Five waste management strategies Incineration, Pyrolysis Gasification, Improved Recycling, Anaerobic Digestion and Composting were analysed based on the 'investors' point of view. Capital and operating costs of the mentioned waste management, including its profitability for a period of 10 years were concluded using cumulative cash flow diagrams. The results showed that both incineration and Thermoselect took 7 years to break even. However, incineration will have a higher cumulative cash flow of SGD 1069.989M while Thermoselect having a cumulative cash flow of SGD 692.37M. Therefore, incineration was chosen as it was the most profitable waste management strategy, offering the highest return on investment.
(1884 words inclusive of executive summary - excluding tabulated texts and appendices)
List of Illustrations
List of Tables
Table of Contents
1. Introduction
With a population density of approximately 5.3 million ("Statistics," 2012) and limited land area, it is imperative that Singapore has an efficient system for the collection and disposal of solid waste. Over the years, the output of solid waste in Singapore has increased from 4.6 million tons in 2000 to 6.8 million tons in 2011. (Tay, 2012) Statistical data showed that 59% of the total waste generated 2011 was being recycled. Out of the 41% that was disposed of, 38% goes to the Waste-to-Energy (WTE) plants where the waste will be incinerated and the energy recovered. The remaining 3% along with the unwanted residue from the incineration would be sent to the Semakau Landfill for landfilling. (Tay, 2012)
At present, the frequency of Singapore building a new incineration plant is one every 5-7 years. (McCrea et al.)With that, the cost involved in dealing with the wastes in Singapore will be constantly increasing as the rate of waste generation increases with respect to the growing population. Hence, it is important that a new waste management strategy is developed in order to accommodate the growing volume of waste. This new strategy should not only be a long term solution to Singapore's growing waste problems, it should also offer attractive returns; one that is worth investing in.
2. Methodology
The existing waste management strategies in Singapore were analyzed.
Research was done on other forms of waste treatment. Research areas were,
Incineration
Pyrolysis & Gasification
Improved Recycling
Anaerobic Digestion
Composting
Factors such as the capital and operating costs of the plant as well as the market value of any saleable products were gathered for the respective research areas.
With the data, an estimation of the profitability and feasibility of each waste treatment process was analysed.
The profitability of each waste treatment process was projected for 10 years through the use of a cumulative cash flow diagram.
At the same time, wastes generation and recycling patterns were studied to determine whether it would be worthwhile to be investing in the waste management business.
From the cash flow diagrams, a comparison was done to decide which waste management process would give the best return on investments.
Finally, a simple risk analysis (sensitivity) of the investment was conducted to investigate the effects of various external undesirable factors on the revenue or operating conditions/costs.
In each of the technologies discussed, a brief description of the technology and some detailed financial data (if available) are attached in Appendices A-E while the general finance related materials are discussed in the report.
3. Market Survey
3.1 Thermoselect
3.1.1 Investment Analysis
Presently, the main waste treatment is by incineration. Comparatively, countries such as Japan and Germany have ventured into Thermoselect, a plant which features cleaner emissions, higher efficiencies and greater investment returns.
A study by the Institute of Chemical and Engineering Sciences was conducted to ascertain the economical viabilities of Thermoselect in Singapore. It was based on a plant in Europe which had the same capacity of the Waste to Energy Incinerator in Tuas South.
Table 1 summarizes the cost and operating conditions related to that of the Tuas Incinerator and the proposed Thermoselect plant.
Table Comparison between Incineration and Thermoselect (Khoo H.H et. al., 2006)
Cost and Operating Conditions
Waste Treatment Technology
Incinerator
Thermoselect
Capacity (tpd)
3000
3000
Type of materials processed
Mixed MSW
Mixed MSW
Main useful product
Electricity (550KWh/ton)
Syngas (890kg/ton)
Capital and construction costs in millions SGD
900
725
Operating costs in SGD/ton
70
100
Tipping fee in SGD/ton
(Source: Cooper J, 2010)
80
80
Disposal cost to landfill in SGD/ton
77
77
Electricity Input (KWh/ton)
70
302
Natural gas input (m3/ton)
(Source: Smart Energy)
0.23
34.6
Residues/Ash
Up to 20%
Up to 5%
From Table 1, it was shown that the Thermoselect plant was much cheaper to build as compared to the Incinerator. However, the operating cost was slightly higher comparatively than the incineration plant.
Figure Cash Flow Diagram for Thermoselect
From Fig. 1, it could be seen that it will take approximately 7 years to break even and that the cumulative cash flow at the end of 10 years would be SGD 692.4M.
3.1.2 Sensitivity Analysis
Figure Sensitivity Analysis of Syngas Production (Khoo H.H. et. al., 2006)
From Fig. 2, it can be seen that low production rates of syngas would increase break even time required for recovery of capital cost. However, higher production of syngas may not reduce the break even time required as the operating costs increases with production rates.
