Garion Chares
[Company name]
[Date]
Contents
1. Corporate Vision .................................................................................................................... 2
1.1. Justification ..................................................................................................................... 2
1.2. Benefits ........................................................................................................................... 3
1.3. Risk ................................................................................................................................. 3
2. Business Case......................................................................................................................... 3
2.1. Problems, Needs and Opportunity .................................................................................. 3
2.1.1. Problem .................................................................................................................... 3
2.1.2. Needs........................................................................................................................ 4
2.1.3. Opportunity .............................................................................................................. 4
2.2. Background ..................................................................................................................... 4
2.3. Corporate Objectives ...................................................................................................... 5
2.4. Solution ........................................................................................................................... 5
2.5. Cost-Benefit Analysis ..................................................................................................... 6
2.5.1. Typical Price of biodiesel in major regions ............................................................. 6
2.6. Sources of finance ........................................................................................................... 7
2.6.1. National Entrepreneurship Development Company Limited (NEDCO) ................. 7
2.7. Sales and Marketing Plan................................................................................................ 7
2.7.1. Marketing Objectives ............................................................................................... 7
2.8. Operational Configuration .............................................................................................. 8
2.9. Risk analysis ................................................................................................................... 8

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1. Corporate Vision

The future vision of the company is to produce gallons per year of biodiesel in the future
but to additionally produce and create our on distribution channel for 3rd generation biofuels
however much research is still needed before this dream can obtain.

Nevertheless the companies current goal is to start – up production early next year and
produce 300 gallons per day of biodiesel from waste oil which would be sold to biodiesel
contractor to sell in many markets.

Furthermore Awareness campaign would done which will play a major role in the
business plan marketing strategy as it will get more potential buyer aware of the potential
benefits of biodiesel vs petroleum base diesel.

1.1. Justification

Due to the increase in awareness of climate change, and fossil fuels being a major cause
of climate change, there is and increase in demand globally for research and production of
alternative sources of energy.

Thus, this is the reason I believe biodiesel production can be a viable and profitable
business, due to the fact that the demand for it has been increasing at a steady rate for many
years, due to it being a much cleaner fuel and also requiring a relatively cheap feedstock for its
production.

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1.2. Benefits

Propose business idea utilizes waste oil as the main raw material, because it’s a recycle
material it very cheap to buy, while biodiesel is becoming a much more valuable fuel due to it
making and excellent blending material for fossil base diesel and the increasing demand for it
as a stand alone fuel. The process itself at the small scale level requires has relatively cheap
capital course compared to other forms of alternative fuel sources.

Hence Biodiesel has the potential to have a high return on invest due to have low cost and
progressively increasing profits.

1.3. Risk

Over saturation in the biofuel market is a clear risk in the biofuel market due to more
people seeking to start up similar production facilities due to low capital cost in starting it up,
additionally countries such as Trinidad and Tobago who are major producers of Oil and Gas
and provide large subsidies locally for fossil base fuel means both the government and the
citizens don’t have much interest in alternative fuel sources therefore the business requires
exportation of the fuel internationally into markets where a demand is required, However this
requires dealing with various countries governmental policies regarding fuels and also their
law concerning taxes.

2. Business Case

2.1. Problems, Needs and Opportunity

2.1.1. Problem

Fossil Fuels are the main source of energy currently used in the world, however
production of fossil fuels comes from a non-renewable resource , crude oil. Which is the main
problem due to the fact that resource in question is limited and thus is depleting. In fact we can
already see the consequences of this problem , for instance, at the fuel pumps the cost of
refuelling vehicles keeps on rising, fuelling houses and paying bills has also become much

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more harder to do, therefore we can sum up the problem to a simple sentence. Fossil fuels are
not a sustainable form of energy.

2.1.2. Needs

The fact that fossil fuels are not sustainable and since the start of the industrial age to
now a world which is currently a heavily dependent technological age which requires a lot of
energy to run, there is a clear need for a sustainable form of energy that can offer the same
energy output as fossil fuels or greater, but does not require any drastic change in how we
design our vehicles and power plants , has causes many to look as biofuels as an alternative
source of energy.

2.1.3. Opportunity

Currently the world demand for biodiesel is expected to expand and at a 3.6% annual
pace and the biodiesel market is expected to continue to grow a healthy pace, due to the support
by the expansion of biofuel mandates in many developing countries and also due to the
European Union’s renewable transport fuel target for 2020.

2.2. Background

In the early 1890’s when the diesel engine was invented which was capable of running
on vegetable oil and a variety of fuels, it did not gain much popularity due to the petroleum
base fuels being cheap and easily available at the time. However during World War II when
petroleum supplies were interrupted, vegetable oil was used as the main source of fuel in
several countries, but once the war was over yet again petroleum fuels became more dominant
once again. In the 1970’s when the petroleum oil embargo cause many countries yet again to
look at vegetable oil as a main source of fuel however due the poor quality of the fuel spray
cause by the thickness of the oil which eventually cause damage to engines, cause a renewed
interest in the conversion of oil into biodiesel.

