Assessment of Government Incentives for Energy from Waste in Colombia

Santiago Alzate-Arias, Álvaro Jaramillo-Duque, Fernando Villada and Bonie Restrepo-Cuestas
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Santiago Alzate-Arias: Research Group in Advanced Materials and Energy (MATyER), Instituto Tecnológico Metropolitano, Calle 54A No. 30-01, Medellín 050013, Colombia
Álvaro Jaramillo-Duque: Research Group in Efficient Energy Management (GIMEL), Faculty of Engineering, Department of Electrical Engineering, Universidad de Antioquia, Calle 67 No. 53-108, Medellín 050110, Colombia
Fernando Villada: Research Group in Efficient Energy Management (GIMEL), Faculty of Engineering, Department of Electrical Engineering, Universidad de Antioquia, Calle 67 No. 53-108, Medellín 050110, Colombia
Bonie Restrepo-Cuestas: Research Group in Advanced Materials and Energy (MATyER), Instituto Tecnológico Metropolitano, Calle 54A No. 30-01, Medellín 050013, Colombia

Sustainability, 2018, vol. 10, issue 4, 1-16

Abstract: This work evaluates the prefeasibility of energy from waste projects in Colombia under the guidelines of Law 1715. That piece of legislation proposes tax incentives for non-conventional energy initiatives, such as deductions of up to 50% on the investment through income tax, VAT exemption, tariff exemption, and accelerated depreciation of assets. Pasto, Colombia, was selected as the case study. Subsequently, incineration, gasification, anaerobic digestion, and landfill gas technologies were evaluated. The potential of electric power generation from municipal solid waste (MSW) of each conversion technology was estimated with mathematical models. Additionally, the economic evaluation considered five cases that combine loan options, accelerated depreciation, and income deductions. Finally, the prefeasibility analysis of each case and technology was based on the internal rate of return (IRR) and levelized cost of electricity (LCOE). The results reveal that only anaerobic digestion and landfill gas technologies constitute viable projects in case of traditional investment with and without loans, because they present IRRs greater than the discount rate, of 6.8%. However, by including the incentives in Law 1715 in the economic evaluation, IRRs of 11.18%, 7.96%, 14.27%, and 13.59% were obtained for incineration, gasification, anaerobic digestion, and landfill gas, respectively. These results make all four technologies feasible in this context.

Keywords: energy policies; waste-to-energy; municipal solid waste; levelized cost of electricity; internal rate of return (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:4:p:1294-:d:142594

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