Electricity From Municipal Solid Waste Of Lahore Environmental Sciences Essay

This research is based on production of electricity from Municipal solid Waste of Lahore. Different studies have been done in world to find out low cost method for the production of electricity. This research is considered useful to collect results of this study and compare them with costs of electricity production from other energy sources. The comparison can then be used to provide a correct perspective of the economic and environmental aspects of the different means of production of electricity. In this research production of electricity was through incineration of municipal solid waste of Lahore. The primary data regarding waste collection, transportation and management of waste was collected from different local municipal waste management authorities and Lahore compost limited. Secondary data concerning procedure for the production of electricity from the MSW and the prices of machinery and equipment was gathered by consultation of literature in different libraries, from the published material by different concerned establishments and cost analysis done by different organization like IAEA.

Pakistan is a developing country, it is currently facing many problems and among these is electricity and waste management. Lahore is capital of Punjab and has a population of approximately 10 million. Its current municipal waste management and disposal system is the reason for its rapidly deteriorating waste problems. About 4500 tons/day of municipal solid waste out of a total 5800 tons/day is collected at five different landfill site of Lahore. Primarily business, household and commercial waste are collected and disposed of by burying in landfills site. Most of this waste is without any sorting.

The objective of this research is to find whether electricity production from MSW of Lahore can be used as an alternative source of electricity production with increase environment and social benefit. Following are the targets for research.

Utilization of MSW to generate energy

Find feasibility for using MSW as source of electricity production

Reduction of MSW

Reduction of environmental and social problems at the disposal site

Improvement of MSW management services.

Background of the topic

Energy is very important for the socioeconomic development of any country and is also considered as lifeline of the economy.it is necessary for lightening our cities, power our vehicles and to run machinery in factory and industrial units etc. Demand for energy is increasing on daily basis due to increase in population and development of industries but supply of energy is not increasing with the same rate because of which a bottle neck is created in the supply of energy which is causing energy crisis in Pakistan. Pakistan’s energy infrastructure is not well developed, rather it is considered to be underdeveloped and poorly managed. Currently the country is facing severe energy crisis. Despite of strong economic growth and rising energy demand during past decade, no serious efforts have been made to install new capacity of generation. Moreover, rapid demand growth, transmission losses due to outdated infrastructure, power theft, and seasonal reductions in the availability of hydropower have worsened the situation. Consequently, the demand exceeds supply and hence load-shedding is a common phenomenon through power shutdown.

During 2009-10, Energy supply and per capita availability of energy witnessed a decline of 0.64 % and 3.09 % respectively in comparison to previous year. Pakistan needs around 15,000 to 20000 MW electricity per day, however, currently it is able to produce about 11,500 MW per day hence there is a shortfall of about 4000 to 9000 MW per day. This shortage is badly hampering the economic growth of the country

Many years have passed since the electricity production from waste was welcomed as cheap source of electricity production in the world. However the main motivation for this program is to provide an affordable and secure source of electricity both for the short and long term. The cost at which electricity can be provided is a highly important issue. For many years, the relative costs of different methods of electricity generation have been estimated and compared by a wide range of organizations in order to develop a proper perspective.

The history of producing of electricity from incineration of solid wastes in Pakistan is not very old. There was no concept of producing electricity from waste for a long time period after creation of Pakistan. Initially it started at some sugar mills that started this activity by burning of sugar cane bagasse that is fibrous waste left after extraction of sugar cane juice from sugar cane. This material is normally used as a fuel for supplying of heat in multiple effect evaporators applied for the concentration of clarified sugar cane juice to produce crystalline sugar an in the manufacture of pulp and paper in some paper mills. It has turned out to be an economical practice. Many mills these days are applying it to produce electricity for their local needs. It is interesting that some are producing electricity not only for their own needs but also are selling surplus to the national grid.

Importance of the study with respect to the world

World energy resources are depleting very quickly and demand for energy is increasing with the development. Now world is searching for alternative sources of energy to continue development and save resources for our future generations. With decreasing resources cost of energy is increasing and it’s important to look for alternatives that are cheap in term of cost and economically feasible.

