Wale Aboyade's thesis - lumes
Wale Aboyade's thesis - lumes
Wale Aboyade's thesis - lumes
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
Akinwale Aboyade, LUMES Thesis, 2003/2004<br />
4.2.1 Projects costs<br />
Costs estimates for this analysis both capital and operational were obtained from representative<br />
estimates given in the US EPA’s landfill gas-to-energy project development handbook (US EPA 1996).<br />
The costs as applied in this study are given in the table below. Based on these costs, estimates of the<br />
projects costs range between US$50 MWh to US$110 (as determined by a sensitivity analysis varying<br />
the costs by ±25%.<br />
Table 4.1 Summary of LFGTE system costs (Source: Adopted from US EPA, 1996)<br />
Activity<br />
Capital<br />
costs(2004<br />
US$)<br />
Planning design and<br />
engineering 1,600,000.00 -<br />
Operating and<br />
Maintenance<br />
costs (2004 US$)<br />
Collection system<br />
(including transmission) 4,500,000.00 271,000.00<br />
IC engine 12,200,000.00 3,000,000.00<br />
Flare system 254,000.00 28,000.00<br />
Total costs 18,554,000.00 3,299,000.00<br />
Apart from these, other important cost items are the transaction costs associated with CER sales;<br />
monitoring costs, verification and validation costs as well as registration and approval costs. Taking<br />
into account the value of emission reductions possible from this project (25 million tCO 2 e over a 20<br />
year crediting period) this projects would qualify as a very large CDM project (UNFCCC 2004a) and<br />
according to Krey (2004) the transaction costs associated with registering and validating emissions<br />
from the project under the CDM would be about US$0.123/ tCO 2 e.<br />
4.2.2 Revenue Streams<br />
The revenue stream derives mainly from electricity and CER sales. In general it is assumed that the<br />
electricity generated from the project would be sold to the municipality for street lighting. Electricity<br />
prices in the analysis will be varied according to current obtainable rates. CER prices have typically<br />
been within the 3 to 6US$/tCO 2 e (Haites, 2004)<br />
4.2.3 Results of financial analysis<br />
To aid policy guidance, cash flow analysis of the viability of the project under these factors as shown in<br />
the CLD above is done in three scenarios:<br />
1.) Funding from local sources at current discount rates<br />
2.) Funding from foreign sources such as the World banks carbon fund<br />
3.) Flaring only option (no electricity generated)<br />
The major distinguishing factor between the first two scenarios is the cost of capita for the project as<br />
determined by interest and discount rates. According to Barish(1962) high interest rates is one major<br />
impediments to projects finance for projects in developing countries.<br />
37