Negative Net Present Value Research Articles

Promoting bioeconomy routes: From food waste to green biomethane. A profitability analysis based on a real case study in eastern Germany

Profitability studies are needed to establish the potential pathways required for viable biomethane production in the Brandenburg region of Germany. This work study the profitability of a potential biomethane production plant in the eastern German region of Brandenburg, through a specific practical scenario with data collected from a regional biogas plant located in Alteno (Schradenbiogas GmbH & Co. KG). Several parameters with potential economic influence such as distance of the production point to the grid, waste utilization percentage, and investment, were analyzed. The results illustrate a negative overall net present value with the scenario of no governmental investment, even when considering trading the CO2 obtained throughout the process. Subsidies needed to reach profitability varied with distance from 13.5 €/MWh to 19.3 €/MWh. For a fixed distance of 15 kms, the importance of percentage of waste utilization was examined. Only 100% of waste utilization and 75% of waste utilization would reach profitability under a reasonable subsidies scheme (16.3 and 18.8 €/MWh respectively). Concerning the importance of investment, a subsidized investment of at least 70% is demanded for positive net present values. Besides, the sensitivity analysis remarks the energy consumption of the biogas upgrading stage, the electricity price, and the energy consumption of biogas production as major parameters to be tackled for the successful implementation of biogas upgrading plants. The results here obtained invite to ponder about potential strategies to further improve the economic viability of this kind of renewable projects. In this line, using the CO2 separated to produce added-value chemicals can be an interesting alternative.

Grid-Scale Battery Energy Storage for Arbitrage Purposes: A Colombian Case

This study seeks to determine a suitable arbitrage strategy that allows a battery energy storage system (BESS) owner to obtain the maximum economic benefits when participating in the Colombian electricity market. A comparison of different arbitration strategies from the literature, such as seasonal, statistical, and neural networks-based models, is performed. To determine BESS’s optimal operation, a Mixed Integer Linear Programming (MILP) optimization problem is formulated, including a battery degradation model based on an upper piecewise linear approximation method. A financial evaluation of the different arbitrage strategies is carried out, resulting, for all the analyzed cases, in a negative net present value (NPV); thus, the results show that the income obtained from BESS when only performing energy arbitrage in the Colombian market do not compensate the investment costs. Results have also shown that strategies based on statistical and prediction models have a better performance than seasonal strategies, especially in atypical circumstances such as COVID-19.

Risk Analysis on PMMA Recycling Economics.

Poly(methyl methacrylate) (PMMA) is a versatile polymer with a forecast market of 4 Mtons/y by 2025, and 6 USD billion by 2027. Each year, 10% of the produced cast sheets, extrusion sheets, or granules PMMA end up as post-production waste, accounting for approximately 30 000 tons/y in Europe only. To guide the future recycling efforts, we investigated the risks of depolymerization process economics for different PMMA scraps feedstock, capital expenditure (CAPEX), and regenerated MMA (r-MMA) prices via a Monte-Carlo simulation. An analysis of plastic recycling plants operating with similar technologies confirmed how a maximum 10 M USD plant (median cost) is what a company should aim for, based on our hypothesis. The capital investment and the r-MMA quality have the main impacts on the profitability. Depending on the pursued outcome, we identified three most suitable scenarios. Lower capital-intensive plants (Scenarios 4 and 8) provide the fastest payback time, but this generates a lower quality monomer, and therefore lower appeal on the long term. On 10 or 20 years of operation, companies should target the very best r-MMA quality, to achieve the highest net present value (Scenario 6). Product quality comes from the feedstock choice, depolymerization, and purification technologies. Counterintuitively, a plant processing low quality scraps available for free (Scenario 7), and therefore producing low purity r-MMA, has the highest probability of negative net present value after 10 years of operation, making it a high-risk scenario. Western countries (especially Europe), call for more and more pure r-MMA, hopefully comparable to the virgin material. With legislations on recycled products becoming more stringent, low quality product might not find a market in the future. To convince shareholders and government bodies, companies should demonstrate how funds and subsidies directly translate into higher quality products (more attractive to costumers), more economically viable, and with a wider market.

