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First National Capacity Building Workshop on

First National Capacity Building Workshop on Clean Development Mechanism (CDM) under CD4CDM Project LGED Bhaban, Dhaka 8-9 April 2008 ADB PREGA Activities and Beyond  Prepared by Dr. M. Eusuf Bangladesh Centre for Advamced Studies (BCAS). PREGA (1 st Phase)

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First National Capacity Building Workshop on

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  1. First National Capacity Building Workshop on Clean Development Mechanism (CDM) under CD4CDM Project LGED Bhaban, Dhaka 8-9 April 2008 ADB PREGA Activities and Beyond  Prepared by Dr. M. Eusuf Bangladesh Centre for Advamced Studies (BCAS)

  2. PREGA (1st Phase) Asian Development Bank (ADB) has launched a project entitled “Promotion of Renewable Energy, Energy Efficiency and Greenhouse Gas Abatement – PREGA” in 2002 in some countries of South East Asia. The objectives of this project are : a) To promote investment in PREGA technologies that will increase access to energy services by the poor, reduce GHG emissions and realize other strategic development activities. b) To generate a pipeline of investment projects for financing through commercial, multilateral and bilateral sources including specialized treaty-linked mechanisms such as CDM and GEF. c) To identify policy and institutional barriers to dissemination of PREGA technologies. d) To study and develop financing models for PREGA investment projects.

  3. From the energy situation study of the country it has been suggested that the following 17 projects be taken for implementation to achieve the objective of poverty alleviation, reaching energy to the poorer sections of the society, empowering women and reduction of GHG emission: 1)Waste to electrical energy project 2) Introduction of co-generation in sugar industries 3) Solar-wind-diesel hybrid for power generation for small towns and villages 4) Solar electricity in the National Assembly building (Parliament Building), President’s House, and Prime Minister’s Office and Official Residence 5) Demonstration of efficient biomass stoves for widespread use 6) Demonstration of biogas plants for popularization 7) Demonstration of CFL and other efficient appliances for popularization

  4. 8) Introduction of intelligent motor controllers for efficiency improvement in electrical sector 9) Fuel switching from oil to gas for power generation 10) Energy efficiency studies in industries 11) Energy efficient devices in industries 12) Rehabilitation of electricity distribution network 13) Combined cycle power plant in place of gas-steam power 14) Conversion of gasoline cars to CNG cars 15) Replacement of 2-stroke engine with 4-stroke engine for auto- rickshaws 16) Power generation through biomass gasification 17) Introduction of mini hydro/micro hydro electricity

  5. Projects undertaken for Pre-feasibility Studies 1.Pre-feasibility study for Dhaka city solid waste to electric energy project  2.Pre-feasibility study for co-generation in sugar industries  3.Pre-feasibility study for solar-wind-diesel hybrid for power generation in small towns and villages  4.Pre-feasibility study for fuel switching from oil to gas for power generation.

  6. Technologies available for processing solid wastes A number of technologies are now available for processing municipal solid wastes (MSW). Popular among them are : (1) Landfill, (2) Mass Burn Incinerator, (3) Fluidised Bed Incinerator, (4) Gasification, and (5) Plasma Converter.

  7. GHG (CO2 equivalent) Production without (Series 2) and with (Series 1) the project activity(MSWEE)

  8. Proposed Project 1) 50 digesters, 8500m3 capacity each, are constructed. 2) 20-MW capacity generator is installed. 3) Generated electricity is fed into the national grid thus displacing equivalent power generation based on natural gas by BPDB. 4) Fresh wastes containing all the components including the recyclables such as metals, glasses, etc. will be fed into the digesters, After digestion, when the digested materials will be dug out, scavengers with necessary safety measures will be employed to pick up the recyclable materials. After anaerobic digestion, the residue becomes completely odourless and mostly germ-free. The sorted-out residue will be disposed of for land filling. 5) Methane produced in otherwise open dumping will be trapped and burnt for power generation 6) With the project activity, total yearly CO2production is 153, 670 tonnes

