Production of Thermoelectric Power from the Solid Waste of Urban Lahore

1. Mohammad Rafiq Khan and Harris Tanveer Lahore School of Economics, 19 Km Burki Road, Lahore Pakistan Production of Thermoelectric Power from the Solid Waste of Urban Lahore

2. Appropriate Technology Sustainable Development and Agenda 21 Solid Waste Disposal with Resource Recovery:Europe, America, Japan and some developing countries Introduction

3. [1] Kyritsis, S.2000.Proceedings of the 1st World Conference on Biomass for Energy and Industry held in Seville in June 2000 [2]Riffat, SB. 2003. Thermo-electrics: a review of present and potential applications. Applied Thermal Engineering, 23(8): 913-935 [3] Dubois, M., Gonzalez, A.M.M., and Knadel, M.. 2004. Municipal Solid Waste Treatment in the EU, Publisher: Centre for Environmental Studies University Of Aarhus Finlandsgade ,Denmark [4] Donelly, C., and Parkman, M., 2006, Leicestershire Municipal Waste Management Strategy, Best Environmental Option , Strategic Assessment., An Environmental Report produced for Lancashire County Council [Online], Retrieved January 21, 2009. from http://www.lancashire.gov.uk/environment/lmwlp/pdf/bpeo161104.pdf [5] Hogg, Leicestershire Municipal Waste Management Strategy Environmental Report LMWMS 2006 Document 14 (May 2006) [6] Skovgaard M, Hedal N, Villanueva A, Andersen FM, Larsen H. Municipal waste management and greenhouse gases. Copenhagen, Denmark. European Topic Centre on Resource and Waste Management, 2008 Background Studies

4. System approach is very popular these days and waste is being modeled for its management and optimal use for energy in future Waste is being modeled for optimization of its use in projections of Denmark and other Scandinavian countries for 2025. These systems also model investment to be made on waste incineration based projects but the studies are on the way

5. Start 2006 Pakistan is also suffering from the problems highlighted above. Along with the food and energy crises, it is also facing the environmental impact of dangerous pollutants. A group of researchers at LSE have undertaken some work to solve these national problems. These researchers framed a pilot scheme to carry out research in three phases. They studied in detail the production of thermo-electric power from solid waste of four educational institutions of Lahore: Lahore School of Economics (LSE), Lahore University of Management Sciences (LUMS), Government College University Lahore (GCUL) and Kinnaird College (KC). Khan and Sheikh assessed the solid waste of LSE and studied the economic viability and technical soundness of the project based on it. Similarly Khan and Kamal appraised a project based on waste of LUMS , Khan and Pervez on that of KC and finally Khan and Abbas on that of GCUL . The results were significant and thus the spectrum of study was extended to schedule a model village, two urban colonies of Lahore and finally the City of Lahore as a whole ; the piece of work being presented today that marked the end of Phase 2 of the Scheme. In Phase 3, the spectrum of activity will be extended to other major cities of Pakistan. The information gathered about different cities and towns will be finally integrated to assess overall potential of Pakistan to produce thermoelectric power. From this source . Work at LSE

6. To standardize a method for safe and techno-economic disposal of Lahore’s solid waste. • To study the feasibility of production of thermo-electric power from the biomass of solid waste. • The project if not feasible, to study how to pull it towards feasibility.  • Recommendations to the concerned agencies for effective solid waste management. The major objectives of the research work reported here were as follows:

7. Results of Phase 1 • Khan, MR and Sheikh, S. (2010). Production of Thermoelectric Power from Solid Waste: A Case of Lahore School of Economics, International Energy Journal, 11: 51-64 • Khan, MR and Kamal, M. (2007). .Production of Thermo-electric Power from the Solid Wastes of Lahore University of Management Sciences. Presented in International Conference on Environment held by Monash University in Malaysia in December, Proceedings in Process. Available on Website of Monash • Khan MR and Pervez, F. (2009). Production of Thermoelectric Power from the Solid Wastes of Kinnaird College, Environ Monitor, IX (9&10): 14-28 • Abbas, S. (2007). Production of Thermoelectric Power from Solid Waste of Kinnaird College; B. Sc, (Honors) Thesis Available in Resource Centre 2, Lahore School of Economics Lahore. Appreciation of Results