Waste is an important topic in every country. The amount of waste produced has strongly grown in the last decades and continues to do so. Further, the treatment of waste has strong impacts on the environment as well as on the health status of the population. The only sustainable way for waste management is to reduce its amount through prevention, reuse and recycle of materials. Waste can be seen as a sign of inefficiency. The less efficiency the more waste. Inefficiency combined with continuous waste growth, means depleting earth’s material resources. The resources on earth are limited. In order to preserve them for our next generations they deserve to be used efficiently. More waste means more treatment. Nearly all waste treatments have emissions. These emissions result in impacts on human health and environment. In heavily populated regions, it becomes steadily more difficult to find space for disposal sites. Also cost of collection and treatment of waste is increasing so we need to utilize the waste in such a way that it can give us some return to cover these costs.

Electricity is very important for world to develop and progress. It has not only made our lives easier but also provided safety. Different organizations in world are trying to find out cost effective sources of producing electricity and production of electricity from waste is one option under consideration. For whole world it is a cost effective and environmental friendly source of energy which can help in reduction of carbon dioxide and GHG emission for mankind. Although some other options like electricity from nuclear are considered cheapest source of electricity but these are quickly dangerous too in case of any natural disaster example of recent days is catastrophe of Japan’s nuclear reactors which has left man to rethink “is it wise to generate energy at the cost of mankind or our earth”. Production of electricity from MSW would be less catastrophic as compare to atomic or other resources.

Importance of study with respect to Pakistan

Population of Pakistan is increasing day by day and the demand of electricity is also increasing due to the increasing consumption. Electricity Crisis is the prime issue in Pakistan which has, more or less, affected all sectors of Pakistan’s machinery ranging from economy to industry, agriculture to social life, inflation to poverty and it is hampering national progress in a drastic manner. Nonetheless, threat of energy crisis can be overcome by government through making effective policies and its proactive implementation. One of their options can be looking for alternative source of producing electricity like production of electricity from MSW. It’s a new entity in power generation during last 1-2 decades. It is a cheap resource in many ways for man which needs less infrastructure, cost and resources. Moreover it is a renewable source of energy which will put no stress on our natural resources and these biofuel resources can be preserved for future generations. It will help in meeting the need of local farmer’s by fertilizers production. It will create job opportunities which will help to eliminate poverty from Pakistan. Simultaneously, it is the responsibility of us, the people of Pakistan, to utilize the available energy astutely and wisely to play our due role for progress of the country.

A typical solid waste management system in our country displays an array of problems, including low collection coverage and irregular collection services, crude open dumping and burning without air and water pollution control. These public health, environmental, and management problems are caused by various factors which constrain the development of effective solid waste management systems. This research can be used as to prevent from waste by reusing the waste for production of electricity. This process will lead to less GHG and acidic gases emission. Much needed land used for dumping this everyday waste can be used for other purposes. It will also help in facilitating the municipal corporation, restaurants and other commercial producers of waste in managing waste and efficient collection of municipal waste will lead to clear environment and healthy society.

Municipal solid Waste

Definition

Municipal Solid Waste (MSW) is defined as waste collected by a municipality. It concerns waste from households (82 % of total MSW), small business, office buildings and institutions such as schools, hospitals, government buildings, waste from parks and street cleaning (Eurostat, 2003, pp. 16).

Municipal solid waste, also called trash, garbage, refuse and rubbish, is the stuff we throw away every day. In our trash are everyday items such as product packaging, grass clippings, furniture, clothing, bottles, food scraps, newspaper, appliances, and batteries that we don’t need any more. Municipal Solid Waste (MSW) is generated by people and by businesses. Not counted as MSW are other discarded materials such as construction and demolition debris, municipal wastewater treatment sludge, and non-hazardous industrial wastes. Although these materials often end up in landfills.

Figure depicts the composition of MSW.

The yearly amount of MSW collected in Lahore is 1,642,500 tons/year. That is 4500tons/day.

Municipal Solid Waste management

Many researchers believe waste can be viewed as an indication of inefficiency. If inefficiency continues with waste that mean earth material resources are draining. We already have limited resources so we need to look for alternatives that can help us in preserving these resources for our future generations. No waste is not possible so we need to find a solution which can maintain it to a sustainable level. If we want to reduce waste amount heavily it cannot be done unless we compromise our comfort of living. Also only reducing waste will not solve our issues it’s a complex problem can only be solved if we are considering many options.

