Biopower Project Cost
The total investment cost for a bio-power project depends upon various factors such as fuel, plant size, country, nature of project (upgrading/attachment/green field), plant availability, equipment, quality, completeness and various other factors.
The development cost is lower for Countries/Regions/Locations where all the required commercial, technical and environmental information related to project implementation are readily available. If the information are not available, then the developer has to collect those details and provide it to the EPC contractor/equipment supplier. If adequate support information is not available then the EPC contractor/equipment supplier may perceive the project as a risky one and quote higher price to cover their risk. To reduce the total project investment cost, developers need to prepare well in advance for collecting all relevant information related to the project.
Due to the preparatory works requirement in Africa, the development cost is generally higher when compared to that of Asia. The project investment cost is also higher by 20 to 25% in Africa due to higher labour, material and other costs/risks.
Among biomass projects, the investment cost for rice husk project is higher. Generally the cost ranges from 1.2 million USD to 2.8 million USD per MW depending upon various factors. For wood waste projects, the investment cost ranges from 1 to 2.5 million USD per MW. For sugar cogeneration plants, the cost is between 0.9 and 2.0 million USD per MW. The above cost information is an indication only and the actual cost depends on various factors. The costs of MSW incineration plants are much higher than biomass power plants.
Apart from equipment cost, the developer should also consider the land cost, site preparation cost, tools and spare parts costs, grid connection cost, bank fee, training cost, insurance during construction cost etc. for estimation of project cost. For the operation of the plant, the project developer should consider the fuel cost, O&M cost, insurance cost during operation, etc.
Fuel cost is one of the major costs for projects which depend on external sources for fuel supply. History proves that several biomass power plants faced problems due to wrong fuel cost assumption during the feasibility study stage. For example, some of the projects which considered fuel cost as 5-10 USD per ton in the feasibility study stage experienced sudden increase in fuel cost to the range of 20-40 USD within 2 to 3 years which affected the returns of the project considerably.
Insurance is a very important aspect in the project and the developers must give due importance to it during construction and operation of the plant. The construction time insurance is expected to be in the range of 0.5-1.0% while the operating time insurance ranges from 0.75-1.5%.
A contingency of 5 to 10% can be considered in the project cost estimation depending on the location and other factors. Whoever interested in Renewable Cogen Asia’s assistance in developing bio-power projects, can contact us.