Comparative Analysis of Natural Gas Cogeneration Incentives on Electricity Production in Latin America

Rivera-Alvarez, Alejandro; Osorio Ramirez, Julian; Montoya, Laura; Fontalvo, Jose; Botero, Edgar; Escudero-Atehortua, Ana

doi:10.1016/j.enpol.2020.111466

Comparative Analysis of Natural Gas Cogeneration Incentives on Electricity Production in Latin America

Journal Article · Wed May 06 00:00:00 EDT 2020 · Energy Policy

DOI:https://doi.org/10.1016/j.enpol.2020.111466· OSTI ID:1659771

Rivera-Alvarez, Alejandro ^[1]; Osorio Ramirez, Julian ^[2]; Montoya, Laura ^[3]; Fontalvo, Jose ^[4]; Botero, Edgar ^[4]; Escudero-Atehortua, Ana ^[5]

Ingeniería Térmica Ltda, Medellín (Colombia); National Renewable Energy Lab. (NREL), Golden, CO (United States)
Ingeniería Térmica Ltda, Medellín (Colombia); Fundación Ergon, Medellín (Colombia); MGM Innova Energy Services, Medellín (Colombia)
MGM Innova Energy Services, Medellín (Colombia); National Univ. of Columbia, Medellin (Columbia)
MGM Innova Energy Services, Medellín (Colombia)
Univ. Pontificia Bolivariana, Medellín (Colombia)

An analysis to assess the influence of country-dependent variables and incentives on the feasibility of natural gas cogeneration projects in Latin America is presented in this work. The analysis is performed using a hypothetical industrial plant, where the cogeneration solution consists in the recovery of waste heat from the power generation for steam production. The feasibility is evaluated by calculating the Return of Investment (ROI) and the Internal Rate of Return (IRR) of the project. Eight Latin American countries are studied considering their specific natural gas markets, regulation, and macroeconomic variables. Two scenarios, electricity production for self-consumption and electricity production with power surplus sale, are independently analyzed considering the effects of available incentives. In the countries where the project is feasible, the application of incentives leads to a significant reduction in the ROI and, consequently, to an increment in the IRR. The effect of the interest rate and environmental impact were also analyzed. In general terms, along the region, the regulation for cogeneration is incipient while incentives are very standard and similar respect to lowering of import, Value-Added Tax (VAT), and income taxes, which seems to be designed purely to promote capital investment. Following the results from this study, it is of paramount importance to create new policy instruments in the future to advance the regulatory framework for cogeneration in Latin America.

View Accepted Manuscript (DOE)

Research Organization:: National Renewable Energy Laboratory (NREL), Golden, CO (United States)

Sponsoring Organization:: USDOE Office of Energy Efficiency and Renewable Energy (EERE)

Grant/Contract Number:: AC36-08GO28308

OSTI ID:: 1659771

Report Number(s):: NREL/JA-5500-74604; MainId:19407; UUID:974d8144-71bf-e911-9c24-ac162d87dfe5; MainAdminID:7885

Journal Information:: Energy Policy, Journal Name: Energy Policy Vol. 142; ISSN 0301-4215

Publisher:: ElsevierCopyright Statement

Country of Publication:: United States

Language:: English

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29 ENERGY PLANNING, POLICY, AND ECONOMY
comparative analysis
financial evaluation
incentives
natural gas cogeneration
power surplus sale
self-consumption

Comparative Analysis of Natural Gas Cogeneration Incentives on Electricity Production in Latin America

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