Waste Management 59 (2017) 90–101

Contents lists available at ScienceDirect

Waste Management
journal homepage: www.elsevier.com/locate/wasman

A financial feasibility model of gasification and anaerobic digestion

waste-to-energy (WTE) plants in Saudi Arabia
Laith A. Hadidi ⇑, Mohamed Mahmoud Omer
Construction Engineering and Management Department, King Fahd University of Petroleum and Minerals, Saudi Arabia

a r t i c l e i n f o a b s t r a c t

Article history: Municipal Solid Waste (MSW) generation in Saudi Arabia is increasingly growing at a fast rate, as it
Received 17 June 2016 hurtles towards ever increasing urban development coupled with rapid developments and expanding
Revised 20 September 2016 population. Saudi Arabia’s energy demands are also rising at a faster rate. Therefore, the importance of
Accepted 22 September 2016
an integrated waste management system in Saudi Arabia is increasingly rising and introducing Waste
Available online 20 October 2016
to Energy (WTE) facilities is becoming an absolute necessity. This paper analyzes the current situation
of MSW management in Saudi Arabia and proposes a financial model to assess the viability of WTE
Keywords:
investments in Saudi Arabia in order to address its waste management challenges and meet its forecasted
Waste to energy
Municipal Solid Waste
energy demands. The research develops a financial model to investigate the financial viability of WTE
Financial feasibility plants utilizing gasification and Anaerobic Digestion (AD) conversion technologies. The financial model
Gasification provides a cost estimate of establishing both gasification and anaerobic digestion WTE plants in Saudi
Anaerobic digestion Arabia through a set of financial indicators, i.e. net present value (NPV), internal rate of return (IRR),
Saudi Arabia modified internal rate of return (MIRR), profitability index (PI), payback period, discounted payback
period, Levelized Cost of Electricity (LCOE) and Levelized Cost of Waste (LCOW). Finally, the analysis of
the financial model reveals the main affecting factors of the gasification plants investment decision,
namely: facility generation capacity, generated electricity revenue, and the capacity factor. Similarly,
the paper also identifies facility waste capacity and the capacity factor as the main affecting factors on
the AD plants’ investment decision.
Ó 2016 Elsevier Ltd. All rights reserved.

1. Introduction the importance of establishing resilient waste management prac-

tices (Hoornweg and Bhada-Tata, 2012).
By the end of 2012, the world generated more than 1.3 billion Waste management was originally adopted for the purposes of
tons of Municipal Solid Waste (MSW) annually. This alarming rate waste volume reduction and maintaining high levels of public
of MSW generation is forecasted to reach 2.2 billion tons by the hygiene. However, over the years, waste management concept
end of 2025 (Hoornweg and Bhada-Tata, 2012). In its report ‘‘What has evolved to include the concepts of waste prevention, waste
a Waste”, the World Bank (2012) cited the global high urbanization recycling and WTE. Waste management, nowadays, encompass
levels as one of the main causes of the high rate of MSW generation wide range of objectives, e.g. environmental protection, resources
as urban residents generate twice as much waste as rural residents. conversion and energy generation (Brunner and Rechberger,
Furthermore, the average rate of MSW generation was 0.64 kg/cap- 2015). However, almost three quarters of the global MSW are dis-
ita/day in 2002. This rate of MSW generation has experienced a sig- posed of in landfills and dump sites while the remaining quarter is
nificant surge in the subsequent years reaching a rate of recycled or utilized in WTE plants to generate heat or electricity
1.2 kg/capita/day in 2012 and is even projected to keep rising to (Gasification Technologies Council, 2011). Landfills accounts for
a rate of 1.24 kg/capita/day of MSW by 2025 as the levels of global the highest proportion of the MSW composition globally, greatly
urbanization are expected to increase at a much higher rate, hence, contribute to the greenhouse gas (GHG) emissions which are con-
sidered to be the main cause of climate change, therefore, address-
ing the global MSW challenges contribute to the overall global
⇑ Corresponding author at: Construction Engineering and Management Depart- efforts of combating climate change through reducing environ-
ment, King Fahd University of Petroleum and Minerals, KFUPM Box 1685, Dhahran mental pollution and WTE plants present a sustainable solution
31261, Saudi Arabia.
to the global MSW challenges (Cucchiella et al., 2014).
E-mail address: [email protected] (L.A. Hadidi).

http://dx.doi.org/10.1016/j.wasman.2016.09.030
0956-053X/Ó 2016 Elsevier Ltd. All rights reserved.
 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101 91

