Validation workshop,
Techno-Economic Study Report for Potential
Biomass Power Plant sites in Nigeria
Nigeria, December 2016
Disclaimer
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Index
1. Introduction - Client (confidential)
2. Introduction - Everest Energy
3. General Context
4. Economic Context
5. Technical Context
6. Introduction of the Techno-Economic Study
7. Methodology – Desk Study
8. Methodology – Field Study
9. Key Findings – Desk Study
10. Key Findings – Financial Modelling
11. Key Findings – Field Study
12. Conclusions
13. Recommendations
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2. Introduction – Everest Energy
Everest Energy is an advisor on the economic development of sustainable energy
projects.
EE specializes in economic project structuring and attaining project finance when
renewable energy is converted into sustainable solutions. The operational and
techno-economic development approach provides a realistic view of the project
returns and risk-value.
By supporting the bio-based economy, EE facilitates the development of projects by
focusing on energy efficiency as the origin of sustainability.
Since Everest Energy executes both advisory assignments as well as development
assignments it possesses in-depth knowledge and experience, both practical as
insightful.
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3. General Context
A development agency is implementing a feasibility study under GEF 4 project (minigrid based Renewable Energy Biomass Sources) to help augment rural electrification
in Nigeria. The core objective of the study is to promote market-based approaches to
RE based mini-grids in Nigeria to augment rural electrification. This study aims at
demonstrating techno-economic viability of biomass based mini-grids.
Nigeria has a huge potential for energy generation from wood waste including
sawdust. There are around 2,000 saw mills in the country, which generate
approximately 104,000 m3 of wood waste per day. A previous study has identified
nine areas with large potential for power generation from biomass waste from sawmills in Ondo and Ogun state.
Everest Energy has been retained to execute a feasibility study which focuses on
techno-economic feasibility and the business plans for the identified sites.
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4. Economic Context
The techno-economic study focuses on investigating small scale Independent Power
Production (IPP) projects using locally sourced feedstock.
The investigation has a market-based approach with the understanding that:
a. Logistical cost are to be kept minimal.
b. This study focuses on an installation capable of using both waste wood and
sawdust as input fuels.
c. Capex as opposed to O&M cost and production efficiency needs to be as low as
possible.
d. The previously executed study, prepared by The Energy and Resources Institute
(TERI), identified a large volume of available fuel; leading to the assumption that
feedstock is available if large(r) plants are desired for efficiency reasons.
e. The steam produced in the process can be a value carrier if this can be utilized by
another client.
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3. Technical Context
The technological part of the study focuses on the most effective and efficient
manner in which feedstock is converted into power and/or thermal energy serving a
grid user/set of users.
The technological boundaries are:
a. The installation (incineration bed) has to be able to use both fuel inputs.
b. Effective transformation of fuel into syngas requires fuel with low moisture
content, it is therefore desired to pre-dry the fuel before incineration using
thermal energy.
c. The IPP is required to run continuously and with stable operation.
d. It is un-desirable to run the plant in a start/stop modus.
e. Feedstock shall be stored on site to be able to guarantee a continuous production
cycle even in rainy seasons.
f. The hooked-up voltage and delivery load has to be in line with the grid.
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4. Introduction of the TechnoEconomic study
The techno-economic study focuses on investigating small Independent Power
Production projects using locally sourced feedstock.
The feasibility study investigated:
1. The optimal electricity generation technique;
2. The technical design of the power plant;
3. Existing electrical infrastructure and
4. Economic feasibility.
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5. Methodology – Desk Study
To create the most valuable output, this study consists of a desk research conducted
from The Netherlands and a Field Study at the identified sites in Nigeria.
Desk research:
The desk research focused on:
• The possibilities for electricity generation;
• Electricity demand;
• Analysis of the existing mini-grid business;
• Assessing different technologies for electricity generation from biomass
(Gasification and Incineration);
• Extensive economic and financial analyses of the generation of electricity with
wood residues from sawmills;
• Financial sensitivity analysis and
• Technical design of the power plant.
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6. Methodology – Field Study
Field research:
The field research was conducted by both Dutch and Nigerian engineers and focused
on biomass quality measurement.
The field research focused on:
• Wood residue properties;
• Possible contaminations of the wood residues;
• Wood residue handling;
• Characteristics and organization of the sawmills in the LGA’s;
• Grid availability and
• Accessibility.
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7. Key Findings – Desk Study
Gasification
• Gasification is suitable for decentralized and on site power generation due to its
scale;
• Gasification is sensitive to contamination and changes in the composition of the
feedstock;
• Continuous operation of the gasifier is necessary for the integrity of the plant.
Incineration
• Incineration can cope with variations in the feedstock;
• Incineration can cope with contaminations like silica better than gasification;
• Continuous operation of the stoker is necessary for the integrity of the plant;
• Possibility to deliver excess heat/steam to neighbouring industries.
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7. Key Findings – Desk Study
General Findings:
• According to previous studies a total of 713,291 MT per annum of waste wood
and sawdust is available in Ondo and Ogun State.
