An Economic and Financial Analysis of a Biomass Energy Project

: In the Region of Sicily the use of biomass as a raw material for producing energy could be 3 interesting for its particular nature and for the soil and climatic features of that territory, with 4 significant, highly positive socio-economic consequences. 5 The objective of this study is to evaluate the potential of a cogeneration system (i.e. electrical, thermal 6 and cooling) in the biomass sector, and to perform a reliable environmental, as well as financial and 7 economic analysis of a production process in an area of Eastern Sicily. With respect to the analysis 8 of financial risk linked to the plant, appropriate sensitivity analyses, calculations of particular 9 elasticities and of threshold values will be carried out, considering different scenarios corresponding 10 to diverse combinations of production capacities. This method of analysis has been chosen, rather 11 than using a fuzzy approach to consider the linguistic imprecision, because the data available are 12 always expressed in crisp figures, but they are subject to the uncertainty of temporal dynamics. The 13 results obtained outline a marginal economic advantage, sometimes negative for the majority of the 14 scenarios considered from the point of view of a private investor.


Introduction
represented by fruit and vegetable growing, flower growing and to a lesser degree citrus fruit growing, 77 whereas in inland areas an extensive farming exists, mainly made up of crops and livestock farming. 78 On this basis a whole series of problems arise defined by the excessive fragmentation of the farms, 79 by the insufficient and reduced maintenance of the infrastructures in existence, by the lack of 80 processing and manufacturing plants for local producers [Klein et al 2015]. All this contributes, 81 together with the isolated situation of the island, to explaining the reduced profitability of agriculture.

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Structural difficulties often force farmers to make production plans that reduce the running costs as Nonetheless, in some areas, users sustain the costs for harvesting and storage especially for the largest 98 remainders as in the case of olive trees, almond trees, peach trees and to some extent citrus fruit trees. 99 Initially, for example it was common during the pruning period that the owners of wood-fired ovens 100 and pizza parlours were willing to pay temporary workers to harvest the remainders in the fields. In 101 these cases the farm company owners had an absolutely free cleaning service for their fields. In the last decade, above all for the specialist wine growers and some fruit growers, the practice of shredding of biomass that would allow for significant savings in terms of supplies from fossil fuels and a better 129 profitability for the farms that manage to diversify their own production and invest in the bio-energy  Table 2 instead shows all the unused potential biomass in the region by a qualitative and quantitative 133 description on a provincial level of each individual type of biomass in each distinct Sicilian province; 134 the largest potential available is that of the by-products from farming, that is to say cereal straw and 135 pruning: pruning of vines, olive branches and citrus fruit tree pruning [Matarazzo and La Pira, 2015].  As shown in Table 2, the province where cereal straw is available in significant quantities is that of The presence of pruning cuttings from vines is also important. The province of Trapani is the regional 156 and national leader with a quantity equal to 87.5 kilo tons per year while in other provinces a total 157 absence is recorded for this biomass [RAEE, 2011;Matarazzo and La Pira, 2015].

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Sicily, however, has a significant availability of a particular type of biomass especially that related to 159 the pruning of fruit trees where it stands out as having the regional and national leadership. The region 160 manages to produce 210 kilo tons per year which represent 20% of the national production.

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Another type of biomass that should not be neglected for its ready availability in the region is that  As far as the type of plant is concerned, the possible options to be assessed are:

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• A network of district heating;

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• A network of district heating and district cooling;

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• Production of electrical energy only;

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• Combining couples of all above alternatives into one plant.

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As far as the power of the plant itself is concerned, the alternatives to be examined are:
Together with the plant, the intention is that of providing sustainable bio-energy production in a highly degraded area from an environmental point of view, with the aim of obtaining immediately 180 reproducible and transferable results on the other industrial areas of the region as well.

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The biomass coming from the agricultural production of the area is an extremely important energy  In connection to this, it is envisaged that the conveyor belts used must be above the ground 218 without impeding however, the transit of means of transport and the safety of the workers, and they 219 must be equipped with suitable roofing. Conferment to the stock site must take place without causing 220 biomass to fall from the top. This, moreover, must have a relative humidity of not less than 40% or 221 otherwise it must be humidified by special sprayers. Treatment of sewage from hospitals must be 222 opportunely treated in an Imhoff septic tank to be cleaned up and subsequently poured into the public 223 sewage network. The meteoric waters, for a quantity equal to the first 5 mm of rain, will be conveyed 224 into a storage tank from which the waters will be transferred by gravity into a desalination tank.

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Output from the latter will be sent to be reused as fire extinguishing water, for cooling and for 226 watering gardens. As far as the water supply for the plant is concerned , it can be ensured by the 227 water network provided in the vicinity of the area for both for the water used in industrial cooling and 228 for drinking water services. All the devices will be set up to optimize the use of the resource by using 229 the recovery of waste water that will ensure sufficient quantities for the fire fighting reserves.

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The supply of the cogeneration plant will be provided not only by dedicated and implanted crops in 233 all those areas around the industrial area of Gela, but especially by the residual biomass available in currently abandoned or burnt in the fields, on the other hand the production of electricity, heating or 242 cooling, with far lower unit costs than currently produced by the use of non-renewable sources.