3.2 Anaerobic Digestion
3.2.1 Investment Analysis
Municipal solid waste can be treated using a process known as anaerobic digestion. From this process, biogas is produced, which is then combusted and used to drive gas engines to produce electricity. The electricity was then sold to the grid. Additional income from the tipping fee was also considered when calculating the overall revenue of the plant.
Table Estimated Costs of Anaerobic Digestion Facilities to Process Mixed Waste (Cant, 2006)
Costs Involved
SGD
Capital Cost
1,5372,000
Annual Operating Costs (including offsite curing and residue disposal)
1,488,400
Annual Electricity revenue
1,215,000
Annual Tipping Fee Revenue
1,600,000
Using the estimated costs from Table 2, a cash flow diagram was generated to analyze the profitability if this waste treatment process.
Figure Cash Flow Diagram for Anaerobic Digestion
From Fig. 3, it was observed that the estimated time taken for the project to break even would be slightly more than 12 years. This was due to the high capital and operating costs of the facility. This meant that the project would not be profitable due to a low return on investment. Hence, the use of anaerobic digestion as a waste treatment process would not be attractive for investors.
3.2.2 Sensitivity Analysis
Given the increasing waste generation trend, it is not expected that the production rates and revenues would be affected.
3.3 Composting
3.3.1 Investment Analysis
While current practices in Singapore are limited to household scale, the neighbouring countries such as Malaysia, Thailand and Philippines already have plants which capitalize on the value of the composts.
D:\Dropbox\Sustainable Industry\Sustainable Report Documents\singapore-fertilizer-consumption-metric-tons-wb-data.png
Figure Trend of Fertilizer Use in Singapore (TradingEconomics.com, 2012)
From Fig. 4, it could be noted that the trend of fertilizer use increasing and thus presents a potential market to be surveyed for feasibility.
Table 2 summarizes the finances associated with the investment into vermicomposting.
Table Summary of Finances (Steve R.S et al, 2002)
Direct costs of operating the processing system
Expenses incurred at Waste Research Centre (WRC)
Cost per Block
Land Rental
$200
Waste application and handling equipment
$200
Screening/harvesting equipment
$980
Utilities
$200
Workshop rental
$600
Labour
$810
Depreciation of beds
$1200
($4190)
Potential Income (per Block)
WRC Income
Worst case
Best case
Compost sales (estimated 20 m3/yr)
$600
$2400
Earthworm sales (estimated 50 kg/yr)
$500
$1000
($1100)
($3400)
Direct Processing Cost (per Block)
Details
Worst case
Best case
Direct processing costs
$4190
$4190
Total income
$1100
$3400
Net costs
$3190
$790
Tonnes processed/year
52
52
Gate fee required to break even
$62
$16
Estimated Overhead Cost (per Block)
Details
Cost per Block
Staff costs
$960
Marketing/administration
$300
Premises/facilities
$300
Tonnes processed/year
52
Gate fee required to break even
$30
Figure Cash Flow Diagram for Composting
Fig. 5 was constructed from Table 3 to illustrate the cumulative cash flow. The plant was constructed under slightly in a year and that with an operating cost of $3340 per annum (due to the fixed capacity of the plant). From the CFD, it would take approximately 2.2 years to break even and at the end of 10 years, the cumulative cash flow would be SGD 32,340.
3.3.2 Sensitivity Analysis
The costs of fertilizers in Singapore are relatively constant and are usually affected by demands and transportation costs. This would then affect production cost and subsequently the selling price of the product. As waste generation is on the rise coupled with the increase in composting trends, it is not expected that the plant feed rate would reduce and hence production efficiencies would not be affected.
However, as the market for the composts is small in Singapore, majority of the products would have to be shipped to the neighbouring countries and by doing so would then increase the gate fee & reduce the profit margin. With all the addition of all the discussed components, the final selling price would be insufficiently competitive even though the cost price and general benefits of composting are cheaper and better than the inorganic fertilizers used alone.
3.4 Improved Recycling
3.4.1 Investment Analysis
Case studies of recycling firms were studied for its economic feasibility. However a financial report for a recycling-only firm could not be obtained. This was because most companies in Singapore incorporate collection and waste treatment. As such, companies such as Sembwaste were used as the basis. Table 3 summarizes the finances of Sembwaste in Year 2011.
Table Summary of finances obtained (Sembcorp - Business at a glance)
Year 2011
Sembwaste
Total waste recycled
(tonnes/year)
150,000
Revenue
(SGD in million)
370.3
Profit
(SGD in million)
42
Capital Cost
(SGD in million)
328.3
Break even
(years)
ï¾ 8.7
Based on Table 4, a 10-year cash flow diagram (Fig. 6) was computed to illustrate the cumulative cash flow. The following assumptions were made in the computation;
Increment of 1% in recycling rate. (According to NEA's waste report of average increment of 1% throughout 10 years.) (Zerowastesg - Singapore Waste Statistics, 2011)
Not all waste collected are recycled.
