Executive Summary

The current search for substitutes for fossil fuels has driven the development of new energy
sources with a lower impact at the environmental level; One of these energy sources
corresponds to biogas.
The development of biogas as an energy source is reserved mainly for the sectors where
the raw material for obtaining it is found. Through the process of anaerobic digestion,
organic matter is bodegraded by the action of microorganisms, which as a product obtain
the gaseous biofuel.
In the national context, there are several projects that develop and use biogas as an
energy source, mainly to meet their own energy requirements. In view of the fact that
organic matter is required to manufacture biogas, in general, the projects for the
generation of biogas are linked to companies in the agricultural / livestock world, because
the waste from this type of industry serves as raw material for the production of biogas.
biogas plants.
The HBS Energía complex complies with this type of operation, using the waste from its
agricultural industries to generate biogas and thus supply its internal energy demand. It
should be noted, however the production of biogas, currently fails to cover all of this
demand with the consumption of biogas, so the complex invests in the purchase of
liquefied gas for the percentage of energy demand that is not covered by biofuel .
Regarding this, a technical study was carried out to find and establish feasible solutions
from a technological and engineering point of view, which concluded with 3 alternatives
where the acquisition of liquefied gas was not required to cover the internal energy
demand.
This economic analysis of the proposals determined in the technical study was carried out
based on the comparison of each proposal with the current measure of the expenditure in
liquefied gas to solve the energy demand of the HBS complex. Based on this expression as
a difference, the relevant analyzes were developed.
In the first instance, it was determined that of the 3 alternatives, the most profitable
corresponded to alternative 2, the proposal that uses activated carbon as an additive in
the anaerobic digestion process. This is mainly due to its low-caliber investment, and its
reduced expense per period in additive, compared to the measure of natural gas. This can
be observed at a qualitative level and at a quantitative level
Defining the proposal options as:
  Proposal 1: Compared cash flow for the alternative of cogenerator replacement
versus the current purchase of liquefied gas for the solvency of the thermal energy
demand of the complex.

 Proposal 2: Compared cash flow for the alternative of using activated carbon as an
additive to obtain a better biogas, versus the current purchase of liquefied gas for
the solvency of the thermal energy demand of the complex.

 Proposal 3: Compared cash flow for the alternative of using zeolite as an additive
to obtain a better biogas, versus the current purchase of liquefied gas for the
solvency
of the thermal energy demand of the complex.

The present study will show the following analysis. In qualitative terms

Comparative Accumulative Cash Flow

60000

-40000 0 1 2 3 4 5 6 7 8 9 10

-140000

-240000 Prop. 1
USD

Prop. 2
-340000 Prop. 3

-440000

-540000

-640000

Year

It can be seen that the behavior of the proposal 2 is better in accumulative terms of cash
flow. Regarding the quantitative analysis, the economic indicators reveals that

Proposal Initial investment NPV IRR INPV

1: Cogenerator 565450 USD -1029854,51 USD -30% - 1,82
2: Activated charcoal 4800 USD 5360,12 USD 360% 1,12
3: Zeolite 4800 USD -66157,11 USD - -13,78

It is easy to determine that the most favorable option of the 3 proposals is option 2, the
alternative of using activated carbon as an additive in the anaerobic digestion process for
the generation of a biofuel that can cover the total energy demand of the HBS energy
complex. After this, the analysis will focus only on proposal 2, due the comparison with the
other alternatives.
For the financing case, the data show the following indicators

Proposal NPV IRR INPV

Internal financing 5360,12 USD 360 % 1,12
External financing - 4275,92 USD 21 % - 0,89

And for the sensitivity analysis, the scenario analyzed is related with gas price variation.
The comparison indicators of the scenarios are presented below

