07.0 Case studies in Solid Waste Management
7 – Case studies in Solid Waste Management
Introduction to Climate Change
Wim Maaskant
BGP Engineers – The Netherlands
www.bgpengineers.com
7 – Case studies in Solid Waste Management
Financial assessment of Emission
Reduction investments
Wim Maaskant
BGP Engineers – The Netherlands
www.bgpengineers.com
7 – Case studies in Solid Waste Management
Carbon Credits enhance the finances of your project :
Carbon credits:
• It is new since approx.7 years when some European Governments
have started to buy with purpose of meeting their Kyoto targets
• The start of the European Emissions Trading Scheme in 2005 has
accelerated the carbon market
• Clean Development Mechanism (CDM) combines financial support
with sustainable development and technology transfer
• Reducing Emissions from Deforestation and Degradation (REDD)
is new mechanism, but still under development, with particular
interest for countries with tropical forests (Indonesia, Cameroun,
Brazil etc.) and with possibilities for generating income
Financing instruments
7 – Case studies in Solid Waste Management
Carbon Credits and credit cash flow, some key issues :
• carbon credits:
•
– enhancing return on equity
– reducing debt leverage
comfort for lenders (investors, banks)
– supporting debt service with carbon cash flows
– securitising with ERPA
CO2 reductions
equity
debt
heat
electricity
Financing instruments
7 – Case studies in Solid Waste Management
Financial assessment: the basics (1)
The purpose of financial assessment is to obtain
1)insight and understanding about your budget;
2)Information about the profitability of your investment;
3)Insight into the financial risks of the project
Key parameter is the Internal Rate of Return (IRR).
We need to understand the time-value of money = a Rupia today is not the
same as a Rupia after 10 years
Financing instruments
7 – Case studies in Solid Waste Management
Financial assessment: the basics (2)
Time-value of money
One barrel of oil = 70 Euo = 110 Dollar = 1 million
Rupia
year
Invest
1
2
3
4
5
6
7
8
9
10
1.000.0
00
If real price remains the same: how much money do you need now to buy one barrel
after 10 years?
Interest
15%
385.54
1.000.
3 424.098 466.507 513.158 564.474 620.921 683.013 751.315 826.446 909.091
000
If real price increases by X% per year: how much money do need now to buy one
barrel after 10 years?
Money:
1.000. 1.150.0 1.322.5 1.520.8 1.749.0 2.011.3 2.313.0 2.660.0 3.059.0 3.517.8 4.045.
000
00
00
75
06
57
61
20
23
76
558
If real price increases by X% per year: how much money do need now to buy one
barrel after 10 years?
Money:
15%
5%
1.000. 1.050.0 1.102.5 1.157.6 1.215.5 1.276.2 1.340.0 1.407.1 1.477.4 1.551.3 1.628.
000
00
00
25
06
82
96
00
55
28
895
Financing instruments
If real price increases by X% and interst rate is Y% per year: how much money do need now to buy one barrel
7 – Case studies in Solid Waste Management
Case studies
Case study 1: Renewable energy in agricultural company (Cyprus)
Case study 2: Energy efficiency in Textile industry (Macedonia)
Case study 3: Landfill Gas Capture and Energy Generation (Indonesia)
Financing instruments
7 – Case studies in Solid Waste Management
Case 1: Renewable energy from waste
Basic information:
The company is a animal farm
Its main production activities are
(i)Breeding
(ii)Waste management
(iii)Energy production
7 – Case studies in Solid Waste Management
Case 1: Renewable energy from waste
Biogas and electricity:
biogas
(i)Biogas is produced in digester
(ii)Biogas is used in gas engine /
Diesel (10%)
CHP-installation
(iii)CHP-installation produces
electricity and heat
(iv)Heat is used for climate control
CHP
in breeding farm
(v)Electricity is supplied to public
network
Hot water
digester
electricity
Public electricity network
farm
7 – Case studies in Solid Waste Management
Case 1 – waste-to-energy: input data
Biogas / Energy Yield from Input
Substrate % Org. Input t/yr
Pig Manure
6
51,000
Dairy manure 6
52,560
Total
Total per day
103,650
284
Biogas Yield m3/t
22
23
Total Biogas Yield per Year
1,122,000 m3
1,208,880 m3
2,330,880 m3
6,386 m3
Notes:
1 m3 of biogas can produce 6.0 KWh of Total Energy (Electrical and Thermal)
1 m3 of biogas can produce 2.0 KWh of electricity
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – basic information
Combined Heat & Power principle:
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – basics of financial assessment
Financial assessment:
1)Must comprise all financial parameters relevant to the project
2)Cost information on: equipment and civil structures, utilities (gas, water,
electricity etc.)
