Modeling the profitability of power production from short-rotation woody crops in Sub-Saharan Africa
Abstract
Increasing electricity supply in Sub-Saharan Africa is a prerequisite to enable economic
development and reduce poverty. Renewable sources such as wood-fueled power plants are
being promoted for social, environmental and economic reasons. We analyzed an economic
model of a vertically integrated system of short-rotation woody crops (SRWC) plantations
coupled with a combined heat and power (CHP) plant under Sub-Saharan African conditions.
We analyzed a 5 MW (electric) base-case scenario under Ugandan conditions with
a 2870 ha Eucalyptus grandis plantation and a productivity of 12 t ha 1 y 1 (oven dry basis)
under a 5-year rotation. Plant construction and maintenance constituted 27% and 41% of
total costs, respectively. Plantation productivity, carbon credit sales as well as land, fuel,
labor & transport costs played an economic minor role. Highly influential variables included
plant efficiency & construction costs, plantation design (spacing and rotation length) and
harvest technologies. We conclude that growing 12e24 t ha 1 y 1 at a five year rotation can
produce IRR’s of 16 and 19% over 30-years, respectively. Reducing rotation length significantly
reduced short-term financial risk related to frontloaded costs and relatively late
revenues from electricity sales. Long-term feed-in tariffs and availability of a heat market
played a significant economic role. The base-case scenario’s 30-year IRR dropped from 16%
to 9% when a heat market was absent. Results suggest a leveling-off of economies-of-scale
effects above 20MW(electric) installations. Implementation-related research needs for pilot
activities should focus on SRWC productivity and energy life cycle analysis