Social cost-benefit analysis of investment in rehabilitation of multipurpose small reservoirs in northern Ghana using an ecosystem services-based approach

Multipurpose small reservoirs are essential infrastructure in providing water for irrigation and non-irrigation uses in water stress areas of northern Ghana. Unfortunately, the flow of multiple ecosystem services from small reservoirs have been declining over several years due to lack of rehabilitation and poor management. Using selected multipurpose small reservoirs and available secondary and survey data, this paper applied an ecosystem services-based approach in the economic analysis of investment in rehabilitation of small reservoirs in northern Ghana. The findings reveal that private financial returns from irrigated crops have negative net present value (NPV) and an internal rate of return (IRR) lower than the cost of capital, implying a lack of economic incentive for private investors in their rehabilitation. However, accounting for the multiple ecosystem services such as livestock watering, fisheries, recreation services, domestic water, and climate regulation show positive NPV and high return on capital (IRR up to 43%). Policy choices would be biased against reservoir development if stakeholders consider only irrigation benefits. Based on the findings we recommend public investment in rehabilitation of multi-purpose small reservoirs to harness the multiple ecosystem services and community livelihoods. We further recommend public–private-user partnership business model to address current management inefficiency and optimize the flows of ecosystem services from small reservoirs to wider community.

Techno-Environ-Economical Analysis of Floating PV/On-Ground PV/Grid Extension Systems for Electrification of a Remote Area in India

Remote area electrification is a major concern for a government of any developing nation. India is also working for it but despite continuous efforts towards remote area electrification, several thousand households in India are un-electrified. Several schemes have been launched by Government for electrification of such areas through grid extension but still many areas have not been covered under the proposed schemes due to economic, environmental and geographical reasons. Narayanpur district in Chhattisgarh state of India has un-electrified regions and various issues like poor literacy, untreated water facility and lack of access to communication networks. In order to find viable option of electricity supply to this region, a case study has been performed for the feasibility of off-grid floating photovoltaic (PV) system, on-ground PV system and grid extension along with their comparative analysis with respect to certain parameters i.e. net present value (NPV), cost of energy (CoE), environment cleanliness and social acceptance. Floating PV and on-ground PV systems have been designed and simulated using System Adviser Model (SAM) software developed by National Renewable Energy Laboratory (NREL), USA. The results show that floating PV system has lowest CoE of $0.0598/kWh and least negative NPV of $185,431 as compared to other two options. However, it is found that floating PV system achieves positive NPV of $38,968 in 28th year of project life.

Ranch Profitability of Improving Soil Health on Rangelands

Conservation practices can maintain or enhance the quantity of ecosystem services realized by both private individuals and society. However, implementing these practices generally has costs that may exceed the benefit received by a private economic agent, particularly if costs are immediate and benefits accrue in the future. This study presents a framework to evaluate ranch-level financial incentives for grazing management that results in improved soil health. A range of hypothetical scenarios of improved forage production is considered for a representative central-Wyoming, US, profit-maximizing rancher. Modeled scenarios are then compared with the possible costs of implementing a practice to improve soil health. The net present value (NPV) of net benefits is shown to be positive if forage production increased immediately. However, it is likely that the forage response is not immediate and would occur over a significant period of time. Scenarios of linear and logistic forage response over a period of 35 yr and 105 yr, as well as two different initial conditions, all show a negative NPV of net benefits (greater implementation costs of rotational grazing than projected benefits from improved soil health) assuming a 7% discount rate. Due to the time it may take for forage benefits to be realized and the time value of money, financial assistance may be required for ranchers to at least break even when implementing practices that improve soil health on rangelands.

Economic analysis of tilapia cage culture in Lake Victoria using different cage volumes

ABSTRACT The economic viability of tilapia cage culture in Lake Victoria was assessed using a profitability analysis model as the main decision support tool. One and five cages of 8 m3 (A), 62.5 m3 (B), and 471 m3 (C) were assessed. The break-even price (US$4.6 kg−1) for one cage of A appeared higher than the tilapia farm gate price in Kenya (US$3.5 kg−1), suggesting unprofitability of the venture. The decreased break-even price relative to increase in cage numbers showed economies of scale throughout the cage volume ranges. The longest payback period (PBP) for A (8 years) implied a risky venture. This was reaffirmed by an internal rate of return (IRR) of < 50% and negative Net present value (NPV) in the first two years of operations. The study affirmed the economic viability of operating large cage volumes (B or C) for Nile tilapia and for broader applicability to other Great Lakes.