There are a number of methods of solid waste disposal. Many countries have adopted Waste management hierarchy to maintain waste to a sustainable level.

Following directives have been given to European states for their waste management. (Eurostat, 2003, p85; www.europa.eu.int).

The waste management hierarchy: Prevention, re-use, recycling and recuperation of energy and materials get priority.

Principle of Best Available Technology (BAT): disposal facilities must be equipped with the best available technology. The BAT is selected on technological, environmental and economic criteria.

Principle of proximity: Waste must be treated as close as possible to the place of production or collection.

Principle of Self-sufficiency: Every member state, every community is responsible of its own waste.

Polluter Pays Principle (PPP): Waste disposal facilities must not be paid by tax payer’s money, but by the polluter.

Following are some MSW management options

Prevention

Its first option for waste management authorities because it has no harmful effect to the preservation of resources, environment and has no cost associated with it.It is also called source reduction because it eliminates pollution at the sources.

Recycling

Recycling is process in which waste is changed to a valuable resource that can be used for financial, environmental and social benefits. It prevents the emission of many greenhouse gases and water pollutants. It also decrease burden from natural resources. It saves energy necessary to produce new materials.

Composting

In this method organic matter is broken down through uncontrolled anaerobic processes, releasing all produced methane into the atmosphere. There are no technical and investment barriers to this option. It is a feasible option but with severe environmental consequences.

Incineration

The reduction in available land for landfill and the growing amount of garbage have become a major problem for many municipalities. Therefore incineration has become a solution for this problem, reducing significantly the volume of waste. Despite this advantage, Municipal Waste Incineration has many environmental problems that need to be overcome before using incineration processes as the major waste management option.

Land-filling: Sanitary landfill is the cheapest satisfactory means of disposal, but only if suitable land is within economic range of the source of the wastes; typically, collection and transportation account for 75 percent of the total cost of solid waste management. Gases are generated in landfills through anaerobic decomposition of organic solid waste. If a significant amount of methane is present, it may be explosive; proper venting eliminates this problem. The methane produced in the landfills is an excellent fuel. If can be collected through the pipes and subsequently supplied for producing heat, electricity and light.

Research Question

Secondary research in this topic show that there is a very limited research done on the ways of producing electricity from different alternative resources. When we look at the condition of Pakistan, we are facing with a lot of energy crisis and a lot of work in required in looking for alternative ways of producing electricity. So my research question is “Is production of electricity from municipal solid waste of Lahore financially feasible?”

Literature Review

Faaij , A. et al. (1997) in this study the technical feasibility and the economic and environmental performance of atmospheric gasification of biomass wastes and residues integrated with a combined cycle for electricity production are investigated for Dutch conditions. Both secondary and primary sources were used. Secondary source used were previous studies done on gasification of biomass waste and primary experiment was done in which the system selected for study is an atmospheric circulating fluidized bed gasifier-combined cycle (ACFBCC) plant based on the General Electric LM 2500 gas turbine and atmospheric gasification technology, including flue gas drying and low-temperature gas cleaning. The results of study shows that the kWh costs are very sensitive to the system efficiency but only slightly sensitive to transport distance; this is an argument in favor of large power-scale plants. As a waste treatment option the concept seems very promising. There seem to be no fundamental technical and economic barriers that can hamper implementation of this technology.

Mark H. et al.(2002) examined the recovery of energy by pre-processing the combustible components of MSW and using them as a fuel in a properly designed combustion reactor and thermoelectric plant to generate electricity and process steam. Data was collected using secondary sources. Secondary source used were the article on waste management from which author abstracted data. They concludes in his study that waste minimization by means of better design of products and packaging is highly desirable. Also, the best way of managing municipal solid wastes is by recovering recyclable materials. The results of this study also indicate that energy recovery from MSW can reduce considerably the amount of land consigned annually to landfilling and also decrease to a small extent dependence on fossil fuels.

