9.2 Case study: Comparative costs of gasifier installations in Argentina and Malaysia

The data, used for the cost comparison below, were collected recently ( 1991- 1992) in projects of the Deutsche Gesellschaft far Technische Zusammenarbeit (GTZ). All costs are subject to changes according to the actual economic situation of the countries (this is, for example, very pronounced in Argentina). The main objective of the case studies is it to demonstrate how the final economic viability of a gasifier installation depends on varying local cost parameters. Only the most important cost parameters are taken for comparison.

To make the calculation as simple as possible, capital loans for investments are neglected. This is justified by the rather low part, represented by investment costs within the total costs of operation. Investment costs are annualized by dividing them by the system lifetime (in years). 10 years of operation are taken as reference.

The energy plant is assumed to operate 5 hours daily on 250 days per year. This gives an annual operation time of 1250 hours.

The charcoal consumption of the gasifier system, running on 10 kW shaft power, is 10 kg per hour. This means a consumption of 12.5 tons of charcoal per year (12 500 kWh per year). Charcoal prices are 50 $/ton in Argentina and 114 $/ton in Malaysia.

The 10 kW shaft power ferrocement gasifier is manufactured locally by a team of craftsmen. After 10 years, the residual value is taken as zero.

Table 3: Annual costs of gasifier-engine systems and resulting energy costs
C = Investment costs
ACC = annualized investment costs (respectively annual costs)
(All costs in us Dollar)

A second hand car engine is overhauled before installation (new pistons, bearings, some assessories). After 5 years of operation, another overhaul is necessary. After 10 years, the residual value is assumed to be zero.

Assumptions with respect to staff costs are difficult. In Argentina, the involved group was convinced that a part time job (150 $/ month) is adequate to run the gasifier, including fuel preparation (sieving of small size charcoal from nearby kilns). In Malaysia, this is considered as a full time job (80 $/month). In the case of liquid fuel operation, the assumptions are:

The same engine is used on gasoline, consuming 8 liters per hour. The gasoline price is 0.70 $/1 in Argentina and 0.48 $/1 in Malasia. Only half of the personnel costs are necessary.

The gasifier-engine-system is supposed to render mechanical energy, for example for direct propulsion of saw mill equipment (this is realized in the project in Argentina). For electricity production, approximately 300 $/ year have to be added as annual costs for the electric generator.

Discussion:

It is interesting to note that the installation costs for the gasifier are not the major part in the calculation of annual costs-this is definitely a success of the low costs of the ferrocement construction. Even the other hardware components (engine, eventually generator) are not too critical, even when considering the rather high engine costs in Argentina, compared to Malaysia. Important for the economic viability of gasifier systems are the operating costs, i.e. the costs for fuel and the operator salary. Both items are very different in both countries. An increase in the salaries for operators will have a pronounced impact on the rentability.

The difference in the resulting energy costs ($/kWh) in both countries is not too high. But, the energy costs of the gasifier system have to be compared with the energy costs of competing energy supply systems, that is grid electricity and liquid fuel operation. Rates for grid electricity in Argentina are 6 times higher than in Malaysia, and that makes a gasifier competitive in Argentina, but not viable in Malaysia, if it has to compete with grid electricity. Compared to gasoline operation, the gasifier has an economic advantage in both countries.