Proposal NPV IRR INPV

Scenario actual 5360,12 USD 360 % 1,12
Gas Price variation 22631,36 USD - - 4,71

Sensitivity analysis and investment scenarios showed that this alternative performs better
without external financing; Since it generates an automatic saving, it is best to achieve a
completely internal financing for such a case. In addition, faced with changes in the price
of natural gas, this option is even more important, given that the additive does not present
variations in its price as a product, which makes it a very attractive alternative to invest at
the organizational level.
Finally, with all the arguments presented, it is concluded that the proposal to use activated
carbon as an additive in the process of generating biogas is feasible from a technical,
economic point of view, and most importantly, generates significant savings in relation to
the current operation of the HBS complex with the purchase of liquefied gas. In addition,
the use of this input in the process allows a complete integration of the process of
generation of biogas to the operation of the complex, making this an energy self-
sufficiency organization and friendly to the environment.
Content
Executive Summary.................................................................................................................2
1. Introduction....................................................................................................................6
2. Objectives........................................................................................................................7
3. Economic analysis of the proposals....................................................................................7
3.1 Cost strcuture of the proposals.....................................................................................7
3.1.1. Current solution – Liquiefied gas..........................................................................7
3.1.2. Proposal 1 – Cogenerator......................................................................................8
3.1.3. Proposal 2 – Aditive 1: Activated charcoal...........................................................8
3.1.4. Proposal 3- Aditive 2: Zeolite................................................................................9
3.2 Comparative evaluations...............................................................................................9
3.2.1 Cash flow cualitative comparison........................................................................10
3.2.2. Cash flow quantitative comparison....................................................................12
3.3 Analysis to proposal 2.................................................................................................12
3.3.1. Financing scenarios analysis...............................................................................12
3.3.2. Sensitivtyt analysis for the proposal...................................................................13
4. Conclusions.......................................................................................................................15
5. References.........................................................................................................................16
6. Appendix...........................................................................................................................18
 1. Introduction

The current search for substitutes for fossil fuels has driven the development of new
energy sources with a lower impact at the environmental level; One of these energy
sources corresponds to biogas.
The development of biogas as an energy source is reserved mainly for the sectors where
the raw material for obtaining it is found. Through the process of anaerobic digestion,
organic matter is bodegraded by the action of microorganisms, which as a product obtain
the gaseous biofuel.
In the national context, there are several projects that develop and use biogas as an
energy source, mainly to meet their own energy requirements. In view of the fact that
organic matter is required to manufacture biogas, in general, the projects for the
generation of biogas are linked to companies in the agricultural / livestock world, because
the waste from this type of industry serves as raw material for the production of biogas.
biogas plants.
The HBS Energía complex complies with this type of operation, using the waste from its
agricultural industries to generate biogas and thus supply its internal energy demand. It
should be noted, however the production of biogas, currently fails to cover all of this
demand with the consumption of biogas, so the complex invests in the purchase of
liquefied gas for the percentage of energy demand that is not covered by biofuel .
Regarding this, a technical study was carried out to find and establish feasible solutions
from a technological and engineering point of view, which concluded with 3 alternatives
where the acquisition of liquefied gas was not required to cover the internal energy
demand.
To fully establish the feasibility and convenience of the options proposed in the technical
study, the present economic evaluation will seek to establish, by means of comparative
indicators and economic scenarios, the convenience of one or another option on the
current proposal for internal energy demand. of the complex.
.

2. Objectives

The present economic study will have as main objective

 Evaluate economically all the technically feasible options, in order to determine

their economic feasibility over time, and determine which of them generate the
greatest benefit, from an economic point of view, for the HBS complex.

As secondary objectives, the Project will study:

 Estimate cash flows for the proposed options,

 Compare investment scenarios and cash flows for options
 Carry out relevant sensitivity analysis

3. Economic analysis of the proposals.

As it was well mentioned in the previous section, to determine the convenience from an
economic point of view of the proposals sustained in the technical study, the alternatives
must be submitted to an economic evaluation. However, unlike the traditional models of
economic evaluations for projects, in this study, none of the alternatives (as well as the
current proposal, as the solutions described) generate income per se, but are only
proposals to reduce expenditure current (corresponding to the consumption of liquefied
gas). In view of such scenario, the comparison optic will correspond to contrast each
proposal of the technical study, with the current solution, in order to elucidate if the
option chosen generates a greater saving than the current investment in liquefied gas as
continuous consumption.
As a starting point, the project will begin to describe the cost structures related to each
proposal, including the current solution, so that, after this, it will specify the cash flow
corresponding to each proposal.
3.1 Cost strcuture of the proposals.