• Nigeria has a rural electrification rate of 24% and power outages tend to occur
240 hours per month on average
• There are 10 mini-grid companies providing over 1 MWe in the Ogun State, of
which one is situated in a region subject to this study (Abeokuta).
Electrical
power use per
capita (KWh)1
Population
Calculated
demand in
(MWh)
Ijebu Ode
156
185,360
28,916
Ijebu North
156
330,840
51,611
Abeokuta North
156
234,360
36,560
Abeokuta South
156
295,200
46,051
Akure North
156
151,930
23,701
Akure South
156
418,570
65,297
Owo
156
258,230
40,284
Odigbo
156
269,880
42,101
Idanre
156
150,800
23,525
Project locations
Ogun state
Ondo State
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7. Key Findings – Desk Study
LGA’s, identified by Everest Energy, with the highest potential for sawdust and waste
wood utilization for a biomass power plant are:
1) Akure South;
2) Owo and;
3) Akure North.
These sites are selected based on:
• The total feedstock availability (sawdust and waste wood);
• The average potential plant capacity in MWe and MWth and plant capacity for
drying in MWth;
• The surface area in km2 of each LGA and the average number of sawmills per km2;
• The number of available ways of transportation (road, water and rail).
These parameters have been standardized on a 0-100 scale, with a 100 score for the
best performer.
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7. Key Findings – Desk Study
LGA’s ranked by Everest Energy on their potential for saw dust and waste
wood utilization for a biomass power plant
State
Ondo
LGA
Ranking
Biomass
available
mt per
region
Akure South
100.0
100.0
86.4
Akure North
70.6
100.0
Owo
85.3
Odigbo
Ranking
Ranking Saw
Ranking
Biomass
mills per
Availbale
available mt
km2 in
Logistics
per sawmill
region
Total
Score
Rank Total
50.0
336.4
1
30.6
50.0
251.2
3
100.0
16.2
50.0
251.5
2
63.6
100.0
10.0
50.0
223.6
5
Idanre
25.2
100.0
3.8
50.0
178.9
6
Abeokuta North
11.5
40.2
10.1
100.0
161.9
8
Abeokuta South
3.5
41.2
33.8
100.0
178.5
7
Ijebu North
29.2
51.6
16.8
50.0
147.5
9
Ijebu Ode
34.6
51.6
100.0
50.0
236.2
4
Ogun
Source: Techno-economic studies on biomass gasification power plants in Nigeria, The Energy and Resource Institute, September
2014 – third progress report.
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8. Key findings – Financial
modelling
Financial Modelling Findings:
• When the average distance between sawmills and power plant is 20km, logistics
account for 34% in the project expenses.
• The project, according to the current available data and assumptions, shows to be
economical feasible.
• Sensitivity 2: With an feedstock value of US$20/MT and inflation rate of 8.1%
project results are positive.
Sensitivity 1
Sensitivity 2
Sensitivity 3
Sensitivity 4
Sensitivity 5
no tax exemption is
given to the project
cost of feedstock (both
sawdust and wood
residue) is 20 USD/MT
and it increases
according to yearly
inflation of 8.1%
CAPEX increases to
USD 5,000,000
Debt/equity gearing is
60/40 %
Price of electricity sold
(Feed-in Tariff) remains
constant for the ten
years at 186.79
USD/MWh
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9. Key Findings – Field Study
During the field study it is observed that:
• Bio residues are disposed or incinerated on site with the use of open pit fires, to
make space for new residues.
• Biomass residues are regularly contaminated with silica due to interaction with
the soil.
• Sawmill owners do not account waste wood as (potential) value carrier.
• The infrastructure to handle residues is not designed to keep it free from
contaminations due to lack of awareness of the value of the sawmill residues.
• No information is available or gathered by sawmill owners about the quantity of
available biomass, the energy content and or the degree of contamination.
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10. Conclusions
• Incineration of biomass in open pit fires are a large source of CO2 emissions.
• Given the limited information about quantity and quality of available biomass for
electricity production; the reliability of the business case-(economic modelling) can
be improved.
• Based on contamination of the feedstock and the heat demand an incineration
Combined Heat Power (CHP) plant is preferred over gasification.
• Growing awareness of potential value of residues should lead to better handling to
reduce contamination.
• Transport distance between sawmill and the power plant should be kept minimal.
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11. Recommendations
•
Due to contamination of feedstock, variety in species and the heat demand in the
region, further studies should investigate the utilization of CHP technology.
•
Because of the limited information available related to capacity of the grid,
connection opportunities and grid availability; further investigation is needed to
determine potential locations and optimal generating capacity of the plant.
•
Sawmill owners should be informed about the potential value of their biomass
residuals to create awareness. This probably will increase the quality of residuals
and decrease contamination.
•
A regional administrative system should be developed to monitor, manage and
evaluate the available quantity and quality of the biomass in the region.
•
Shortlisted nine sawmills should get technical assistance in the development of
their business case. This TA must focus on both the economical business case and
on improving the quality and quantity of the biomass available for electricity
generation.
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Contact
Everest Energy B.V.
Prins Hendriklaan 9
3701 CK Zeist
The Netherlands
Tel: +31 (0) 30 78 52 409
[email protected]
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