8. Phase 2 Publications in process) • Ahmad, M. Production of Thermoelectric Power from the Solid Waste of Canal View Cooperative Housing Society Lahore. 2008. B. Sc. Honors Thesis Available in Resource Center 2 of Lahore School of Economics. • Zia, M. 2008 .Production of Thermoelectric Power from the Solid Waste of Gulberg, Lahore. 2008. B. Sc. Honors Thesis Available in Resource Center 2 of Lahore School of Economics • Burhan, M. 2008. Production of Thermoelectric Power from the Solid Waste of Bhengali (Union) Council, Lahore. 2008. B. Sc. Honors Thesis Available in Resource Center 2 of Lahore School of Economics • Tanveer, H. 2008.Production of Thermoelectric Power from the Solid Waste of Urban Lahore. B. Sc. Honors Thesis Available in Resource Center 2 of Lahore School of Economics. Research paper written out of this thesis is Under review by Energy-Elsevier for Publication Ali, Z. 2008. • Ali, Z. 2008.Production of Thermoelectric Power from the Solid Waste of Infectious Hospital Waste of Lahore. B. Sc. Honors Thesis Available in Resource Center 2 of Lahore School of Economics • Phase 3 • 1. Khan, MR. 2010. Potential of Production of Thermoelectric Power by Sugar Mills of Pakistan, Presented in Conference on Energy and Sustainable Development 2010 held by Asian Institute of Technology in Chiang Mei on June 2 to 4. • 2. Khan, MR. 2010. Production of Thermoelectric Power by Some Educational Institutions of Pakistan: Presented in Conference on Energy and Sustainable Development 2010 held by Asian Institute of Technology in Chiang Mei on June 2 to 4. Khan also presented this article in capacity of a specially invited speaker in a seminar on May 05, 2010 organized by Pakistan Institute of Development Economics (One of the Weekly Seminar Series) to take feedback of teachers, scholars and students. Significant positive comments were made which were helpful in presentation in Conference. Available at AIT and PID EWebsites

9. Secondary Data: The projection is based on primary data Collected from Punjab Urban Unit The primary data about production and mode of disposal of solid waste were collected from different offices of LMC, PUU, LDA, EPD and others by interviewing concerned officials. The total electricity consumed by the people of Lahore from WAPDA and Local Production from Generators was calculated from data collected from LESCO as shown in Table 3(Number of connections, revenue collected from the monthly bills) . Questionnaire Data Analysis The data collected from different respondents was sorted in terms of reports. The basic and alternative project were cost designed and subsequently appraised by the application of discounted cash flow techniques standardized by Asian Development Bank (ADB 2001 and 2002). The details of cost design and analysis of projects are compiled later. Interpretation of Results Methodology of Research

10. Table 1: The details of the solid waste produced and disposed at different sites

11. Table 2: Physical composition of Solid Waste

12. Table3: Power Consumption in Lahore over the last four years

13. Cost Analysis Initial Fixed Investment It includes the cost of land, building, machinery, equipment ( Table 4), and preproduction expenditure . The total initial fixed investment with land was Rs 1,756,340,000 while that without land was Rs. 1,656,340,000 Operating Cost The operating cost is computed in Table 6. The operating cost for year 1 came out to be Rs 471,752,000. Expenditure in the Base Year Initial fixed Investment = Rs 1,756,340,000 Operating Cost = Nil Total Expenditure = Rs 1,756,340,000 Expenditure in Future Years The assumptions and computations are given in Appendix 1. The computation is displayed in Table 6. The total operating cost discounted to the base year turned out to be Rs. 2,367,132,214.

14. Table 4: Cost of Plant Machinery & Equipment Total Cost of Plant Machinery and Equipment = 1,607,500,000

15. Table 5: Break Down of Labor and Labor Cost

16. Table 6: Total Operating Cost

17. Table 7: Total Operating Costs Discounted at 10% to the Base Year

18. Revenue Return per Annum = Rs 4,801,680,000 Gross Profit = Total Revenue Return per Annum- Operating Cost Year 1 = Rs 4,801,680,000 - Rs 471,752,000 = Rs. 4,329.928,000 Present Value of Benefits = Rs 29,504,258,878 B/C Ratios, NPV and PBP These values are computed. The BCR for the project came out to be 5.71 while NPV was Rs. 24,396,734,715. The PBP for this reference alternative turned out to be 0.40 implying that the investment can be recovered in less than half year. Benefits