3)Must include financing parameters (“how will you pay for the investments?”)
4)Objective is to assess the revenues and the financial risks of the investment
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – basics of financial assessment
Financial assessment:
We make EXCEL sheet for financial analysis (EXERCISE)
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – approach of financial assessment
Approach:
1)Collect prices of equipment, works and services relevant to the project; validity
of prices; payment terms
2)Collect price information on input flows and output flows; make price prognosis
3)Set-up EXCEL sheet
4)Make analysis of risks and price effects
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – EXCEL - overview
Organic Waste Digester
Investment Appraisal for the installation of anaerobic digestion
Variables
Exchange rate
Discount rate
Select applicable
rate
7,00%
Period (years)
1,60 $/Euro
CER-income
10
Euro/CER
10
Investment amount
€ 1.950.000,00
Investment second phase
€
CHP Units and Anaerobic Reactor and Electrical installation and groundwork,engineering
750.000,00
Year
0
1
2
3
4
5
6
7
8
9
10
Outflows
Investment Capital (initial)
(2.700.000)
-
-
-
-
Capital Cost
-
(189.000)
(189.000)
(189.000)
(189.000)
Replacement cost CHP
-
(47.074)
(79.382)
(94.613)
(94.613)
Maintenance (1)
-
(58.968)
(140.873)
(163.811)
Diesel Costs (2)(3)
-
(36.303)
(86.726)
Salaries
-
(34.200)
General
-
(3.420)
(2.700.000)
Total cash outflow
-
-
(189.000)
(189.000)
(189.000)
(189.000)
(189.000)
(94.613)
(94.613)
(94.613)
(94.613)
(94.613)
(94.613)
(163.811)
(163.811)
(163.811)
(163.811)
(163.811)
(163.811)
(163.811)
(100.847)
(100.847)
(100.847)
(100.847)
(100.847)
(100.847)
(100.847)
(100.847)
(35.910)
(37.706)
(39.591)
(41.570)
(43.649)
(45.831)
(48.123)
(50.529)
(53.055)
(3.591)
(3.771)
(3.959)
(4.157)
(4.365)
(4.583)
(4.812)
(5.053)
(5.306)
(368.965)
(535.483)
(589.747)
(591.821)
(593.998)
(596.285)
(598.685)
(601.206)
(603.853)
(606.632)
775.370
(189.000)
Inflows
Electricity Sales (4)(5)(6)
-
279.116
666.801
775.370
775.370
775.370
775.370
775.370
775.370
775.370
Income from Heating
-
43.000
45.150
47.408
49.778
52.267
54.880
57.624
60.505
63.531
66.707
150.000
150.000
150.000
150.000
150.000
150.000
150.000
150.000
150.000
150.000
CARBON CREDITS
Tax Benefit 7Years Depr
-
27.000
27.000
27.000
27.000
27.000
27.000
27.000
27.000
27.000
27.000
Tax Benefit on interest payment
Total cash inflow
-
18.900
518.016
18.900
907.851
18.900
1.018.678
18.900
1.021.048
18.900
1.023.537
18.900
1.026.151
18.900
1.028.895
18.900
1.031.776
18.900
1.034.801
18.900
1.037.978
Net Cash Flow
(2.700.000)
Discount factor
149.051
1,00000
Discounted Value
7.014
(NPV=Total discounted values)
IRR
7%
(2.700.000)
372.368
0,93458
139.300
428.931
0,87344
325.240
429.227
0,81630
350.135
429.539
0,76290
327.456
429.866
0,71299
306.255
430.209
0,66634
286.438
430.570
0,62275
267.913
430.948
0,58201
250.595
431.346
0,54393
234.407
0,50835
219.274
7 – Case studies in Solid Waste Management
Case 1 – EXCEL – input data
1) Biogas production data
2) Performance data from CHP-installation (IN: gas, OUT: heat, electricity)
3) Life time of project
4) Cost of money (interest rate, non-islamic banking)
5) Currency (import or domestic equipment)
6) Prices of utilities (water, electricity, carbon credits etc.)
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – exercise
Analysis of optimization of investment (GROUP WORK + PRESENTATION):
1)Which are the key factors to increase the profitability of the investment project?
-on input side
-on operational side
-on output side
2) Which (additional) risks can you identify if:
-the project life time is 6 years instead of 10 years?
-the project life time is 15 years instead of 10 years?
