# 6.6 Profitability of using wood gas at Loma Plata

The generation of electricity with wood gas at Loma Plata has turned out to be a successful and profitable operation, compared to the alternative of using diesel oil as a fuel. The price of diesel oil has gone up from 72 G/l in June 1983 to 127 G/l in December 1984. During this period the cost of the wood chips has been on average 2.9 G/kg, which is more than six times the price of wood-fuel at the Sapire sawmill (see Chapter 4), but is still a very favourable cost compared to the price of diesel oil.

Production of 1 kWh electricity consumes 1.89 kg of wood-fuel at a cost of 5.48 G, while the corresponding number for diesel oil would be 0.34 l and 34 G, calculating with an average oil price of 100 G/l.

Table 6.4 Electricity Generation Costs Using Wood Gas at Loma Plata (9)

 Year Wood-fuel G Lubricants G Operation G Maintenance G Total G 1983 4212365 897000 1581216 916850 7667431 1984 21542100 3923000 4671000 18337000 48473100 Total 25814465 4820000 6252216 19253850 56140531

During this period the total electricity production was 4703650 kWh, which gives an average unit cost of 11.93 G/kWh. The share of the lubricating oil of the final costs was 1.02 G/kWh, and the share of the maintenance costs 4.09 G/kWh. The total investment costs of the power-plant (excluding the third gasifier unit) was 319 million G and the share of the equipment costs 208 million G.

Calculating with a real interest rate of 10% and a depreciation time of eight years the annual capital costs for the installations are 59.3 M G or equivalent to 11.9 G/kWh, with an estimated average electricity production of 5000 MWh per year. This means total electricity production costs of 23.8 G/kWh, which is only half of the actual electricity price of 1984, 46 G/kWh.

The pay-back time for the whole project has been estimated to roughly 6.5 years. The net annual savings in fuel costs by using wood instead of diesel-oil for year 1984 was over 100 million G.

All the economic numbers calculated above, clearly indicate the profitability of using wood-gas for electricity generation at the Loma Plata power-plant. The other positive socio-economic impacts of using biomass-based power generation on the agricultural and industrial activity within the Chortitzer cooperative are dificult to express in numbers but are obvious.

 Exchange Rates June 1983 1 US\$ = 160 June 1984 1 US\$ = 360 September 1984 1 US\$ = 445 January 1985 1 US\$ = 377 April 1985 1 US\$ = 455 July 1985 1 US\$ = 625 January 1986 1 US\$ = 635