How to Start a Profitable Bio-Diesel Production Business

Do you want to start a bio-diesel production unit on a small scale? If yes, you have landed at the right place.

There is a continuous search for renewable sources of fuels due to the rate of depletion of fossils. Basically, the term biofuel is used to define fuels that are obtainable from plants or animals. Being a renewable source, it is gaining attention all over the world today.

Jatropha Curcus is a large 3 to 4 Meter high shrub, native to tropical America, occurring throughout India mostly. Its kernel yields 46-58 percent by weight of oil, which is 30-40 percent of seed weight. The oil is generally called Circus oil. On Etherification, the oil becomes Bio-Diesel.

However, you can blend it with high-speed Diesel from 20 to 80 percent by volume. Transesterified Jatropha Oil blending with Diesel is now a policy adopted by the Government of India. The production process is not complex and several universities and institutes are there that have developed the transesterification process of biodiesel production.

Is Bio Diesel Business Profitable?

There is a growing demand for biodiesel products globally. According to a report by Global Market Insights, the global biodiesel market is projected to reach a value of over $50 billion by 2026.

Though the biodiesel production business is profitable,  it can vary depending on various factors. It includes market demand, production capacity, operational efficiency, raw material costs, and government policies. Furthermore, the demand for biodiesel is influenced by various other external factors too. It includes environmental regulations, fuel prices, and government policies promoting renewable energy.

8 Steps to Start Bio-diesel Production Business

1. Conduct Market Research

The first step towards starting a bio-diesel production business is to study the demand and market potential for biodiesel in India. Do detailed market research and gather extensive information so that you can explore the gaps that exist.

You need to analyze the competition and identify potential customers. These include a wide range of industries, transportation companies, and agricultural sectors.

2. Develop a Business Plan

It is essential to create a business plan to develop a sustainable bio-diesel production business. You need to clearly document your business goals, target market, and production capacity in your business plan document. Also, estimate the startup costs, including land, equipment, raw materials, permits, and licenses, pricing strategy, and financial projections.

3. Secure Funding

Before deciding on how much fund is required, it is advised to assess the capital required for land, equipment, raw materials, and operational expenses. You can pitch for funding to banks, government subsidies, venture capital, or private investors. Here, your business plan document will be mandatory for asking for funds from potential investors or financial institutions.

In addition, apply for a credit card to meet small-time expenses.

4. License & Permissions For Bio-diesel Production

In starting bio-diesel production, you must register your firm first and must obtain a Trade License from the local Municipal Authority. GST registration is a must to start a production business at present in India. Apart from these, you need to apply for the following permissions:

• Factory Licenses: For setting up any Factory, one needs to take approval from the District factory Inspectorate.
• Explosive License: For storage of Methanol, one has to obtain an Explosive License from the Directorate of Explosive.
• Pollution Control Board Clearance: You need to have clearance from the Pollution Control Board.

5. Bio-Diesel Production Unit Setup 

Find a suitable location with access to raw materials, utilities, and transportation. Construct or lease a production facility based on your production capacity and future expansion plans. Install necessary equipment such as reactors, pumps, mixers, filters, and storage tanks.

You can establish a biodiesel production unit in two ways. One is producing biodiesel from jatropha oil. Another one is producing jatropha oil and then biodiesel from that.

For the first option, the main raw material is jatropha oil and for the second one, the main raw material is jatropha seed. Here we will discuss the process and equipment for biodiesel production from jatropha oil.

Machinery and apparatus used in the production of the biodiesel are as follows: thermometer, retort stand, pipette, measuring cylinder, separating funnel, magnetic stirrer, oven, water bath, hydrometer, conical flask, digital weighing balance, stopwatch, hot plate, distilled water, methanol, and jatropha oil.

6. Bio-Diesel Manufacturing Process

Basically, you can carry out the biodiesel production process using oil in methanol in a shaking incubator at 250 r.p.m and 45° C for 4 hours.

•  First, dissolve the lye into the methanol. Shake or swirl until all the lye has dissolved.
• This may take 10 minutes. It is normal that the temperature rises. This mixture is called sodium methoxide. Now make sure the J Oil is in a vessel large enough (at least 150% of its volume), preferably with a valve at the bottom, and heat it to about 60 °C, then stop heating. Then add the methoxide mixture. Additionally, make sure that you mix it well for at least 10 minutes. Leave the vessel and let the different constituents separate by sedimentation
• The glycerin will settle out at the bottom. After 8 to 24 hours the sedimentation is complete and the glycerine can be drained off.
• What remains is raw biodiesel. If the reaction went well and the biodiesel is clear, you can use it straight, although its quality may be inferior because of impurities. Water washing will remove most of these impurities.

Methods commonly used for bio-diesel production are batch and continuous processes. In general, smaller-capacity plants and variable feedstock quality warrant the use of batch systems. Continuous systems generally lead the operation on a 24×7 basis, requiring larger capacities to justify larger staffing needs and also requiring uniform feedstock quality.

This standard prescribes the requirements and methods of sampling and tests for bio-diesel suitable for fuel in diesel engines. Bio-diesel is a fatty acid alkyl ( methyl or ethyl ) ester for use as a blend component ( up to 20 percent ) with diesel fuel meeting the requirements of IS 1460 ‘Automotive diesel fuel — Specification’.

7. Source Raw Materials

You must identify and establish partnerships with suppliers of raw materials. It includes vegetable oils, animal fats, or used cooking oil. Also, ensure a reliable and consistent supply chain of raw materials.

8. Marketing and Distribution

Create a marketing strategy to target potential customers. You need to establish relationships with fuel distributors, transportation companies, and industries requiring biodiesel. Explore partnerships with government agencies promoting renewable energy or environmental sustainability.

FAQs (Frequently Asked Questions)

What is the Cost of Setting up a Bio Diesel production unit in India?

The cost of setting up a biodiesel production business can vary based on several factors. It includes production capacity, location, infrastructure, and equipment. The cost of starting a Bi0 Diesel production unit in India can range from several lacs to crores of rupees.

The major cost components include the following:

• Land acquisition or lease costs
• Construction or facility setup
• Machinery and equipment
• Raw materials
• Permits and licenses
• Utility costs
• Salaries and wages
• operational expenses

What are the raw materials required for biodiesel production?

The common raw materials used for biodiesel production include vegetable oils (such as soybean, sunflower, or palm oil), animal fats, and used cooking oil.

Is biodiesel production environmentally friendly?

Biodiesel is considered a cleaner and more environmentally friendly alternative to fossil fuels. It reduces greenhouse gas emissions and dependence on non-renewable resources.

What are the government subsidies or incentives available for biodiesel production?

The Government of India offers various subsidies, incentives, and tax benefits for renewable energy projects, including biodiesel production. Research and inquire about state and central government schemes to avail of these benefits.

What quality standards should biodiesel meet?

Biodiesel should meet the relevant quality standards specified by the Bureau of Indian Standards (BIS) or the Indian Renewable Energy Development Agency (IREDA). Ensure compliance with these standards to maintain product quality and market acceptance.

Are there any by-products or co-products in biodiesel production?

Glycerin is a common by-product of biodiesel production, which can be further processed for various applications in industries such as pharmaceuticals, cosmetics, and food processing.