Li-ion batteries for peak shaving, price arbitrage, and photovoltaic self-consumption in commercial buildings: A Monte Carlo Analysis

This study investigates the benefits of introducing Li-ion batteries as energy storage unit in the commercial sector by considering a representative building with a photovoltaic system. Only the costs and revenues related to the installation and operation of the battery are considered in this study. The operational strategy of the battery consists in balancing the following processes through day-ahead forecasts for both electricity consumption and photovoltaic production: shaving a targeted peak, performing price arbitrage, and increasing photovoltaic self-consumption. By reviewing the electricity price cost for commercial buildings from several companies around the world, a general electricity price structure is defined. Afterwards, a Monte Carlo Analysis is applied for three locations with different solar irradiation levels to study the impact of climate, electricity price components, and other seven sensitive parameters on the economic viability of Li-ion batteries. The Monte Carlo Analysis shows that the most sensitive parameters for the net present value are the battery capacity, the battery price, and the component of the electricity price that relates to the peak power consumption. For Stockholm, one of the investigated locations, the corresponding Pearson correlation coefficients are −0.67, −0.66, and 0.19 for the case were no photovoltaic system is installed. For the considered battery operational strategies, the current investment and annual operation costs for the Li-ion battery always lead to negative net present values independently of the location. Battery prices lower than 250 US$/kWh start to manifest positive net present values when combining peak shaving, price arbitrage, and photovoltaic self-consumption. However, the integration of a photovoltaic system leads to a reduced economic viability of the battery by reducing the revenues generated by the battery while performing peak shaving.

Economic feasibility of implementing an infrastructure for collecting rainwater from the roof of free-stall sheds

his study aimed to analyze the economic feasibility of implementing and using the necessary infrastructure to collect rainwater from the roof of free-stall sheds in a dairy production system in southern Minas Gerais, Brazil. Specifically, the total cost (TC), total operating cost (TOC), and actual operating cost (AOC) of a cubic meter of rainwater and the break-even point in cubic meters were estimated. The research was conducted from January to December 2017 on a property located in the south of Minas Gerais. The following MOP scenarios were analyzed: most likely (Scenario 1), optimistic (scenario 2), and pessimistic (scenario 3). The grant value of the Das Velhas River basin was considered for the most likely scenario, as it has the most similar value with that of the basin surrounding the Furnas reservoir, in which the property is inserted. The grant value for water collection and consumption from the Paraíba River basin was considered in Scenario 2, as this Federal basin has the lowest grant value. The grant value for water collection and consumption from the Piracicaba, Jundiaí, and Capivari river basins was considered in Scenario 3, as these basins have the highest prices for the cubic meter of the collected and consumed water. The implementation of the infrastructure for collecting rainwater from the roof of free-stall sheds under the studied conditions was economically unfeasible for all scenarios, with negative net present values (NPV). Simple and discounted paybacks were longer than the proposed horizon. The internal rate of return (IRR) could not be estimated due to the negative values of the net cash flow. The benefit-cost ratios (BCR) were unsatisfactory (lower than 1). The TC values for rainwater collection from the roof of free-stall sheds were R$ 23,206.59 and R$ 20,489.25 for scenarios with interest rates of 8.50 and 6.99%, respectively, while the TOC value was R$ 7,850.30 for all analyzed scenarios. The unit values for TOC and AOC were R$ 9.9024/m3 and R$ 1.3060/m3 of collected water, respectively. The break-even point could not be estimated in the studied scenarios, as the variable cost per cubic meter of water collected from the roof of the free-stall shed was higher than the grant value charged by the water management committees of the different studied basins.