(please look for internal risks (= inside of project) and external risks (= cannot be
influenced by project)
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: Energy Efficiency in industry
Basic information:
Project Title: Energy Conservation Program at Tetex Textile Mill in Tetovo
Teteks (est. 1951) is a large, vertically integrated, wool textile manufacturer in
Tetovo, Macedonia. It employs 3,200 employees
Its main production processes are 1,030 tons of yarn, 800,000 meters of fabric,
700,000
pieces for ready-made garments and 330,000 pieces for knitted apparel.
The plant has two steam boilers and generates large quantities of steam for
both process and heating purposes (approximately 83,000 tons/year). The
Company paid approximately $1.37 million for heat and approximately
$390,000 for electricity (approximately 9,300 MWh)
7 – Case studies in Solid Waste Management
Case 2: continued…
Energy case:
Purpose: to reduce costs
Main object: two operating boilers that generate steam
EE option: the coal-fired boiler has the capacity to generate 40 tons of steam
per hour (25-bar). The heavy oil-fired boiler has the capacity to generate 10-15
tons of steam per hour (7-bar). According to a past survey, however, both
boilers were operating at a much lower capacity and generated only 18 tons of
steam per hour (7-bar) in total.
Heat consumption was 2.5 times higher in the winter than during the rest
of the year.
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
Approach:
1) Feasibility study with assessment of options
2) “Quick fix” measures (short pay-back period)
3) More advanced measures (medium or long pay-back period)
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
Collect real data:
•Boiler combustion measurements were taken using a combustion analyzer.
•A thorough survey of the arrangement, sizing and insulation of the steam
distribution system was conducted to identify potential improvements.
•A steam trap survey was conducted to identify and quantify failures and leaks
and explore how condensation recovery and heat transfer efficiency could be
optimized.
•Hot water systems were inspected to evaluate heat recovery opportunities and
identify physical requirements for making improvements.
•Plant equipment was inspected to assess energy efficiency. Opportunities for
consolidation to improve efficiency were identified and discussed with
production managers.
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
• The condition and thickness of building insulation and weatherproofing were
•
•
inspected. A general lack of building insulation was noted. Numerous
openings in doors and windows were also observed.
Steam, air and water leak detection and maintenance practices were
assessed.
The tracking and management system by which Teteks monitors and
controls energy use was assessed.
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
Key information from study: Teteks consumes 83,143 tons of steam per
year and 9,271 MWh of electricity in 2001. Steam represented approximately
60% of the total energy consumption per year while electricity consumption
amounted to 35%. Compressed air made up the remaining five percent.
(-> set priorities!)
Based on the results, it were recommended several low and medium cost
measures, as well as a few high cost measures. These measures required a
total investment outlay of $1,587,000 with a simple payback period of
approximately 24 months generating an annual cost savings of $772,683.
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
Results: see paper
•Awareness increased
•All management levels involved
•Reduction of operational room
•Management strategy is required
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
CO2-reduction:
In addition to these cost savings, environmental benefits were also generated.
Implementation of the improvement measures reduce carbon dioxide emissions
by 20,000 tons per year
•Kyoto-period (2008-2012) allows trading of Carbon Credits
•If all measures are implemented in 2008, 4 years of Carbon Credits can be
produced, approx. 80,000 credits
•Price of Carbon Credits is approx.12-15 euros
Therefore, the value of the emissions reduction equals to approx. 1 million euro
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: Landfill gas capture and energy generation
Basic information:
The landfill is an existing one with some parts not in operation and some parts
where waste is disposed
•The landfill was started 8 years ago
•The landfill needs re-structuring (by shape and by organisation)
•Waste amounts are expected to increase during 2008-2012
•The upgrading plan foresees the construction of gas wells, flare, processing
unit and generation of electricity
Case study will define, calculate and assess the costs and benefits of the
envisaged investment and the operations
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the current picture
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the current picture, continued…
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the current picture, continued…
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the future picture
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the future picture, continued…
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the future picture, continued…
7 – Case studies in Solid Waste Management
Case 3: the future picture, continued…
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the future picture, continued…
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: Methane (1)
Methane Sources are:
• Oil & gas industry (45%)
• Waste sector (25%)
• Agriculture (20%)
• Natural sources (10%)
Molecular structure
Chemical formula
7 – Case studies in Solid Waste Management
Case 3: Methane (2)
Methane characteristics:
• Odourless gas
• Invisible gas
• Very explosive (@ 5-15 vol% with air)
• High energy content (38 MJ/Nm3)
• Non toxic
• Pure, no contaminants
• Global warming potential = 21
•
•
Nm3 = one cubic meter at standard conditions of 0 oC (273 oK)and 1 atmosphere pressure (105 Pa)
Energy content is defined as higher or lower thermal value
Question: why is possible that we are able to smell landfill gas?
