Abstract:
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Landfilling solid urban waste is the prevailing method of solid waste disposal
worldwide. Biodegradable waste is disposed of in landfills which then
decompose often over many decades releasing landfill gas. This gas, is mainly
composed of methane and carbon dioxide, both are greenhouse gases which
actively contribute to global warming. Indeed, methane has a global warming
potential 21 times more than CO2. These environmental problems associated
with landfill gas demand for current energy needs highlights the potential of the
recovery of landfill gas as a significant alternative to fossil fuels.
This study sets out to determine the extent to which the economic value of
power generation from landfill gas differs from the market value of the CO2
equivalent landfill gas. To achieve this purpose, a cost-benefit model has been
created in order to identify the different capital, power generation and
operational costs associated with a landfill operational site. In the same manner,
the main sources of revenue have been determined: sales of electricity to the
grid and carbon credits.
Three different scenarios have been analyzed: small, medium and large landfill
sites, all of them placed in the UK. The analysis had two different appraisals:
economic and environmental. In the first one, the feasibility and profitability of
the three scenarios have been evaluated. In the latter, the amount of tonnes of
CO2 equivalent avoided to be pumped into the atmosphere has been
calculated.
The economic analysis indicates that the average capital costs for all the sites
are notably higher. Particularly, for small sites, i.e. a capacity of 1MW, where
landfill gas-to-energy projects were not profitable. On average, the Net Present
Value (NPV) of small sites was less than 0. This factor indicated that the initial
investment would not be recovered in a long period and therefore, the revenues
achieved from the implementation of LFG Collection Systems were not enough
for the operators to invest in these infrastructures.
Not only from an economic point of view, but also considering an environmental
appraisal, it can be stated that the price of selling electricity to the grid is below
the real price of avoiding methane emissions (shadow price of the carbon).
THE ANALYSIS DONE SUGGESTED THAT LARGE AND MEDIUM SITES
PROJECTS WERE VIABLE (NPV>0) WITH REDUCED ROC SUPPORT.
HOWEVER, FOR SMALLER PROJECTS MORE OPTIMISTIC REVENUES
AND COST OF CAPITAL WERE REQUIRED IN ORDER TO ACHIEVE
VIABILITY. |