Techno-economic analysis of a grape pomace biorefinery: Production of seed oil, polyphenols, and biochar

Processing grape pomace (GP), a major waste from the wine industry, into multiple value-added products based on the biorefinery concept has a potential to reduce waste disposal and promote a sustainable bioeconomy. However, its economic feasibility at a commercial scale remains unknown. The present study aims to evaluate the economics of a biorefinery process of GP, by performing comparative techno-economic analysis of three processing scenarios: (1) a whole biorefinery process that fully utilizes GP biomass and produces grape seed oil, polyphenols, and biochar (GSO+GSKP+GB), (2) a process that produces grape seed oil and polyphenols (GSO+GSKP), and (3) a process that produces only grape seed oil (GSO). A plant capacity of about 33,000 metric tons/year was considered in the analysis. Among the three scenarios, the whole biorefinery process (GSO+GSKP+GB) showed the highest economic performance with the net present value (NPV), internal rate of return (IRR), and payback period of 111.7 million US-$, 34.3%, and 2.5 years, respectively, due to the diverse revenues and minimized waste disposal cost. The GSO plant showed the lowest economic performance with a negative NPV. Sensitivity analysis revealed that plant capacity, polyphenol price, polyphenol concentration (percentage) in grape pomace, and biochar price had dominating influences on the economic performance of the biorefinery process.

Comparative analysis of dish Stirling engine and photovoltaic technologies: Energy and economic perspective

Solar energy can be harnessed by direct conversion of solar energy to electrical energy by using photovoltaic (PV) technology or with the help of thermodynamic cycle by using concentrated solar power (CSP) technologies. The goal of this paper is to perform detailed comparative analysis for the two solar technologies namely: PV and dish Stirling engine (DSE). In order to ensure a fair comparison, the two systems are designed for the same rated capacity of 1 MW for Tabuk, Saudi Arabia. The average values of direct normal irradiance (DNI) and global horizontal irradiance (GHI) in Tabuk are 7.43 kWh/m2/day and 6.31 kWh/m2/day, respectively. The two technologies are analyzed based on several performance indicator factors such as capacity factor (CF), solar to electric efficiency, energy output, levelized electricity cost (LEC), and net present value (NPV). The comparative analysis of the two technologies shows that PV system has 6.9% better CF and 54% more energy output compared to DSE system. The LEC of PV systems is 3.39 ¢/kWh which is much better than the 11.74 ¢/kWh from the DSE system. The NPV of the PV system is positive while DSE system has negative NPV. This paper present useful insight of the two technologies which is helpful to choose a solar power technology for a power project.

Positive Profits in Competitive Credit Markets With Adverse Selection

We provide theoretical foundations for positive lender profits in competitive credit markets with asymmetric information, where potential borrowers have scarce collateralizable assets. Strikingly, when some borrowers have negative net present value projects, an equilibrium always exists in which lenders make positive profits, despite their lack of ‘soft’ information and free entry of competitors. We then establish that greater access to collateral for borrowers reduces lender profits, and we relate our findings to the empirical evidence on micro-credit, payday lending, and, more broadly, retail and small business financing.

Economic viability of ‘Niágara Rosada’ grape production in the north and northwest regions of Rio de Janeiro

Abstract The ‘Niágara Rosada’ grape (Vitis labrusca) is the main table cultivar produced in the North and Northwest Regions of the Rio de Janeiro State. This cultivar presents greater rusticity and lower production cost than the cultivars of fine grape (Vitis vinifera L.) because it is more resistant to diseases and the absence of some cultural treatments. The research aimed to determine the economic affordability of the production of ‘Niágara Rosada’ grapes in the north and northwest regions of Rio de Janeiro state, by calculating the Net Present Value (NPV) and the Internal Rate of Return (IRR), and to identify the risk of viticulture, through the sensitivity analysis and the use of the Monte Carlo method. To collect the data, questionnaires, and interviews were applied directly to the wine producers on the technical coefficients and respective production costs of the grape in 1 ha. The results highlighted that viticulture could be a good alternative for the regions, with satisfactory profitability. The variables with the most significant effect on profitability were the sale price of the product, the cost of labor, and the price of packaging. The probability of winegrowers to obtain a negative NPV is 33.32%, considering an attractiveness rate of 6% per year.