7 – Case studies in Solid Waste Management
Case 3: Methane (3)
Methane is very important reason for Global Warming
7 – Case studies in Solid Waste Management
Case 3: Global Warming Potential
Global warming potential (GWP) is a measure of how much a
given mass of greenhouse gas is estimated to contribute to
global warming. It is a relative scale which compares the gas
in question to that of the same mass of carbon dioxide (whose
GWP is by definition 1).
A GWP is calculated over a specific time interval and the value of
this must be stated whenever a GWP is quoted or else the
value is meaningless.
Carbon dioxide has a GWP of exactly 1 (since it is the baseline
unit to which all other greenhouse gases are compared).
Methane has a GWP of 21
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: Landfill gas
Landfill gas characteristics:
• Smelly gas
• Invisible gas
• Very explosive (@ 10-30 vol% with air)
• High energy content (18-20 MJ/Nm3)
• Main components are CH4, CO2, N2, H2S and organic compounds
• Toxic
• It contains contaminants
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: Landfill gas capture and energy generation, continued…
Basic calculation:
The landfill is an existing one with some parts not in operation and some parts
where waste is disposed
•The landfill was started 8 years ago
•The landfill needs re-structuring (by shape and by organisation)
•Waste amounts are expected to increase during 2008-2012
•The upgrading plan foresees the construction of gas wells, flare, processing
unit and generation of electricity
Case study will define, calculate and assess the costs and benefits of the
envisaged investment and the operations
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: Landfill gas capture and energy generation
Basic information, more facts:
•Release of methane (landfill gas) has been observed
•There is insufficient structure in landfill activities
•Approx. 50 people live near or on top of the landfill
Define the immediate problems which you have and present approach to
preparing landfill gas extraction project (SHORT GROUP WORK)
Make 3-4 bullet point for each question
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: The value of landfill gas
Basic information, key data:
•Weight of methane: 0.72 kg/Nm3
•Global warming potential = 21
•Landfill gas: high energy content (18-20 MJ/Nm3) – 50% of landfill gas = CH4
•Calculated production of landfill gas = 50 Nm3 per hour
•Landfill gas equipment will be operational during 8,000 hours per year
•Landfill gas is utilized by gas engine for producing electricity (efficiency = 35%
from gas to electricity)
•Energy conversion: 1 MJ = 0.27 kWh
•Value of Carbon Credit = 9 Euro
Exercise:
1.How much of global warming potential is achieved per year? (express in tonnes)
2.How much electricty is produced per year? (express in MWh)
3.How much is value of emissions reduction per year? (express in Euro)
Financing instruments
7 – Case studies in Solid Waste Management
Exercise: calculate value of landfill gas
Biogas production is calculated at 50 Nm3/h
Number of hours = 8,600 hours per year (simplified)
=> 50 x 8,600 = 430,000 Nm3 biogas per year
Methane content of biogas = 50% of volume
=> 0.50 x 430,000 = 215,000 Nm3 CH4/year
Weight of methane gas = 0.72 kg/Nm3
=> 0.72 x 215,000 = 154,000 kg CH4/year = 154 ton CH4/year
GWP of Methane = 21 ton CO2-equivalent per ton CH4
=> 21 x 154 = 3250.8 ton CO2-equivalent
Number of operational hours = 8,000 per year (600 hours for maintenance)
Emission Reduction = 8000 hours/8600 hours x 3250.8 = 3,024 ton CO2equivalent
Remains: 3250.8 -/- 3024 = 226.8 ton CO2-equivalent
7 – Case studies in Solid Waste Management
Exercise: calculate value of landfill gas
Electricity:
Biogas production is calculated at 50 Nm3/h
Number of operational hours = 8,000 per year
=> 50 x 8,000 = 400,000 Nm3/year => the gas goes to gas engine
Energy content of landfill gas = 20 MJ/Nm3
=> Energy production: 20 x 400,000 = 8,000,000 MJ/year
Efficiency of gas engine = 35%
=> 8,000,000 x 0.35= 2,800,000 MJ/year electricity production
Conversion factor = 0.27 kWh/MJ
=> 0.27 x 2,800,000 = 756,000 kWh/year = 756 MWh/year
Price of kWh = 500 Rp/kWh => 378,000,000 Rp/year = 35,000 Euro/year
CER = 3024/year x 9 euro = 27,216 Euro/year
Introduction to Climate Change
Wim Maaskant
BGP Engineers – The Netherlands
www.bgpengineers.com
7 – Case studies in Solid Waste Management