Murphy J and McKeogh E. (2003) have done technical, economic and environmental analysis of energy production from MSW. In this article Primary research was done in order to quantify the MSW and Secondary research was done to find out the four technologies which produce energy from municipal solid waste. They explained that residual components of MSW are incinerated producing electricity at an efficiency of 20% and thermal products at an efficiency of 55%. They further explained in his article that gasification produces more electricity than incineration but it requires a smaller gate fee than incineration and when thermal product is not utilized generates less greenhouse gas per KWh than incineration. Both biogas technologies require significantly less investment costs than the thermal conversion technologies (incineration and gasification) and have smaller gate fees. Of the four technologies investigated transport fuel production requires the least gate fee.

Dubois M. et al. (2004) carried out a study on municipal solid waste treatment in the European Union. This study goes through most of the available techniques related to disposal of waste, as well as the environmental and health impacts created by them and different ways of treating municipal solid waste: Recycling, composting, incineration and land filling. Secondary sources are used for collecting data about the municipal solid waste treatment and for its quantification. The researchers defined Municipal Solid Waste Management as “the generation, separation, collection, transfer, transportation and disposal of waste in a way that takes into account different parameters, such as public health, economics, environment, conservation, and aesthetics and is responsive to public demands.” They reported that yearly amount of MSW collected in Western Europe was 210 million tons/year. The authors recommended that Principle of Best Available Technology (BAT): disposal facilities must be equipped with the best available technology. The BAT is selected on technological, environmental and economic criteria and Polluter Pays Principle (PPP) must be strictly followed. In response, landfill directive was introduced which aimed at prevention or reduction of negative impacts of land filling on the environment and health. The waste prevention is the highest priority in EU. The study indicates that the major stress in European Union is on recycling and minor on its disposal by incineration to produce electricity. And in the end it concludes that only sustainable way for waste management is to reduce its amount through prevention, reuse and recycle of materials.

Renbi B and Sutanto M. (2000) reviewed the practices and challenges of solid waste management in Singapore. This article gives an overview of current solid waste management situation and provides a brief discussion of the future challenges. Due to the rapid industrialization and economic development there is a tremendous increase in solid waste generation in Singapore. The solid waste incineration has been identified as management saw that land is extremely scarce. Therefore solid waste incineration has been identified as the most preferred disposal method.

Barry, F (Barry, 1973) has done a study on waste heat utilization. In this article, different sources of waste heat have been discussed. Uses of waste heat in closed-agriculture offer a way to use thermal discharges from power plants and industrial processes. The use of waste heat in aquaculture is highly possessive. Along with development, some technological problems have been highlighted.

Ernst B (Ernst, 1996) carried out study on clean fuels from municipal solid waste for fuel buses in metropolitan areas. In this case he explained that due to increasing MSW, costs of landfills are increasing day by day. So he gave an idea that MSW can be used for production of fuel which can be very cost efficient. He compared different costs and shown that production of fuel form MSW is most convenient and cost efficient way.

Kagawa S. et al. (1999) undertook a study which aimed at the utilization of low temperature thermal energy. Both primary and secondary sources were used. Secondary source used were the articles on utilizing waste to produce thermoelectricity. Primary research was done by an experiment in which a thermoelectric generator was applied to a municipal solid waste incinerator. Oil was used on the hot side as the heat transfer medium and water was used on the cold side. A running test was passed out with 22 times on/off heat cycles. The operating time was 115 hours. No significant degradation of the thermoelectric module was observed throughout the test period.

Judith D. et al. (1965) emphasizes in his article that thermal power is one of the key element which lead towards the economic development. That is why technology should be effectively managed, as it is going to save one’s resources. He compares the thermal power with the hydroelectric and makes the hydroelectric superior over the thermal in contributing to the economic development.

Sufian M and Bala B,k carried out a study on modeling of electrical recovery from urban solid waste system. Data was collected from Dhaka City Corporation .They took the case of Dhaka city in which he described that the percentage of total electricity demand supplied from solid waste decreases with time. However MSW could still supply a significant electricity demand of Dhaka. So adoption of a policy for electrical recovery from urban solid waste of Dhaka should be dictated by the economies and the environmental implications.

Thomas S (Thomas, 1993) has studied the energy resources of India and explains their underdevelopment in terms of lack of energy resources. He further says that alternative resources should be used to cover the problem of scarce resources in India. Inefficiency of production and distribution is one of the reason which gave rise the problem of scarce resources.

