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Economic analysis of biogas and compost projects in a palm oil mill with clean development mechanism in Malaysia

Author

Listed:
  • Tatsuya Yoshizaki
  • Yoshihito Shirai
  • Mohd Hassan
  • Azhari Baharuddin
  • Nik Abdullah
  • Alawi Sulaiman
  • Zainuri Busu

Abstract

This article is a case study to compare the economic viabilities of biogas generation and compost projects in a palm oil mill in Malaysia with and without clean development mechanism (CDM). Biogas is captured from anaerobic ponds or digester tanks treating palm oil mill effluent (POME) and converted to green renewable electricity for grid connection, while compost is produced from the shredded empty fruit bunch and raw untreated POME. The both technologies were compared by considering the changes of the materials flow and energy balances. A palm oil mill with a capacity of 54 t fresh fruit bunch per hour has the potential to produce either 6.9 GWh of electricity from biogas or fertilizer equivalent to 488 t of nitrogen, 76 t of phosphorus and 1,065 t of potassium per year. The economic analysis for 10 years project term analysis indicated that CDM gave a significant impact and ensured economic viability for both projects with 25 % of internal rate of return (IRR), RM 12.39 million of net present value (NPV) and 3.5 years of payback period (PBP) for biogas project, whereas 31 % of IRR, RM 10.87 million of NPV and 2.9 years of PBP for compost project, respectively. In addition, sensitivity analysis indicated that the profitability of both projects will vary depending on the economic situation, such as electricity price which is based on the government policy, whereas compost price that depend on fertilizer market price with 43 % NPV change in 20 % range of fertilizer value. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Tatsuya Yoshizaki & Yoshihito Shirai & Mohd Hassan & Azhari Baharuddin & Nik Abdullah & Alawi Sulaiman & Zainuri Busu, 2012. "Economic analysis of biogas and compost projects in a palm oil mill with clean development mechanism in Malaysia," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 14(6), pages 1065-1079, December.
    • Handle: RePEc:spr:endesu:v:14:y:2012:i:6:p:1065-1079
    DOI: 10.1007/s10668-012-9371-7
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    References listed on IDEAS

    as
    1. Yoshihito Shirai & Minato Wakisaka & Shahrakbah Yacob & Mohd Ali Hassan & Shin’ichi Suzuki, 2003. "Reduction of Methane Released from Palm Oil Mill Lagoon in Malaysia and Its Countermeasures," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 8(3), pages 237-252, September.
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    Cited by:

    1. Garcia-Nunez, Jesus Alberto & Ramirez-Contreras, Nidia Elizabeth & Rodriguez, Deisy Tatiana & Silva-Lora, Electo & Frear, Craig Stuart & Stockle, Claudio & Garcia-Perez, Manuel, 2016. "Evolution of palm oil mills into bio-refineries: Literature review on current and potential uses of residual biomass and effluents," Resources, Conservation & Recycling, Elsevier, vol. 110(C), pages 99-114.
    2. Abu Norhasmillah & Chiew Puah & Nor Ibrahim & Azhari Baharuddin & Yuen Choo, 2013. "Life cycle inventory of the commercial production of compost from oil palm biomass: a case study," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 15(6), pages 1663-1670, December.
    3. Tan, Yue Dian & Lim, Jeng Shiun, 2019. "Feasibility of palm oil mill effluent elimination towards sustainable Malaysian palm oil industry," Renewable and Sustainable Energy Reviews, Elsevier, vol. 111(C), pages 507-522.
    4. Kelechi E. Anyaoha & Lulu Zhang, 2023. "Technology-based comparative life cycle assessment for palm oil industry: the case of Nigeria," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(5), pages 4575-4595, May.
    5. Chin, May Ji & Poh, Phaik Eong & Tey, Beng Ti & Chan, Eng Seng & Chin, Kit Ling, 2013. "Biogas from palm oil mill effluent (POME): Opportunities and challenges from Malaysia's perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 26(C), pages 717-726.
    6. Pablo Emilio Escamilla-García & Ana Lilia Coria-Páez & Francisco Pérez-Soto & Francisco Gutiérrez-Galicia & Carolina Caire & Blanca L. Martínez-Vargas, 2023. "Financial and Technical Evaluation of Energy Production by Biological and Thermal Treatments of MSW in Mexico City," Energies, MDPI, vol. 16(9), pages 1-14, April.

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