Developing Asian countries, in general, are facing a huge MSW to assess the viability of WTE investments in Saudi Arabia. The
management challenges due to their high population levels. WTE developed financial model investigates the key affecting invest-
technologies present a unique opportunity to countries like India, ment factors to justify establishing WTE plants based on the gasi-
Sri Lanka and Bangladesh to address their MSW challenges and fication or the AD conversion technologies. The financial analysis is
meet their energy demands simultaneously (Dasanayaka and based on a set of financial indicators, i.e. net present value (NPV),
Wedawatta, 2015; Shariar and Al-Bustam, 2012; Rathi, 2006.). This internal rate of return (IRR), modified internal rate of return
also includes Malaysia which disposes 28,500 tons of MSW directly (MIRR), profitability index (PI), payback period, discounted pay-
into landfills daily (Agamuthu and Fauziah, 2011; Fauziah and back period, levelized cost of electricity (LCOE) and levelized cost
Agamuthu, 2012). However, strong Asian economies like Japan of waste (LCOW). The data and the finical figures in this research
and South Korea reached advanced levels of sustainable solid are collected and gathered as a result of an extensive review of
wastes that includes ‘‘Zero Waste” and/or ‘‘Zero Landfilling” which local and international published researches, reports and studies
is certainly expensive for weaker economies such as those of India that were conducted by academic institutions, governments’ enti-
or Indonesia (Shekdar, 2009). Between 1997 and 2002, Taiwan suc- ties, independent agencies as well as reputable expert individuals.
ceeded to reduce total MSW production by 27%, where the average Finally, sensitivity analysis is conducted on the developed financial
daily per capita weight of MSW had fallen from 1.14 kg in 1997 to model to identify the key affecting factors that the decision makers
0.81 kg in 2002 (Lu et al., 2006). In China, Li et al. (2013) stated should pay more attention towards.
that, by 2010, about 60% of the overall solid waste generation in
China had already been reutilised, and more than 20% of the total Nomenclature of abbreviations
resource requirement was reutilised resource.
GCC The Gulf Co-operation Council
Although Saudi Arabia has the largest oil reserves in the world,
BFB Bubble Fluidized Bed
it has recently stepped up its efforts to shift its energy focus
CAPEX Capital Expenditure
towards renewable energy. Saudi Arabia has a vested interest in
WACC Weighted Average Cost of Capital
adapting waste to energy technologies, renewable sources of clean
GHG Greenhouse Gas
energy, in order to address its waste management challenges.
IRENA International Renewable Energy Agency
Saudi Arabia’s energy demands has also risen at an average rate
IRR Internal Rate of Return
of 5% annually, faster than some of the world’s biggest emerging
MIRR Modified Internal Rate of Return
economies, such as, China, and India. Currently, Saudi Arabia is
MOMRA Ministry of Municipal and Rural Affairs
the seventh largest energy consumer worldwide (International
KACARE King Abdullah City for Atomic and Renewable
Renewable Energy Agency, 2016). Alhumoud et al. (2004) studied
Energy
the financial feasibility of a national recycling program in the Gulf
NPV Net Present Value
Co-operation Council (GCC), in general, and in Saudi Arabia in par-
OPEX Operation and Maintenance Expenditure
ticular. Ouda et al. (2013) assessed the potential contribution to
PI Profitability Index
the electricity demand up to 2032 in Saudi Arabia for an incinera-
RDF Refuse Derived Fuel
tion WTE with recycling and without recycling facilities. The WTE
incineration plant has the potential to produce almost 166 MW for
the recycling scenario and about 2073 MW without the recycling
scenario. Hakami and Abu Seif (2015) suggested that the public 2. Materials and methods
themselves must be socially involved in pre-sorting their MSW.
Khan and Kaneesamkandi (2013) attempted to study the environ- The data and the finical figures in this research are collected
mental benefits and the financial feasibility of anaerobic digestion and gathered as a result of an extensive review of local and
WTE plant. According to the study, an anaerobic digestion WTE international published researches, reports and studies that were
facility in Saudi Arabia with a waste processing capacity of conducted by academic institutions, governments’ entities,
21,112 (ton/day) would generate electricity at a rate of 398.528 independent agencies as well as reputable expert individuals.
(KWh/ton) and has a total cost of about 12 million SAR (USD The International Renewable Energy Agency (IRENA), a
3,199,062). renowned international organization that specializes in renewable
Waste to Energy (WTE) plants presents a unique opportunity energy researches, in its report titled ‘‘Renewable Power Genera-
for Saudi Arabia to address its waste management challenges, tion Costs” (2015) presented a set of globally applicable financial
and meet its energy obligations. More importantly, it offers Saudi costs related to the cost of establishing gasification and anaerobic
Arabia the opportunity to contribute to the global green efforts digestion WTE plants after investigating a set of financial informa-
of combating climate change. WTE technologies are waste treat- tion derived from already existing plants worldwide to assess the
ment processes that convert the energy content of different types financial performance of these types of WTE plants (International
of waste, mainly MSW, into either power, i.e. electricity, or heat Renewable Energy Agency, 2015). According to IRENA (2012), the
(Rogoff and Screve, 2011). Furthermore, WTE technologies are clas- choice of the type of the gasification or the anaerobic digestion
sified into two main categories: Thermochemical conversion tech- WTE technology is greatly dependent upon the cost, the type and
nologies, i.e. incineration, gasification, pyrolysis, etc., and Non- the availability of the waste utilized by the gasification or the AD
thermochemical conversion technologies, i.e. anaerobic digestion conversion system. Furthermore, it also relies on the local demands
(AD), fermentation, composting, etc. (Rogoff and Screve, 2011). for energy, i.e. electricity and heat (International Renewable
However, this research focuses on generating electricity by utiliz- Energy Agency, 2012). To better understand the economic needs
ing gasification and AD conversion technologies, which are consid- for the WTE projects, the literature related to MSW in Saudi Arabia
ered to be the most optimal conversion technologies in terms of and international best practices are collected and evaluated which
their capital cost, electrical generation efficiency (Gasification further helped to estimate the input parameters to develop the
Technologies Council, 2011), environmental benefits (Purser, financial model. Finally, it enabled to perform the sensitivity anal-
2011) and their effects on potential recycling initiatives ysis (study the effect of input parameters on the financial indica-
(Gasification Technologies Council, 2011). tors) as described in Canada et al. (2005). The main steps of this
The objective of this paper is to analyze the current situation of approach are: MSW analysis in Saudi Arabia, financial model
MSW management in Saudi Arabia and propose a financial model development, and sensitivity analysis.
92 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101

