Techno-economic analysis of a biomass gasification power plant dealing with forestry residues blends for electricity production in Portugal

Abstract

In 2017, deadly wildfires flared across central and north of Portugal. Following these events, the Government released a set of forestry policies promoting the increase of the currently installed forest biomass combustion thermal power plant capacity. In this study, we conduct a techno-economic analysis of an 11 MW gasification power plant, as a cleaner alternative to traditional combustion plants, dealing with forest biomass blends in Portugal central region. The analysis is built based on existing literature review and evaluation reports concerning investment projects in biomass-to-energy power plants. A spreadsheet economic model combining net present value (NPV), internal rate of return (IRR) and payback period (PBP) is developed over the plant’s lifetime period of 25 years. Cost factors incurred in initial investment, amortizations, fixed assets and working capital investments, financial income, operation and maintenance costs, employees and structure costs. Revenues are generated from selling electricity to the grid. A Monte Carlo sensitivity analysis is employed to gauge the economic model performance and investment risk. Lastly, an assessment of the environmental impact, noxious emissions and future prospects to this biomass-based energy conversion process are addressed. Results predict the feasibility of the project, with an NPV of 2.367 M€, an IRR of 8.66% and PBP of 23.1 years. Sensitivity analysis foresees affordable risks for investors, and that the project’s NPV is highly sensitive to the electricity sales price and electricity production. Despite the viability of the project delivered by the economic model, the economic performance is strongly reliant on revenues from electricity sales regulated by uncertain tariffs and reimbursements. Thus, special concerns must be considered regarding the project attractiveness to potential investors.