  9. Yearly Abatement of CO2 Equivalent due to the Project Activities

  10. Cumulative Reduction of CO2 over the Project Period(MSWEE)

  11. Project benefits(MSWEE)

  12. Financial Aspects(MSWEE) Base case Investment cost : 1573.66 million Taka Annual operating cost : 61.8 million Taka IRR : –6% NPV (at 10%) : -77.57 million Taka B-C Ratio (at 10%) : 0.81

  13. Financial Analysis with Carbon Benefit (1.13 million tons of CO2 Reduction per annum) -MSWEE With 5 dollars per ton of CO2 IRR = 84.02% NPV (at 10%) = 2136.99 million Taka B-C ratio (at 10%) = 6.2 with 3 dollars per ton of CO2 IRR = 54.73% NPV (at 10%) = 1251.79 million Taka B-C ratio (at 10%) = 4.4

  14. (MSWEE) Other Economic and Social Benefits lJob creation : New jobs will be created through landfill project. lIncome generation : Incremental wage increase at land-fill energy plant compared to alternative jobs. lTrade Balance : Positive trade balance due to reduction of fuel import. lEfficient use of land : Density of waste in land fill project is higher than present dump-site. The higher the density, the better is the land use. lRenewable Energy : It is renewable. lThe project will lead to technology transfer and which can be replicated.

  15. Co-generation in Sugar Industries lTo produce both electricity and process heat using the same fuel, bagasse lNow a days, trigeneration, by which electricity, heating and cooling are achieved through burring the same amount of fuel lAt present 15 sugar mills are in operation processing annually about 2.5 million tonnes of sugarcanes and producing about 0.9 million tonnes of bagasse. Location and production capacities of these sugar mills are given below :

  16. Current Practices in Sugar Mills lMajor portion of the bagasse is burnt in the boiler to produce electricity and the waste steam is used as process heat. Depending on the capacity of the sugar mills 0.2 – 2.0 MW is produced. Working period of the sugar mills is 120 – 150 days (sugarcane cultivation season). lCalorific value of bagasse containing about 50% moisture is 2300 kcal/kg. lAt present 35 – 40 kgs steam is needed to produce 1 kWh of electricity where with efficient co-generation, steam needed per kWh is only 5–6 kgs. lIn this pre-feasibility-study, a 2000-tonne per day (TCD) plant has been chosen. According to the results of the study, 11 MW of electricity can be generated in place of current 2.0 MW. 2MW will be supplied to the mill and the remaining 9 MW to the Grid. lTotal investment cost is 384 million Taka. Environment additionality of the project is 22,850 tonnes of CO2 per year. lFinancial and economic analyses will be presorted by Mr. Khandaker Mainuddin, Team Member.

  17. (Co-generation) CO2 production without (series 1) and with (series 2) the project activity over the project period.

  18. (Co-generation) Yearly abatement of CO2 due to the project activities.

  19. (Co-generation) Financial Aspect Base case Investment cost : 378 million Taka Annual operating Maintenance cost : 30.61 million Taka Annual Gross revenue : 75.24 million Taka (37.62 GWh @ Tk. 2 per kWh) Analysis period : 14 years FIRR : 5.59% NPV (at 10%) : – 22.5 million Taka B-C Ratio (at 10%) : 0.77 The project in the base case is not financially viable.

  20. Financial Analysis with CO2 Benefit (22,850 tons of CO2 reduction per year) with 10 dollar per ton of CO2 FIRR = 18.66% NPV (at 10%) = 50.75 million Taka B-C Ratio (at 10%) = 1.51 with 5 dollars per ton of CO2 IRR = 12.54% NPV (at 10%) = 14.12 million Taka B-C ratio (at 10%) = 1.14 The Project becomes financially viable with CO2 Valued at 5 dollar/ton

  21. Solar-Wind-Diesel Hybrid for Power Generation in Small Towns and villages lBangladesh has good potential of solar energy, energy falling on 1m2 per year is 1.73 MWh per year on the average. lAccording to an estimate (Country Study Report), using the currently available technology some 54000 MW of solar PV can be installed. lIn the coastal belt and off-shore islands wind speeds are good enough for 2000 MW of wind turbine.