19. Major factors that rendered the projects non-feasible were less tonnage of solid waste and cost of land [ ]. Here there was no problem of tonnage deficiency but cost of land was still an important factor. Thus alternative projects were designed with and without cost of land. • There are two norms to accommodate the impact of inflation on project appraisal. The first is based on the assumption that if the cost components undergoes an increase in price with the passage of time, the revenues also increase proportionately due to the proportionate increase in prices of the products. Thus the impact of inflation is nullified. It need not be studied. That is why alternatives were also designed by calculating operating cost with and without increase in salaries. • Finally, the price at which the power production companies sell to the government and distributing companies and the price that the end customer may be different. The enquiry revealed that it was almost half of the price per unit (Rs 3.25). Thus projects based on this sale price were designed and appraised. Similarly, the prices in 2010 are now almost double of the prices in 2008, the year in which study was carried out Alternative Projects

20. Table 8: Bases and Requisites of Different Alternative Projects

21. Table 9: Computation of results of evaluation of alternatives

22. Results are reported in two parts: the general information gathered from interviewees about Lahore waste and its disposal is reported in part 1 as descriptive research and the results of cost analysis are reported in part 2. Results

23. Benefit to Cost Ratio is one of the important criteria for grading a project as non-profitable, profitable or socially acceptable. The decision rule is that if it is more than 1, the project is profitable and thus acceptable and if it is less than 1, it is non- profitable and thus not acceptable. Similarly for Net Present Value or NPV of the Project the decision rule is that the project is acceptable if NPV is positive and if negative, then project is rejected. In both cases, the project is rejected if it does not fall in the category of some social obligation. If so, entrepreneur has to accept it on expectation of subsidy from a sponsoring agency such as government or a social welfare organization. Payback period (PBP) tells the time in which initial investment will recover: shorter the time period, quicker is the recovery of investment in a project. A long payback period is not desirable. Results of the Cost Analysis

24. Alternative 1 (With Land): The BCR in Alternative 1 is 5.71, the NPV is Rs. 24,396,734,715 while Payback Period is 0.41 Years, Thus, the Benefit Cost Ratio (BCR) is far above 1 and the Net Present Value (NPV) is also highly positive along with a very shorter payback period. This means that this alternative is fully feasible. Alternative 2 (With Land but Without Increase in Salaries): The BCR in this alternative is 6.35; NPV is Rs 24,911,181,728 and payback period: 0.41 Years. As the values of deciding factors don’t differ significantly from Alternative 1, the increase in salaries over future years has a minor effect. The BCR still comes out to be above 1 and the NPV is also positive. The PBP remains the same as that in Alternative 1. Thus this alternative is also feasible. Alternative 3 (Without Land): The BCR in Alternative 3 is 5.83, NPV Rs 24,496,734,715 and the PBP is 0.38 Years. The BCR and NPV have undergone a small increase by exclusion of cost of land from initial fixed investment. The results of this alternative are also similar to those in Alternatives 1 and 2. The PBP is also shorter and thus this alternative is little better than Alternative 1. Less difference may be due very high cost of machinery and equipment as compared to land and also inclusion of high cost and cost of fuel used to run fifty trucks around the year.

25. Alternative 4 (Without Land and Without Increase in Salaries):The BCR in Alternative 4 is 6.48, the NPV Rs 25,010,521,728 where as the PBP is 0.38 Years. The BCR is still above 1 and NPV is also positive. The PBP is same as in Alternative 3. So after excluding the cost of land from expenditure stream of project and without increasing salaries of the labor this project becomes more profitable than a similarly evaluated with land and without increase in salaries Alternative 2. Alternative 5 (Decrease in Price of Electricity to Rs. 4/Kw and With Increase in Salaries): This alternative was designed to check the feasibility in case the producer of electricity has to supply to WAPDA the power distributor in Pakistan at lower price (Rs 4 in 2008) for onward supply to the consumer at higher price than was Rs 6.50. The revenue will reduce accordingly to a little more than half of that collected in the Alternative 1. The values will also reduce and thus the BCR in this alternative is 3.52; the NPV is Rs. 13,048,943,838 whereas PBP is 0.70 years. The Benefit /Cost is still very good and it’s above 1 and the Net Present Value (NPV) is also positive. So even after decreasing the price of electricity to Rs. 4 /KW, the project is still profitable. Alternative 6 (Decrease in Price of Electricity to Rs. 4/kW Without Increase in Salaries): This alternative is similar to Alternative 5 with the difference that salaries were not increased as done in Alternative 3 and 4, The BCR in Alternative 6 is 3,89. the NPV is Rs. 13,148,943,838 while PBP is 0.66 Years, This alternative is slightly better than Alternative 5.