3.1.1. Current solution – Liquiefied gas

The current solution to solve the internal energy demand consists in the annual purchase
of liquefied gas as fuel for the heating system (thermal requirements). From this point of
view, the expenses generated by the purchase of fuel are reduced to the fuel itself, and the
costs translated into the salary to the operators to carry out operations with the energy
resource; this without counting the logistics and administration operators, given that they
are framed in the global context of the complex, and not specifically in this operation.
Table 1. Cost strcuture for current solution to internal energy demand.

Direct cost
Fuel 5000 USD/year
Transport 400 USD/year
Indirect cost
Operation 3100 USD/year

3.1.2. Proposal 1 – Cogenerator

The first proposal consists of the acquisition of the cogenerator; This unit requires
investment both in the equipment itself and in its installation for its start-up. During its
operation inside the plant, it generates the continuous operating expense associated with
the maintenance and use of the equipment for the energy requirements of the complex.

Table 2. Structure of costs and investment for the purchase of the cogenerator. In the maintenance option, this will be
considered every 5 years of use of the equipment.

Investment
Equipment 500000 USD
Instalation 15450 USD
Contingence 5000 USD
Indirect cost
Operation 3100 USD/year
Maintenance 1500 USD/year

3.1.3. Proposal 2 – Aditive 1: Activated charcoal

One of the solutions of the technical study consisted of the proposal of adding an additive
on the anaerobic digestion process, which as a consequence would result in the
generation of a biogas of better quality than currently obtained, and with it, a total
coverage of biogas as an energy source.
In this scenario, the proposal consists of the addition of activated carbon as an additive to
obtain a biogas of higher calorific value, and with it, more energy to solve the internal
energy demand.
Table 3. Investment data and operating costs for the proposed use of activated carbon as an additive for the anaerobic
digestion process

Investment
Equipment 2300 USD
Instalation 1500 USD
Contingence 1000 USD
Direct Cost
Aditive 2700 USD/year
Indirect cost
Operation 3100 USD/year
Maintenance 1500 USD/year

3.1.4. Proposal 3- Aditive 2: Zeolite

As in the previous scenario, this proposal bases its effect on the modification of the biogas
production process, through the addition of an additive to the anaerobic digestion
process. In this proposal, the additive used is zeolite, with characteristics and effects quite
similar to the aforementioned input.
Tabla 4. Investment and operating costs for the proposed use of zeolite additive

Investment
Equipment 2300 USD
Instalation 1500 USD
Contingence 1000 USD
Direct Cost
Aditive 18900 USD/year
Indirect cost
Operation 3100 USD/year
Maintenance 1500 USD/year

3.2 Comparative evaluations

Regarding the proposals described above, it should be remembered, as was mentioned at

the beginning of this study, the nature of the project, unlike conventional plans, does not
include the concept of income from sales, given that all proposals seek the solvency of a
internal need of the complex (in this case, energy requirements), that is, only reach a way
to cover an expense, without the possibility of generating income.
In order to establish which of the proposed options is the most convenient, the
comparison is used; Cash flows are contrasted between each proposed alternative and the
current solution
Cas h Flow comparated =C . F . proposal−C . F . current (1)

From equation 1, it will be determined if any of the proposals allows to generate a

significant saving in comparison with the current alternative.
Based on this, it will be defined as:

 Proposal 1: Compared cash flow for the alternative of cogenerator replacement

versus the current purchase of liquefied gas for the solvency of the thermal energy
demand of the complex.