  22. (Hybrid) Cumulative production of CO2 in the absence (series 1) and in the presence of the project activity

  23. (Hybrid) Financial Aspect Base case Investment cost : 12.35 million Taka Annual operating Maintenance cost : 1.53 million Taka Annual Gross revenue : 3.120 million Taka (0.624 kWh @ Tk. 5 per kWh) Analysis period : 14 years FIRR : 11.13% NPV (at 10%) : 0.19 million Taka B-C Ratio (at 10%) : 1.06

  24. (Hybrid) Financial Analysis with CO2 Benefit (637 tons CO2 reduction per year) with 10 dollar per ton of CO2 FIRR = 29.03% NPV (at 10%) = 2.67 million Taka B-C Ratio (at 10%) = 1.86 with 5 dollars per ton of CO2 FIRR = 17.86% NPV (at 10%) = 1.43 million Taka B-C ratio (at 10%) = 1.46

  25. Fuel Switching from Oil to Gas for Power Generation lIn 2001-02, BPDB and IPP together had a total installed capacity of 4230 MW out of which 494 MW was oil-based. lIn that year, oil-based captive generation in the public and private sectors was 2480 MVA. lAccording to National Energy Policy (1996) projection of total electricity production and that based on oil is shown in the figure below :

  26. (Oil to gas) Cumulative production of CO2 without (series 1) and with (series 2) project activity from Monno Ceramics Industries Ltd. over the project period

  27. (Oil to gas) Yearly abatement of CO2 due to the project activity

  28. (Oil to gas) Financial Aspect Base case Investment cost : 33.03 million Taka Annual operating Maintenance cost : 4.25 million Taka Annual Gross revenue : 8.63 million Taka (3.45 GWh @ Tk. 2.50 per kWh) Analysis period : 14 years FIRR : 12.71% NPV (at 10%) : 1.26 million Taka B-C Ratio (at 10%) : 1.15 Financial Aspect Base case Investment cost : 33.03 million Taka Annual operating Maintenance cost : 4.25 million Taka Annual Gross revenue : 8.63 million Taka (3.45 GWh @ Tk. 2.50 per kWh) Analysis period : 14 years FIRR : 12.71% NPV (at 10%) : 1.26 million Taka B-C Ratio (at 10%) : 1.15 Financial Analysis with CO2 Benefit (21,98 tons CO2 reduction per year) with 10 dollar per ton of CO2 FIRR = 28.93% NPV (at 10%) = 9.87 million Taka B-C Ratio (at 10%) = 2.19

  29. (Oil to gas) Financial Analysis with CO2 Benefit (21,98 tons CO2 reduction per year) with 10 dollar per ton of CO2 FIRR = 28.93% NPV (at 10%) = 9.87 million Taka B-C Ratio (at 10%) = 2.19

  30. Project Prioritisation Comparison of results of the financial and economic analysis of the 4 pre-feasibility studies is given below : Contd.

  31. Comparative Study i)It is seen from the above table that MSWEE is the most capital intensive requiring 1601.16 million Tk. followed by Cogen (384.35 million Tk.), Oil to gas (34.20 million Tk.) and Hybrid (12.77 million Tk.) ii)While making the financial and economic analysis, 70% is assumed to be obtained on loan and the remaining 30% to be provided as equity. iii)According to financial analysis, based on IRR in the base case, Oil to gas appears to be the most feasible (IRR, 12.71%) followed by Hybrid (IRR, 11.13%), MSWEE (IRR, 6.39%) and Cogen (5.59%).