2.1. MSW in Saudi Arabia MSW are considered to be recyclable waste, i.e. paper, plastics,
glass and textiles.
The large oil producing country, Saudi Arabia, is witnessing an
increasing pattern of domestic oil consumption threatening its oil 2.1.2. MSW collection
export leverage. In recent years, domestic oil consumption In the context of Saudi Arabia, the term MSW collection refers
accounted for more than a quarter of its oil production to the collection of MSW from the generation point to the disposal
(Alkhathlan and Javid, 2015). Saudi Arabia established King Abdul- point. Each city is segmented into several residential and commer-
lah City for Atomic and Renewable Energy (KACARE) to spearhead cial areas. Each area has dedicated collection crew and equipment.
its efforts to overhaul its energy investments towards clean renew- The MSW, which is un-segregated, is collected regularly, usually
able energy. Not long after its establishment, KACARE announced twice a day, from designated open containers located throughout
its renewable energy targets. By 2030, renewable energy will meet each area. For the most part, the MSW is usually collected by col-
50% of Saudi Arabia energy demands. In particular, Saudi Arabia is lection trucks with a three-man crew, including the driver, for each
planning to produce 3 GW of electricity to meet its ever growing collection truck.
domestic demands using WTE by 2030, which represents almost
3% of its 2030 forecasted electricity demands, i.e. 120 GW 2.1.3. MSW disposal
(International Renewable Energy Agency, 2016). Moreover, the Despite the fact that most of the landfills in Saudi Arabia are
responsibility of establishing MSW management practices and expected to be saturated within the next 10 years, landfilling
solutions in Saudi Arabia lies with the Ministry of Municipal and remains the most popular waste disposal technique due to the vast
Rural Affairs (MOMRA). On its 2015 budget, Saudi Arabia allocated availability and the relatively low cost of land resources which
more than three billion dollars to MOMRA. The largest portion of makes implementing a large government MSW recycling initiative
the budget was dedicated to managing Saudi Arabia’s rising infeasible at the moment. Currently the landfilling requirement is
MSW challenges. 2.8 million m2/year (Ouda et al., 2013). Only 10–15% of the col-
lected MSW from the residential and commercial areas is recycled
2.1.1. MSW generation while the remaining waste gets disposed of in open landfills or
Saudi Arabia Rapid developments coupled with its expanding dumpsites. Furthermore, recycling is limited to an informal labor
population and rising urbanization levels have resulted in a sharp intensive sector of scavengers who extracts paper, metals and plas-
increase in the amount of MSW generated. At the moment, Saudi tics manual from MSW (Hakami and Abu Seif, 2015).
Arabia population annually generates more than 15 million tons The general trend of MSW management is developing from
of MSW (Hakami and Abu Seif, 2015), which accounts for nearly mere disposal, such as landfills, to sustainable management (Ma
64% of the MSW generated by all of the Gulf Cooperation Council and Hipel, 2016). The emerge of WTE plants can be seen as a tech-
(GCC) countries (Taher and Hajjar, 2014). Furthermore, Saudi Ara- nological advancement that serves the needs of sustainable MSW
bia is project to generate about 26.9 million tons of MSW by 2030 management. Yet, there are still some developments to the tradi-
(Ouda et al., 2013). The average rate of MSW generation in Saudi tional disposal of MSW such as incinerators ash recycling (Huang
Arabia is 1.4 kg/capita/day (Ouda et al., 2013), which is higher than et al., 2006). Although, the output of such technologies can be used
the global average rate of 1.2 kg/capita/day. This high rate of MSW in different outlets, the focus of this research is only geared
generation can be attributed to high urbanization rates, increasing towards the use of WTE plants to generate electricity. Sustainable
income levels, growing purchasing power and scarcity of environ- MSW management decision making models are affected by two
mental public awareness programs to encourage the reduction of factors: social factors, and public participation (Hung et al.,
the high rates of MSW generation (Ouda et al., 2013; Ouda and 2007). Indeed, the voluntary social practices of the MSW cycle
Cekirge, 2013). Furthermore, the lack of legislations coupled with are expected to reduce the cost of the MSW cycle. However, target-
weak implementation of existing legislations regulating waste ing MSW reduction does not lead to lower efficiency of public ser-
management practices in Saudi Arabia has also contributed to vice provision (De Jaeger et al., 2011; De Jaeger and Rogge, 2013)
the rising rate of generation of MSW (Magram, 2015). As shown above, Saudi Arabia is striving to alleviate the pres-
As Table 1 shows, organic waste is the largest component of the sure on their natural resources to generate electricity for its
MSW produced in Saudi Arabia, 37% of the MSW generated in increasing population. The main WTE technologies are the gasifica-
Saudi Arabia. Furthermore, as shown in Table 1, paper waste tion and Anaerobic digestion (AD). In the following, we brief the
accounts for 28.5%; wood comprises 8%; textiles, any material that readers on those two WTE technologies.
is rendered unusable for its original purposes, make up 6.4% and Gasification is the process in which solid or liquid carbon based
plastics account for 5.2%. Glass follows at 4.6%. Metals make up waste materials are converted into energy rich gas (Synthetic gas
8.3%. Other miscellaneous wastes, such as leather, and rubber, or Syngas) as shown in Fig. 1 below.
make up about 2% of all MSW generated in Saudi Arabia. The waste is exposed to high temperatures ranging between
Furthermore, as Table 1 shows, there is a huge potential for 600° and 1000 °C (Gasification Technologies Council, 2011). The
material recycling in Saudi Arabia. Almost 44.7% of Saudi Arabia’s resulting syngas can be used in boilers to produce heat. However,
this study focuses on using the syngas in combustion engines to
produce electricity. Although gasification technologies can process
Table 1
unsorted MSW, the efficiency of the process is higher when han-
Components of Municipal Solid Waste in
Saudi Arabia (Ouda et al., 2013).
dling sorted MSW (Purser, 2011). Therefore, this paper assumes
that the MSW delivered to the gasification WTE facility is pro-
Waste type Waste composition (%)
cessed through a mechanical handling system where all the recy-
Organic 37.0 clable and the inorganic materials are removed (Gasification
Paper 28.5 Technologies Council, 2011). The resulting waste is referred to as
Wood 8
Textiles 6.4
Refuse Derived Fuel (RDF) which increases the efficiency of the
Plastics 5.2 gasification process. Furthermore, gasification significantly reduces
Glass 4.6 the greenhouse gas (GHG) emissions.
Metals 8.3 On the other hand, Anaerobic digestion (AD) is a conversion
Others 2.0
process that is biological in nature where the organic components
 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101 93

Preparation
Heating the
of the waste
waste to Syngas Power
feedstock
generate Cleaning Generation
(Pre-
Syngas
treatment)

Fig. 1. Process stages of gasification WTE plants.

sffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi
n Future Values of positiv e cash flow
of MSW is treated resulting in methane and carbon dioxide rich gas
MIRR ¼ 1
called biogas (65% methane and 35% carbon dioxide) (International
Present v alue of outlays
Renewable Energy Agency, 2012). As Fig. 2 shows, the obtained
biogas can be cleaned and used to generate heat and electricity. PI is usually is a common financial indicator for public projects.
However, this study focuses on using the biogas to produce only It is the ratio of the present value of the future expected cash flows
electricity. The AD process contributes significantly to the global after initial investment divided by the amount of the initial
efforts of reducing GHGs (International Renewable Energy investment.
Agency, 2012). However, unlike gasification, AD only process Pn
organic components of MSW where plastics and other contami- Present Value of positiv e cash flow  t¼1
ðOPEX t þLt Þ
ð1þrÞt
PI ¼
nants have already been removed (Purser, 2011). I0
PP is the needed number of years to recover initial investment.
2.2. Financial model DPP is the needed number of years to recover initial investment
and its cost of fund.
As mentioned above, this research focuses on generating elec- Although the above indicators are important, but in general, the
tricity by utilizing the gasification and AD conversion technologies. LCOE is the most common methodology to enable comparison of
the financial feasibility of a WTE plant in Saudi Arabia using the the cost of electricity generated from different conversion tech-
above two technologies is investigated through a set of financial nologies (International Renewable Energy Agency, 2015). The
indicators, i.e. Net Present Value (NPV), Internal Rate of Return method of LCOE allows for different WTE conversion technologies
(IRR), Modified Internal Rate of Return (MIRR), Profitability Index with different power capacity to be compared against one another
(PI), Payback period (PP), discounted payback period (DPP), Leve- on the basis of the unit cost of electricity (KWh) during the opera-
lized cost of electricity (LCOE) and Levelized cost of waste (LCOW). tional life of the facility. The LCOE is calculated using the following
To calculate the financial indicators, the following definitions are formula:
used:
P
I0 þ nt¼1 ðOPEX t þLt Þ

