Search

IRR , a widely used profitability measure, is the Discount Rate that yields Net Present Value ( NPV ) = 0 for a stream of positive and negative cash flows, at least one of each sign and with no explicit financing payments. A big disadvantage is lack of parameters, such as a project finance rate or the enterprise rate ( ER ), i.e., Return on Investment of the overarching investment group to serve as a measure of opportunity cost. The coupled metrics proposed earlier by the author— NPV project and NPV % –do not suffer these disadvantages, so IRR is analyzed in terms of NPV % . Useful information can be obtained from a projection of IRR values onto the NPV % , ER plane revealing the sensitivity of IRR to risk under meaningful operating conditions. [ABSTRACT FROM AUTHOR]

• Intensification approaches in ethylbenzene production process arrangements. • Economic evaluation of the processes at issue. • Environmental analysis in terms of CO 2 emissions. • Sensitivity analysis on economic scenarios. Globally, industries constantly search for technological innovations in order to reduce environmental impacts and provide better economic results. Accordingly, improvement approaches by the use of process intensification techniques have been developed. Hence, considering the goal of applying such developments, it is elementary to evaluate the economic performance of these technologies. In this context, an environmental and economic evaluation of five conceptual intensified designs for the production of ethylbenzene was carried out in order to compare them with the conventional process. The double-effect distillation alternative resulted in a more profitable configuration in all evaluated economic indexes, resulting in a 15%, a 1% and a 2% higher Net Present Value, Internal Rate of Return, and Profitability Index, respectively, while having a 2.9% shorter payback period in comparison to the conventional design. In addition, said technology presented a reduction of 21.9% and 21% in the CO 2 emissions and energy consumption, respectively. Image, graphical abstract [ABSTRACT FROM AUTHOR]

• The designs of vapor-recompression distillation columns for the ethylene-ethane separation with high or low pressures in the auxiliary condenser are compared. • High pressure reduces refrigeration cost in the condenser but increases compressor cost. • The high-pressure design has 11% lower total energy cost but requires more capital investment. • The return on investment is quite attractive. A recent paper studied the separation of ethylene and ethane using several types of distillation systems in which cryogenic cooling is required. The economics of a conventional column using a very low-temperature expensive refrigerant in the condenser were compared with several configurations using process compressors. The alternative configurations involve the pressure in the auxiliary condenser and the fraction of the column overhead vapor sent through the compressor. Low pressure in the condenser requires a very low-temperature expensive refrigerant but has lower compressor costs. The purpose of this paper is to show that all of the vapor from the column should be compressed and then split, with some going to the reboiler and the rest going to an auxiliary condenser that operates at high pressure so that a higher-temperature less-expensive refrigerant can be used. [ABSTRACT FROM AUTHOR]

• The general problem of developing profitability optima is considered at the conceptual level for chemical process designs. • Industrial estimates often employ IRR (Internal Rate of Return) to measure profitability, with a "traditional" hurdle rate to specify the required IRR (ROI). • The NPV % measure provides a more effective basis. Its parameters are adjustable to match the process, the financial environment, and profitability requirements. • Viewing long-term profitability (NPV project), short-term risk [(NPV %)−1] and total capital invested (TI), the first should be maximized ... the last two, minimized or at least subject to bounds. • A new graphical method, with NPV % plotted versus NPV project , couples the three objectives, thus avoiding a Pareto-style optimization with its arbitrary weightings. • The optimum design is at the point of diminishing returns for LT profitability. Any lower value of TI reduces max (NPV project); any larger value isn't fully recovered. Recent fundamental work with discounted cash flow methods shows that an alternative metric for evaluating profitability and risk, one different from Internal Rate of Return (IRR) —namely the annualized and non-dimensionalized Net Present Value (NPV %)— can make evaluating project profitability easier yet more informative. It provides a simple and transparent strategy to optimize a design's key financial dependent variables (capital investment, profitability, risk). 1 1 Model form was originally referred to as "inside-out," but is now called "exo-parametric," i.e., switching from the vernacular to a more scientific and widely-used terminology (Mellichamp, 2018). Both traditional and exo-parametric modeling methods developed by the author are linked to this metric, providing an efficient and precise mechanism to organize and carry out the financial/optimization search procedures in process design. Design engineers want to know what is the optimum size of investment (TI) that meets projected market conditions? What is the expected long-term (NPV) return? What metric can be used to maximize them, consistent with the need to recover capital as quickly as reasonably possible (i.e., to bound the "short-term risk")? The proposed approach answers all three questions simultaneously, with a precise min-max solution obtained transparently. [ABSTRACT FROM AUTHOR]