Methodology

Research Type

Qualitative data will be acquired from a mix of primary and secondary data. The focus would be on secondary research along with analysis of in-depth interviews conducted of Lahore compost limited (a private limited company set up to operate compositing facilities) representatives.

Data Type and Research Period

Both primary and secondary data will be gathered. The primary data will be collected through in-depth interviews. Interviews from Waste management authorities will be based upon collection procedure, quantity and nature of solid waste. Secondary data will be about production of electric power from solid waste. Secondary data will be cross sectional.

Sources of Primary Data

Different sources of data that supplied information about the solid waste include

Lahore Compost Limited

Lahore Urban Unit

Lahore Waste Management Company

City District Government Lahore.

Sources of Secondary Data

The secondary data will be collected from literature in different libraries and published material by different people who have recently done work in this field and by reading various articles on Internet.

Dependent Variable:

Electricity Production

Independent Variables:

Biodegradable waste

Recyclable material

Inert waste

Composite wastes

Domestic hazardous waste & toxic waste

Operational Definitions

Biodegradable waste: is a type of waste, typically originating from plant or animal sources, which may be degraded by other living organisms. Biodegradable waste can be commonly found in municipal solid waste (sometimes called biodegradable municipal waste, or BMW) as green waste, food waste, paper waste, and biodegradable plastics.

Recyclable material: Recyclable waste or materials can be processed and used again. Recyclable materials include many kinds of glass, paper, metal, plastic, textiles, and electronics.

Inert waste: Inert waste is waste which is neither chemically or biologically reactive and will not decompose. Examples of this are sand, drywall, and concrete. This has particular relevance to landfills as inert waste typically requires lower disposal fees than biodegradable waste or hazardous waste.

Composite wastes: Composite waste material is a product of material waste such as vegetable waste, plant waste, dungs, food product, waste clothing, Tetra Packs, waste plastics such as toys.

Domestic hazardous waste & toxic waste: Leftover household products that contain corrosive, toxic, ignitable, or reactive ingredients are considered to be “household hazardous waste” or “HHW.” Products, such as paints, cleaners, oils, batteries, and pesticides that contain potentially hazardous ingredients require special care when you dispose of them.

Relationship between variables: There is a positive relationship between the Independent variables and dependent variables. As with the increase in independent variables which are our types of municipal solid waste there will be an increase in total quantity of MSW. So with the greater quantity of MSW we can produce more and more of steam and fuel gasses which can further produce higher quantity of electricity for us.

Research Hypotheses

The following hypotheses were developed to study the relationship of the variables:

Hypothesis1:

H0: increase in Biodegradable waste will not increase quantity of electricity produced.

H1: increase in Biodegradable waste will increase quantity of electricity produced.

Hypothesis2:

H0: decrease in Recyclable material will not decrease quantity of electricity produced.

H1: decrease in Recyclable material will increase quantity of electricity produced.

Hypothesis3:

H0: increase in Inert waste will not increase quantity of electricity produced.’

H1: increase in Inert waste will increase quantity of electricity produced.’

Hypothesis4:

H0: decrease in Composite wastes will not decrease quantity of electricity produced.’

H1: decrease in Composite wastes will decrease quantity of electricity produced.’

Hypothesis5:

H0: increase in Domestic hazardous waste & toxic waste will not increase quantity of electricity produced.

H1: increase in Domestic hazardous waste & toxic waste will increase quantity of electricity produced.

Techniques

Cost analysis will be done by using NPV technique. Steam power generation will be used in production model through gas insertion at it has low gate fee.

Process used for production of electricity

Different plants are developed in order to increase the efficiency of electricity production from waste. The process and plant we will be using is of REI’s Recovered Energy Systemâ„¢ developed by PIAENERGY. (http://www.piaenergy.com)

Process Flow Description

The following is a description of REI’s Recovered Energy Systemâ„¢ process for transforming Municipal Solid Waste (MSW) into energy and useable by-products. The process can be broken down into four sub-systems: material handling, thermal transformation or plasma gasification, gas clean up, and steam and energy production. A flow diagram is shown at the end.