Decision Support Model for Optimal Design of Wind Technologies Based Techno–Economic Approach

This paper aims to propose a practical decision support model for the optimal design of future wind turbines based on available wind potential on the site of interest. A developed decision support model based a comprehensive wind turbine modeling and a constrained techno-economic optimization framework is presented. Optimization was subject to the Net Present Value (NPV) maximization of the net incomes from wind energy generation, under the constraints on wind turbine nominal power restriction and the maximum ratio permitted between the rotor diameter and tower hub height. Optimizations of rotor diameter and tower height sizing have direct impacts on energy and cost production, those parameters have been considered as the design variables. The optimal design selection considers: the nominal power, rotor diameter, and tower hub height, which led to the maximum NPV in a specific site. Furthermore, an analysis of the Levelized Cost of Energy production (LCOE) has been performed. The developed decision support model has been tested and applied to a case study to validate its application and performance. The developed model was verified and significant results were achieved using three different wind sites: Dakhla, Casablanca, and Tanger. Results showed that the optimal design of the wind turbine technologies is given by the limit conditions cited, conducting to the maximum NPV with low LCOE and more exploitation of available wind potential in Dakhla and Tanger; however Casablanca was found as no profitable site for wind projects presenting negative NPV.

Análise econômica financeira do emprego de cobertura vegetada em edifícios públicos

The thermal performance of a building is directly related to the materials it is composed of. The roof is the part of the envelope that is most exposed to direct solar radiation and therefore has a strong influence on the transfer of heat to indoor environments. The vegetated roofs are suggested as a technology to help reduce energy consumption in buildings. This research refers to a hypothetical case study on the applicability of a vegetated roof system in a building for public educational use (computer labs) in the city of Florianópolis, in the period of an academic year. In order to achieve the objectives of this study, numerical simulation was carried out in 3 proposed situations, through the EnergyPlus program, materials budget through SINAPI, determination of a minimum attractiveness rate and application of financial economic viability analysis techniques (NPV, Payback and IRR). The maximum savings with electricity consumption for cooling was 8.7%. As a result, it was found that the budget for a vegetative roof has a cost approximately three times greater than that of conventional fiber cement roof. For all situations, negative Net Present Value (NPVs) were obtained and the Internal Rate of Return (IRR) did not exceed the determined Minimum Attractiveness Rate of Return (MARR). In the situation with better thermal performance, for the initial investment to be completely recovered, that is, to have its NPV zeroed by the deadline, 27% of the investment would still have to be recovered .

Technical, Financial and Environmental Assessment of Bio-oil Production from Pyrolysis of Pigeon Pea [Cajanus cajan (L.) Millsp.] Wood

Pigeon pea (Cajanus cajan (L.) Millsp. wood was pyrolyzed using a semi-continuous gram-scale reactor at optimized conditions of temperature (469°C), nitrogen flow rate (14.2 mL min-1), and particle size (1.3 mm), yielding bio-oil (54%), biochar (26%), and syngas (16%). The cost of bio-oil production for 1 t yr-1 was estimated to be US$ 681.00. Financial analysis revealed a net present value (NPV)of US$ 24,322.00 at 12% discount rate, an IRR of 343.85 %, with breakeven quantity of 199 L. Sensitivity analysis showed that an increased price of raw materials up to 30 %, and a decreased price of products down to 25 %, resulted to an increased NPV and IRR. Decreasing the bio-oil yield below 40 % gave a negative NPV with an IRR of 9%. If bio-oil and biochar were tapped as alternative bioenergy, 360,000 L of fuel oil and 259 t of coal could be saved. A total greenhouse gas emission of 749 t of CO2 equivalent can be avoided. Thus, pigeon pea pyrolysis for bio-oil production provided a net positive energy output and was proven to be profitable investment, and environment-friendly as potential bioenergy resource to replace petroleum-based fuels.

KAJIAN TEKNO EKONOMI PRODUKSI BAHAN PROPILENA GLIKOL BERBASIS BIOMASSA VIA HIDROGENOLISIS GLISEROL

Governmental policies that promote biofuels such as biodiesel have led to the generation a largeamounts of glycerol waste as a low-cost raw material. The purpose of this paper is to present a technoeconomic study on the production of biomass-based propylene glycol via glycerol hydrogenolysis,considering hydrogen feeds that partially or fully utilize renewable sources. For analysis andcalculation, computer simulations are carried out using the Aspen Hysys V11 simulator. The technoeconomic analysis is performed by modelling the propylene glycol synthesis process from glycerol,which is then used to calculate the facility capital cost and estimate operating costs to obtain an annualreturn on investment. Sensitivity analysis is also conducted for several parameters on a 36,000ton/year propylene glycol plant. The results showed the production cost was 0.76 USD/kg or 10,802IDR/kg when the hydrogen is generated from the natural gas steam-methane reforming (SMR)process. If the hydrogen is produced from the glycerol steam reforming process, which is fullyrenewable, the plant is not feasible, as indicated by a negative net present value (NPV).