Hence due to biodiesel being able to help countries to reduce their dependence on
petroleum fuels and biodiesel providing less air pollution and less net carbon emissions then
fossil fuels have led to the current demand for biodiesel as of today.

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2.3. Corporate Objectives

• In the first year of business to produce 300 gallons per day of biodiesel
• To develop an awareness campaign for the beneficial use of biodiesel
• To start developing the companies own distribution channel and develop a ongoing
buyer relationships with several companies
• To start research and one day the production of 3rd generation biofuels
• To expand the facility to produce our own oil from soybeans
•

2.4. Solution

The proposed solution is the development of a biodiesel facility that utilizes waste
vegetable oil as the main feedstock, however it should be noted that virgin oil can also be use
as the main feedstock or as a combination of both if necessary.

Even though virgin oil can be used which can provide a higher yield ,waste oil was
chosen due to the fact that it is much cheaper and there exist a local supplier which purifies it
for industrial use, which greatly brings down the capital cost as no equipment would be
required for the treating of the waste oil.

The production of biodiesel can thus be a fantastic solution for the problem many
countries face of only having unsustainable fuel sources, meeting their market need for a
renewable alternative fuel source and can have great profit opportunities due to the demand
being high and expected to continue to grow at a healthy rate in the coming year and since the
market is still in the early stages there is still room for start-up companies to get into business.

Furthermore since the growth is happening relatives fast it’s a very time sensitive issue
therefore companies interest into getting into the business need to act soon or risk being left
out once the market becomes well established.

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2.5. Cost-Benefit Analysis

Constant Costs
Cost of Equipment $15,000.00
Batch Size of Biodiesel Processor 150
Usage Fee Per Batch $ 300.00
Labor Cost Per Hour $ 25.00
Rent Per Month $ 1,000.35

Used
Cost Per Per Per Per
Variable Costs Bulk Cost Unit Batch Batch Gallon
Methanol (Per Gallon) $192.50/55 gallon $3.50 8 $28.00 $ 0.19
Catalyst (KOH) (Per Gram) $65/50# bag $0.00296 1890 $5.59 $ 0.04
Electricity (Per Killawatt Hours) 25 kWh @ $0.10/kWh $0.10 25 $2.50 $ 0.02
Water (Per Gallon) $0.01/gal $0.010 40 $0.40 $ 0.00
Usage Fee (Per Batch) $300.00 1 $300.00 $ 2.00
Labor (Per Minute) $0.42 45 $18.75 $ 0.13
Rent (Per Day-Assuming 30
Days/Mo) $33.35 1.5 $50.02 $ 0.33
Total $355.24 $ 2.70

Savings & ROI Analysis

Cost To Produce (per gallon) $ 2.70
Cost Of Diesel Fuel (per gallon) $ 3.27
Cost Savings Per Gallon $ 0.57
Cost Savings Per Batch $ 85.24
Batches Required For Equipment Payback 176
Gallons Required For Equipment Payback 26,397

2.5.1. Typical Price of biodiesel in major regions

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2.6. Sources of finance

2.6.1. National Entrepreneurship Development Company Limited (NEDCO)

NEDCO provides entry level’s up to $ 250,000 (TT) which will be sufficient enough for the
capital cost for the production facility and the few months of the raw material cost.
Additionally NEDCO also provides business advisory services which can help improve and
give a competitive edge in the market by providing real time information in areas such as
Marketing, Financial Management, Business Planning and Record Management.

2.7. Sales and Marketing Plan

The main source of sales at the start will come from the company working with a contractor to
deliver the product to their customers.

2.7.1. Marketing Objectives

• The first marketing objective is to develop and online presents with the creation of
website to get the companies name and contact information known and additionally
develop business page on social media platforms such and Facebook .
• The development of an ongoing purchase order partnerships with companies that have
a large fuel demand.

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2.8. Operational Configuration

A titration is first conducted on a sample of the oil supply to determine how much lye
would be required for the process.

Once this is determine the oil in added the biodiesel processor oil storage tank, where
it is pump into the large reactor tank. The amount of lye need for the batch is then added into
the smaller reactor tank, and then the required methanol is also added, the correct valves are
then open and closed and the pump is turn on once again to added the reacted mixture of
methanol and lye to the large reactor tank with oil, it allowed to react to produce biodiesel and
glycerine. Once the reaction is finish, the glycerine is drain from the bottom of the tank. Finally
the biodiesel is sent to the washing unit of the biodiesel processor to remove any remaining
impurities.

2.9. Risk analysis

With the growing demand for biodiesel and the popularity of the production of biodiesel from
waste oil, may lead to the increase in the price of the raw material, additionally development
of 3rd generation biofuels in the future may provide a better alternative as a renewable fuel,
additionally the petroleum industry is very large and well establish and takes many measure to
stifle competition, however the risk of this impacting the propose business idea is small since
it a small scale facility which poses no treat to said industry.

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