Biomass - Energy Toolbox

The Economics of Dendro-Power

In this section we examine the economics of dendro-power and ask the quetion how much will it cost to establish a moderate-sized generation plan, how much will it cost to operate and how will this compare to operation from the use of coal. Again the examples are drawn from Sri Lankan and Indian experience. Costs are given in Sri Lankan rupees (Rs), which can be taken to be equivalent of a US cent, i.e. 100 Rs = 1 US$, or more precisely 102 Rs = 1 US$

A detailed breakdown of the capital and recurrent costs involved with the establishment and operation of a dendro-power unit of 10MW can be accessed here. As indicated above, the figures suggest that the IRR over 20 years is expected to be close to 19%, with a payback period of 5.7 years. Total capital costs would be of the order of $11.8 million.

The main assumptions made for this calculation are provided on the spreadsheet. It is assumed that the wood consumption of 1.5 kg/kwh. The plant would produce an output of 71,280,000 KWh on the basis of operation of 330 days/year with 10% of the power being used internally. Total amount of wood that will be required will equal 118,800 tonnes/year at a cost of Rs2,000/tonne.
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A similar spreadsheet has been prepared for a similar plan operating from coal. Capital investment of around $14.4 million will be required. The figures are based on the consumption rate of 0.5 kg/kwh. The IRR is estimated to be around 15% over 20 years with a payback period of 8.0 years. The cost of coal is taken to be Rs6,000/tonne For simplicity, in both cases a constant rate of Rs8.50/kwh - the current rate.
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