Feasibility assessment of harvest residue gasification for bioelectricity and its financial impact on conventional plantation forestry

ABSTRACT

This study investigates the financial feasibility of using harvest residue for bioelectricity and its financial impact on conventional plantation forestry in South Africa. The biomass gasification system used is a 5-megawatt (MW) plant by GreenForze. Data were collected on the investment cost, operational and maintenance costs, timber harvest and transport costs, wages and salaries, and revenues from electricity sales through interviews with forestry stakeholders and a literature search. The cost details used in the investment and financial risk analysis of the conventional plantation forestry operations were from Forestry Economics Services (FES). An excel spreadsheet model was developed and used for the financial feasibility analysis using net present value (NPV), and internal rate of return (IRR) as indicators. A Monte Carlo sensitivity analysis was integrated into the model to analyze the investment risk. Results revealed that harvest residue gasification for electricity is financially feasible with an NPV of 7,049,336.64 South African Rand/Zuid-Afrikaanse Rand (ZAR) and an IRR of 15.8%. The integration of bioelectricity production with conventional plantation forestry operations improved the IRR from 15.10% to 18.31%, while at the same time improving the NPV from ZAR 10,334.86 to ZAR 15,378.46. Sensitivity analysis forecasts low-cost risks for investors. The gasification plant’s NPV was found to be highly sensitive to the investment cost, and transport cost of harvest residues. The study deduces that integrating conventional plantation forestry with timber harvest residue gasification for bioelectricity is a feasible pathway to sustainable electricity production in the South African context.

KEYWORDS:

• Forest residue
• Gasification
• Biomass power plant
• Bio-electricity
• Monte Carlo sensitivity analysis

Disclosure statement

No potential conflict of interest was reported by the author.

Data Availability Statement

The data that support the findings of this study are available from the corresponding author upon reasonable request.

Additional information

Notes on contributors

Chidiebere Ofoegbu

Chidiebere Ofoegbu is a forest and environmental scientist with interest in the socioecological aspect of nature, ecosystems services and biodiversity management. He is enthusiastic about the linkages between science and policy development. His research interests focus on landscape and natural resources sustainability and ecosystem services, particularly on the economic, policy, and social dimensions of these. As a broadly trained natural resource scientist, Chidiebere is well suited to understand and communicate the connections among the ecological, economic, policy, and social dimensions of these systems within the context of sustainable development. At the Centre for Landscape and Climate Research, University of Leicester, Chidiebere is part of the project team working on the development of landscape decisions framework for a holistic land use system that is coherent with policy goals on Net zero emissions, renewable energy uptake, climate change mitigation and adaptation, biodiversity conservation, and multifunctional landscapes. This publication contributes to ongoing works on land use systems for sustainable renewable energy.