BioDiesel Conversion – Starting a Biodiesel Business

BioDiesel conversion can be a very profitable business for young entrepreneurs looking to start a new business or for seasoned entrepreneurs looking to add a new resource to their empire. In the U.S., there are over 30,000,000 gallons of waste vegetable oil that restaurants and fast food joints dispose of annually. Most pay to have their oil disposed of!

A few entrepreneurs that I know have made a lot of profit simply by charging the restaurants to collect their waste oil. They in turn, convert the oil to biodiesel after they charge the business to get the oil. Once they successfully convert the oil, they are able to receive both state and federal tax incentives for producing alternate fuel sources. The federal government pays up to $ 1.50 per gallon and the state incentives vary from one state to the next.

After this is done, they sell their biodiesel to both individuals and businesses generating another $ 1-$ 1.85 per gallon profit. They are producing 2.3 million gallons annually so after all of the overhead involved, they are successfully making $ 4-5 million in profit every year!

How does one get started in the business? The first step is to find a good commercial biodiesel processor. There are many of these on the market, however, you would want one that includes warranties and instructions to make your first batch of biodiesel.

Business startup costs and facts:

You can get a great commercial biodiesel processor that has an annual capacity of 2.3 million gallons for less than $ 50,000!
If you intend to collect your own oil, you will need a good truck to haul the oil in. You can get one of these for very little as well if you go to an auction or even check ebay.
Your raw materials needed for the conversion can be purchased cheap as well, however, you will need to buy the chemicals in bulk. This is also rather easy, simply contact the manufacturer and if they won’t sell the products to you direct, they will refer you to a distributor who will. You will need both methanol and NaOH or KOH.
You will need a building or structure of sorts to setup the equipment in. Keep in mind that the methanol and NaOH mixture (methoxide) releases a very harmful vapor. It is best to have the area well ventilated. A lot of entrepreneurs set their equipment up in a container trailer to start with. This provides a stable shelter without costing a lot of money and gives the owner a lot of flexibility for moving the business in the future. Is this method recommended? For just a little more, you can purchase a metal building that provides more room and durability for your business. It also provides you the extra room if you decide to expand.
What about the tax incentives that biofuel producers get? Though it is commonly known that the government gives large tax incentives to alternative fuel manufacturers, the process to get approved can be strenuous. You must file paperwork with EPA to get approved as a clean producer. It isn’t hard to be approved by the EPA if you dry wash the biodiesel. This essentially means that you have no waste water! Whenever you dry wash a batch of biodiesel, you are using a chemical (purolite) to wash the impurities out. This also allows for production of ASTM standard biodiesel.
It is recommended to purchase additional storage tanks. You can purchase a good tank with a 15,000 gallon capacity for your biodiesel for about $ 15,000. It is probably a good idea to get a storage tank for your fuel.
Who can you sell the biodiesel to? Check with local gas stations to start with. I recently read about this gentleman who started his business in September 2008. He has already exceeded $ 1,000,000 in sales in less than 4 months, not including the tax incentives! He talked with a few local trucking businesses and was able to offer the fuel to the trucking companies that save the truckers thousands of dollars weekly. The trucking companies were able to offer more competitive rates to their customers which in turn got them more business. The more business they picked up, the more fuel my client was able to sell. He actually just purchased his second commercial processing kit to keep up with his customer’s needs!

BioDiesel is the way of the future. It is a natural resource, burns much cleaner than petroleum based fuel, can be produced for much less, and breaks our dependency of the very pricey crude oil.