 Proposal 2: Compared cash flow for the alternative of using activated carbon as an
additive to obtain a better biogas, versus the current purchase of liquefied gas for
the solvency of the thermal energy demand of the complex.

 Proposal 3: Compared cash flow for the alternative of using zeolite as an additive to
obtain a better biogas, versus the current purchase of liquefied gas for the solvency
of the thermal energy demand of the complex.

3.2.1 Cash flow cualitative comparison.

The following shows the behavior of the cash flows compared for all options, at the level
of comparison by period (per year) individually and cumulatively.
 Comparative Cash Flow
60000

40000

20000
Prop. 1
USD

0 Prop. 2
0 1 2 3 4 5 6 7 8 9 10
Prop. 3
-20000

-40000

-60000

Year

Graph 1. Comparative cash flow in individual terms.

Comparative Accumulative Cash Flow

60000

0 1 2 3 4 5 6 7 8 9 10
-40000

-140000

-240000 Prop. 1
USD

Prop. 2
-340000 Prop. 3

-440000

-540000

-640000

Year

Graph 2. Comparative cash flow in accumulative terms.

Qualitatively, it can be seen that the behavior of the proposal 1 is better at the level of
each period (year), from figure 1 (with the exception of the first year, where the large
investment makes it very unfavorable, in comparison with the other two proposals.
For the comparison in cumulative terms, the best proposal is raised as option 2, mainly
due to its lower expenditure on inputs (additives) as in the initial investment.

3.2.2. Cash flow quantitative comparison.

In order to determine the compared behavior, for each compared cash flow the main
economic indicators related are determined.
Table 5. Economic indicators for the different proposals

Proposal Initial investment NPV IRR INPV

1: Cogenerator 565450 USD -1029854,51 USD -30% - 1,82
2: Activated charcoal 4800 USD 5360,12 USD 360% 1,12
3: Zeolite 4800 USD -66157,11 USD - -13,78

From the economic indicators shown, as well as the qualitative behavior, it is easy to
determine that the most favorable option of the 3 proposals is option 2, the alternative of
using activated carbon as an additive in the anaerobic digestion process for the generation
of a biofuel that can cover the total energy demand of the HBS energy complex. Therefore,
the following analysis will consider this alternative as valid, mainly due to the fact that,
both in the Net Present Value and in the Internal Rate of Return, the indicators are very
favorable, both in comparison with the other alternatives, and himself, and this makes a
lot of sense; both the investment to use this alternative, and the expense in additive, is
lower compared to the current option of buying fuel.
3.3 Analysis to proposal 2

To determine the profitability, from a thrifty point of view, of the aforementioned

proposal, it will be evaluated in different scenarios, in order to establish whether this
option, analyzed individually, is convenient from an economic point of view.

3.3.1. Financing scenarios analysis

The financing of a project is always an important issue to consider, particularly when they
are large investments within the budgets of an organization. For the particular case of a
project of thrifty characteristics, as it is the case, the investment, whatever its quantity, it is
important to consider its financing, because for the analysis of the proposal, there is no
consideration of income from sales , so it is necessary to analyze the case in which external
financial assistance is required.
Considering an interest rate of 30%, due to the nature of the proposal, which although it is
supported from a research point of view, but with few practical examples within the biogas
production market. In addition, it is considered that the payment period of the credit
corresponds to the duration of the project, that is, 10 years.
Table 6. Comparative scenarios of external financing for the proposal 2.

Proposal NPV IRR INPV

Internal financing 5360,12 USD 360 % 1,12
External financing - 4275,92 USD 21 % - 0,89

From this comparison, it is easy to deduce that the idea of external financing is not
adequate, given mainly by investment, which is relatively low (especially with the
aforementioned proposal 1), which would generate an external debt whose solvency,
although it is possible to cover (the internal rate of return is positive), but it would
generate unnecessary debt, seeing that the proposal, by itself, is quite solvent.

