Mponeng Holdings, an indigenous small IPP investor in South Africa, engaged PPA Energy to advise it on an investment in three biomass projects in Limpopo and KwaZulu-Natal. The projects were in response to the IPP Procurement Programme being pursued by the Department of Energy. Feed stock fuel was municipal solid waste at sites in varying environmental condition; and with different requirements for project implementation.
PPA Energy, an international company, specialises in organisational reform, regulatory review, investor advice, performance review, technical studies/solutions, innovation and capacity building among in the electricity supply industry. The South African branch actively contributes to power utilities in the southern African region and South Africa in particular. The company has followed government policy and programmes on renewable energy provision in South Africa. It has contributed to legislation review, participated in public discussions and engaged with prospective investors. It has participated in resolving technical problems arising from penetration of renewable technologies on traditional power grids in UK, Europe and elsewhere.
The Mponeng project
Fig. 1: Typical single stage gas plasma process (source: Westinghouse Plasma Corporation website).
Site visits
Two sites were located in the Limpopo Province and one site was located in Zululand. A team comprising PPA Energy (the technical partner), BJR International AS, (an environmental expert) and Mponeng Holdings (the prospective investor) visited the sites to assess:
The site visits yielded the following information:
Site 1
There was a functional weekly municipal refuse removal service available to 9,5% of the population and 89,4% have access to electricity for lighting. The current waste disposal facility is a disused quarry pit which began operation in 1985 on a ten hectare piece of land. It’s operated as a dump site. The collected waste includes organic and inorganic material. Some degree of waste sorting takes place and some recycling goes on. A licence for its closure and rehabilitation has been issued. The team collected a 15 kg sample from the sorted waste for testing purposes.
Under the Integrated Waste Management Plan (IWMP) (2005) a new landfill disposal facility located on a 20 hectare piece of land was licensed. The site will receive waste through some transfer stations.
Electrical connectivity to the grid will be through 132 kV line which is 100 m away.
Site 2
There was a functional weekly municipal refuse removal service available to 20,7% of the population at two centres within the district, while 89,4% have access to electricity for lighting. There are two waste disposal facilities that are operated as unlicensed dumpsites. The collected waste includes organic and inorganic material. Some degree of waste sorting takes place and some recycling goes on. A representative 15 kg sample was taken for analysis.
Under the Integrated Waste Management Plan (IWMP) (2005) a new landfill disposal facility located next to the existing dump site was planned but was not finalised.
Electrical connectivity to the grid will be through a 22 kV transmission line.
Site 3
Weekly refuse removal is provided to 19,7% of the population and 73,4% have electricity for lighting. Waste removal is carried out by a private service provider which sorts the waste at a transfer station before trucking the remaining waste to a centre 130 km away. Two trips of two containers each per week are made. Sorting at source is being arranged by the service provider. The collected waste includes organic and inorganic material. A representative 15 kg sample was taken for analysis.
Electrical connection to the grid will be through a 22 kV line in the vicinity.
Feed stock composition/quality
Feed stock samples were taken to a specialist laboratory for analysis. Elementary analysis was carried out for moisture and ash content. A detailed analysis of the resultant syngas from the plasma gasification process at 1200°C was carried out to determine the content of various gasses including nitrogen, hydrogen, oxygen, carbon dioxide, carbon monoxide, acetylene, methane, etc. The calorific value of the feed stock could then be determined and its application could be decided.
Technology evaluation
Both the thermal and biochemical energy pathways were considered for converting municipal solid waste to electrical energy. The thermal pathway was a better choice because the feed stock is of a dry nature. Three thermal conversion methods of combustion, pyrolysis and gasification were evaluated. Gasification became the most favourable method. With the aim of exhausting clean gas to the atmosphere whilst harvesting as much solid material as possible, plasma technology presented itself well for the task. Two plasma technologies were evaluated. The South African version which heats up to 1200°C and the Westinghouse advanced plasma technology which heats up to 8000°C. Because of size of operation, cost, its indigenous origins, simplicity and economic value, the South African version was preferred. Its general process flow is shown below.