Lev elized Cost of Electricity ðLCOEÞ ¼

ð1þrÞt
I0 : The total investment cost at year 0 Pn ðEt Þ
t¼1 ð1þrÞt
OPEX t : The fixed and variable operation and maintenance
expenditure in year t. Similarly, the LCOW enables the comparison of the cost of the
Lt : The cost of landfilling the residual generated waste in year t. treated waste by different conversion technologies. The method
Et : The quantity of electricity generated in year t (MWh). of LCOW allows for different WTE conversion technologies with
n: The project economic life. different facility waste capacity to be compared against one
r: The weight average cost of capital (WACC) or the discount another on the basis of the unit cost of waste (ton) during the oper-
rate. ational life of the facility. The LCOW is calculated using the follow-
ing formula:
NPV is the discounted value in the present of the monetary cash
P
flow that can be calculated using the following formula: I0 þ nt¼1 ðOPEX t þLt Þ

Lev elized Cost of Waste ðLCOWÞ ¼

ð1þrÞt
Pn ðW t Þ
X
n
ðOPEX t þ Lt Þ t¼1 ð1þrÞt
NPV ¼ I0 þ t
t¼1 ð1 þ rÞ
where
Internal Rate of Return (IRR) is the value of ðrÞ that makes the W t : The amounted of waste treated in year t (ton).
NPV equal to zero. However, this values cannot be found analyti-
cally and hence it needs trial and error approach. Luckily, Microsoft 2.2.1. General assumptions
Excel 2013 has the IRR function automated and can be found using To facilitate the financial analysis, this paper establishes, for
this automated function. MIRR is found using the following both technologies, the following initial analysis. The numbers used
formula: in this analysis for both models are mostly derived from estimates

Preparation
of the Heating
waste the waste Biogas Power
feedstock to generate Cleaning Generation
(Pre- Biogas
treatment)

Fig. 2. Process stages of anaerobic digestion WTE plants.

94 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101

reported in the South African literature (Purser, 2011) and studies Table 2
conducted by the International Renewable Energy Agency (IRENA) CAPEX Cost breakdown for gasification and AD plant.

(International Renewable Energy Agency, 2012): Category Contribution to the CAPEX Cost (%)
Gasification AD
1. Economic life: The literature indicates that the economic life
BFB conversion system 60 26
of WTE plants ranges from 20 to 25 years (International Civil cost 19 11
Renewable Energy Agency, 2012). Therefore, the paper uses Prime mover 9 18
20 years of operation for both technologies, starting from Consultancy design 5 18
year 2016. Mechanical handling system 4 20
Plant electricity 3 7
2. Design and the construction phase: This research assumes
that the design and the construction phase will last for three
years, the WTE plant will become operational at year (year
2019).
3. Depreciation method: This paper assumes a straight line 1. The Amount of the Processed MSW and the Resulting Electricity
depreciation starting from the first year of operation, i.e. Generation Capacity:
year 3, with a zero salvage value. a. Annual waste capacity and throughput: This paper assumes
4. Capacity factor: The capacity factor is the ratio of the pro- that almost 1,000,000 tons of unsorted MSW is delivered to
cessed waste (tons) during the year to the waste (tons) that the BFB gasification plant annually. As assumed earlier, the
could be processed if the plant is working at its maximum facility has a capacity factor of 85%; therefore, the BFB gasi-
capacity. The paper assumes, as reported in the literature, fication WTE plant annual throughput is 850,000 tons.
85% capacity factor (International Renewable Energy b. Sorted MSW input to the gasifier: As mentioned earlier, in
Agency, 2012). order to increase the efficiency of the gasification process,
5. Transportation cost: This research disregards waste trans- the delivered waste is processed by a mechanical handling
portation costs allowing for both technologies to be com- system. Processing one ton of unsorted MSW through
pared against each other after the waste is delivered to the mechanical handling system produces 0.3 ton of RDF
WTE facility. (Purser, 2011). Therefore, 850,000 tons of unsorted MSW
6. Environmental benefits: The research disregards the is converted to 255,000 tons of RDF after all the recyclable
benefits of the WTE facility in land savings and reducing and the residual waste are separated.
the national GHG emissions and, therefore, reducing air c. Energy Potential and Electricity Production: 1 ton of RDF
pollution levels. possess an energy content of 23,000 MJ and 1 MJ of energy
7. Ownership, waste cost and availability: The paper assumes produces energy at a rate of 0.0003 MWh (Purser, 2011).
that the WTE plant would be a state-owned and operated Therefore, 255,000 tons of RDF has the potential to produce
by MOMRA. Therefore, the cost of the waste is Zero and energy at rate of 1,759,500 MWh. Also, BFB gasification
the waste feedstock is continuously available. plant has an electrical generation efficiency that ranges
8. Electricity cost: This paper assumes that the electricity pro- from 31% to 36% (International Renewable Energy Agency,
duced by the WTE plant is sold at a rate of 0.085 USD/KWh, 2015). This paper assumes an electrical efficiency of 32%.
which is the electricity consumption tariff for governmental Therefore, the gasification WTE facility generates energy
institutions in Saudi Arabia. at a rate of 563,040 MWh annually.
9. Weight Average Cost of Capital (WACC): a 10% WACC is d. Recycling Potential: As mentioned earlier, 44.7% of Saudi
assumed. Arabia’s MSW are recyclable waste. Therefore, out of the
10. Annual Inflation rates: it is assumes that the selling price of 850,000 tons of the unsorted MWS waste almost
the generated electricity would be inflated at a rate of 6%, 379,950 tons have recycling potential. Furthermore, 8.3%
the selling price of the generated recycled waste and the cost of Saudi Arabia’s MSW consists of metals, i.e. 83 kg per
of landfilling the resulting residual waste at a rate of 5% and ton. Assuming a selling price of 0.03 USD/kg of metal
the fixed and variable operation and maintenance expendi- (Purser, 2011), 2.49 USD/ton is generated from selling recy-
ture (OPEX) at an annual inflation rate of 8%. cled metals. Similarly, 4.6% of Saudi Arabia’s MSW consists
11. Capital Expenditure (CAPEX): The average CAPEX cost for of glass, i.e. 46 kg per ton. Assuming a selling price of
WTE plant utilizing BFB gasification technology is 0.02 USD/kg of metal (Purser, 2011), 0.92 USD/ton is gener-
3925 USD/KW and 4339 USD/KW for the AD plant ated from selling recycled glass.
(International Renewable Energy Agency, 2015). e. Waste recycling revenue: a revenue of 3.41 (USD/ton) can
12. CAPEX breakdown: CAPEX cost includes planning, engineer- be generated from selling the recycled metals and glass in
ing and construction, source separation, mechanical handing the BFB gasification plants, i.e. 2,898,500 USD.
costs and the capital cost of the equipment. Also, Table 2 f. Residual waste landfilling: it is assumed that the residual
indicates the CAPEX cost breakdown for WTE plants (gasifi- waste remaining from the gasification conversion system
cation and AD) (International Renewable Energy Agency, and the recycling activities is sent to landfill. The portion
2012). of MSW that is sent to landfills accounts for 52% from
MSW received at the BFB gasification Plant, i.e. 520 kg/ton.
2.2.2. Gasification plant assumptions Furthermore, the research assumes that the cost of landfill
While the above assumptions are general, other assumptions is 0.01 USD/kg of waste, i.e. 5.2 USD/ton (Purser, 2011).
are pertinent only to gasification technology. This paper develops 2. The Operation and Maintenance Expenditure (OPEX) Assump-
the financial model for a gasification WTE plant that is using Bub- tions for the BFB Gasification Technology: OPEX breakdown:
bling Fluidized Bed (BFB) gasification as a conversion technology. OPEX costs are classified into two categories, fixed and variable
The reason for this choice is that this type of gasifiers, when com- OPEX.
pared to other gasifiers’ types, has a higher performance, produces a. Fixed OPEX: Includes costs of labor, insurance, routine
a Syngas with higher energy content and can process wider range parts replacement, schedules maintenance, etc. Further-
of wastes (International Renewable Energy Agency, 2012). more, the fixed OPEX costs are expressed as a percentage
 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101 95