Material Handling

The incoming waste is weighed in and then deposited on the tipping floor from any of the trucks currently in use that pick-up and or transfer MSW. No tedious sorting or handling is needed. The only separation that is required will be large oversized pieces that won’t fit into the shredder, heavy metal items like engines that may slow down the shredder or items that need special pre-processing. Hazardous waste and medical waste are handled separately and not co-mingled with normal waste.

The system is designed to process waste as quickly as possible. During delivery hours the waste is delivered faster than it can be gasified. Part of the waste is stored for processing at night and on weekends and holidays. Any oversized material is shredded and then conveyed to storage.

The waste is completely cycled every 3-4 days. Should unscheduled shutdowns occur, the waste received from the municipality goes into the storage area which is designed to handle normal surges and continue accepting the waste.

Thermal Transformation

The waste is injected into the upper part of thermal transformer (also referred to as the plasma gasifier or reactor) and piles up in the body of the reactor. The plasma torches located at the bottom of the reactor generate a flame that is between 5000-8000° F.

The organic material does not burn because there is not enough oxygen. The organic matter is transformed to a gas composed primarily of carbon monoxide (CO), hydrogen (H2) and nitrogen (N). This gas contains substantial energy and can be used in a variety of ways.

The hot gas rises up through the waste piled in the reactor and begins the gasification process on the material piled in the reactor. By the time the waste has reached the bottom of the reactor, the high temperature, oxygen starved environment has totally transformed all organic compounds into a gas.

The gas that exits from the top of the reactor and is made up of primarily carbon monoxide, hydrogen, water and nitrogen. Small amounts of chlorine, hydrogen sulfide, particulate, carbon dioxide and metals with boiling points less than 2280° F are contained in the gas. Because of the low oxygen atmosphere and high temperature, the base elements of the gas cannot form toxic compounds such as furans, dioxins, NOx, or sulfur dioxide in the reactor.

As the gas exits the reactor it first goes to a proprietary gas reformer and then it is cooled in a series of high temperature heat exchangers. The sensible heat is reduced to about 270° F and is used to generate high-pressure steam that is fed to a steam turbine to produce electricity.

The high temperatures from the plasma torches liquefy all inorganic materials such as metals, soil, glass, silica, etc. All matter, other than the metals, becomes vitrified or molten glass. The metal and glass flow out of the bottom of the reactor at approximately 3000° F. As the metal and glass flow from the reactor, they are quenched in a water bath. The glass forms obsidian like glass fragments. The metals are then separated from the glass.

There is no waste left at the end of the thermal transformation. All of the waste is recycled into metal, glass or has been converted to fuel gas.

Gas Cleanup

After the fuel gas has left the heat exchanger, approximately 85% of the particulates are removed in a cyclone. A smaller percentage of the metals are also removed with the particulate. The recovered particulate and metals are then injected into the molten glass. The components of the glass are locked into the glass matrix and cannot leach out.

The gas then goes through a scrubber where the hydrochloric acid (HCL) is scrubbed out to form dilute HCL water. The liquid goes through a series of nano filter membranes where the particulates and metal in the liquid are removed. The metals and particulate at this stage cannot go back into the glass and can either be sold to a metal refiner or removed to a landfill. This small amount of material is the only potential material that goes back to a landfill and represents less than a fraction of 1 percent of the waste feedstock. The clean HCL water is concentrated to 15-20% for commercial sale.

The water in the gas is condensed out and is used to provide clean makeup water for the rest of the plant.

The hydrogen sulfide (H2S) in the gas is scrubbed out to make fertilizer grade sulfur using a biological process or alternatively can be converted into sodium bisulfite. The gas then goes to a gas compressor and then to the gas turbine.

Steam And Power Generation

High-pressure steam from the primary heat exchanger goes to a steam turbine where it is converted to electricity. The electricity generated with this steam source provides most of the power needed for internal power requirements. The system is capable of generating all its own internal requirements.

The fuel gas goes into a gas/steam combined cycle turbine where it is used to produce electricity.

All the available heat in the process is used to make electricity or steam. The discharge temperature off the gas turbine is less than 270°F. Any low-pressure steam (small amount) not used in the process is condensed.

A facility designed with electricity production can export approximately one megawatt of electricity for each ton of MSW, depending on the moisture content and characterization of the MSW.

