Applied Science and Biotechnology Journal for Advanced Research

Biomass source is the emerging energy among renewable energy sources having potential to fulfill the energy demand of the rural areas to enhance the rural economy in developing countries.

The present research work was mainly intended towards the assessment cost of energy generation and the feasibility for the power generation through biomass based gasifier power generation system. This information will help in deciding in retrofitting such system in rural area of the country to fulfill the energy demand. The gasifier based power generation system installed at Dr. PDKV, Akola was studied as a case for the research project work which considering the various aspects of energy generation with the various cost measures.

2. Materials and Methods

The present study was carried out at biomass power generation system of 10 kW installed capacity at the College of Agricultural Engineering and Technology, Dr. Panjabrao Deshmukh Agricultural University (Dr. PDKV), Akola Maharashtra, India. The system has been installed during March 2009. The installation and the maintenance cost of the system for turnkey operation was gathered and determined. In the present study, cost of energy generation has been evaluated. The cost of energy generation was evaluated by considering the optimum performance of the gasifier system[8];[9];[10]. The life cycle cost of energy generation was determined by considering the present economic appraisal. The feasibility of the power generation of gasifier system was evaluated by discounted cash flow technique (DCF) [8];[9];[10]. The parameters like net present value, benefit-cost ratio, internal rate of return and payback period of the system was evaluated by considering the current nature of discount rate.

2.1 Theory of Economic Analysis

The economics of gasifier based power generation system was calculated by evaluating various costs measured and by using the discounted cash flow techniques for system economic feasibility. The data regarding installation cost, cost of fuel and cost of labour for the case determined by operations considered.

The present analysis has been carried out for power generation of 22 h, 20 h, 16 h with the scenario of without subsidy (Case I) and subsidy of 50 percent (Case II) on total installation cost of gasifier based power generation system.

2.2 Economic Feasibility of Biomass Power System

The project evaluation technique (discounted cash flow) was used to measure the economic feasibility of power generation system. This technique measures the productivity of the capital invested and for which the flow of costs and returns over life period. These costs can be brought to refer to the particular point of time i. e., present period by discounting them [11];[12];[13].

Comparative picture of different measures of capital productivity used in economic evaluation of investment in biomass energy systems used are: net present value, benefit cost ratio, internal rate of return and payback period.

2.2.1 Net Present Value

In this method, generally the discounted rate/ compound rate, which reflects the price of the investment funds, is used to arrive at costs and returns to a common point of time. These costs are subtracted from the return to get the net present values of the systems. The positive net present values indicate that the investment is worthwhile and the size of the net present value (NPV) indicates how worthwhile the project is in utilizing the resources to maximize income. Following expression is used to work out the net present value;

where, R is the returns in the year t, C is the costs in year t, N is the project life, i is the discount rate in per cent.

The decision criteria are:

  If NPV > 0  Investment is worthwhile

    NPV < 0  Investment is not worthwhile

    NPV = 0  Neutral case

2.2.2 Benefit Cost Ratio

The benefit cost ratio measures the returns or benefit per unit of cost of investment.

system. The maintenance cost was considered for both scenarios of one per cent to the installed cost. Similarly, levelised replacement cost was considered 25 per cent of maintenance cost. The gasifier based power generation system is operated to 22 h, 20 h, and 16 h having biomass fuel feeding of 15 kg/h. The cost of purchased biomass fuel was 1.5 INR/kg. The gasifier system has been considered for 300 days in operation in one year. For the condition of 22 h, 20 h, and 16 h, three labours were required to operate the power generation system. The cost per man laborers per day was INR 80. While considering the above stated fact the operational requirement of fuel and labour with maintenance cost, the capital statement and energy production scenario is depicted in Table 1.

