Cost management for waste to energy systems using life cycle costing approach: A case study from China

Abstract

This study is the first systemic cost investigation using the life cycle cost (LCC) method to analyse a municipal solid waste (MSW) incineration power plant project in China. In this study, LCC is divided into acquisition cost, maintenance cost, fault cost, and operating cost. Considering the time value of each cost, a model based on the LCC theory is established and three indexes are introduced to evaluate the MSW incineration power project, including the loan repayment period, the dynamic investment payback period, and a performance indicator. For a 12 MW MSW incineration power plant project, each cost and index are investigated under the designed runtime of 5500 h and a sensitivity analysis is performed to measure the impacts of main factors on the cost assessment results, including the annual operating hours, the government subsidies, the social discount rate, inflation rate and interest rate. The results show that the MSW project's LCC and total revenue are approximately 588 × 106 CNY and 746 × 106 CNY, resulting in an LCC performance indicator of 1.270 relative to the revenue; the acquisition cost comprises the maximum proportion of approximately 50% of the LCC, and the electricity price subsidy for utilising energy from waste (EFW) technology accounts for the largest proportion of approximately 30% of all subsidies; the loan repayment period and dynamic investment payback period are 9 and 15 years, respectively. The sensitivity analysis indicates that the variations in annual operating hours, the subsidy for disposing MSW, and the electricity price for utilising EFW technology have significant effects on the costs and indexes when compared with those of the social discount rate, inflation rate and interest rate; and that the increased acquisition cost and operating cost for denitration system may be offset by an increase in electricity subsidy by up to 0.013 CNY/kW h.