Process Flow Diagram

Data Analysis

The data were analyzed at two levels. At the first level, the information gathered through the interviews and questionnaire responses was computed and described as the results of qualitative analysis. At the second level, the projects were cost designed and subsequently appraised by the discounted cash flow techniques published in Guidelines of Asian

Data Interpretation

Data will be interpreted using benefit to cost ratio by taking NPV of the cash flow in comparison with cost incurred

Analysis of Results

Financial Analysis of the project

Financial analysis is done in order to determine the profitability of the project. Overall cost of the project is calculated and compared with revenue generated from sale of electricity with other salable products.

Construction of plant will take about 2 years and will be completely operational in the start of third year. In initial investment the costs for building, land, office equipment etc is estimated based on the information given by real estate agent about current land and construction cost near mahmood botti (dumping area of waste). Land required for the construction of the building will be around 4 acre. Covered area will be around 16 kanals. Cost of machinery and equipment is calculated by analyzing different plasma gasification projects. Other costs like certification will be added in it. After the initial investment operation and maintenance costs are calculated in which there will be no raw material cost as we will be using waste that is not used and electricity required in operation will be supplied by the plant itself. There will be no operational and maintenance cost for first two years as the project will be in construction and testing stage. As the plant has a useful life of 20 years straight line depreciation method will be used to find out the depreciation cost. Expenditure in future years will be estimated with no extension programs in the plant size.

Now on revenue side there will be revenue with selling salable products generated from process or without selling these products. We will be checking the feasibility of two scenarios whether the project is feasible with or without loan and how much it will affect the B/C ratio and payback period time.

Following assumptions have been used in the analysis of the project

Base year for the project is 2011 with useful life of 20 years. Discount rate used is 12%. About 50% of total cost incurred will be financed through loan or all the money will be invested by own.

Land Cost

Total land required = 4 acres

Cost of land = 10,000,000 per acre

Total land cost = 4* 10,000,000 = 40,000,000 Rs

Building Cost

Currently construction companies are charging around 650 rupee per sqft.

Total construction area of plant is around 16 kanals = 16 * 4500 = 72000 sqft

Total construction cost of building = 72000 * 650 = 46,800,000 Rs

Plant and Equipment Cost

According to different studies done on plasma gasification projects REI process will cost around 350 million dollars = 350,000,000 * 86 = 30,100,000,000 Rs

Pre-Production Expenditure: It will take one full year to install the plant. Thus, the expenditure involved includes salaries of the staff and consultants, etc.

Consultant Fee: 500,000/Annum Rs

Project Head: 1,000,000/Annum Rs

Power House In charge: 560,000/Annum Rs

Boiler Foreman: 300, 000/Annum Rs

Total salaries & fees = 2,360,000/Annum Rs

Total initial fixed expenditure = 30,418,106,620 Rs

Cost of capital

If we decide to take loan we will take it in second year of construction first construction will be financed through own investment. While as we have planned to finance 50% of our initial fixed cost through bank loans we will take it from 2nd year of construction.

Total financial cost incurred in 2nd year will be =15,209,053,310 @ 14% = 2,129,267,463Rs

Estimation Overall Cost

Fixed Initial Investment Cost

Land

40,000,000

Building

46,800,000

Vehicle And Office Equipment

17,500,000

Salaries &Fees

2,360,000

Factory Equipment

30,100,000,000

Capitalized Financial Cost

211,446,620

Total

Pkr 30,418,106,620

Total Operating and Maintenance Cost

As we are producing electricity from waste so there will be no raw material cost , electricity required during operation will be supplied through own production.

Transportation cost

We will need to transport waste from three other dumping site of WASA. If we contract the transportation of waste it will cost us.

Total Transportation cost of Waste per day = 200,000 Rs

Total Transportation cost per year = 200,000 * 365 = 73,000,000 Rs

Cost of labor

Labor

Number

Salary per Employee

Salary per Month

Boiler/Turbine attendant

10 15000

150,000

Boiler/Turbine Helper

30 10000

300,000

Turbine Foreman

3 25000

75,000

Water Treatment Plant Labor

20 10000

200,000

Electrician

4 15000

60,000

Transport of Waste to Storage

15 10000

150,000

Managers

3 50,000

150,000

Directors

2 150,000

300,000

Head of project

1 250,000

Total Salaries per month = 1,635,000 Rs

Total salaries per year = 1,635,000 * 12 = 19,620,000 Rs

Maintenance Cost

The maintenance cost is calculated at the rate of 5% of the purchase price of machinery and equipment. Thus,

Maintenance Cost = 30,100,000,000 * .05 = 1,505,000,000 Rs

Depreciation Cost

We are using a straight line method for calculation of depreciation with useful life of 30 years.

