The total investment cost for a biomass power project depends upon various factors such as fuel, plant size, country, nature of project (upgrading/retrofit/green field), plant availability, equipment quality, completeness and various other factors.
The development cost is lower for sites where all the required commercial, technical and environmental information related to project implementation are readily available. If the information are not available, then the developer has to collect these details and provide them to the EPC contractor/equipment supplier. If adequate support information is not available then the EPC contractor/equipment supplier may perceive the project as a risky one and quote higher price to cover their risk. Hence, to reduce the total project investment cost, developers need to prepare well in advance for collecting all relevant information related to the project.
Due to the detailed preparatory works requirement in Africa, the development cost is generally higher than that of Asia. The project investment cost is also higher by 20 to 25% in Africa due to higher labour, material and other costs/risks.
Among biomass projects, the investment cost for rice husk project is higher. Generally the cost ranges from 1.2 million USD to 2.8 million USD per MW depending upon various factors. For wood waste projects, the investment cost ranges from 1 to 2.5 million USD per MW. For sugar cogeneration plants, the cost is between 0.9 and 2.0 million USD per MW. The above cost information is an indication only and the actual cost depends on various other factors also. The costs of MSW incineration plants are much higher than biomass power plants. Apart from equipment cost, the developer should also take into the land consideration, other costs like, site preparation, tools and spare parts, grid connection, bank fee, training, insurance during construction etc. for estimation of the total project cost.
For the operation of the plant, the project developer should consider the fuel cost, O&M cost, insurance cost during operation, etc. Fuel cost is one of the major costs when the fuel supply is bought from external sources. In the past, several biomass power plants faced problems due to wrong fuel cost assumption during the feasibility study stage.
Insurance is a very important aspect in the project and the developers must give due importance to it during construction and operation of the plant. During construction time insurance is expected to be in the range of 0.5-1.0% while during operating time insurance ranges from 0.75-1.5%. A contingency of 5 to 10% can be considered in the project cost estimation depending on the location and other factors.
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