The total installation cost for a 10 kW capacity gasifier based power generation system comes to INR 650000 in case I and INR 325000 in case II. The annual energy generation is 66000 kWh for 22 h, 60000 kWh for 20 h and 48000 kWh for 16 h in case I and case II. The cost of electricity for calculating the grass annual income from the power generation system were considered as 6 INR/kWh as per present tariff of Maharashtra Electricity Regulation Board for biomass energy generation system. The annual fixed charge rate of power generation system was INR 12.75 % for both cases. The interest rate for biomass based power generation system is reported to be 13 % [14]. The project life time of gasifier based power generation system was considered for 20 year. The gross annual income was obtained INR 396000 for 22 h, INR 360000 for 20 h and INR 288000 for 16 h in both cases. The annual operation and maintenance cost in both cases was INR 228625 for 22 h, INR 215125 for 20 h and INR 164125 for 16 h. The return per unit of energy generation was obtained in case I of 1.261 INR/kWh for 22 h, 1.01 INR/kWh for 20 h and 0.831 INR/kWh for 16 h. In case II, return per unit of energy generation was obtained 1.887 INR/kWh for 22 h, 1.698 INR/kWh for 20 h and 1.685 for 16 h. The economic return of 0.3 millions USD/year is reported [14]. The reported electricity revenue of biomass based project is about 10.34 €/GJ [16] Levelised replacement cost was considered to be 25 % on maintenance cost.

based gasifier power system, which comes to be 0.0246, 0.0270 and 0.0338 INR/kWh. The potential and cost of energy of biomass have reported by Downing & Robin 1996 [18]. The case study of biomass based power generation is reported by Ravindranath, 2004 [19].

The cost of energy for the biomass based gasifier power generation system is the equal to sum of three component mentioned above, i.e., capital cost component (1.25, 1.38, 1.72 INR/kWh), operation and maintenance cost (3.46, 3.59, 3.42 INR/kWh) and cost of replacement (0.0246, 0.0270, 0.0338 INR/kWh) giving a total of 4.74, 4.10 and 5.10 INR/kWh for 22 h, 20 h and 16 h operation of power generation system respectively. The costs of electricity generation from biomass based project are reported as 0.0 USD/kWh [15], for rice hull as fuel 0.27 Yuan RMB/kWh [20]. The relative effect of these estimated cost values (Table 2; Table 3; Table 4) gives insight into where the overall economics of the system may be impacted. From Table 2; 3 and 4, it is seen that the leading component of cost of bioenergy are of operation and maintenance cost followed by the cost of capital. The operation and maintenance cost in Case I represent 73 %, 72 % and 62 % for 22 h, 20 h and 16 h operation of power generation system respectively. The operation and maintenance cost for 10 % wood co-firing biomass project is reported to be 0.04 p/kWh at which fuel cost is found about 0.16 p/kWh [22]. The replacement cost of the system is in the range of not more than 0.65 % for 22 h, 20 h and 16 h operation of power generation system respectively.

Table 2: Comparison of calculated cost of energy component (22 hours; Case I)

Table 5: Profit per kWh of biomass power generation system for case I

3.1.3 Cost of Energy Generation (Case II)

The annual energy generation for operating of 22 h, 20 h, and 16 h was 66000 kWh, 60000 kWh and 48000 kWh respectively. The ICC (all equipment) at value of INR 325000 for 10 kW power generation installed capacity (case II). The similar case was considered at 40 % subsidy of total cost of project [24]. The specific capital cost of biomass power generation system was calculated for case II of 22 h, 20 h and 16 h which comes to be 4.92, 5.41 and 6.77 INR/kWhyr^-1 respectively. Capital cost component were calculated using these specific capital cost and annual fixed charge rate of 12.75 per cent which comes to be 0.63, 0.69 and o.86 INR/kWh for 22 h, 20 h and 16 h respectively. The capital cost for the biomass system has been reported as 1588, 1696, 1371, 1108 and 1350 $/kW [25]. The installed capital cost for wood fired system is reported as $1765/kWe[26]. Besterbroer et al., have reported capital cost of biomass project in range of $5835-$8335 per kWe[27]. Annual operation and maintenance was INR 228625, INR 215125 and INR 164125 for biomass based power generation system and these were 3. 46, 3.59 and 3.42 INR/kWh for 22 h, 20 h and 16 h respectively. The cost of levelised replacement were examined by considering 25 per cent of operation and maintenance cost of biomass based gasifier power system, which comes to be 0.0246, 0.0270 and 0.0338 INR/kWh.

