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Financial appraisal of wet mesophilic AD technology as a renewable energy and waste management technology

Dolan, T.; Cook, M. B. and Angus, A. J. (2011). Financial appraisal of wet mesophilic AD technology as a renewable energy and waste management technology. Science of the Total Environment, 409(13) pp. 2460–2466.

DOI (Digital Object Identifier) Link: https://doi.org/10.1016/j.scitotenv.2011.03.011
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Abstract

Anaerobic digestion (AD) has the potential to support diversion of organic waste from landfill and increase renewable energy production. However, diffusion of this technology has been uneven, with countries such as Germany and Sweden taking the lead, but limited diffusion in other countries such as the UK. In this context, this study explores the financial viability of AD in the UK to offer reasons why it has not been more widely used. This paper presents a model that calculates the Internal Rate of Return (IRR) on a twenty year investment in a 30,000 tonnes per annum wet mesophilic AD plant in the UK for the treatment of source separated organic waste, which is judged to be a suitable technology for the UK climate. The model evaluates the financial significance of the different alternative energy outputs from this AD plant and the resulting economic subsidies paid for renewable energy. Results show that renewable electricity and renewable heat sales supported by renewable electricity and renewable heat tariffs generates the greatest IRR (31.26%). All other uses of biogas generate an IRR in excess of 15%, and are judged to be a financially viable investment. Sensitivity analysis highlights the financial significance of: economic incentive payments and a waste management gate fee; and demonstrates that the fate of the digestate by-product is a source of financial uncertainty for AD investors.

Item Type: Journal Item
Copyright Holders: 2011 Elsevier B.V.
ISSN: 0048-9697
Project Funding Details:
Funded Project NameProject IDFunding Body
Not SetNot SetGreenspire
Keywords: anaerobic digestion; financial viability; renewable energy; economic incentives
Academic Unit/School: Faculty of Science, Technology, Engineering and Mathematics (STEM) > Engineering and Innovation
Faculty of Science, Technology, Engineering and Mathematics (STEM)
Interdisciplinary Research Centre: Design and Innovation
Item ID: 31973
Depositing User: Matthew Cook
Date Deposited: 01 Feb 2012 09:39
Last Modified: 22 Mar 2017 17:03
URI: http://oro.open.ac.uk/id/eprint/31973
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