Financial assessment of Emission
Reduction investments
Wim Maaskant
BGP Engineers – The Netherlands
www.bgpengineers.com
7 – Case studies in Solid Waste Management
Carbon Credits enhance the finances of your project :
Carbon credits:
• It is new since approx.7 years when some European Governments
have started to buy with purpose of meeting their Kyoto targets
• The start of the European Emissions Trading Scheme in 2005 has
accelerated the carbon market
• Clean Development Mechanism (CDM) combines financial support
with sustainable development and technology transfer
• Reducing Emissions from Deforestation and Degradation (REDD)
is new mechanism, but still under development, with particular
interest for countries with tropical forests (Indonesia, Cameroun,
Brazil etc.) and with possibilities for generating income
Financing instruments
7 – Case studies in Solid Waste Management
Carbon Credits and credit cash flow, some key issues :
• carbon credits:
•
– enhancing return on equity
– reducing debt leverage
comfort for lenders (investors, banks)
– supporting debt service with carbon cash flows
– securitising with ERPA
CO2 reductions
equity
debt
heat
electricity
Financing instruments
7 – Case studies in Solid Waste Management
Financial assessment: the basics (1)
The purpose of financial assessment is to obtain
1)insight and understanding about your budget;
2)Information about the profitability of your investment;
3)Insight into the financial risks of the project
Key parameter is the Internal Rate of Return (IRR).
We need to understand the time-value of money = a Rupia today is not the
same as a Rupia after 10 years
Financing instruments
7 – Case studies in Solid Waste Management
Financial assessment: the basics (2)
Time-value of money
One barrel of oil = 70 Euo = 110 Dollar = 1 million
Rupia
year
Invest
1
2
3
4
5
6
7
8
9
10
1.000.0
00
If real price remains the same: how much money do you need now to buy one barrel
after 10 years?
Interest
15%
385.54
1.000.
3 424.098 466.507 513.158 564.474 620.921 683.013 751.315 826.446 909.091
000
If real price increases by X% per year: how much money do need now to buy one
barrel after 10 years?
Money:
1.000. 1.150.0 1.322.5 1.520.8 1.749.0 2.011.3 2.313.0 2.660.0 3.059.0 3.517.8 4.045.
000
00
00
75
06
57
61
20
23
76
558
If real price increases by X% per year: how much money do need now to buy one
barrel after 10 years?
Money:
15%
5%
1.000. 1.050.0 1.102.5 1.157.6 1.215.5 1.276.2 1.340.0 1.407.1 1.477.4 1.551.3 1.628.
000
00
00
25
06
82
96
00
55
28
895
Financing instruments
If real price increases by X% and interst rate is Y% per year: how much money do need now to buy one barrel
7 – Case studies in Solid Waste Management
Case studies
Case study 1: Renewable energy in agricultural company (Cyprus)
Case study 2: Energy efficiency in Textile industry (Macedonia)
Case study 3: Landfill Gas Capture and Energy Generation (Indonesia)
Financing instruments
7 – Case studies in Solid Waste Management
Case 1: Renewable energy from waste
Basic information:
The company is a animal farm
Its main production activities are
(i)Breeding
(ii)Waste management
(iii)Energy production
7 – Case studies in Solid Waste Management
Case 1: Renewable energy from waste
Biogas and electricity:
biogas
(i)Biogas is produced in digester
(ii)Biogas is used in gas engine /
Diesel (10%)
CHP-installation
(iii)CHP-installation produces
electricity and heat
(iv)Heat is used for climate control
CHP
in breeding farm
(v)Electricity is supplied to public
network
Hot water
digester
electricity
Public electricity network
farm
7 – Case studies in Solid Waste Management
Case 1 – waste-to-energy: input data
Biogas / Energy Yield from Input
Substrate % Org. Input t/yr
Pig Manure
6
51,000
Dairy manure 6
52,560
Total
Total per day
103,650
284
Biogas Yield m3/t
22
23
Total Biogas Yield per Year
1,122,000 m3
1,208,880 m3
2,330,880 m3
6,386 m3
Notes:
1 m3 of biogas can produce 6.0 KWh of Total Energy (Electrical and Thermal)
1 m3 of biogas can produce 2.0 KWh of electricity
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – basic information
Combined Heat & Power principle:
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – basics of financial assessment
Financial assessment:
1)Must comprise all financial parameters relevant to the project
2)Cost information on: equipment and civil structures, utilities (gas, water,
electricity etc.)
