case study bf gasifier financial viability

8/12/2019 Case Study Bf Gasifier Financial Viability

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SNV Netherlands Development Organisation 1 Case Studies 2013

GASIFIER PILOT PROJECTECONOMIC FEASIBILITY STUDY

A pilot gasification system has been installed at the Wouol cashew transformationfacility in Dakoro. The goal of this study was to determine the costs and savings

associated with the installation of a gasification unit. Specifically, it was desired todetermine the financial feasibility of future gasification projects. There are two main

processes which the gasifier is intended to improve upon:

1.

The steaming of cashews. In this step, cashews are placed in a closed vat andbathed in steam until they are soft enough to be cracked open. This processrequires the use of a boiler, typically heated by firewood. It is intended for thefirewood to be replaced with syngas produced by the gasification unit.

2. The drying of cashews. In this step, cashews are placed in large containerswhich are heated by propane. Cashews are dried so that they can be furtherprocessed and stored. It is intended to replace the gas with piped hot water,heated by the boiler and gasification unit mentioned above.

A gasification system consists of many components: gasifier, new dryers, waterreservoir (with pump, heat exchanger and piping) and a photovoltaic system. All of

these items must be considered when determining the price of a gasification system.The Dakoro gasification system was a pilot project and cost roughly 24,000,000 CFA.Upon meeting with William Ilboudo, head of ISOMET, I have acquired some new, more

realistic prices for a gasifier system. We must also consider the cost of operation andmaintenance, although I have made the assumption that these costs will not changesignificantly with the new system. Indeed, from my experience in Dakoro, people spent

less time working when the gasification system was in place.

Based on literature I have read, gasifiers are typically given a lifetime of anywhere

between 15,000 and 30,000 working hours. Based on the expected usage of the gasifierin Dakoro, I have estimated that the gasifier would have a lifetime of 10 to 15 years.

William Ilboudo has quoted an estimated lifetime of 7 to 10 years. Ignoring minorrepairs, the gasifier is likely the limiting factor in any gasification projects lifetime.

The financial feasibility of a gasification unit depends largely on the output of a cashew

transformation facility, as well as local production costs. A photovoltaic system to powerthe gasifiers ventilators is essential for any future projects in non-electrified areas: Thecosts associated with a diesel generator (both environmental and economic) may

negate the positive impacts of the gasifier. In electrified areas, the benefits of investingin a photovoltaic system are debatable, but this is a separate topic and will not bediscussed here.

To prove financially feasible, a gasification system must pay for itself with the moneysaved for wood and propane. Cashew transformation facilities vary significantly in their

output and production costs. I would like to consider 3 different transformation facilities

and determine the feasibility of installing a gasifier at each of them.

In Dakoro, a gasifier has been constructed at the cashew transformation facility. Dakorohas no grid access, so a photovoltaic system has been installed to power thegasification systems pump and ventilators (replacing a diesel generator). Dakoro

produces between 80 and 100 tons of cashews per year, at a production cost of 7.52CFA per kg of dry cashew produced (based on financial records). Annual productioncosts are roughly 750,000 CFA. Based on the new quotes from ISOMET, the cost of a

new gasification system in a small facility like Dakoro will be 17,500,000 CFA, includinga photovoltaic system and 18% sales tax.

Based on my analysis, a gasification system will not be feasible in a small facility like

Dakoro over the gasifiers lifetime. If we want a payback period of 5 years, then thegasification systems cost must be reduced as follows:

Author:SNV

Country: Burkina Faso

Sector: Renewable energies

FINANCIAL

ANALYSIS

CONTEXT


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fairly large facility, in an electrified area, but it is not yet in operation. I was told thatthis facility should have an annual production greater than 300 tons of cashews.

Table 2 describes some possible scenarios. For annual production rates of over 500 tons(and no photovoltaic system), the project becomes feasible in as little as 5 years.Clearly, in a new transformation facility, where dryers do not need to be replaced, a

gasification system is likely a good investment.

If we consider only the economic benefits of the gasifier, then the system is only a goodinvestment for newly constructed facilities with large output. However, if we considerthe additional benefits, discussed below, a gasifier may be justifiable even in a small

transformation facility.

Unlike firewood, which produces sooty smoke, a gasifier produces a clean-burning

syngas with no visible smoke. Having employees spend all day tending a smoky woodfire can result in respiratory problems. Replacing these harmful fumes with a cleansyngas will have obvious health benefits, making the transformation facility a safer and

healthier place to work. This will not only benefit employees, but the surroundingcommunity as well.

The use of a gasifier has a positive environmental impact: By avoiding the use offirewood, we can limit deforestation in the surrounding area. Cashew shells contain

CSNL oils, which can damage skin and cause rashes. By gasifying cashew shells, we canprevent these toxic CSNL oils from leaking into and contaminating ground water.Additionally, burning cashew shells helps manage disposal problems, since cashewshells are currently just left piled outdoors to slowly decompose. Finally, by omitting

propane and firewood, the cashew transformation process can be made carbon-neutral,

which results in limited contributions to global warming. The environmental impact oftransporting and burning firewood and propane in a non-sustainable manner is quite

high the gasifier allows us to negate these costs. After consulting with Erik Buysman,

we estimate that roughly 42 tons of CO2 emissions per year are avoided in Dakoro byemploying a gasifier. Roughly 150 tons of CO2 emissions per year can be avoided in a

larger facility such as Brgadougou. These numbers alone are not enough to secure

carbon financing, but may contribute to a larger project which focuses on gasification inthe food processing industry.

