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Abstract of the thesis:
The thesis analyses the business case and financial viability of commercial, waste-to-energy biogas installations for industrial energy self-supply and electricity generation by municipal distributors in South Africa. In undertaking this analysis, the following questions are answered:
(I) is biogas a financially attractive opportunity for energy supply and alternative waste handling?
(II) is the shared savings model a feasible delivery mechanism for biogas projects?
(III) what economic and financing parameters have to be met to develop biogas in South Africa?
(IV) are business environment and framework conditions conducive for biogas?
In the thesis, the overall market conditions for biogas in South Africa are elaborated, using the PESTLE analysis approach to structure the market factors. To conclude on economic parameters a biogas project has to meet the author conducted a review of existing biogas facilities and project cases, as well as interviews with biogas sector stakeholders. In order to determine the viability and attractiveness of biogas the author analysed two replicable case scenarios – one each for an industrial user and for a municipality – and set the results in relation to the basic economic parameters.
The thesis concludes that,
(I) the framework conditions for biogas in South Africa are improving,
(II) investments in biogas installation are justified by attractive financial results under certain preconditions, and
(III) that shared saving models can be attractive for both, the financing ESCO and the client.
The PESTLE analysis illustrates the improving framework conditions for biogas application, including the recognition of biogas as an appropriate alternative waste treatment (AWT) technology, as well as the increasing electricity tariffs and waste management costs. The financial results of the case studies stand to reason to regard waste management costs as the determining factor for the viability of a biogas installation. Under the condition that substantial amounts of organic waste are diverted from landfill, the thesis’ viability criteria are meet with ease and, in case of the industry scenario, attractive IRR and ROI value are attained. Therefore, the minimisation of waste management costs via anaerobic digestion could be deemed as the more relevant driver for biogas utilisation in South Africa than supply of energy. The financial results indicate that shared savings models constitute a probable project delivery mechanism for biogas in South Africa. The share of income to the ESCO in both scenarios is sufficient to meet the financing obligations and to provide for attractive returns to the ESCO. The financial benefits of the client are also sizeable.
The thesis’ results suggest to further investigate shared savings models as a mean to mobilise private sector investment to support South Africa’s shift towards waste recycling and recovery, as well as to foster the decarbonisation of the country’s electricity supply.