Assessing the economic viability of biogas plants at abattoirs in South Africa
With electricity tariffs in South Africa escalating at a rapid pace the demand for alternative power sources has increased. One of these renewable energy sources includes the use of biogas. Biogas is not only one of the most efficient and effective renewable energy possibilities available but also requires less capital investment as compared to other renewable sources like hydro, solar and wind and are also more economical as it involves less per unit production cost. Biogas plants have been used around the globe for numerous years, but are a relative new technology in South Africa, predominantly in the red meat industry with the use of slaughter waste as a form of biomass. Slaughter waste offers a vital possible source of renewable energy. A variation of factors makes the production of renewable energy from slaughter waste particularly appealing. The continuous rise of energy prices, waste disposal prices, and incentives for renewable energy production have increased the value of outputs from slaughter waste-to-energy systems. The primary objective of the research is assessing the economic viability of biogas plants at abattoirs in South Africa and if such a biogas plant would be beneficial to an abattoir. The research aimed to determine the viability through various capital budgeting techniques and define what the most significant calculated variables are that should be addressed in such an economic viability model. For the purposes of this study a Class A abattoir with a slaughtering capacity of 400 cattle per day was used as a case study. Biogas will be generated through anaerobic digestion and the utilising of the gas for the generation of electricity and heat by means of a CHP generator. The economic viability study contains of a base case scenario and two other possible scenarios and provides recommendations and a concluding report, based on the scenario that is the most viable. The succeeding techniques which were recognised were used to analyse the economic viability of the biogas plant: Payback Period, Discounted payback period, Net present value, profitability index, and internal rate of return. Furthermore a sensitivity analysis was done in the study with a pessimistic and optimistic outcome on key variables. The study establish that in the base case scenario a positive net present value was realised, the internal rate of return was more than the required rate of return and the payback periods was shorter than required. In this study the concept of biogas plants in the red meat industry were researched with the purpose of determining the economic viability of these plants. In determining the viability of the biogas plant the key variables that will impact the viability was also identified and discussed. Based on the data gathered and assumptions that was made it was concluded that a biogas plant will be beneficial to an abattoir and was considered economically viable.