Financial and economic model of waste incineration plant construction

Abstract

Currently, Russia produces 55–60 mln tons of solid domestic waste (SDW) annually. Over 90% of it is sent to landfills and unauthorized junkyards. Processing level in Russia is 5–7%, while the European Union countries process up to 90% of SDW. To date, there are about ten waste incineration plants (WIP) in Russia with low production capacity, which is negligible on a national scale. In contrast, the number of WIPs: in Switzerland – 29, in Japan – 1,900, in Sweden – 21, in Denmark – 32, and the population of these countries is less than that of Russia. It is obvious that new plants are very expensive both at construction and operation phases. The article gives an assessment of economic impact of switching over to SDW processing by WIP-based incineration. A WIP processing 350 thousand tons of SDW per year, including a thermal power plant with 24 MW installed power capacity operated by the energy produced from SDW incineration, is taken as an object for calculation. Such construction is unlikely to be financed at the expense of local budget. Possible involvement of a third-party investor, which would construct and operate the WIP at its own expense against guarantee of certain profitability, is considered in this case. The article provides financial and economic model of this project.