Probabilistic techno-economic assessment of anaerobic digestion predicts economic benefits to smallholder farmers with quantifiable certainty. (1st February 2022)

• Record Type: Journal Article
• Authors: Tolessa, Amsalu; Louw, Tobias M.; Goosen, Neill J.
• Is Part Of: Waste management. Volume 138(2022)
• Page Start: 8
• Page End: 18
• Publication Date: 2022-02-01
• Subjects: Anaerobic digestion -- Cost-benefit analysis -- Economic feasibility -- Smallholder farming -- Techno-economic analysis -- Water-Energy-Food nexus; Hazardous wastes -- Periodicals; Refuse and refuse disposal -- Periodicals; 363.728
• DOI: 10.1016/j.wasman.2021.11.004
• Languages: English
• ISSNs: 0956-053X

Abstract

Highlight: A techno-economic assessment (TEA) tool was developed for AD technology. Tool is demonstrated specifically in the context of smallholders in South Africa. Probabilistic simulation of feasibility indicators using a Monte Carlo method. Risk assessment was conducted using sensitivity analysis and Monte Carlo method. Stochastic TEA can be used to assessing other AD technologies. Abstract: Anaerobic digestion (AD) technology holds numerous potential benefits for farmers, however, challenges persist in terms of implementation costs and sustainability in developing countries. This paper presents a probabilistic techno-economic assessment tool for AD. A clear distinction is made between direct financial feasibility and wider (socio) economic feasibility. The tool identifies the technical- and economic factors influencing the returns of a particular AD process as well as the sensitivity of model predictions to variations in the value of the identified factors using a Monte Carlo approach. The tool is applied to assess the feasibility of a smallholder farm-based AD installation under a variety of substrates and operating conditions as an illustrative case study, where on-going flows of costs and benefits were considered over a 15-year period and discounted at a rate of 8%. The results of the case study revealed that the installation of a 10 m 3 smallholder farm-based anaerobic digester are likely to be financially and economically viable with a financial benefit-cost ratio of 1.30–1.38 and an economic benefit-cost ratio ranged from 5.49 to 6.01. Risk assessment results confirmed the strong economic feasibility of a smallholder farm-based AD implementation: under the most conservative cost estimates, there is a 73% probability of achieving a financial benefit-cost ratio > 1, while there is a 96.6% probability of achieving an economic benefit-cost ratio > 1. The case study demonstrated the utility of probabilistic techno-economic assessments for informed decision making, a tool which can be readily generalized to other settings.