  32. iv) Risk analysis with 15% decrease in revenue or 15% increase in capital investment shows that none of these projects pass these tests as IRR drops down below 4%, decrease in revenue having more negative effect than increase in capital investment. v) Inclusion of carbon credit makes all the 4 projects financially viable with IRR values of 54.71% for MSWEE, 28.93% for Oil to gas, 24.03% for Hybrid and 18.66% for Cogen, CO2 credit price per tonne being US$ 3.00 for MSWEE and US$ 10.00 for the remaining 3 projects. vi) Based on per MW power generation, environment additionality per annum is 56,527 tonnes for MSWEE, 8,493 tonnes for Hybrid, 2,539 tonnes for Cogen and 1.374 tonnes for Oil to gas project.

  33. Conclusions and Recommendations Ranking of the projects are A. Based on annual environmentB.Based on annual additionality per MW of power environmentadditionality 1.MSWEE 1.MSWEE 2.Hybrid 2.Cogen 3.Cogen3.Oil to gas 4.Oil to gas4.Hybrid

  34. A. Projects Undertaken and Reports (draft) Submitted to ADB 1. Quantity and quality assessment of Khulna city solid waste for electricity generation. 2. Pre-feasibility study on Khulna city solid waste to electric energy 3. Pre-feasibility study on widespread use of efficient stoves 4. Pre-feasibility study on popularization of biogas plants 5. Feasibility study (bankable standard) of Khulna city solid waste for electricity generation. 6. Feasibility study (bankable standard) for co-generation in sugar Industries. 7. CDM Project design document (PDD) for Joypurhat bagesse co-generation project 8. CDM project design document (PDD) for Khulna city solid waste to electricity generation.

  35. B. Capacity Building activities (training programmes/ workshops) Completed 1. National workshop in Dhaka for REGA and CDM awareness building and motivation, LGED Bhaban, 1 – 2 June, 2005. 2. National workshop in Chittagong for REGA and CDM awareness building and motivation, Saint Martin Hotel, 18-19 June, 2005. 3. National workshop in Khulna for REGA and CDM awareness building and motivation, Western Inn International Ltd. 3 – 4 July, 2005. 4. National workshop in Rajshahi for REGA and CDM awareness building and motivation, Senate Hall, Rajshahi University, 27 – 28 July, 2005. 5. National workshop in Dhaka on report writing and financial/ economic analysis of CDM-able projects including CDM modalities, procedures and PDD evaluation, Golden Deer Hotel, 4 – 6 February, 2006.

  36. Physical Composition of the Solid Wastes of KCC Vegetable matters including food & fruit wastes : 20.80-85.87% by wt. Paper & paper products : 2.10-13.64% ,, Metals : 0.0-0.26% ,, Glass : 0.0-0.80% ,, Wood : 0.0-0.0% ,, Tree trimming & straw : 0.9-24.20% ,, Clothes : 0.0-4.40% ,, Stone, ceramic, sand & debris : 3.83-19.61% ,, Plastic & polythene : 1.53-14.07% ,, Proximate Analysis of the refuse of KCC (as received) Moisture content : 63.00 -90.00 % by wt. Volatile matter : 8.20-19.61% ,, Fixed carbon : 0.30-1.91% ,, Ash : 1.50-15.48% ,,

  37. GHG (CO2 equivalent) Production without (Series 1, upper) and with (Series 2, lower) the project activity

  38. Yearly Abatement of CO2 Equivalent due to the Project Activities

  39. Estimated Comulative Reduction of GHG Emission During 2008-2021

  40. Financial Analysis Base case Investment cost : 220.64 million Taka Annual operating cost : 6.15 million Taka IRR : 3.76% NPV (at 10%) : -10.38 million Taka B-C Ratio (at 10%) : 0.69 Financial Analysis with Carbon Benefit (0.123 million tons of CO2 Reduction per annum) with 3 dollar per ton of CO2 IRR = 50.28% NPV (at 10%) = 159.23 million Taka B-C ratio (at 10%) = 3.72

