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Qualifying Solar and ethanol distillery equipment as a business expense.

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Posted by John on May 28, 2006, 4:25 pm
 


Hello,

I am interested in determining what I would need to do to qualify a
photovotaic power system as a business expense, say on a 5 - 10 acre
farm, where corn is qrown to produce ethanol, and the power for
distillation, the business, and the home, is derived from solar panels.
The potential tax credits for the State and Fed, could total to 65% of
the total solar/distillery equipment costs , spread over 5 or more
years. I want to make sure this can be done legitimately, and am having
problems finding definitive information on this. Any help and / or
suggestions would be greatly appreciated.

Have a Great Day,

John

Posted by JoeSP on May 29, 2006, 1:23 am
 




Let's do the math, shall we?

Using info from:
http://hubbert.mines.edu/news/Pimentel_98-2.pdf

Let's see, 10 acres of corn should produce about 20-50 tons, depending on a
lot of factors, including your location and how much you spend on crop
inputs such as fertilizer and pesticides. Costs of growing corn are
typically at least 4 cents a pound, for a total production cost not less
than $000, for 50 tons.

To be generous, 50 tons of corn will yield about 500 gallons of ethanol,
which is equivalent to about 333 gallons of gasoline, which is about a
year's supply of fuel for an average car. One gallon of ethanol contains
about 75,000 BTUs of energy, which translates to about 22 kilowatt hours.

Since ethanol requires about 3 KWH per 4 KWH produced, the electrical
requirements for distillation are about 16.5 KWH per gallon of ethanol. To
distill that 500 gallons of ethanol that 10 acres of corn gives you, you
need about 8.25 megawatt hours (8250 KWH) of electrical power in total.

Of course, you won't be distilling all 500 gallons of ethanol in one hour,
but if you spread the job out to something like 6 months, running an average
of 8 hours a day (depending on sun availability), you have about 1500 hours
of sunshine to work with. Divide your 8250 KWH requirement by 1500 hours and
you will need about 5.5 kilowatts of power minimum for your array.  Last
time I checked, a kilowatt of solar panels cost at least $000.  This
translates to about a $0,000 array for a minimum requirement.  Amortized
over 20 years would be about $500 a year.

I don't know what your distiller would cost, but you can't do much for less
than a $5,000 investment. Set up to do the entire distillation job over a
6-month period each year using solar power, it would have to be fairly
small. A well designed system should last 15 years.

 Costs per year (before subsidies)
======================
Corn production cost:   $000
Solar energy cost:         $500
Distillation equipment:   $000
                               _________
Total cost per yr:          $500

Cost per gallon (500 total) = $.30.

Of course, each of these calculations is based on a best-case scenario for
each factor. In the real world, expect the cost per gallon to double or
triple at least.




Posted by Pooh Bear on May 29, 2006, 4:03 am
 



JoeSP wrote:


If that were so, making ethanol fron corn would be a non-starter.

Graham


Posted by John on May 29, 2006, 3:54 pm
 

JoeSP wrote:

Thank you for your information!

Looking forward to energy independence,

John

Posted by Mike Swift on May 29, 2006, 11:16 pm
 

wrote:


Playing to the roll of Congresses intent you could reduce the cost of
your ethanol by doing several thing that the big boys are doing by
replacing that expensive solar system with coal fired boilers in the
distillation step.  Another help would be to take the $.55/gallon,
subsidy, you know, tax the few rich to buy votes from the many people
working in the farming industries.  This would help immensely in your
bottom line.

In adjusting your cost per gallon it should be compared to the gasoline
it is replacing. This would be $.30*500/333 or $.95.  Coal would
reduce your distillation costs by at least two thirds.  That would
require the $.95 per gallon of gasoline equivalent to be corrected by
$.95*5500/6500 or $.65 for its gasoline equivalent, however you may
also correct it for the free money your getting from rich taxpayers.
That would make it  1.65-(0.55*(500/333))=$.82.:)

  Now we see how ethanol can be used to reduce smog, increase energy
independence, and insure the reelections of all those in Congress.
  Just ignore that coal boiler behind the curtain, and the fact that to
be a significant oil replacement would require several times the total
farm-able land the U.S. has.

--
Mike Swift

Two things only the people anxiously desire, bread and circuses.
                                      Decimus Junius Juvenalls

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