Ethanol, also known as ethyl alcohol is an alcohol derived from the processing of agricultural products of starch and sugar crops such as cassava, sugarcane, molasses and corn, etc., derived from digestion of starch to sugar (in case of starch raw material), and fermentation to convert sugar to alcohol; and then followed by distillation and dehydration to produce alcohol at the desired purity, up to 99.5% by volume.
The molecular formula of ethanol is C2H5OH with a boiling point at around 78oC. In general, its properties are transparent liquid, colorless, flammable, and high octane fuel, which can be blended with gasoline at an appropriate amount to produce a clean and complete combustible fuel and reduce air pollution with less formation of hydrocarbon compound, carbon monoxide (CO) and carbon dioxide (CO2), which is the main cause of greenhouse effect in the atmosphere.
Production of Ethanol for Fuel
Thai Agro Energy Public Co., Ltd. (“TAE”), a subsidiary company, produces ethanol for fuel by using molasses and cassava as its main raw material. The ethanol production process consists of four main stages as follows:
- Mash Preparation: each type of raw material requires different processes as follows:
(a) Molasses: Preparation of molasses before fermentation by dilution with water for suitable concentration and added with acidic additive, causing organic substance or salt to settle from the molasses solvent.
(b) Cassavas: Prior fermentation, cassavas are cleaned to eliminate contaminants including metal and dirt. Subsequently, clean cassavas are mashed and mixed with water to make starch paste, then to be digested with enzyme, converting starch to sugar, before proceeding to fermentation.
- Fermentation : Solvent from the first stage is fed to fermentation tanks with yeast being added to convert sugar into alcohol.
- Distillation : Fermentation mash from the second stage is fed to the distillation column to separate contaminants and water producing about 96 percent
pure alcohol which is the maximum concentration that can be achieved through this normal fermentation process. The remaining 4 percent of water shall be removed by the final stage.
- Dehydration : The water removal process for producing the dehydrated alcohol from the distillation process into 99.5 percent pure alcohol. Water content is absorbed by zeolites molecular sieves in two dehydration units. The dehydrated alcohol will then be distilled and cooled down before being stored for further distribution.
Ethanol Pricing Policy
The Energy Policy Council (EPC) has approved the reference ethanol pricing by comparing the lowest prices between the ethanol price as reported to the Excise Department by ethanol producers and the ethanol price as reported to the Energy Policy and Planning Office (EPPO), Ministry of Energy, by Section 7 traders under the Fuel Trade Act B.E. 2543. The reference pricing was to be effective from December 2015 onwards.
The determination of ethanol selling price is based on cost-plus-margin basis, as well as other factors, including, ethanol raw material price, supply and demand, and domestic and international competition.
Ethanol Sales and Distribution Channels
In compliance with the regulation of the Excise Department, the ethanol product sold to oil companies must undergo denaturation process, in which ethanol of at least 99.5 percent by volume is mixed with gasoline or gasohol of 0.5 percent by volume. The result is denatured ethanol that can be sold to oil companies according to Section 7 of Fuel Trade Act B.E. 2543. The denatured ethanol purchased by the oil companies is then blended with gasoline at 10, 20 or 85 percent to become the Gasohol E10, E20 or E85. While most customers are responsible for the transportation of ethanol, in some cases the sellers are responsible for the transportation to the storages of a few other customers. Most of the sales are on credit term basis, and the customers are large oil companies with stable financial status. Therefore, there is no risk of customers not paying debt in the future.
Priorities are to given to service and quality control of the products which have earned customers’ trust, making it possible to retain majority of the market share.
Ethanol Industrial Trend
Ethanol consumption demand in year 2019 averaged at 4.20 million liters per day, which was lower than the target in accordance with the Alternative Energy Development Plan B.E. 2558-2579 that had projected the ethanol consumption in 2018 at 4.72 million liters per day. Nonetheless, ethanol demand in 2018 increased from year 2017 by about 5 percent as global oil price was still at low level with the average price at USD 65 per barrel, as well as, new registered personal cars increased in 2018 by about 60,000 cars or 9.5 percent from the previous year 2017 and the Government policy promotion and support in determining fuel price structure.
While the consumption of gasohol in the Country has continued to increase significantly from 21.94 million liters per day in 2017 to 29.97 million liters per day in 2018 or compound annual growth rate (CAGR) of 8.11 percent per year as new cars are able to use higher ethanol content in the gasohol. In addition, retail prices of gasoline are still relatively at low level and the consumption and sale of E20 and E85 gasohol, which have higher ethanol content, have continued to increase due to support from the Government sector by increasing the difference in prices of E10 and E20 gasohol and compensation from oil fund, as well as, new type of cars can use higher ethanol content gasoline.
Market Share of Ethanol Business
Domestic Ethanol Consumption
Denatured Ethanol Sales Volume of TAE
|Market Share of TAE (%)|
Remark: TAE’s market share decreased to 6.83 percent in year 2017 was due to the flood incident in the 4th quarter of 2017, resulting in the temporary halt of ethanol production and distribution for more than 2 months to resolve such problem.