  41. Feasibility Study (Bankable Standard) for Co-generation in Sugar Industries Co-generation in Sugar Industries To produce both electricity and process heat using the same fuel, bagasse Now a days, trigeneration, by which electricity, heating and cooling are achieved through burring the same amount of fuel At present 15 sugar mills are in operation processing annually about 2.5 million tonnes of sugarcanes and producing about 0.9 million tonnes of bagasse. Location and production capacities of these sugar mills are given below :

  42. Pre-feasibility Study on widespread use of efficient stoves The problem arising from burning of biomass fuels in the traditional stoves are: a) More than 56.37 million tonnes of biomass is being consumed annually for cooking, parboiling, concentrating date palm and sugarcane juice, etc. The stoves used for these purposes are very inefficient, efficiencies varying from 5 to 15%, thus causing unnecessary wastage of our biomass wealth. b) The inefficient traditional stoves produce GHG i.e. carbon dioxide gas, other gases and particulates which are harmful to the health as well as to the environment. c) Cattle feed are decreasing as the people are increasingly using straw and dried grass for cooking. d) Cattle-dung and crop residues which were previously left in the land for maintaining natural fertility are now being taken home for meeting cooking needs. e) Rapid deforestation, due to increasing demand on fuel wood for cooking, will ultimately bring about a change in the ecosystem leading to erosion and a change in the climatic patterns. Some signs of desertification are already visible in the northern part of the country. f) Increase of GHG in the environment due to increased burning of biomass and other fuels.

  43. Supports for utensils Ash outlet & Air entry Ash outlet & Air entry Fuel feed Grate The models which are popular and accepted by the users are: i. Single mouth domestic improved cook stove, half-underground, with iron rod or cast iron grate (Fig-5). ii. Single mouth commercial efficient stove with iron rods or cast iron grate (Fig-6). iii. Double mouth improved cook stove, half-underground, coupled with chimney (Fig-7). iv. Double mouth improved cook stove, on the ground, coupled with chimney (Fig-8). v. Commercial improved cook stove, coupled with chimney, suitable for hotels, hostels, community center, commercial enterprises etc. (Fig-9). Single-mouth domestic improved cook stove, half-underground, with iron rod or cast iron grate

  44. Chimney Cap Chimney 1st pot hole 2nd pot hole Connecting pipe between the 1st and 2nd pot holes Hole leading to the chimney Grate Ash outlet & Air entry Fuel feed Double-mouth domestic improved cook stove, half-underground, coupled with chimney.

  45. Chimney Cap Hole leading to the chimney Chimney 2nd pot hole 1st pot hole Grate Connecting pipe between the 1st and 2nd pot holes Fuel feed Ash outlet & Air entry Double-mouth domestic improved cook stove, on the ground, coupled with chimney.

  46. Financial Analysis Base case Investment cost : 41.11 million Taka (initial) Annual operating Maintenance cost : variable (5.8 – 11.66 million Taka) Annual Gross revenue : variable (–2.11 to 56.70 million Taka) Analysis period : 10 years FIRR : –0.53% NPV (at 15%) : – 174.76 million Taka B-C Ratio (at 15%) : 13.70 The project in the base case is not financially viable.

  47. Financial Analysis with CO2 Benefit with 3 dollar per ton of CO2 (values refer to 3 month period) FIRR = 12.51% NPV (at 15%) = 599.03 million Taka B-C Ratio (at 15%) = 51.39 The Project becomes financially viable with CO2 Valued at 3 dollar/ton 10% Fall in Revenue (with CO2 valued at 3 $ per tonne) FIRR = 10.60% NPV (at 15%) = 465.59 million Taka B-C (at 15%) = 40.17

  48. Cumulative CO2 production without (Series 1) and with (Series 2) the project activity over the project period.

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