of CAPEX cost. According to IRENA study, the fixed part of processed by a mechanical handling system. Processing
OPEX cost ranges between 3% and 6% of the CAPEX cost. one ton of unsorted MSW through mechanical handling
This research assumes that fixed OPEX accounts for 4% of system produces 0.3 ton of RDF (Purser, 2011). Therefore,
the total CAPEX cost (International Renewable Energy 850,000 tons of unsorted MSW is converted to 255,000 tons
Agency, 2015). of RDF after all the recyclable and the residual waste are
b. Variable OPEX: Includes unscheduled maintenance, separated.
unplanned equipment replacement, ash disposal and fuels c. Electricity Production: Using AD conversion technology, the
costs. Furthermore, the variable OPEX costs are related to 255,000 tons of organic waste is converted to biogas and
the output of the WTE plant and, therefore, expressed as then the resultant biogas is utilized further to generated
a per unit value of the WTE plant output, e.g. (USD/ electricity. 1 ton of RDF waste has the potential to generate
MWh). According to IRENA study, the variable part of OPEX 992 KWh of electricity when treated through AD conversion
cost for BFB gasification technology is 4 USD/MWh system (Banks and Zhang, 2010). Therefore, 255,000 tons of
(International Renewable Energy Agency, 2012). RDF treated through AD conversion system has the
potential to produce energy at rate of 252,960 MWh. Also,
2.2.3. AD plant assumptions The literature also reports that the AD plant has an electrical
Similarly, this paper also develops the financial model for a WTE generation efficiency of 36% (International Renewable
plant that is using AD as a conversion technology. The reason for Energy Agency, 2015). Therefore, the AD plant generates
this choice is that this technology is mature and commercially electricity at a rate of 91,066 MWh.
available on a large scale worldwide (International Renewable d. Recycling Potential: AD plants have the potential to recycle
Energy Agency, 2012). According to the literature, WTE plants that metals, glass, plastics and paper. Therefore, in addition to
utilize AD as a conversion technology usually tend to process the 3.41 (USD/ton) revenue generated from selling the
significantly less amount of waste than WTE plants that use recycled metals and glass waste, AD plants can generate
gasification as a conversion technology (Purser, 2011). additional revenue from selling the recycled plastics and
paper. Therefore, as mentioned earlier, paper accounts for
1. The Amount of the Processed MSW and the Resulting Electricity 37% of Saudi Arabia’s MSW, i.e. 370 kg per ton. Assuming
Generation Capacity: a selling price of 0.02 USD/kg of paper (Purser, 2011)
a. Annual waste capacity and throughput: This research 7.40 USD/ton is generated from selling recycled paper
assumes that almost 1.000,000 tons of unsorted MSW is waste. Similarly, 5.2% of Saudi Arabia’s MSW consists of
delivered to the AD plant annually. As assumed earlier, plastics, i.e. 52 kg/ton. Assuming a selling price of
the facility has a capacity factor of 85%; therefore, the AD 0.08 USD/kg of plastic (Purser, 2011), 4.16 USD/ton is
plant annual throughput is 850,000 tons. generated from selling recycled plastic waste.
b. Sorted MSW input to the AD conversion system: Since AD e. Waste recycling revenue: a revenue of 14.97 (USD/ton) can
facilities only process the organic portion of the MSW, be generated from selling the recycled metals, glass, paper
as mentioned earlier, the delivered unsorted waste is and plastics in AD plants, i.e. 12,724,500.

Table 3
Summary of all the input data to the financial model for the AD and gasification WTE plants.

