Annex E – Approach to Costs
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Imagine the result FINAL REPORT ASSESSMENT OF THE OPTIONS TO IMPROVE THE MANAGEMENT OF BIO-WASTE IN THE EUROPEAN UNION ANNEX E: Approach to estimating costs STUDY CONTRACT NR 07.0307/2008/517621/ETU/G4 EUROPEAN COMMISSION DG ENVIRONMENT ARCADIS Project number – 11/004759 | Version A | 30-11-2009 2/57 11/004759 CLIENT European Commission Directorate-General Environment Mr. Bartosz Zambrzycki Unit G.4 – BU – 5 05/118 B-1049 Brussels ASSESSMENT OF THE OPTIONS TO IMPROVE THE MANAGEMENT OF BIO-WASTE IN THE EUROPEAN UNION CONSULTANTS ARCADIS Belgium nv Clara Snellingsstraat 27 2100 Deurne Belgium EUNOMIA Research & Consulting 62 Queen square Bristol, BS1 4JZ United Kingdom Contact Laurent Franckx Telephone +32 3 328 62 73 Telefax +32 3 328 62 87 E-mail l.franckx @arcadisbelgium.be Website www.arcadisbelgium.be Assessment of the options to improve the management of biowaste in the European Union – Annex E: Approach to estimating costs 3/57 11/004759 Revision Version Date Remark Final 30/11/2009 Issued by Department Function Name Signature Date ARCADIS, Team leader and Laurent Franckx Strategic Policy senior economist Advice ARCADIS, Senior waste Mike Van Acoleyen Strategic Policy specialist Advice Eunomia Dr Dominic Hogg Eunomia Dr Adrian Gibbs Eunomia Tim Elliott Eunomia Chris Sherrington Eunomia Ann Ballinger Eunomia Siobhan O’Brien Eunomia Debbie Lister Eunomia Catherine Beswick Verified by Department Function Name Signature Date Approval by client Department Function Name Signature Date Assessment of the options to improve the management of biowaste in the European Union – Annex E: Approach to estimating costs 4/57 11/004759 TABLE OF CONTENTS A FINANCIAL MODELLING ..........................................................................................7 A.1 Cost Metrics ..........................................................................................................................................................7 A.2 Costs and Gate Fees.............................................................................................................................................. 8 A.3 The Nature of Switches......................................................................................................................................... 9 A.4 Key Variables........................................................................................................................................................9 A.5 Weighted Average Cost of Capital .................................................................................................................... 10 A.6 Revenue from Electricity Sales..........................................................................................................................13 A.6.1 Revenues from Heat Sales ............................................................................................................................ 15 A.6.2 Revenues from Biogas to Grid Sales ............................................................................................................ 17 A.6.3 Revenues from Biogas to Vehicle Fuel Sales ............................................................................................... 18 A.6.4 Levels of Support for Renewable Electricity................................................................................................ 20 A.6.5 Levels of Support for Renewable Heat......................................................................................................... 23 A.6.6 Levels of Support for Biogas to Grid............................................................................................................ 23 A.6.7 Levels of Support for Biogas to Vehicle Fuel............................................................................................... 23 A.6.8 Landfill Tax, Standard Rate.......................................................................................................................... 24 A.6.9 Landfill Tax, Lower Rate.............................................................................................................................. 24 A.6.10 Incineration Tax............................................................................................................................................ 25 A.6.11 Landfill Gate Fee, Hazardous ....................................................................................................................... 25 A.6.12 Landfill Gate Fee, Non-hazardous................................................................................................................ 25 A.7 Process-specific Assumptions............................................................................................................................. 25 A.7.1 Open Air Windrow Composting................................................................................................................... 26 A.7.2 In-vessel Composting (IVC) ......................................................................................................................... 28 A.7.3 Anaerobic Digestion .....................................................................................................................................29 A.7.4 Landfill ......................................................................................................................................................... 38 A.7.5 Incineration................................................................................................................................................... 39 A.7.6 Mechanical Biological Treatment (MBT)..................................................................................................... 45 B VARIATIONS IN CAPEX AND OPEX BETWEEN MEMBER STATES ...................47 B.1 Labour Costs for Landfill .................................................................................................................................. 52 B.1.1 Landfill Capex .............................................................................................................................................. 52 B.1.2 Landfill Opex................................................................................................................................................ 52 B.2 Labour Costs for Incineration ...........................................................................................................................52 B.2.1 Incineration Capex........................................................................................................................................ 52 B.2.2 Incineration Opex ......................................................................................................................................... 52 B.3 Labour Costs for MBT....................................................................................................................................... 53 B.3.1 MBT Capex .................................................................................................................................................. 53 B.3.2 MBT Opex.................................................................................................................................................... 54 B.4 Labour Costs for AD .......................................................................................................................................... 54 B.4.1 AD Capex ..................................................................................................................................................... 54 Assessment of the options to improve the management of biowaste in the European Union – Annex E: Approach to estimating costs 5/57 11/004759 B.4.2 AD Opex....................................................................................................................................................... 54 B.5 Labour Costs for Windrow................................................................................................................................55 B.5.1 Windrow Capex ............................................................................................................................................ 55 B.5.2 Windrow Opex.............................................................................................................................................. 55 B.6 Labour Costs for IVC......................................................................................................................................... 55 B.6.1 IVC Capex .................................................................................................................................................... 55 B.6.2 IVC Opex...................................................................................................................................................... 56 LIST OF GRAPHS Figure A-1: Adjustments Made to Average Cost of Capital Estimates ............................. 11 Figure A-2: Investment Cost for Biogas Clean-up as a Function of Capacity (m 3/hr) ...... 35 Figure A-3: Cost per kWh of Cleaned Biogas as a Function of Plant Capacity................ 35 Figure A-4: Biogas injection to grid................................................................................... 37 Figure A-5: Variation in Capital Cost with Scale............................................................... 41 Figure A-6:Range of Unit Capital Costs Reported in German Tenders for MBT Facilities (by capacity).....................................................................................................................