Evaluating the Energy Cost Benefit of a Biomass Fired Combined Heat and Power Plant

Abstract

The feasibility of a proposed project is essentially determined by the
economic savings accruing to the project in other to justify the huge
capital investment to be made. This study investigated the economic
potential of incorporating a back pressure steam turbine, steam
generator and other auxiliary components into a process system in the
Nigerian Institution of Oil Palm Research (NIFOR). Data from a
proposed project with electricity generation capacity of 3.625MW
reported in a research work was used. From the economic/financial
analysis conducted in this study, it was observed that with an estimated
capital investment of $2, 000,000, there would be a cash inflow of $388,
990.362 per annum. It was also observed that electricity demand by
NIFOR from the National Grid would drop from 1443200kWh to
1051380.8kWh per month, consequently reducing the cost of electricity
and savings to $488, 990.362 per annum. The internal rate of return is
36.42% while the simple payback period for which the project would
payback itself is 5.14yrs after which the plant would continue to generate
more revenue for the Institution. The Net Present Value (NPV) is also
positive which ultimately indicates that the proposed project is
essentially valuable based on the financial analysis and therefore should
be adopted by the Nigerian Government and the private investors.