Input parameter Gasification WTE plant Anaerobic digestion (AD) WTE plant
Beginning date of design and construction phase 2016 2016
Design and construction time (Years) 3 3
Beginning date of operation 2019 2019
Operations life (years) 20 20
Ending date of operation 2039 2039
Salvage value (USD) 0 0
RDF waste resulted from processing 1 ton of unsorted MSW through MHS (tons) 0.30 0.30
Energy content of 1 ton of RDF (MJ/ton) 23,000 –
Electricity generated from 1 MJ of energy (MWh) 0.0003 –
Electricity generated from 1 ton of RDF of energy (MWh) – 0.922
Residual waste sent to landfill (kg/ton) 520 150
Cost of landfilling the residual waste (USD/kg) $0.01 $0.01
Operating days per year (days/year) 365 365
Operating hours per year (hours/year) 7446 7446
Facility electricity capacity (MW) 75.62 12.2
Facility waste capacity per year (tons/year) 1,000,000 1,000,000
Capacity factor (%) 85 85
Facility annual throughput (tons/year) 850,000 850,000
RDF sorted waste input to the conversion system annually (tons/year) 255,000 255,000
Electrical generation efficiency (%) 32 36
Electricity production (MWh) 563,040 91,066
CAPEX (USD/MW) 3,925,000 4,339,000
Fixed OPEX (% of CAPEX/Year) 4% 3%
Annual inflation rate of fixed OPEX (%) 8 8
Variable OPEX (USD/MWh) 4 4.4
Annual inflation rate of variable OPEX (%) 8 8
WACC (discount rate) 10% 10%
Revenue generated from selling the recyclable waste (USD/ton) $3.41 $14.97
Annual inflation rate for the selling price of the recyclable waste (%) 5.00% 5.00%
Generated electricity revenue (USD/KWh) $0.085 $0.085
Generated electricity revenue annual inflation rate (%) 6.00% 6.00%
Cost of landfilling the generated residual waste (USD/ton) $5.20 $1.50
Annual inflation rate for the cost of landfilling the residual waste (%) 5.00% 5.00%
96 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101

f. Residual waste landfilling: The paper assumes that the As shown in Table 4, both WTE technologies have a favorable
residual waste remaining from the AD conversion system financial performance across all of the financial indicators. Both
and the recycling activities is sent to landfills. The portion WTE plants have a positive NPV which indicates that both plants
of MSW that is sent to landfill accounts for 15% from are considered to be financially profitable undertakings, although
MSW received at the AD plant, i.e. 150 kg/ton. Furthermore, that the financial model shows a higher NPV for the WTE plant
the paper assumes that the cost of landfill is 0.01 USD/kg of using the AD conversion technology. The financial profitability
waste, i.e. 1.5 USD/ton (Purser, 2011). of both WTE plants is further proven by the values of the PI. Since
2. The Operation and Maintenance Expenditure (OPEX) Assump- both values of the PI financial indicators are greater than one,
tions for the AD Technology: both projects are considered to be financially profitable. Further-
a. OPEX breakdown: As in the gasification plant case, OPEX more, the financial model calculates both the payback period
costs are classified into two categories, i.e. fixed and vari- and the discounted payback period for both WTE plants. As shown
able OPEX. They are not accounted for until the WTE plant in Table 4, the AD plant has scored faster payback and discounted
becomes operational, at year 2019. payback periods than gasification WTE plant. Moreover, the LCOE
b. Fixed OPEX: Similar to the gasification plants, the fixed indicator shows the minimum selling price of the electricity
OPEX costs include costs of labor, insurance, routine parts generated by the WTE plant that would make the WTE plant
replacement, schedules maintenance, etc. Furthermore, profitable given that there are no other sources of revenue for
the fixed OPEX costs are expressed as a percentage of the WTE plants, i.e. in our case without accounting for the rev-
CAPEX cost. According to IRENA study, the fixed part of enue generated from the selling of all the recyclable waste. As
OPEX cost ranges between 2.1% and 7% of the CAPEX cost. previously mentioned, the electricity selling price assumed in this
This research assumes that the fixed OPEX cost accounts study is 0.085 (USD/KWh), which is the current electricity con-
for 3% of the total CAPEX cost (International Renewable sumption tariff for government institutions in Saudi Arabia. At
Energy Agency, 2015). this consumption tariff rate, both AD and gasification WTE plants
c. Variable OPEX: Include unscheduled maintenance, are not financially profitable without accounting for the other
unplanned equipment replacement, ash disposal and fuels source of income, i.e. the revenue generated from the selling of
costs. Furthermore, the variable OPEX costs are related to all the recyclable waste. Furthermore, the AD plant has scored
the output of the WTE plant and, therefore, expressed as more favorably than the gasification plant on the LCOW indicator,
a per unit value of the WTE facility output, e.g. (USD/ which allows the comparison between the two conversion tech-
MWh). According to IRENA study, the variable part of OPEX nologies on the basis of waste cost regardless of their waste
cost for AD technology is 4.4 USD/MWh (International capacity.
Renewable Energy Agency, 2012). Also, both WTE plants have a positive IRR and MIRR that is
higher than the WACC which represent further indications of
Table 3 below presents a summary of all the financial assump- the financial profitability of both projects. The difference between
tions made so far in this research to develop the financial models both financial indicators is that the IRR assumes that the positive
for the AD and gasification WTE plants. These input data are mod- cash flows from this project are reinvested at the IRR while the
eled using Microsoft Excel in order to develop the required finan- MIRR assumes that these positive cash flows are reinvested at
cial models. the WACC rate of return. MIRR values provide a more accurate
estimation of the financial performance of both endeavors.
Finally, from the results of the financial model shown in Table 4,
3. Results it can be concluded that for Saudi Arabia the AD plant is finan-
cially more profitable than the gasification WTE plant. AD plant
For the purpose of this research, the financial model is devel- has scored more favorably across all financial indicators which
oped based on the assumptions and the estimates described previ- higher NPV, PI, LCOE, LCOW, payback period, discounted payback
ously to measure the performance of both gasification and AD period IRR and MIRR. In the following, a sensitivity analysis is
plants by evaluating a set of financial indicators, i.e. NPV, IRR, conducted on the financial model using the data table function
MIRR, PI, payback period, discounted payback period, LCOE and in Microsoft Excel. It highlights the main affecting factors on
LCOW. Table 4 presents the result of the financial model developed the investment decision. The NPV is found to be the highest
for both WTE plants (AD and gasification) over the 23 years evalu- investment criterion affected by the input parameters and the
ation time, i.e. 3 years of design and construction and 20 years of effect on LCOE and LCOW criteria is found to be minimal. The fol-
operation. lowing two sections show the analysis for the NPV and LCOE,
LCOW criteria.