3)Must include financing parameters (“how will you pay for the investments?”)
4)Objective is to assess the revenues and the financial risks of the investment
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – basics of financial assessment
Financial assessment:
We make EXCEL sheet for financial analysis (EXERCISE)
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – approach of financial assessment
Approach:
1)Collect prices of equipment, works and services relevant to the project; validity
of prices; payment terms
2)Collect price information on input flows and output flows; make price prognosis
3)Set-up EXCEL sheet
4)Make analysis of risks and price effects
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – EXCEL - overview
Organic Waste Digester
Investment Appraisal for the installation of anaerobic digestion
Variables
Exchange rate
Discount rate
Select applicable
rate
7,00%
Period (years)
1,60 $/Euro
CER-income
10
Euro/CER
10
Investment amount
€ 1.950.000,00
Investment second phase
€
CHP Units and Anaerobic Reactor and Electrical installation and groundwork,engineering
750.000,00
Year
0
1
2
3
4
5
6
7
8
9
10
Outflows
Investment Capital (initial)
(2.700.000)
-
-
-
-
Capital Cost
-
(189.000)
(189.000)
(189.000)
(189.000)
Replacement cost CHP
-
(47.074)
(79.382)
(94.613)
(94.613)
Maintenance (1)
-
(58.968)
(140.873)
(163.811)
Diesel Costs (2)(3)
-
(36.303)
(86.726)
Salaries
-
(34.200)
General
-
(3.420)
(2.700.000)
Total cash outflow
-
-
(189.000)
(189.000)
(189.000)
(189.000)
(189.000)
(94.613)
(94.613)
(94.613)
(94.613)
(94.613)
(94.613)
(163.811)
(163.811)
(163.811)
(163.811)
(163.811)
(163.811)
(163.811)
(100.847)
(100.847)
(100.847)
(100.847)
(100.847)
(100.847)
(100.847)
(100.847)
(35.910)
(37.706)
(39.591)
(41.570)
(43.649)
(45.831)
(48.123)
(50.529)
(53.055)
(3.591)
(3.771)
(3.959)
(4.157)
(4.365)
(4.583)
(4.812)
(5.053)
(5.306)
(368.965)
(535.483)
(589.747)
(591.821)
(593.998)
(596.285)
(598.685)
(601.206)
(603.853)
(606.632)
775.370
(189.000)
Inflows
Electricity Sales (4)(5)(6)
-
279.116
666.801
775.370
775.370
775.370
775.370
775.370
775.370
775.370
Income from Heating
-
43.000
45.150
47.408
49.778
52.267
54.880
57.624
60.505
63.531
66.707
150.000
150.000
150.000
150.000
150.000
150.000
150.000
150.000
150.000
150.000
CARBON CREDITS
Tax Benefit 7Years Depr
-
27.000
27.000
27.000
27.000
27.000
27.000
27.000
27.000
27.000
27.000
Tax Benefit on interest payment
Total cash inflow
-
18.900
518.016
18.900
907.851
18.900
1.018.678
18.900
1.021.048
18.900
1.023.537
18.900
1.026.151
18.900
1.028.895
18.900
1.031.776
18.900
1.034.801
18.900
1.037.978
Net Cash Flow
(2.700.000)
Discount factor
149.051
1,00000
Discounted Value
7.014
(NPV=Total discounted values)
IRR
7%
(2.700.000)
372.368
0,93458
139.300
428.931
0,87344
325.240
429.227
0,81630
350.135
429.539
0,76290
327.456
429.866
0,71299
306.255
430.209
0,66634
286.438
430.570
0,62275
267.913
430.948
0,58201
250.595
431.346
0,54393
234.407
0,50835
219.274
7 – Case studies in Solid Waste Management
Case 1 – EXCEL – input data
1) Biogas production data
2) Performance data from CHP-installation (IN: gas, OUT: heat, electricity)
3) Life time of project
4) Cost of money (interest rate, non-islamic banking)
5) Currency (import or domestic equipment)
6) Prices of utilities (water, electricity, carbon credits etc.)
Financing instruments
7 – Case studies in Solid Waste Management
Case 1 – exercise
Analysis of optimization of investment (GROUP WORK + PRESENTATION):
1)Which are the key factors to increase the profitability of the investment project?
-on input side
-on operational side
-on output side
2) Which (additional) risks can you identify if:
-the project life time is 6 years instead of 10 years?
-the project life time is 15 years instead of 10 years?
