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Assessment of Government Incentives for Energy from Waste in Colombia

Author

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  • Santiago Alzate-Arias

    (Research Group in Advanced Materials and Energy (MATyER), Instituto Tecnológico Metropolitano, Calle 54A No. 30-01, Medellín 050013, Colombia)

  • Álvaro Jaramillo-Duque

    (Research Group in Efficient Energy Management (GIMEL), Faculty of Engineering, Department of Electrical Engineering, Universidad de Antioquia, Calle 67 No. 53-108, Medellín 050110, Colombia)

  • Fernando Villada

    (Research Group in Efficient Energy Management (GIMEL), Faculty of Engineering, Department of Electrical Engineering, Universidad de Antioquia, Calle 67 No. 53-108, Medellín 050110, Colombia)

  • Bonie Restrepo-Cuestas

    (Research Group in Advanced Materials and Energy (MATyER), Instituto Tecnológico Metropolitano, Calle 54A No. 30-01, Medellín 050013, Colombia)

Abstract

This work evaluates the prefeasibility of energy from waste projects in Colombia under the guidelines of Law 1715. That piece of legislation proposes tax incentives for non-conventional energy initiatives, such as deductions of up to 50% on the investment through income tax, VAT exemption, tariff exemption, and accelerated depreciation of assets. Pasto, Colombia, was selected as the case study. Subsequently, incineration, gasification, anaerobic digestion, and landfill gas technologies were evaluated. The potential of electric power generation from municipal solid waste (MSW) of each conversion technology was estimated with mathematical models. Additionally, the economic evaluation considered five cases that combine loan options, accelerated depreciation, and income deductions. Finally, the prefeasibility analysis of each case and technology was based on the internal rate of return (IRR) and levelized cost of electricity (LCOE). The results reveal that only anaerobic digestion and landfill gas technologies constitute viable projects in case of traditional investment with and without loans, because they present IRRs greater than the discount rate, of 6.8%. However, by including the incentives in Law 1715 in the economic evaluation, IRRs of 11.18%, 7.96%, 14.27%, and 13.59% were obtained for incineration, gasification, anaerobic digestion, and landfill gas, respectively. These results make all four technologies feasible in this context.

Suggested Citation

  • Santiago Alzate-Arias & Álvaro Jaramillo-Duque & Fernando Villada & Bonie Restrepo-Cuestas, 2018. "Assessment of Government Incentives for Energy from Waste in Colombia," Sustainability, MDPI, vol. 10(4), pages 1-16, April.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:4:p:1294-:d:142594
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    References listed on IDEAS

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    Cited by:

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    3. Donald Ukpanyang & Julio Terrados-Cepeda & Manuel Jesus Hermoso-Orzaez, 2022. "Multi-Criteria Selection of Waste-to-Energy Technologies for Slum/Informal Settlements Using the PROMETHEE Technique: A Case Study of the Greater Karu Urban Area in Nigeria," Energies, MDPI, vol. 15(10), pages 1-26, May.
    4. Agaton, Casper Boongaling & Guno, Charmaine Samala & Villanueva, Resy Ordona & Villanueva, Riza Ordona, 2020. "Economic analysis of waste-to-energy investment in the Philippines: A real options approach," Applied Energy, Elsevier, vol. 275(C).
    5. Oluwaseun Nubi & Stephen Morse & Richard J. Murphy, 2022. "Prospective Life Cycle Costing of Electricity Generation from Municipal Solid Waste in Nigeria," Sustainability, MDPI, vol. 14(20), pages 1-24, October.
    6. Muhammad Mufti Azis & Jonas Kristanto & Chandra Wahyu Purnomo, 2021. "A Techno-Economic Evaluation of Municipal Solid Waste (MSW) Conversion to Energy in Indonesia," Sustainability, MDPI, vol. 13(13), pages 1-10, June.
    7. Alexey Paukov & Romen Magaril & Elena Magaril, 2019. "An Investigation of the Feasibility of the Organic Municipal Solid Waste Processing by Coking," Sustainability, MDPI, vol. 11(2), pages 1-13, January.
    8. Dek Vimean Pheakdey & Nguyen Van Quan & Tran Dang Xuan, 2023. "Economic and Environmental Benefits of Energy Recovery from Municipal Solid Waste in Phnom Penh Municipality, Cambodia," Energies, MDPI, vol. 16(7), pages 1-19, April.

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