Table 4 3.1. NPV criterion

The models output of the financial indicators for the AD and gasification WTE plants.
To build the sensitivity analysis, we need to select the input
Financial indicator Gasification Anaerobic
WTE plant digestion parameters that will be subject to change. In addition, the level
(AD) WTE plant of change of each parameter should be also defined. The selected
Net present value (NPV) (USD) 35,458,304.52 125,064,553.79 parameters for the analysis are: capacity factor, WACC, OPEX (fixed
Profitability index (PI) 1.12 3.36 and variable), facility waste capacity, facility generation capacity,
Payback period (Years) 9.73 4.94 electricity generation efficiency, electricity production, generated
Discounted payback period (Years) 19.45 6.44 electricity revenue, and cost of land filling the generated residual
Levelized cost of electricity (LCOE) $0.13 $0.14
(USD/KWh)
waste. Each of these parameters is selected to change from (5%
Levelized cost of waste (LCOW) $87.07 $15.23 till +5%) and for each changed value, the NPV is calculated. Table 5
(USD/ton) shows the effect of changing the above input parameters on the
Internal rate of return (IRR) (%) 11.12% 25.22% NPV (in USD) of the gasification plant.
Modified internal rate of return 10.54% 15.95%
The NPV of the gasification plant has a positive relationship
(MIRR) (%)
with changes in the capacity factor, generated electricity revenue,
 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101 97

Fig. 3. Gasification technology WTE plant sensitivity analysis result.

annual inflation rate of generated electricity revenue, electricity the NPV of the gasification plant. The NPV is less sensitive to
production, electricity generation efficiency and facility waste changes in the annual inflation rate of generated electricity
capacity. The NPV of the gasification WTE plant has an inverse rela- revenue, electricity production, electricity generation efficiency
tionship with changes in the facility generation capacity, CAPEX, and fixed OPEX. However, the NPV is almost insensitive to changes
WACC, fixed OPEX, cost of landfilling the generated residual waste in facility waste capacity, variable OPEX and cost of landfilling the
and variable OPEX., Fig. 3 plots the highly sensitive parameters for generated residual waste.
the gasification plant. A similar analysis has been also conducted to the AD plant.
Moreover, the sensitivity analysis shows that the NPV has an Based on the initial analysis, the effect on IRR, LCOE and LCOW cri-
identical positive relationship to any changes in both the electricity teria is also found to be minimal. Therefore, only the results of the
production and electricity generation efficiency values resulting in sensitivity analysis on the NPV are considered. Table 6 shows the
the same NPV value. However, the NPV has an identical negative effect of changing the input parameters on the NPV (in USD) of
relationship to any changes in both the facility generation capacity the AD plant.
and CAPEX values resulting in the same NPV value. This is expected The NPV of the AD plant has a positive relationship with
since the electricity production is derived from the electricity gen- changes in the capacity factor, facility waste capacity, generated
eration efficiency and the value of CAPEX is expressed based on the electricity revenue, annual inflation rate of generated electricity
facility generation capacity. revenue, electricity production and electricity generation effi-
As can be seen from Table 5, the sensitivity analysis results ciency. Furthermore, the NPV of the AD plant has an inverse rela-
show that the NPV is highly sensitive to changes in the facility gen- tionship with changes in the WACC, facility generation capacity,
eration capacity, CAPEX, WACC, generated electricity revenue and CAPEX, fixed OPEX, cost of landfilling the generated residual
the capacity factor. Fig. 3, shows the highly sensitive factors on waste and variable OPEX. Moreover, the sensitivity analysis

Table 5
Gasification plant NPV (in USD) based on input parameters change.

Input parameter 5% decrease 0% (No change) +5% increase Sensitivity

Capacity factor 11,002,066.57 35,458,304.52 59,914,542.48 High
WACC 53,125,997.03 35,458,304.52 18,982,983.84 High
CAPEX 58,141,627.25 35,458,304.52 12,774,981.80 High
Fixed OPEX 43,301,901.22 35,458,304.52 27,614,707.82
Variable OPEX 36,946,289.77 35,458,304.52 33,970,319.28
Facility waste capacity 33,685,389.30 35,458,304.52 37,231,219.75
Electricity generation efficiency 32,901,337.36 35,458,304.52 38,015,271.69
Electricity production 32,901,337.36 35,458,304.52 38,015,271.69
Facility generation capacity 58,141,627.25 35,458,304.52 12,774,981.80 High
Generated electricity revenue 8,730,029.38 35,458,304.52 62,186,579.67 High
Cost of landfilling the generated residual waste 37,735,997.32 35,458,304.52 33,180,611.73
98 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101

Table 6
AD plant NPV (in USD) based on input parameters change.

Input parameter 5% decrease 0% (No change) +5% increase Sensitivity

Capacity factor 115,106,177.43 125,064,553.79 135,022,930.15 High
WACC 134,572,529.26 125,064,553.79 116,200,201.27 High
CAPEX 128,769,702.46 125,064,553.79 121,359,405.12
Fixed OPEX 126,116,374.24 125,064,553.79 124,012,733.34
Variable OPEX 125,329,285.77 125,064,553.79 124,799,821.81
Facility waste capacity 118,811,326.10 125,064,553.79 131,317,781.48 High
Electricity generation efficiency 124,711,426.47 125,064,553.79 125,417,681.11
Electricity production 124,711,426.47 125,064,553.79 125,417,681.11
Facility generation capacity 128,769,702.46 125,064,553.79 121,359,405.12
Generated electricity revenue 120,741,545.81 125,064,553.79 129,387,561.77
Cost of landfilling the generated residual waste 125,721,580.56 125,064,553.79 124,407,527.02

shows that the NPV has an identical positive relationship to any Finally, the sensitivity analysis results show that the NPV is
changes in both the electricity production and electricity genera- highly sensitive to changes in the capacity factor, WACC and
tion efficiency values resulting in the same NPV value. On the facility waste capacity. The NPV is less sensitive to changes in
other hand, the NPV has an identical negative relationship to the facility generation capacity, CAPEX, and generated electricity
any changes in both the facility generation capacity and CAPEX revenue. However, the NPV is almost insensitive to changes in
values resulting in the same NPV value. This is expected since electricity production, electricity generation efficiency, variable
the electricity production is derived from the electricity genera- OPEX, fixed OPEX and cost of landfilling the generated residual
tion efficiency and the value of CAPEX is expressed based on waste. Fig. 4 plots the highly sensitive parameters for the AD
the facility generation capacity. plant.

Fig. 4. Anaerobic digestion technology WTE plant sensitivity analysis results.

Table 7
Parameters effect on the difference of NPV (in favor for AD plant).

Input parameter 5% decrease 0% (No change) +5% increase Sensitivity

Capacity factor 104,104,110.86 +89,606,249.27 75,108,387.67 High
WACC 81,446,532.23 +89,606,249.27 97,217,217.43 High
CAPEX 70,628,075.21 +89,606,249.27 108,584,423.32 High
Fixed OPEX 82,814,473.02 +89,606,249.27 96,398,025.51
Variable OPEX 88,382,996.00 +89,606,249.27 90,829,502.53
Facility waste capacity 85,125,936.80 +89,606,249.27 94,086,561.73
Electricity generation efficiency 91,810,089.11 +89,606,249.27 87,402,409.42
Electricity production 91,810,089.11 +89,606,249.27 87,402,409.42
Facility generation capacity 70,628,075.21 +89,606,249.27 108,584,423.32 High
Generated electricity revenue 112,011,516.43 +89,606,249.27 67,200,982.10 High
Cost of landfilling the generated residual waste 87,985,583.24 +89,606,249.27 91,226,915.29
 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101 99

Fig. 5. NPV difference (AD - gasification).