Plant size determination
The feedstock delivery rate, composition and recycling processes were assessed during the site visits. Feedstock calorific value was determined through laboratory tests. With that information available, it was possible to calculate plant size given various operational regimes, e.g. the number of running hours per day, load factors, maintenance requirements, etc. A plant size of 8 MW was recommended for plant site 1. Plant sizes for the other sites are still to be determined.
Financial analysis
With publicly available information from an American grate combustion plant using municipal waste to energy conversion, it was possible to make assumptions on the inputs to a financial model. The American plant was used as a reference. Two analyses were run, one for the American grate plant on proven technology and another on the unproven South African technology. Recycling feed stock was set at 50% whilst plant availability factor of 85% was considered typical for both plants. The investor required evaluation of a 100% equity and 80% equity scenarios.
Project pre-construction, construction and operational phase timings were assumed and factored into the financial model. The macro financial factors of inflation rates, exchange rates, interest rates, taxes, indexations, rate of return on investment, etc., made part of the financial model inputs.
The capital cost for the American plant was calculated to be R46,2-million/MW installed. After factoring in plant efficiency degradation and assuming operating hours, a yearly production figure was calculated and a tariff of R2,68/kWh was derived for the reference plant. This tariff was higher than what was permissible for the technology by the South African Department of Energy (R1,40/kWh).
Similar calculations were made for the South African version plant whose feedstock flow was 300 tons per day (tpd) before recycling. The investor requested that plant size analysis be carried out for a 10 tpd and 150 tpd feed stock flow after recycling. Considering feed stock moisture and ash content; auxiliary power requirements calorific value; and generator efficiency at 27,3%; a 0,51 MW generator size was determined for the 10 tpd case. A 1 MW generator size was therefore recommended for a configuration with two 10 tpd gasifiers per generator. Since there is a linear relationship between plant size and feedstock flow, a plant with 8 x 1 MW generators and 15 gasifiers was recommended for the 150 tpd case. The capital cost for the 150 tpd plant is eight times that of a 10 tpd plant.
The modular approach gives flexibility to perform planned maintenance and keeps high availability during forced outages.
With an array of cost elements from the prospective local equipment supplier, capital and operational expenses were found. Capital cost elements included those directly associated with equipment procurement and those associated with legal, financial, engineering and construction. Planned maintenance and labour formed part of the fixed costs whilst an amount was given for the variable cost elements (breakdown maintenance, overheads, some labour costs, transport etc.).
Based on an assumption of 100% equity funding, total funding required for the 8 MW plant was calculated to be R214,6-million. After considering power production, auxiliary power consumption, efficiency degradation etc, a tariff of R1,65/kWh was determined. The figure is higher than that allowed for the technology (R1,40/kWh). With 80% seed funding from one of the local banks at an interest rate of 7% the funding requirements reduce to R197,9-million and the tariff reduces to R1,27/kWh which is below the maximum permissible tariff.
Both plants do not incorporate an automatic sorting plant, which may bring an extra revenue stream from sale of recycled material. It was assumed that the plant could cost up to 10% of the capital costs. With this cost factored in, but without a revenue stream (worst case), the tariff rose to R1,49/kWh, which is slightly above the permissible rate.
Socio-economic evaluation
Site 1 was preferred as the first plant to be installed due to legal requirements, environmental impact assessment, extension of life of the dump site, operating processes and likely lower cost. The site is also close to the site of the plant supplier. It was found that if a plant is located there, its environmental impact would be minimum as the plant would be located at an already operational site without need for much extra land. Impact on the local economy would be high as there will be job creation opportunities during construction and in the operation phase. Power generation would also raise the economic profile of the area. With the plant in operation, garbage collection is likely to improve as the garbage will increase in value. Further jobs and downstream business opportunities may be created by the recycling process. With growth of population, waste generation will increase, leading to increasing capacity of the plant and expanded opportunities for the local community. The chosen technology, being indigenous, will answer to the “buy South African” call, help in unemployment alleviation and make use of local content. The investment structure includes local participation, thereby complying with economic empowerment policies and programmes.
Business viability
It was found that the business proposal was viable because:
Contact Lovemore Chilimanzi, PPA Energy, Tel 011 615-3403, lovemore.chilimanzi@ppaenergy.co.za