Figure Cash Flow Diagram for Improved Recycling
The waste statistics from National Environment Agency showed that the recycling rate in year 2011 was 59% with the total waste recycled at 4,038,800 tonnes. From the financial report of Sembwaste, it was noted that they only had a share of 2.2% (150,000 tonnes) of the 59% of waste recycled in Singapore. This low percentage proved that the potential for revenue is high; furthermore it is expected that the recycling rates are to be increased.
From Fig. 6, it could be seen that it took 8.7 years to break even with a cumulative cash flow of SGD 65.2M at the end of 10 years.
3.4.2 Sensitivity Analysis
Figure Relationship between commodity prices and profit (Fabian B & Mathias S., 2012)
From Fig. 7, it could be seen that the increase in amount of waste recycled could affect the income. Similarly, the commodity price also affects the income as seen from the gradients of the lines in Fig. 7 (commodity price being the gradient of the lines). Hence, with the increasing trend in the commodity prices coupled with the increase in waste generation, it is not expected that business would be affected by a reduction in waste processing rate.
3.5 Incineration & Landfill
3.5.1 Investment Analysis
The total waste generated in Singapore was 6.8 million tonnes in 2011 with a projected increment of approximately 5.37% per year due to population growth and increasing effluence. (Solid Waste management, 2012)
Table 5 summarizes the approximated finances for the processing of 2.3 million tonnes of waste per annum.
Table Summary of Finances of TSIP
Spending Avenue
Rate
Generation/Production
Cost per Annum
- Capital Cost
S$890M
NA
NA
- Waste Generated to TSIP
NA
2.3Mil ton/yr
NA
- Operation Cost
S$70/ton
NA
-S$161M
- Landfill fee
S$77/ton
0.066Mil ton/Yr
-$5.13M
Revenues
- Electricity sold
S$0.27/kWh
64MW
S$151.4M
- Ferrous Metal sold
S$270
0.39Mil tonne/yr
S$105.3M
- Tipping Fee
S$80/tonne
2.3Mil tonne/yr
S$184M
Net Profit less Capital
S$440.7M
Figure Cash Flow Diagram for Incineration
From Fig. 8, it will take approximately 6.8 years to break even with a cumulative cash flow of S$ 1070M at the end of 10 years.
From the Table 5, it was observed that the tipping fee contributed to the biggest portion of the revenue. The tipping fee was calculated based on weight of the waste and would hence increase as the waste generation increases.
Recovered ferrous metal could be sold to local steel mills. The resale of ferrous metal only contributes to 24% of the whole revenue generated. The total recovered metals was 0.39 million tonnes in year 2011. (Solid Waste management, 2012) The average price for ferrous metal of S$270/tonne was derived from Table 6.
Recently a potential market in the bottom ash produced from incineration was found for use in concrete. As the bottom ash is very porous, concrete made from bottom ash is lighter than those made from natural gravel which helps in lowering the transportation cost. For this reason, more construction businesses have switched to bottom ash for use in concrete. This reduced the cost of land filling the bottom ash by 15-20% which was estimated to be $22/tonne from the current $25/tonne. (Heiner Zwahr)
Table Prices of Ferrous Metal Recyclates in Year 2011 (Letsrecycle: Metal, 2012)
3.5.2 Sensitivity Analysis
The energy recovered from the incineration of wastes is also reliant on the calorific value of the waste. Figure 9 shows how the calorific value and working capacity would affect production cost and subsequently revenue.
Figure Factors Affecting Treatment Cost and Subsequently Revenue
(Decision Maker's Guide To Municiple Solid Watse, 1999)
From Fig. 10, it was observed that revenue would not be affected significantly despite the decline in the prices of ferrous metals due to the increase in waste generation per year.
Figure Prices of Ferrous Metals (Letsrecycle: Metal, 2012)
4. Conclusion
Amongst the explored technologies available for proposal in the survey, a Table 7 was constructed to aid in decision making process for the final selection of the technology for investment.
Table Summary of the Economic Analysis of All Technologies
Technology
Indicators
Performance
Thermoselect
Breakeven period
7 years
Cumulative Cash @ 10 year
SGD 692.37M
Risk (Sensitivity)
High
Anaerobic Digestion
Breakeven period
12 - 13 years
Cumulative Cash @ 10 year
SGD -3.433M
Risk (Sensitivity)
Low
Composting
Breakeven period
2 years
Cumulative Cash @ 10 year
SGD 25,135
Risk (Sensitivity)
Medium
Improved Recycling
Breakeven period
9 years
Cumulative Cash @ 10 year
SGD 65.178M
Risk (Sensitivity)
Low
Incineration
Breakeven period
7 years
Cumulative Cash @ 10 year
SGD 1069.989M
Risk (Sensitivity)
Low
It is clear from Table 7 that Thermoselect, Composting and Incineration were promising technologies which would be profitable with a reasonable period to breakeven. Both Thermoselect and Incineration broke even at the 7th year mark and were low in investment risk. However, at the 10th year of investment, it could be seen that Incineration had the highest cumulative cash flow which meant higher return on investment. Furthermore, the Thermoselect technology
Therefore, Incineration was chosen for the ideal waste management technology for Singapore - business as usual.