The economic prospect of rooftop photovoltaic (PV) system in the commercial buildings in Bangladesh: a case study

The research investigates the financial and environmental implications of rooftop PV installation in a case study of commercial buildings in Bangladesh. With annual horizontal solar radiation of 4.65 kWh/m2/day, Bangladesh has a great potential to avail sustainable solar energy which would have environmental and economic ramifications. To accomplish this, the simulation has been carried out using the RETScreen software. To perform the calculation, the climatic data from NASA for the selected location have been considered. Numerous economic indices encompassing net present value, payback period, internal rate of return and benefit–cost ratio have been taken into consideration as a measure of performance indicator for the enacted project. The determined economic outcome of the case study points out a net present value of $756,896 with 14.2% internal rate of return, 10.1 years simple payback time, 8.1 years equity payback and 1.5 benefit–cost ratio which implies that the project is remarkably appealing. In addition, the sensitivity analysis of the project highlights that the profitability of the investment is protected in most of the cases for ± 30% variation in input parameters. For example, initial and fuel costs of the proposed case may generate a negative net present value beyond 15% variations. However, a positive net present value within the wide sensitivity ranges for fuel costs base case, operation and maintenance costs, fuel cost escalation and discount rate, debt ratio and debt term imply that economic feasibility is still obvious. This may encourage the building owner to incorporate solar PV in commercial buildings in Bangladesh.

The impacts of real options analysis on EU co-financing policy: the case of Ponta Delgada Port in the Azores

Under the EU's cohesion policy, even if investments have negative net present values, they can be co-funded if they are critical for a region's development and economic and social cohesion. Ponta Delgada Port, the most important maritime infrastructure in the Azores, is struggling to keep pace with its growing activity due to its limited capacity. Investment plans to expand its capacity were drawn, but the traditional discounted cash flow method showed that the investment should not be deployed. However, the project will generate positive effects in the economy. The framework used by the EU to figure co-funding rates does not incorporate the flexibility factor. This study uses real options analysis to assess the investment and its potential impact on the EU's co-financing policy. The hypothesis is that real options analysis can result in lower co-funding rates compared to the method currently used by the EU. The results support this hypothesis.

Circumventing Unintended Impacts of Waste N95 Facemask Generated during the COVID-19 Pandemic: A Conceptual Design Approach

The global crisis arising from the current COVID-19 pandemic has resulted in a surge in the magnitude of global waste from used Personal Protective Equipment with special emphasis on waste N95 facemask. Creative approaches are therefore required to resolve the surging facemask waste disposal issue in an economical and environmentally friendly manner. In an attempt to resolve the evolving global waste challenge, the present study has assessed the economic and environmental performances of converting N95 facemasks to steam and electricity via a combined heat and power plant, to ethanol via a syngas fermentation process, and to an energy-dense gasoline-like oil product via a hydrothermal liquefaction process. These processes were assessed using “conceptual” process models developed using ASPEN plus as the process simulation tool. Economic and environment assessments were undertaken using net present values (NPVs) and the rate of potential environmental impacts (PEIs) respectively, as sufficient performance measures. Therefore, the present study was able to establish that the conversion of waste N95 facemask to syngas prior to a fermentation process for ethanol production constituted the least economical and least environmental friendly process with a negative NPV and the highest rate of PEI (1.59 PEI/h) value calculated. The NPV values calculated for N95 facemask waste conversion to steam and electricity and energy-dense oil processes were US$ 36.6 × 106 and US$ 53 × 106 respectively, suggesting the preference for the production of a valuable energy-dense oil product. Furthermore, it was observed that when the environmental performance of both processes was considered, rates of PEIs of 1.20 and 0.28 PEI/h were estimated for the energy-dense oil production process and the steam and electricity generation process, respectively. Therefore, the study was able to establish that the utilisation of waste N95 facemask for steam and electricity generation and for generating an energy-dense oil product are both promising approaches that could aid in the resolution of the waste issue if both environmental and economic performances constitute crucial considerations.