26. Alternative 7 (Decrease in Price of Electricity to Rs. 12/kW and With Increase in Salaries): This alternative was designed to fit the project in the current market scenario of electricity. The prices have almost doubled as compared to those in 2008. That is why the revenue return has been calculated at the cost of Rs.12/kW as compared to Rs 6.50/kW. The revenue will increase accordingly and will be almost double of that collected in Alternative 1. The values will also reduce and thus the BCR in this alternative is 10.54; the NPV is Rs. 49,361,876,842 whereas PBP is 0.20 years. The Benefit /Cost is very good and ils doubled 1 and the Net Present Value (NPV) is also positive. So much so after increasing the price of electricity to Rs.12 /kW, the the project is highly feasible with profit almost double that in Alternative 1. An excellent display of the evaluation of this project is that the investment is fully recovered within two three months Alternative 8 (Increase in Price of Electricity to Rs. 12/kW Without Increase in Salaries): This alternative is similar to Alternative 7 with the difference that salaries were not increased as done in Alternative 3,4 and 6. The BCR in Alternative 6 is 10.75, the NPV is Rs. 49,461,876,842, while PBP is 0.19 Years, This alternative is slightly better than Alternative 7.

27. The main objective of work reported here was safe and techno-economic disposal of Lahore’s solid waste and study of feasibility of production of thermo-electric power from its biomass content. To that end, basically a primary project was planned and appraised. The results of this appraisal were highly promising. The BCR in Alternative 1 was 5.71, the NPV was Rs. 24,396,734,715 while PBP was s 0.41 Years, The BCR was far above 1 and NPV) was also highly positive along with a very short PBP. This means that the feasibility of project was beyond any doubt. This result is very different and highly distinguished from the recently reported results of the studies on different educational institutions of Lahore [3]-[4], [32]-[33]. Out 4, production of thermoelectric power in all was not feasible if the cost of land was included in the expenditure stream. If the cost of land was excluded, it turned out to be non-feasible in three LSE, KC and LUMS and marginally feasible in GCUL. Major factors that rendered the projects non-feasible were the high cost of land due to institutions being located in expensive area such as posh colonies or near commercial centers and tonnage of the solid waste produced per annum. That is why alternative projects based on cost exclusion and increase in tonnage were constructed and subsequently appraised to pull the projects towards feasibility. The changes qualified the alternatives but generally on marginal basis. Here the results are distinguished in the sense that the primary project designed on the basis of large tonnage of waste produced in Lahore which was 5,700 m ton per annum or 435.5 m ton/hr. Thus, the projection based on such a large quantity of solid waste was free from the tonnage constraint. The constraint due second major factor the cost of land was also eliminated due selected location being out of Urban Lahore such as Rai Wind Road where some agriculture land could be purchased at cheaper price (Rs 20 million for 4 Acre) which for GCUL as an example may be the price 0.12 Acre. That is why BCR turned out to be manifold in case of Urban Lahore and NPV very high between 20 t0 25 million rupees. The most attractive facet of this evaluation is very small PBP even less than half year which in some previously reported cases was even infinite which means that investment cannot be recovered at all. Discussion

28. The authors are really thankful to the people at District Council, Lahore and at Pattoki Sugar Mills, especially CEO Chaudhry Muhammad Aslam, General Manager Mr. Ikram-ul-HaqSajid, Mian Abdul Shakoor, and Mr. ZafarIqbal for their valuable help and cooperation throughout the project span. They are also grateful to officials of Urban Unit Punjab for providing them the solid waste data about Urban Lahore and Steam Power Station Faisalabad, who really guided researchers in the right direction that ultimately translated into productive results. Acknowledgments