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As far as the thermal efficiency of the plant is concerned, defined by the ratio between the electric 244 and thermal energy produced and the energy input that is made available from the fuel used, in this 245 case the Best Available Technologies expect both the available energy components to be employable 246 in such a way that aforesaid ratio is between 75% and 90%. Moreover, some stratagems to improve 247 the thermal efficiency have been introduced, such as reduction of unburned waste, the elevation of 248 the enthalpy of the hot fluid in the inlet of the turbine, the reduction of heat losses by conduction, the 249 temperature of the ash. The optimum electrical efficiency of the plant, according to the BAT, must 250 not be less than 20%. The plant has a value of electric output equal to 20% thanks to a whole series 251 of expedients adopted for the recovery of heat. If there is no thermo-cooling load, the remaining 60% 252 of the thermal energy input will be dissipated in this way:

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• 12% losses for route sensitive heat necessary for the release of smoke into the atmosphere;

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• 3% radiation loss of the metallic parts of the oven;

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• 45% available for horticultural greenhouses or district heating in general.
The Energy Return On Investment (EROI) is also calculated; this index is the ratio between energy 257 out (i.e., the energy content of the products) and the non-renewable energy in (i.e., all the non-258 renewable energy inputs, direct and indirect, required along the full life cycle [Hammerschlag 2006; 259 Cherubini and Jungmeier 2010].

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It is a coefficient that is used for a particular energy source, it indicates the expediency in terms of 261 energy efficiency and, algebraically, is the ratio between the energy produced and all the energy used 262 to obtain it. In particular, an energy source with an EROI lower than 1 is energetically at a loss; 263 therefore, energy sources with a EROI less than 1 cannot be considered primary sources of energy, 264 as their exploitation uses more energy than is produced. The EROI, therefore, proves to be an After the computation of EROI index, i.e. the ratio Energy Gained (KW)/Energy Used (KW).

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It can be said that the most competitive solution in terms of energy efficiency investment is related 279 to the district heating (scenario 1) with a power output of 1MW (EROI = 1.08). as a consequence, 280 our analysis is related to this kind of plant.
As already noted, the project involves the construction of a biomass cogeneration plant with the 282 installation of a network of district heating and cooling that will allow for the distribution of heat (hot 283 water, hot water or steam) and cooling energy (for a 6 °C) for most industrial and house users which 284 connected to the same network, will maintain their independence by autonomously managing their 285 own consumption.

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As regards the co-trigeneration plant, a turbo generator will be installed integrated with a heating specifically for their industrial processes. District cooling is an energy service that derives from the 306 same principle as district heating. Cold water is generally produced in the central co -trigeneration plant by absorption machines powered by heat, that is, hot water, or superheated steam, sent to the 308 users thanks to networks similar to the district heating ones, consisting in pre-insulated steel pipes. In 309 the present case the district heating and district cooling network is made up of four pipes, which will 310 bring both hot and cold water. All this will allow users to be offered a full service winter and summer 311 air-conditioning, and from the point of view of production, make the most of the power plants and 312 networks. In particular, the cooling network will allow the use, at least in part, of the heat available 313 also in the summer period.  (Table 3).  heating network and district cooling is very difficult to make in a preliminary phase of the project.

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The planner has however provided an estimate of them to the extent of about 16% or 29% of the total 416 investment costs depending on whether only district heating or both services are envisaged.

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As for the operating and maintenance costs, these were estimated on an annual basis, net of tax,  In order to take into account the high degree of uncertainty in particular production and the actual use       € 20.000,00-€ 25.000,00 € 15.000,00-€ 20.000,00 € 10.000,00-€ 15.000,00 € 5.000,00-€ 10.000,00 € 0,00-€ 5.000,00 -€ 5.000,00-€ 0,00 -€ 10.000,00--€ 5.000,00 some of the most significant economic variables, as a measure of the corresponding degree of 557 uncertainty. More precisely, the degree of elasticity of the NPV was calculated, that is, what  Table 6 shows the values of the degree of elasticity of the NPV with respect to the price of electricity  With reference to the most interesting case (0,60 thermal energy), it is observed that these indicators

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In the light of this, the bio-energy project at the Gela plant could beneficially influence the territory 630 where it is based thanks to benefits linked to its building, clearly based on the hypotheses mentioned State resources, moreover must be sufficient to give a substantial and crucial impulse to this kind of 676 plant, for the production of energy with a low environmental impact, without weighing on the budgets 677 in un unsustainable way, and assuring an equal division of the added value among all the plants of 678 the industrial sector. The role of the local and regional governments will be therefore decisive.

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Finally, the building of plants of energy production and co-generation, and the related financial 680 measures for their support, like economic incentives and tax relief for virtuous initiatives, as well as 681 scientific and technological research, are the cornerstones which cannot be disregarded in order to 682 achieve an efficient, sustainable energy system capable of fostering the development of the territory.

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Sicily could, indeed, exploit an extraordinary patrimony and revive a sector in serious crisis. It must 684 be underlined that agriculture could become the link between the economic recovery of the sector  Availability of data and materials 708 The results of this study is applicable in all kind of biomass plants; a database has not been used but  Three-dimensional graph of NPV (K€) as a function of the rate i and the time t Horizontal sections of the NPV (K€) and indifference curves according to the pairs i, t (discount rate, time)