ROI is used as a decision tool that allows the stakeholders to evaluate the
performance of an investment or a project and compare it to others in their portfolio.
The current study also uses this indicator to evaluate the efficiency of the algal
biofuels production. ROI can be estimated as:
ROI ¼
P T
t¼0 C 1 Ã P t
P T
t¼0 C 0 Ã P t
ð2Þ
where T represents the operation time, C 1 is the capital investment in dollars per
year, C 0 stands for annual expenditure, and P t is the discount factor in year t.
2.2 Sensitivity Analysis
The usual purpose of the sensitivity analysis is to investigate the potential changes
in inputs and the corresponding effects on the economic output. Hence, the current
work employs sensitivity analysis to identify the influence of each type of inputs on
the basis of the economics, which may provide valued evidence for cost reduction.
A typical sensitivity analysis comprises of five steps. The first step is to determine
the indicators, such as payback period, ROI, NPV, and earnings before interest and
tax. The second and third steps correspond to the estimation of the technical target
values, and the selection of uncertainties, respectively. Particularly, in the third step,
the factors that have higher probabilities of change and superior impacts on the
target values of economic analysis are chosen. This is followed by the fourth step,
where the influences of these uncertainties on the target value are quantified. Lastly,
a comprehensive analysis is conducted and some insightful suggestions are proposed in the fifth and final step, based on the outcomes from the previous four steps.
2.3 Data Sources
Detailed data are elaborated in the supplementary information.
3 Results and Discussion
3.1 Algae-Derived Ethanol
3.1.1 Cost and Revenue
The total cost to manufacture one tonne of algae-derived ethanol is USD 6410. As
depicted in Fig. 1, the highest cost is attributed to TFOC, occupying about half of
162
K. Peng et al.
performance of an investment or a project and compare it to others in their portfolio.
The current study also uses this indicator to evaluate the efficiency of the algal
biofuels production. ROI can be estimated as:
ROI ¼
P T
t¼0 C 1 Ã P t
P T
t¼0 C 0 Ã P t
ð2Þ
where T represents the operation time, C 1 is the capital investment in dollars per
year, C 0 stands for annual expenditure, and P t is the discount factor in year t.
2.2 Sensitivity Analysis
The usual purpose of the sensitivity analysis is to investigate the potential changes
in inputs and the corresponding effects on the economic output. Hence, the current
work employs sensitivity analysis to identify the influence of each type of inputs on
the basis of the economics, which may provide valued evidence for cost reduction.
A typical sensitivity analysis comprises of five steps. The first step is to determine
the indicators, such as payback period, ROI, NPV, and earnings before interest and
tax. The second and third steps correspond to the estimation of the technical target
values, and the selection of uncertainties, respectively. Particularly, in the third step,
the factors that have higher probabilities of change and superior impacts on the
target values of economic analysis are chosen. This is followed by the fourth step,
where the influences of these uncertainties on the target value are quantified. Lastly,
a comprehensive analysis is conducted and some insightful suggestions are proposed in the fifth and final step, based on the outcomes from the previous four steps.
2.3 Data Sources
Detailed data are elaborated in the supplementary information.
3 Results and Discussion
3.1 Algae-Derived Ethanol
3.1.1 Cost and Revenue
The total cost to manufacture one tonne of algae-derived ethanol is USD 6410. As
depicted in Fig. 1, the highest cost is attributed to TFOC, occupying about half of
162
K. Peng et al.