Financial Model of Levelized Cost of Electricity (LCOE) for Bioenergy Resources in Pakistan

Abstract

For agriculture-based economies, energy generation through biomass is currently among the few practical means for overcoming energy and environmental crisis. However, economic assessment for bioenergy poses significant challenges to the developing nations due to limited availability of data and existing financial models. This study therefore conducts an economic assessment for Pakistan based on Levelized Cost of Electricity (LCOE) for those bioenergy technologies which are commercially available in developing countries. These technologies vary from thermal processes such as biomass gasification or incineration in turbines to bio-chemical processes such as anaerobic digestion. LCOE modeling was performed through a mathematical set of equations driven by input parameters i.e., Feedstock price, total capital cost, auxiliary cost, operation and maintenance cost, capacity factor, and plant lifecycle. The results obtained from the modeling depicted that LCOE for bioenergy in Pakistan may vary from as low as $0.06/kWh to as high as $0.315/kWh. Combustion techniques like stoker boiler and Circulating Fluidized Bed (CFB) have lower cost and yield better economic value with LCOE ranging from $0.06-0.22/kWh. Further, feedstock cost is the most dominant factor that contributes to approximately 60% of the total LCOE. Hence, to make bioenergy economically viable, a sustainable biomass supply chain is essential. This will not only provide a sound energy alternative for developing countries, but it will also contribute towards social and environmental sustainability.