In the following, we will study whether the change in input 3.2. LCOE and LCOW criteria
parameters can change our favor to the AD plant investment.
Therefore, a further sensitivity analysis to the comparison of the The LCOE and LCOW are important financial indicators as they
two plants is conducted with respect to the NPV. The NPV analysis helps investors to price their revenue per production unit (either
is on the favor of AD plant [NPV(AD)-NPV(gasification) = USD KWh or ton of waste). As shown in Table 8, the difference of the
89,606,249.27]. The NPV difference still remains with different LCOE (0.01 US/KWh) is small and slightly in favor to the gasifica-
model parameters values as shown in Table 7. The highly affecting tion plant. On the other hand, the LCOW difference is found to be
input parameters are shown in Fig. 5 (capacity factor, WACC, in favor for the AD plant (less by 71.84 USD per ton of waste).
CAPEX, facility generation capacity, and generated electricity The cost of waste elimination through AD plant is cheaper than
revenue). gasification plant.
Similar to the NPV analysis, the effect of input parameters is
studied on the LCOE and LCOW financial indicators. The difference
Table 8
of the LCOE (0.01 US/KWh) was not affected by the input parame-
Plants comparison (LCOE, and LCOW).
ters. Nevertheless, There is some effect on the LCOW. Table 9
Financial indicator Gasification AD Difference shows the effect of the input parameters on the difference of
plant plant (AD-gasification) LCOW. The LCOW difference still remains in favor of the AD plant
Levelized cost of electricity 0.13 0.14 +0.01 with different model parameters values. The highly affecting input
(LCOE) (USD/KWh) parameters are shown in Fig. 6 (capacity factor, CAPEX, facility
Levelized cost of waste 87.07 15.23 71.84 (83%)
(LCOW) (USD/ton)
generation capacity, electricity generation efficiency, and electric-
ity production).

Table 9
Parameters effect on the difference of LCOW (in favor for the AD plant).

Input parameter 5% decrease 0% (No change) +5% increase Sensitivity

Capacity factor 75.12 71.84 68.86 High
WACC 70.44 71.84 73.28
CAPEX 68.71 71.84 74.96 High
Fixed OPEX 70.72 71.84 72.95
Variable OPEX 71.63 71.84 72.04
Facility waste capacity 71.84 71.84 71.84
Electricity generation efficiency 68.51 71.84 75.16 High
Electricity production 68.51 71.84 75.16 High
Facility generation capacity 68.71 71.84 74.96 High
Generated electricity revenue 71.84 71.84 71.84
Cost of landfilling the generated residual waste 71.57 71.84 72.10
100 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101

$76.00

$75.00 Capacity Factor

$74.00
CAPEX

$73.00

Electricity Generation Efficiency

$72.00

$71.00
Electricity Production

$70.00

Facility Generation Capacity

$69.00

$68.00
-6% -4% -2% 0% 2% 4% 6%

Fig. 6. LCOW difference (gasification - AD).

4. Discussion and conclusion The developed financial model has provided a cost estimate of
establishing both gasification and AD plants in Saudi Arabia
Despite the fact that WTE plants present a unique opportunity through a set of financial indicators, i.e. NPV, IRR, MIRR, PI, payback
to address waste management challenges in Saudi Arabia, there period, discounted payback period, LCOE and LCOW. The paper has
is a severe paucity in the literature regarding the waste manage- also conducted a sensitivity analysis on the developed financial
ment practices in Saudi Arabia. Financial feasibility studies of model to identify the main affecting factors that the decision mak-
establishing WTE plants in Saudi Arabia are virtually non- ers should pay more attention towards when evaluating both tech-
existent; hence, the importance of this study since it fills this sig- nologies. For example, for the case of the gasification WTE plant,
nificant gap in the literature. The significance of this research is the NPV is highly sensitivity towards changes in the generated
to compare the economical effectiveness between different WTE electricity revenue. Therefore, during the planning phase, the deci-
alternatives (gasification and AD). Although, AD plants provide sion maker should deeply explore the uncertainty in the electricity
higher NPV for investment, still the gasification plant has higher selling prices and consider the effect on the overall profitability of
capacity of waste handling and energy generation. The decision the project. Similarly, the NPV for the AD plant is highly sensitive
makers may prefer to have gasification WTE plants in high density towards changes in the facility waste capacity. Therefore, the deci-
population areas. AD plants are more appealing in smaller sion maker must decide on a waste capacity that would ensure the
population. profitability of the project while keeping in mind the availability of
This paper has analyzed the current situation of MSW manage- the desired level of wastes.
ment in Saudi Arabia and proposed a financial model to assess the As a suggested future research, this work can be extended to
viability of WTE investments (AD and gasification). This research include the effect of MSW sorting before reaching the WTE plant.
promotes the establishment of WTE plants to solve the MSW envi- In order to reduce the cost of sorting MSW, the MSW should be
ronmental challenges which indeed will reduce carbon footprint segregated into colored containers at the generation site according
and, mitigate global climate change. It also enhances the decision to the type of the waste. This step will enhance the recycling efforts
makers’ ability to make informed decisions on WTE investments. and reduce the MSW management cost through reducing the cost
The developed model provides valuable financial insights into the of sorting MSW. Since the research assumes that the WTE plant
integrated WTE management system (source separation, mechan- would be state-owned, other future researches can study the finan-
ical handling, recycling and landfilling facilities associated with cial viability for private investments in the sector of WTE plants.
both technologies). The results found AD and gasification WTE This can be accomplished by applying the same model developed
plants are financially profitable endeavors yielded in favorable in this paper, however, the cost of the waste delivered to the
investment indicators, i.e. NPV, IRR, MIRR, PI and LCOW. Addition- WTE facility must be accounted for. Another future research can
ally, the LCOE, represent the minimum selling price of the electric- account for the financial gains generated from the landfills airspace
ity generated by the WTE plant, which help authorities to savings and the carbon footprint savings as well. Finally, in order to
determine the selling price of (KWh). formalize a comprehensive estimate for the integrated WTE
 L.A. Hadidi, M.M. Omer / Waste Management 59 (2017) 90–101 101

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