Economic and financial feasibility risks of power generation through municipal solid wastes to reduce environmental impacts, a case study based on Western Province in Sri Lanka

Abstract

The main objective of this paper is to explore the economic and financial feasibility risks of power generation through Municipal Solid Waste (MSW) in Western Province of Sri Lanka to minimize environmental impacts of both MSW and burning of fossil fuel for electricity generation. This research recommends the use of thermal technologies such as gasification or pyrolysis even though it associates with high capital costs and sophisticated process technology. Combination of Refuse Derived Fuel (RDF) based incineration/gasification and bio-gas based power plants are also feasible for Sri Lankan applications. Two scenarios have been analyzed and baseline financial analysis shows that both scenarios are feasible. However, sensitivity analysis shows that increase of cost and reduced project benefits by 10% will cause negative NPV value with 12% discount rate and IRR goes below cost of capital. Therefore project is associated with high risk but if implemented, it will resolve disposal issues of MSW in urban Sri Lanka with many other environmental and health benefits. The methodology used, findings and policy recommendations derived from this research can be used to analyze similar cases in other countries.