Economic Analysis of a Jatropha Biodiesel-fired Power Plant in Nigeria

Tosin Onabanjo; Giuseppina Di Lorenzo; Athanasios Kolios School of Energy, Environmental and Agrifood (SEEA)

1

2Outline

— Background

— Research Motivation

— Methodology

— Key Results

— Conclusion

3Background

>1.3 billion people are without access to electricity

Courtesy: The Breakthrough Institute

95%

84%

50-75%

4Background

© 2014 IEA Africa Energy Outlook 

NIGERIA• >93 million people are

without access to electricity

• >40% of the population are connected to the grid -18% rural population

• ~20% of the peak demand is met

— 2400MW vs 10GW (2012)

— 1700MW vs 12.8GW (MAY 2015)

5Background

Exposed to indoor and outdoor pollution 

Fuel is a scarce commodity  

Self-generated electricity

Power plants often lack the required fuel 

Fuel crisis situation in Nigeria

Electricity Generation by Fuel

Electricity Consumption by Fuel

6Background

Renewable Potential in Nigeria

Hydropower

Solar

Wind

Biomass

Municipal Solid Waste

Agricultural Residues

Energy Crops

• Decentralized Power Generation

• Local biodiesel production for Rural Electrification

• Existing structures: Orphan PP

• Emergency Solutions

• Substitute to conventional fuels

7Research Motivation

• Engine Performance & Emissions

≈

• Environmental Performance

8Research Motivation

• Economic Viability Jatropha

Biodiesel

Conventional Diesel

Natural Gas

?

─ Feasible? ─ Possible mechanisms to integrate?

9Methpodology

Olorunsogo Power Plant

South West, Nigeria

Jatropha Biodiesel

Power: 126 MW

PR: 12.6

Mass Flow: 418 kg/s

EGT: 543oC

Efficiency: 34%

Methodology 10

Schematics of the techno-economic and environmental framework

11

Methodology

Short, W., Packey, D.J. and Holt, T. 2005). A manual for the economic evaluation of energy efficiency and renewable energy technologies. Honolulu, Hawaii. University Press of the Pacific

Economic Parameters

Capital Cost

Maintenance Cost

Emission Cost

Fuel Cost

12

Methodology

Fuel Characteristi

cs

Performance Analysis

Emission Analysis

Economic Analysis

TurbomatchSoftware

Emission Module

Economic Module

NASA CEA

SIMPLIFIED WORKFLOW FOR THE TECHNO-ECONOMIC ANALYSIS

13

Key Results

Table 1: Economic Performance for the different fuels

a$1.8/MMBTU, b$4/MMBTU,

Economic Measures Unit Baseline

NGa

NGb

DI

JT

Simple Payback Period (SPB) Years 3 3 >20 >20

Net Present Value (NPV) $ 567 479 -3240 -3184

Levelized Cost of Electricity (LCOE) $/MWh [N/kWh] 37 [6] 51[8] 497 [80] 491[79]

non-viable when operating solely on JT fuel due to high TLCC (-ve NPV, >20 SPB, high LCOE, nearly 10 x NG case

14

Results

Table 2: Jatropha Biodiesel Integration Supported by Tax Incentives

Economic Measures Unit JT (Baseline)

+NPV LCOE [NG~JT]

Tax/Incentives $/MWh [N/kWh] 0 211 [33.9] 268 [43.2]

Simple Payback Period (SPB) Years >20 >20 2

Net Present Value (NPV) $’000000 -3184 0.001 873

Levelized Cost of Electricity (LCOE) $/MWh [N/kWh] 491 [79] 137 [22] 38 [6]

Minimum tax incentive required to integrate Jatropha biodiesel with similar plant economics as the NG case is $268/MWh

15

Results

Table 3: Jatropha Biodiesel Integration by Partial Substitution

Economic Measures Unit NG JT Fuel Mixture

100% 100% 15% 20% 20% + Govt.

Inc. ($0.21/kWh)

Simple Payback Period (SPB) Years 3 >20 16 >20 3

Net Present Value (NPV) $’000000 567 -3184 152 14 651

Levelized Cost of Electricity (LCOE)

$/MWh [N/kWh]

37 [6] 491 [79] 106 [17.1] 129 [20.7] 62 [10]

Maximum partial substitution required to integrate Jatropha

biodiesel without compromising good plant economics is 20% Improves with inclusion of a tax incentive.

16

Results

Table 4: The Average Levelized Cost of Electricity in Nigeria

Parameters Business Family of Six

LCOE with Other Energy Costs1 $/kWh [N/kWh] 62.40 [10046] 14.94 [2406]

LCOE without Other Energy Costs2 $/kWh [N/kWh] 27.21 [4380] 9.41 [1515]

LCOE full hours3 $/kWh [N/kWh] - 34.64 [5577]

High LCOE as much as $6000/MWh for local business and $3500/MWh for a family of six

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Results

Power plant operating with 100% Jatropha Biodiesel in comparison to

natural gas

 

Power plant operating with partial substitution of fuel in comparison to

natural gas

  The introduction of carbon tax would be an advantage for Jatropha biodiesel integration at > $257.5/tC

18

Conclusion

— Appears uneconomically and non-competitive to NG-fired PP

— Integration can be achieved by partial substitution (up to 20%), inclusion of renewable tax incentives (up to USD 211/MWh), carbon tax levy up to $260/tC

— Opportunities for distributed and independent power generation