Deliverable 5.4 - RES URBIS economic analysis

Abstract

This deliverable reports the activities performed for assessing quantitative economic performances in terms of Costs and Benefits of RES URBIS technology applied in a projected full scale environment.

Specific models have been developed and applied here in order to assess both Costs and Benefits deriving from the utilization of the technology.

In the first part of the report a comparison with the AD landscape in terms of costs and benefits for the operations of a plant converting bio-waste into PHA with respect to conversion into biogas has been analyzed. This analysis has highlighted that the PHA production, although the greater value of PHA with respect to the current value biogas per unitary weight, has also associated costs, therefore its competitiveness is very much linked to the process production yield. Since the PHA yield may not be at its maximum for the entire operations cycle, due also to quality of the bio-waste input streams, this introduces a risk that is higher with respect to adopting standard biogas technology, especially with considering current incentives schemes even reducing the risk on the biogas side.

As a consequence, a synergy with biogas existing value chain rather than a competition has been sought and scenarios in which RES URBIS technology is integrated with existing AD facilities have been designed and analyzed.

The analysis performed here is based on the RES URBIS Territorial Clusters: Barcelona, Lisbon, South Wales, Province of Trento, Copenhagen, represented in the consortium. For this reason, the specific needs by clusters along with current AD framework have been mapped and the RES URBIS scenarios have been designed to address the needs and infrastructure of each cluster.

The Cost- Benefit analysis has been performed at cluster level in particular covering the part of the value chain impacted by RES URBIS adoption, thus based on specific AD plants to be converted into PHA factories through the RES URBIS technology concept. This enables to identify solutions for the implementation of RES URBIS at full scale, with an estimation of the economic implications of costs and benefits.

It is important to remark that costs and benefits considered here are strongly related to the operations dedicated to the production to PHA, which is the next key factor for determining the size of investment and its return. In other words the costs and benefits considered here are those that would be in the first line bear from a potential investor for realizing RES URBIS at full scale.

We considered here the sale of PHA equal to 3 € per kg, which is realistic considering a distributor as intermediary, thus avoiding to build the infrastructure for marketing and sale of the biopolymers.

Other costs and benefits deriving from the substitution of traditional plastics with RES URBIS bio-plastics impacting both the consumers and the waste collection operations are not considered here. 

The result of this study is that PHA integration into AD facilities increases resilience of AD plants in case of volatility of bio-waste treatment prices. Moreover, it decouples the economic performances of the AD plants from price of waste treatment, which could be critical in case of removing incentives for biogas.

The integration with AD plants allows an easy entry point to PHA, since the synergy between biogas and PHA has a large potential especially because reducing OPEX specific for PHA (except material costs).

EBITDA was selected as main parameter for the evaluation, as this is a very well understood economic figure, e.g. no further explanation is needed for potential investors, and enables the comparison with the existing AD operations.

However for cases in which the EBITDA of the AD plant exceeds the specific gross margin of PHA, with cut off at approximately 60%, the integration of RES URBIS technology in existing AD facilities depresses the overall EBIDTA. This can be only apparent as the cases of EBDTA > 60% are unlikely to be realized in practice due to operational inefficiencies and sub-optimal technology performances in the praxis. The advantage of RES URBIS integration for PHA production is maximized in case of loss models where for example a negative EBIDTA of 30% has been turned in a positive one. However numbers cannot generalized and depends on the specific cost structure and on type of biomass treated.

Moreover, if PHA contribution to total income is not much relevant, prices may be dropped from 3000 € per ton to 1000 € per ton to increase market uptake, at least in initial marketing phase.

In the second part Cost-Benefit model is especially designed for RES URBIS relevant scenarios, taking into account the impact of economic figures relevant for the assessment of economic performances of the operations platform for PHA production, such as CAPEX and OPEX, projected at a full scale, and it has been run across relevant case studies to be designed based on the results from other streams.

The integration of RES URBIS technology in existing AD plants of the RES URBIS territorial clusters leads to 6.5-7 KTA PHA per annum and total additional bio-waste treatment of 270 KTA, with over 6 million m3 additional biogas generated. The gross economic value is comprised between 21 and 49 million € per annum. Considering the mid case of 35 m € gross value per annum, we estimate 100 -120 new jobs will be created, not only within the plant but also related to the entire value chain.

The RES URBIS implementation with linkage to the AD value chain opens up large potential for replication Europe wide, since there is a large number of AD plants for both bio-waste and sewage sludge treatment that can be used as basis for replication.

We assume that the average size for debottleneck project is 1 KTA PHA which is linked to €5-8 million annual gross vale and 15 new jobs. The average investment ranges between € million5 and 10 million depending on the pre-existing AD plant set up.

A replication in 80-100 clusters is a reasonable perspective for the mid-term 2025-2030, in the European landscape. This would represent € 0.5-0.8 billion gross annual value and 1200- 1500 new green jobs to be created in Europe through RES URBIS Technology.