• Distillation feasibility boundaries can be a priori determined by mean of an accurate thermodynamic analysis via residue curve maps. • Since indexes assess different properties, in order to carry out a reliable flexibility assessment, the most suitable one should be identified according to the expected deviation nature. • The higher flexibility of a process design is not sufficient to provide its final validation until its higher profitability is proved as well. Multicomponent mixtures can be separated into their single components by mean of different distillation system configurations. The typical distillation train design procedure consists of the assessment of the optimal columns configuration according to the economic and operational aspects. However, this optimal design is strictly related to the operating conditions, i.e. perturbations, when present, can seriously compromise the operation profitability. In these cases a flexibility analysis could be of critical importance to assess the operating conditions range of better performance for different system configurations. This is the typical case of biorefineries where the floating nature of the feedstock causes composition disturbances downstream the fermenter across the year's seasons. A brand new ABE/W mixture separation case study has been set up; this mixture derives from an upstream microbial conversion process and the successful recovery of at least biobutanol and acetone is crucial for the return on the investments. This paper then compares the possible distillation train configurations from a flexibility point of view. The analysis is focused in particular in highlighting the differences, if present, between the economic optimal solution and flexibility optimal configuration that could not be the same, causing this way a very profitable design to be much less performant under perturbated conditions. Furthermore, a detailed analysis correlating the complex thermodynamics to the operation under uncertain conditions is thoroughly discussed. The proposed design procedure allowed to highlight the differences between weak and strong flexibility constraints and resulted in a dedicated "additional costs vs. flexibility" trend useful to improve the decision making. [ABSTRACT FROM AUTHOR]

Conserving utilities in an eco-industrial park (EIP) by exploiting the synergistic heating/cooling needs of its inhabitants can have significant economic and environmental benefits. However, a successful implementation of an EIP-wide heat integration involves much more than the simple minimization of utility usage. Like any collaborative endeavour involving independent and diverse profit-making enterprises, an EIP-wide heat integration faces several real and practical challenges such as exchanger locations, stream transports over long distances, etc. In this work, we propose a mixed-integer nonlinear programming model (MINLP) for configuring an EIP-wide multi-enterprise heat exchanger network (HEN). We propose a practical and rational strategy that (1) considers all the major capital and operating costs, and utility savings, (2) selects an optimum HEN location with the highest net present value, (3) uses a third-party logistics provider for managing and operating the HEN, and (4) ensures an identical rate of return on investment for all participating enterprises. [ABSTRACT FROM AUTHOR]

This research note includes a significant theoretical extension and minor errata for an earlier publication [Mellichamp, DA. New discounted cash flow method: estimating plant profitability at the conceptual design level while compensating for business risk/uncertainty. CACE 2013; 48:251–63.]. A closed-form theoretical expression is developed that provides a direct estimate of the financial advantage to be obtained by using outside financing rather than internal (enterprise) funds to build a chemical plant. Emphasis is at the conceptual design level, where the reduction in financial profitability ( ROI BT ) required to justify further work on a project is developed in terms of the financial parameters (enterprise rate, construction rate, bond rate, etc.). An unexpected outcome is that the reduction in required profitability is independent of any specified risk cushion ( NPV % ) or long-term profitability ( NPV ); it is solely a function of background financial market rates and project internal timing assumptions vis-a-vis the enterprise’ historic rate of return. [ABSTRACT FROM AUTHOR]

This paper provides an overview of the influences that different economic objectives have on the efficiencies of those optimal process designs obtained by using single- and multi-objective optimizations. Optimizations of monetary criteria, like the profit, lead to operationally and environmentally more efficient but economically less attractive designs than optimization of non-monetary economic objectives, like the internal rate of return. The net present value produces compromise designs with intermediate efficiencies and environmental impacts. These differences are significant only if the processes’ mathematical models are sufficiently accurate for establishing appropriate trade-offs between investment and cash flow. The Pareto curves obtained by different economic objectives vary regarding the maximum environmental impacts and in the intervals of the environmental indicators. The composed criteria that combine the economic and environmental indicators into one single objective produce smaller differences between optimum designs that are closer to those designs with minimum possible environmental impacts. [ABSTRACT FROM AUTHOR]

Traditional criteria for designing processes that utilize only economic aspects can have a negative impact on the environment and society. In this study, a process for the production of dimethyl ether (DME) from methanol is evaluated by employing sustainability metrics. Operational conditions are optimized by implementing a rigorous global multi-objective optimization algorithm based on maximization of economic performance measured by the return on investment (ROI) and minimization of environmental and social impacts. The most efficient operational conditions for DME production based on sustainability criteria are obtained with a homotopy continuation method in conjunction with a process simulator. The resulting conditions indicate that the global warming metric of the DME process is decreased more than 10 times and the decrease of photochemical smog formation, mass intensity and energy intensity is 96%, 12% and 9%, respectively. The optimized, sustainable process shows an only an insignificant reduction in terms of economic aspect. [ABSTRACT FROM AUTHOR]

The paper presents a methodology for the quantitative assessment of sustainability applied to the design of chemical plants. Specifically, we focus on the economic and environmental sustainability. The methodology implemented for the economic assessment is the predictive conceptual design (PCD) that uses as indicator the cumulated dynamic economic potential over a long-term horizon. PCD accounts for both CAPEX and OPEX terms, which on their turn depend on dynamic econometric models of commodities and utilities. The environmental assessment is based on the waste reduction algorithm and on the evaluation of the potential environmental impact. The benefit of PCD consists in accounting for market uncertainty and prices/costs volatility of OPEX terms. The optimal solutions of the economic and environmental assessment lay on the Pareto line produced by the multi-objective-optimization (MOO) problem. The MOO of a cumene plant allows discussing various optimal solutions in terms of economic and environmental concerns/criteria. [ABSTRACT FROM AUTHOR]