Financial and Economic Analyses of Biogas-to-Energy Projects in Brazil

Abstract

The Alegria Wastewater Treatment Plant (WWTP) is one of the largest wastewater treatment plants in Brazil. It is owned by the Companhia Estadual de Aguas e Esgotos, the state agency that manages and treats most of the sewage water in Rio. Sewage at the WWTP is treated through several different processes, including sedimentation tanks and anaerobic reactors. A byproduct of sewage treatment via anaerobic digestion is biogas. After it is processed to required standards of purity, biogas becomes a renewable fuel for electricity generation or a substitute for natural gas. Currently, Alegria WWTP flares the biogas produced in the anaerobic reactors. In doing so, the WWTP is incurring operational costs and wasting a valuable source of energy. However, looking into the future, Alegria WWTP intends to use the energy stored in the biogas to generate electricity or natural gas.

This study aimed to analyze what is the best use of the WWTP’s biogas from both the financial and economic perspectives. A discounted cash flow (DCF) analysis was used to compare the net befits of a biogas-to-electricity project (Green Electricity Project) and a biogas-to-renewable natural gas project (RNG Project). Analyses of the CO2 emissions reductions from each project were also performed. The methods used in this study included on-site data collection, literature review and interviews with industry specialists.

Results from the study showed that both projects have high and positive net present value. However, the RNG project generated larger benefits for both the private investor and the economy as a whole. With regards to the environmental benefits, the emissions reductions obtained through the implementation of an RNG project were also higher than for a green electricity project. By implementing an RNG project the Alegria WWTP will provide an environmentally and economically sustainable solution for biogas treatment and will serve as a model for other wastewater treatment plants in Brazil.