(please look for internal risks (= inside of project) and external risks (= cannot be
influenced by project)
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: Energy Efficiency in industry
Basic information:
Project Title: Energy Conservation Program at Tetex Textile Mill in Tetovo
Teteks (est. 1951) is a large, vertically integrated, wool textile manufacturer in
Tetovo, Macedonia. It employs 3,200 employees
Its main production processes are 1,030 tons of yarn, 800,000 meters of fabric,
700,000
pieces for ready-made garments and 330,000 pieces for knitted apparel.
The plant has two steam boilers and generates large quantities of steam for
both process and heating purposes (approximately 83,000 tons/year). The
Company paid approximately $1.37 million for heat and approximately
$390,000 for electricity (approximately 9,300 MWh)
7 – Case studies in Solid Waste Management
Case 2: continued…
Energy case:
Purpose: to reduce costs
Main object: two operating boilers that generate steam
EE option: the coal-fired boiler has the capacity to generate 40 tons of steam
per hour (25-bar). The heavy oil-fired boiler has the capacity to generate 10-15
tons of steam per hour (7-bar). According to a past survey, however, both
boilers were operating at a much lower capacity and generated only 18 tons of
steam per hour (7-bar) in total.
Heat consumption was 2.5 times higher in the winter than during the rest
of the year.
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
Approach:
1) Feasibility study with assessment of options
2) “Quick fix” measures (short pay-back period)
3) More advanced measures (medium or long pay-back period)
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
Collect real data:
•Boiler combustion measurements were taken using a combustion analyzer.
•A thorough survey of the arrangement, sizing and insulation of the steam
distribution system was conducted to identify potential improvements.
•A steam trap survey was conducted to identify and quantify failures and leaks
and explore how condensation recovery and heat transfer efficiency could be
optimized.
•Hot water systems were inspected to evaluate heat recovery opportunities and
identify physical requirements for making improvements.
•Plant equipment was inspected to assess energy efficiency. Opportunities for
consolidation to improve efficiency were identified and discussed with
production managers.
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
• The condition and thickness of building insulation and weatherproofing were
•
•
inspected. A general lack of building insulation was noted. Numerous
openings in doors and windows were also observed.
Steam, air and water leak detection and maintenance practices were
assessed.
The tracking and management system by which Teteks monitors and
controls energy use was assessed.
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
Key information from study: Teteks consumes 83,143 tons of steam per
year and 9,271 MWh of electricity in 2001. Steam represented approximately
60% of the total energy consumption per year while electricity consumption
amounted to 35%. Compressed air made up the remaining five percent.
(-> set priorities!)
Based on the results, it were recommended several low and medium cost
measures, as well as a few high cost measures. These measures required a
total investment outlay of $1,587,000 with a simple payback period of
approximately 24 months generating an annual cost savings of $772,683.
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
Results: see paper
•Awareness increased
•All management levels involved
•Reduction of operational room
•Management strategy is required
Financing instruments
7 – Case studies in Solid Waste Management
Case 2: continued…
CO2-reduction:
In addition to these cost savings, environmental benefits were also generated.
Implementation of the improvement measures reduce carbon dioxide emissions
by 20,000 tons per year
•Kyoto-period (2008-2012) allows trading of Carbon Credits
•If all measures are implemented in 2008, 4 years of Carbon Credits can be
produced, approx. 80,000 credits
•Price of Carbon Credits is approx.12-15 euros
Therefore, the value of the emissions reduction equals to approx. 1 million euro
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: Landfill gas capture and energy generation
Basic information:
The landfill is an existing one with some parts not in operation and some parts
where waste is disposed
•The landfill was started 8 years ago
•The landfill needs re-structuring (by shape and by organisation)
•Waste amounts are expected to increase during 2008-2012
•The upgrading plan foresees the construction of gas wells, flare, processing
unit and generation of electricity
Case study will define, calculate and assess the costs and benefits of the
envisaged investment and the operations
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the current picture
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the current picture, continued…
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the current picture, continued…
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the future picture
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the future picture, continued…
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the future picture, continued…
7 – Case studies in Solid Waste Management
Case 3: the future picture, continued…
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: the future picture, continued…
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: Methane (1)
Methane Sources are:
• Oil & gas industry (45%)
• Waste sector (25%)
• Agriculture (20%)
• Natural sources (10%)
Molecular structure
Chemical formula
7 – Case studies in Solid Waste Management
Case 3: Methane (2)
Methane characteristics:
• Odourless gas
• Invisible gas
• Very explosive (@ 5-15 vol% with air)
• High energy content (38 MJ/Nm3)
• Non toxic
• Pure, no contaminants
• Global warming potential = 21
•
•
Nm3 = one cubic meter at standard conditions of 0 oC (273 oK)and 1 atmosphere pressure (105 Pa)
Energy content is defined as higher or lower thermal value
Question: why is possible that we are able to smell landfill gas?