The cost of energy for the biomass based gasifier power generation system is the equal to sum of three component mentioned above, i.e., capital cost component (0.63, 0.69 and 0.86 INR/kWh), operation and maintenance cost (3.46, 3.59, 3.42 INR/kWh) and cost of replacement (0.0246, 0.0270, 0.0338 INR/kWh) giving a total of 4.11, 4.30 and 4.31 INR/kWh for 22 h, 20 h and 16 h operation of power generation system respectively.

Table 8: Comparison of calculated cost of energy component (16 hours Case II)

3.1.4 Profit Statement of Biomass Power System (Case II)

The system benefit for the overall project has been determined over a year for operation of 22 h, 20 h, and 16 h. The information presented Table 9 shows the profit statement for 10 kW gasifier based power generation system for one year having considering 50 per cent financial assistance (subsidy). The profit per unit was worked out to be 1.881 INR/kWh for 22 h, 1.698 INR/kWh for 20 h and 1.685 INR/kWh for 16 h. The gross annual income has been calculated by considering annual energy production and the return on per unit of energy generation. The gross annual income comes to INR 396000, INR 360000 and INR 280000 and the production cost of energy comes to be (INR 4.11 x 66000) INR 271260, (INR 4.30 x 60000) INR 258000 and (INR 4.31 x 48000) INR 206880 giving a profit for the first year of operation (22 h, 20 h and 16 h operating duration per day) as INR 124146, INR 101880, INR 80880. The electricity revenue per kWh is reported as 0.037 € [16].

Table 9: Profit per kWh of biomass power generation system for case II

3.2 Economic Feasibility of Biomass Power Generation System

For initial project appraisal, some form of DCF is normally required.

3.2.1 Net Present Value(NPV)

The Net present value was found to be positive in both cases. Hence it seems the project is feasible and can be considered for the next parameters determination. The Net present value was found to be INR 266058 for 16 h, INR 412353 for 20 h and INR 587741 for 22 h in case I. The NPV for case II was INR 559700 for 16 h, INR 746353 for 20 h and INR 912741for 22 h. The reported NPV 196960274 Dra at 40 % subsidy [24].

3.2.2 Internal Rate of Return (IRR)

The IRR was found to be positive in both cases. The IRR was found to be 19 % for 16 h, 22 % for 20 h and 26 % for 22 h in case I. For with subsidy (case II) IRR was 39 % for 16 h, 44 % for 20 h and 52 % for 22 h. The reported IRR for biomass project are 44.644 to 44.525 % respectively [24], 30 % [23], 19 % [30] and 51 % [31].

3.2.3 Benefit Cost Ratio(BCR)

The information presented in Table 10 reveals that the benefit cost ratio was positive. The benefit cost ratio was found to be 1.13 for 16 h, 1.18 for 20 h and 1.24 for 22 h for without subsidy case. For with subsidy case benefit cost ratio was observed to be 2.39 for 16 h, 1.38 for 20 h and 1.44 for 22 h. The reported benefit cost ratio for biomass based electricity generation projects are 2.270 to 2.763[24], 1.68 [30].

3.2.4 Pay Back Period

The information presented in Table 10 reveals that the payback period was found to be in the range of 4 years to 1 year for case I and 2 years to 1 year for case II. The discounted payback period reported including subsidy (40 %) is 2.905-2.914 years. The assessed payback period is reported 7 years [30] and 2.28 years [31].

4. Conclusion

Biomass power generation cost was determined in term of INR/kWh. A simple technique was used in finding the cost of energy generation from biomass. The costs of biomass energy include the three costs namely installation cost, specific capital cost and the cost of energy generation. In cost of energy generation from the biomass sources, operation and maintenance cost is the leading cost component that the installation cost.

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