The amount of time required for the steaming process is roughly 7 hours when usingfirewood, while as little as 2 hours when using the gasifier. This is the result of the

gasifier producing a more intense, direct flame which can more quickly heat a boiler to

operating temperature. These time savings imply a potential to greatly increaseproduction, which will lead directly to increased profits. This is of course limited by the

other steps of the transformation process, but a gasifier will improve a facilitys

efficiency if nothing else. It is important to note that the greater the facilitys output,the greater the cost benefit of the gasifier.

It is possible that in the future the European Union will actively discourage food importswhich have been treated with fossil fuels. By replacing propane with piped hot water in

the drying process, we can ensure the continued export of cashews to the European

Union. In addition, there is market potential for selling products at a higher price if they

have been produced in an environmentally friendly, sustainable way. Using gasificationtechnology may allow a transformation facility to take advantage of that market.

Significantly, gasification provides a sustainable, independent source of energy. Rather

than be limited by the availability of propane and firewood, a gasifier guarantees

continuous, uninterrupted operation of a cashew transformation facility. In addition,firewood and propane may be limited in the near future due to shortages, and their

costs may rise significantly and unexpectedly. This will directly increase production

costs and reduce profits. Conversely, cashew shells are a guaranteed, cost-free sourceof fuel, which decrease expenses and make production costs more stable.

It is notable that more cashew shells are produced than are consumed during thetransformation process. Since the new dryers were not working during my stay, I am

unsure about the exact cashew shell surplus, but I would estimate that roughly twice asmany cashew shells are produced as are consumed. This is important because theseadditional cashew shells can be used to power other processes, such as steaming rice or

drying mangoes. Mango drying has a particularly strong potential: Currently in

ADDITIONAL

BENEFITS


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Brgadougou, mango drying is performed during the wet season, when cashews arenot being processed. Mango drying consumes large quantities of propane, which couldbe substituted by a gasifier, using the same technology and equipment used to dry

cashews. Employing a gasifier in other processes will amount to additional cost savingsand added benefit.

I have been asked to elaborate on how gasification technology can help improve thelives of women working at cashew transformation facilities. Since the gasifier does notaffect the shelling or peeling processes, it will not help these women directly. However,

the gasifier does provide potential for increased production, which will lead to jobcreation. Also, since the gasifier reduces production costs, it is possible that any savingswill be passed on to the workers in the form of higher wages. This second point is

dependent on the policy of the controlling organization and must be discussed, but it isa possible benefit of the gasifier. In summary, gasification will not help the femaleworkforce directly, but may result in new working opportunities and increased wages.

All of these benefits do not provide immediate cost savings, but should be taken intoaccount when considering investing in a gasification unit. Of particular note is the

potential for increased production, which will result in direct cost savings and increasedprofits. This also has the potential to create new jobs and increase wages. Otherbenefits, such as reducing negative health and environmental impacts, will have a

positive impact on the nearby communities and will ensure export to the EuropeanUnion. Also, having an independent, sustainable and free fuel source is valuable for any

industrial process, ensuring continuous operation and reduced, predictable productioncosts. Finally, since we still produce a surplus of cashew shells, gasification can be usedto power other processes.

The financial feasibility of a gasification system can be briefly summarized: Substitutingfirewood and propane consumption results in direct savings. These savings may be able

to pay for a gasification unit in as little as 5 years in a newly built facility. Modifying old

dryers or developing a cheaper drying system will go a long way towards reducing theinitial investment costs and augmenting the incentive to purchase a gasifier. For a

smaller facility, like Dakoro, it might be preferable to invest in a RONGEAD-style gasifier

to replace wood consumption and select some other system for drying.

When considering whether or not a gasification unit is a good investment, we must alsotake into account the implicit savings. Of particular note is the potential for increasedproduction, which will result in additional profits, new job creation and possibly

increased wages. Other benefits, such as reducing negative health and environmental

impacts, will have a positive impact on surrounding communities and ensure futureexports. Reducing emissions may also make gasification eligible for carbon financing.

Also, a free sustainable fuel source guarantees continuous operation and low production

costs. A cashew shell gasifier can also be used to power other processes, such asmango drying.

In conclusion, gasification has a large potential, especially in agro-industrial processeswith exploitable by-products. When considering the feasibility of investing in a

gasification unit one must consider both the implicit and explicit cost savings. Investing

in gasification is likely a good economic decision given a large enough annual production

in a newly built facility, and the additional benefits of gasification may make a gasifier adesirable purchase for even a small cashew transformation facility.

SUMMARY

case study bf gasifier financial viability

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