Total depreciation per year=30,100,000,000 / 20 = 1,505,000,000 Rs

Total Expenditure

Revenue Estimation

The efficiency of our plant is to produce 1 MW of electricity from 1 ton of waste. We will be estimating our revenue on this basis

Revenue Discounted to the Base Year

Alternative analysis:

Scenario 1:(without Loan)

Now we will find out B/C ratio of the project if we don’t take loan from bank and invest our money for complete project

Present Value of Benefits 64,133,576,017

Benefit / Cost Ratio = ————————— = ——————————— = 1.318

Present Value Cost PKR 48,671,456,241.89

Net Present Value = 64,133,576,017- 48,671,456,241.89 = 15,462,119,776 Rs

Total Investment 30,206,660,000

Payback Period = _______________ = _______________ = 3.08 years

Annual Return PKR 9,800,000,000.00

Scenario 2: (With Loan)

Now we will calculate B/C ratio with assuming that we have financed half of our fixed investment cost from Loan taken from bank for 4 years payback time.

Present Value of Benefits 64,133,576,017

Benefit / Cost Ratio = ————————— = ——————————— = 1.300522664

Present Value Cost PKR 49,313,693,495

Net Present Value = 64,133,576,017- 49,313,693,495= 14,819,882,522 Rs

Total Investment 30,418,106,620

Payback Period = _______________ = _______________ = 3.10 years

Annual Return PKR 9,800,000,000.00

Results

Results are based on the cost analysis as well as on the general information of Lahore’s waste and mill technology in operation to produce thermo-electric power from bagasse. The results based on general information of Lahore’s waste and mill technology in operation to produce thermo-electric power from baggase are descriptive research which is discussed in sub headings as under:

BCR

NPV

Payback Period

Scenario 1

1.318

15,462,119,776

3.08 years

Scenario 2

1.300

14,819,882,522

3.1 years

Results of the Cost Analysis

The results of cost analysis are reported below.

Acceptance and Rejection Criteria for the above Techniques:

Benefit to Cost Ratio is one of the important criteria for grading a project as non-profitable, profitable or socially acceptable. The decision rule is that if it is more than 1, the project is profitable and thus acceptable. If it is less than one, it is non- profitable and thus not acceptable if it does not fall in the category of social obligations.

Payback period tells us the time in which we will recover our initial investment. Payback method suggests the shorter the time period the quicker the recovery of the investment in a project. A long payback period is not very desirable.

For Net Present Value or NPV of the Project the decision rule is that the project is acceptable if NPV is positive. If it is negative, then project is rejected provided it does not fall in the category of social obligations. Usually, the projects meant to produce products for sale for competing in the market are straight away rejected if the NPV is negative. Of course, these may be considered for acceptance if their social cost is high and that is in terms of general social benefits such as cleanliness of environment, response to a community need if no other appropriate source is available, creation of employment opportunities, etc.

The total electricity consumed by the people of Lahore from WAPDA and Local Production from Generators was calculated from data collected from LESCO. The same was compared with the expenditure involved in production of electricity from Incineration of municipal Solid Waste.

Scenario 1 (Without Loan): The BCR in Alternative 1 is 1.318, the NPV is Rs. 15,462,119,776 while Payback Period is 3.08 Years, Thus, the Benefit Cost Ratio (BCR) is greater than 1 and the Net Present Value (NPV) is also positive along with a longer payback period. This means that this alternative is feasible.

Scenario 2 (With Loan): The BCR in this alternative is 1.300; NPV is Rs 14,819,882,522 and payback period: 3.10 Years. This shows that taking loan from bank with 4 year payback time is more suitable option in comparison with the first scenario as we have to invest much less than without loan and incase of not taking loan we have to invest 15,103,330,000 Rs more which give so return if we compare the result of options.

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