Feasibility assessment of harvest residue gasification for bioelectricity and its financial impact on conventional plantation forestry

Abstract

This study investigates the financial feasibility of using harvest residue for bioelectricity and its financial impact on conventional plantation forestry in South Africa. The biomass gasification system used is a 5-megawatt (MW) plant by GreenForze. Data were collected on the investment cost, operational and maintenance costs, timber harvest and transport costs, wages and salaries, and revenues from electricity sales through interviews with forestry stakeholders and a literature search. The cost details used in the investment and financial risk analysis of the conventional plantation forestry operations were from Forestry Economics Services (FES). An excel spreadsheet model was developed and used for the financial feasibility analysis using net present value (NPV), and internal rate of return (IRR) as indicators. A Monte Carlo sensitivity analysis was integrated into the model to analyze the investment risk. Results revealed that harvest residue gasification for electricity is financially feasible with an NPV of 7,049,336.64 South African Rand/Zuid-Afrikaanse Rand (ZAR) and an IRR of 15.8%. The integration of bioelectricity production with conventional plantation forestry operations improved the IRR from 15.10% to 18.31%, while at the same time improving the NPV from ZAR 10,334.86 to ZAR 15,378.46. Sensitivity analysis forecasts low-cost risks for investors. The gasification plant’s NPV was found to be highly sensitive to the investment cost, and transport cost of harvest residues. The study deduces that integrating conventional plantation forestry with timber harvest residue gasification for bioelectricity is a feasible pathway to sustainable electricity production in the South African context.