7 – Case studies in Solid Waste Management
Case 3: Methane (3)
Methane is very important reason for Global Warming
7 – Case studies in Solid Waste Management
Case 3: Global Warming Potential
Global warming potential (GWP) is a measure of how much a
given mass of greenhouse gas is estimated to contribute to
global warming. It is a relative scale which compares the gas
in question to that of the same mass of carbon dioxide (whose
GWP is by definition 1).
A GWP is calculated over a specific time interval and the value of
this must be stated whenever a GWP is quoted or else the
value is meaningless.
Carbon dioxide has a GWP of exactly 1 (since it is the baseline
unit to which all other greenhouse gases are compared).
Methane has a GWP of 21
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: Landfill gas
Landfill gas characteristics:
• Smelly gas
• Invisible gas
• Very explosive (@ 10-30 vol% with air)
• High energy content (18-20 MJ/Nm3)
• Main components are CH4, CO2, N2, H2S and organic compounds
• Toxic
• It contains contaminants
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: Landfill gas capture and energy generation, continued…
Basic calculation:
The landfill is an existing one with some parts not in operation and some parts
where waste is disposed
•The landfill was started 8 years ago
•The landfill needs re-structuring (by shape and by organisation)
•Waste amounts are expected to increase during 2008-2012
•The upgrading plan foresees the construction of gas wells, flare, processing
unit and generation of electricity
Case study will define, calculate and assess the costs and benefits of the
envisaged investment and the operations
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: Landfill gas capture and energy generation
Basic information, more facts:
•Release of methane (landfill gas) has been observed
•There is insufficient structure in landfill activities
•Approx. 50 people live near or on top of the landfill
Define the immediate problems which you have and present approach to
preparing landfill gas extraction project (SHORT GROUP WORK)
Make 3-4 bullet point for each question
Financing instruments
7 – Case studies in Solid Waste Management
Case 3: The value of landfill gas
Basic information, key data:
•Weight of methane: 0.72 kg/Nm3
•Global warming potential = 21
•Landfill gas: high energy content (18-20 MJ/Nm3) – 50% of landfill gas = CH4
•Calculated production of landfill gas = 50 Nm3 per hour
•Landfill gas equipment will be operational during 8,000 hours per year
•Landfill gas is utilized by gas engine for producing electricity (efficiency = 35%
from gas to electricity)
•Energy conversion: 1 MJ = 0.27 kWh
•Value of Carbon Credit = 9 Euro
Exercise:
1.How much of global warming potential is achieved per year? (express in tonnes)
2.How much electricty is produced per year? (express in MWh)
3.How much is value of emissions reduction per year? (express in Euro)
Financing instruments
7 – Case studies in Solid Waste Management
Exercise: calculate value of landfill gas
Biogas production is calculated at 50 Nm3/h
Number of hours = 8,600 hours per year (simplified)
=> 50 x 8,600 = 430,000 Nm3 biogas per year
Methane content of biogas = 50% of volume
=> 0.50 x 430,000 = 215,000 Nm3 CH4/year
Weight of methane gas = 0.72 kg/Nm3
=> 0.72 x 215,000 = 154,000 kg CH4/year = 154 ton CH4/year
GWP of Methane = 21 ton CO2-equivalent per ton CH4
=> 21 x 154 = 3250.8 ton CO2-equivalent
Number of operational hours = 8,000 per year (600 hours for maintenance)
Emission Reduction = 8000 hours/8600 hours x 3250.8 = 3,024 ton CO2equivalent
Remains: 3250.8 -/- 3024 = 226.8 ton CO2-equivalent
7 – Case studies in Solid Waste Management
Exercise: calculate value of landfill gas
Electricity:
Biogas production is calculated at 50 Nm3/h
Number of operational hours = 8,000 per year
=> 50 x 8,000 = 400,000 Nm3/year => the gas goes to gas engine
Energy content of landfill gas = 20 MJ/Nm3
=> Energy production: 20 x 400,000 = 8,000,000 MJ/year
Efficiency of gas engine = 35%
=> 8,000,000 x 0.35= 2,800,000 MJ/year electricity production
Conversion factor = 0.27 kWh/MJ
=> 0.27 x 2,800,000 = 756,000 kWh/year = 756 MWh/year
Price of kWh = 500 Rp/kWh => 378,000,000 Rp/year = 35,000 Euro/year
CER = 3024/year x 9 euro = 27,216 Euro/year