3.3.2. Sensitivtyt analysis for the proposal.

Regarding the sensitivity analysis for this alternative, the following assumptions must be
considered:

 The main input required by this proposal corresponds to activated carbon. Due to
its additive nature, its use as a product is limited to a secondary additive in other
processes of the global industry, mainly in the cleaning of contaminated flows, or
purification in general. This means that the variation in the price is negligible, given
that the use of this compound remains within narrow margins with little variation.
To add, the obtaining of this material is made from organic plant elements, which
are assured their availability, so that the price of this input can be considered as
practically constant for the life of the project.

 Both the expenses corresponding to maintenance, operation, among others, will

also be considered constant.

 The only value that is considered to vary corresponds to the price of natural gas,
mainly due to the nature of its market, which is subject to global speculation,
which affects its final price.
Considering this last point, it will refer to its historical variation to make a projection of its
price in the future, and with this consider scenarios of profitability for the alternative.

Image 1. Gas price forecast, based on data on Henry Hub database.

From the aforementioned reference, based on the information provided by the Henry Hub
page, 3 scenarios are projected, the most likely being the high-well-productivity scenario.
In such scenario, it is seen that the price of fossil fuel, within the evaluation period of the
project (2018 - 2029) reaches 5 USD per million BTU. Considering this scenario, the
indicators of the proposal change, since the amount of savings depends on the price of
gas.
In this sense, a more favorable scenario is generated for the proposal, given that as the
price of gas rises, it is even more convenient to consider the use of the additive to mitigate
this expense.
Table 7. Comparative scenarios of the variation in gas price.

Proposal NPV IRR INPV

Scenario actual 5360,12 USD 360 % 1,12
Gas Price variation 22631,36 USD - - 4,71

In this case, it is much more obvious to note that the proposal is a saving that positively
impacts, obtaining a better Net Present Value index. Given that the savings generated are
constant, equation (1) only yields positive values, so the calculation of the Internal Rate of
Return loses its meaning; the proposal allows savings to be obtained from the first
evaluation period.
4. Conclusions

The economic analysis of the proposals determined in the technical study was carried out
based on the comparison of each proposal with the current measure of the expenditure in
liquefied gas to solve the energy demand of the HBS complex. Based on this expression as
a difference, the relevant analyzes were developed.
In the first instance, it was determined that of the 3 alternatives, the most profitable
corresponded to alternative 2, the proposal that uses activated carbon as an additive in
the anaerobic digestion process. This is mainly due to its low-caliber investment, and its
reduced expense per period in additive, compared to the measure of natural gas.
Subsequently, sensitivity analysis and investment scenarios showed that this alternative
performs better without external financing; Since it generates an automatic saving, it is
best to achieve a completely internal financing for such a case. In addition, faced with
changes in the price of natural gas, this option is even more important, given that the
additive does not present variations in its price as a product, which makes it a very
attractive alternative to invest at the organizational level.
Finally, with all the arguments presented, it is concluded that the proposal to use activated
carbon as an additive in the process of generating biogas is feasible from a technical,
economic point of view, and most importantly, generates significant savings in relation to
the current operation of the HBS complex with the purchase of liquefied gas. In addition,
the use of this input in the process allows a complete integration of the process of
generation of biogas to the operation of the complex, making this an energy self-
sufficiency organization and friendly to the environment.

5. References

Abastible. (2016). Abastible. Obtenido de Gas licuado de petróleo:

http://www.abastible.cl/wp-content/uploads/2016/08/HDS-GLP.-Ver1-Julio-
2016.pdf
Agenitor. (2018). AgenitorCogeneración a biogás. Obtenido de
http://logicenergy.net/images/pdf/biogas_b.32_s_1.3.pdf
Agrícola, R. (Abril de 2017). Red Agricola. Obtenido de Un Modelo Propio en Construcción
Acelerada: http://www.redagricola.com/cl/modelo-propio-construccion-acelerada/
Agricolas, N. (2016). Invernaderos para cultivo de tomate. Obtenido de
http://www.novedades-agricolas.com/es/invernaderos-tomate
Alibaba. (2018). Alibaba. Obtenido de 1.2 MW biogas gas genset cogeneration plant:
http://www.alibaba.com/product-detail/1-2-MW-biogas-gas-
genset_60755450777.html?spm=a2700.7724838.2017115.20.21125efbDZGH9A
Biogas. (s.f.). Biogas. Obtenido de ¿Qué es la digestión anaeróbica?:
https://www.biogas.es/digestion-anaerobica/
Cárdenas, S. (2016). Residuos Sólidos. Universidad Católica de Valparaíso, Facultad de
Ingeniería .
Coagra. (2011). Coagra. Obtenido de Revista Coagra:
https://www.coagra.com/noticias/revista-coagra/articulos-destacados/la-energia-
de-los-briones-saval
Costa, A. e. (2015). naerobic Digestion and its Applications. Cincinnati: EPA.
Council, A. B. (2018). American Biogas Council. Obtenido de What is Anaerobic Digestion?:
https://www.americanbiogascouncil.org/biogas_what.asp
Cuetos, e. a. (2017). Enhancing anaerobic digestion of poultry blood using activated
carbon. Journal of advanced Research, Cairo University.
Data, C. (s.f.). Climate Los Angeles. Obtenido de https://es.climate-
data.org/location/2048/#climate-graph
EIA. (2018). EIA. Obtenido de Today In Energy:
https://www.eia.gov/todayinenergy/detail.php?id=7710
Energética, A. d. (2018). Industria y Minería . Obtenido de Cogeneración:
http://www.cogeneracioneficiente.cl/tecnologia/
Energética, A. d. (2018). Industria y Minería Cogeneración. Obtenido de ¿Qué es la
cogeneración?: www.cogeneracioneficiente.cl/que-es-cogeneracion/
Energizar. (2017). Energizar. Obtenido de Biogas:
http://www.energizar.org.ar/energizar_desarrollo_tecnologico_biogas.html
Energy, A. (s.f.). Aurora Energy. Obtenido de Cost Comparison Table:
https://www.auroraenergy.com.au/your-home/gas/want-aurora-gas/cost-
comparison-table
FAO. (2011). FAO. Obtenido de Manual de Biogas:
http://www.fao.org/docrep/019/as400s/as400s.pdf
González, A. (2017). EFECTO DE LA CONCENTRACION DE CARBÓN ACTIVADO EN
DIGESTIÓN ANAEROBIA. Santiago: Departamento de Ingenería Química y
Ambiental, Universidad Técnica Federico Santa María.
IITD. (2018). IITD. Obtenido de Entrepeneurship Models On Biogas For Rural Areas:
http://web.iitd.ac.in/~vkvijay/Entrepreneurship%20Models%20on%20Biogas
%20for%20Rural%20Areas.pdf
INIA. (2017). Inia. Obtenido de Manual del cultivo de tomate bajo invernadero:
http://www.inia.cl/wp-content/uploads/ManualesdeProduccion/12%20Manual
%20de%20Tomate%20Invernadero.pdf
knoema. (2018). knoema. Obtenido de natural gas prices forecast:
https://knoema.es/ncszerf/natural-gas-prices-forecast-long-term-2017-to-2030-
data-and-charts
Lagos, F. (2013). Analisis de factibilidad técnica y económica de la generación de biogás a
partir de purines mediante biodigestores anaerobios. Santiago: Universidad de
Chile Facultad de ciencias veterinarias y pecuarias.
Poirier, S. e. (2017). Improving anaerobia digestion with support media. Science Direct.
Yang, Y. e. (2017). Adding granular activated carbon into anaerobic sludge digestion to
promote methane production and sludge decomposition. Journal of Cleaner
Production.

6. Appendix

Cash Flow current solution

Cash flow alternative 1
Cash flow alternative 2
Cash flow alternative 3