While a cost for some business sectors, the rising cost of waste disposal and management is creating opportunities for wastewater utilities in terms of maximising the resource value that is recovered from wastewater and other organic waste products. Synergies conducted a comprehensive assessment of the financial and economic feasibility of two options for the implementation of co-digestion at Queensland Urban Utility’s Luggage Point Wastewater Treatment Plant. The analysis identified the option that would maximising both the direct financial benefit to QUU and wider economic benefit from the avoided economic cost associated with the disposal of organic waste
Waste management is becoming a significant issue for utility service providers and society in general as the cost of waste disposal continues to increase. As is common throughout the industry, QUU uses anaerobic digesters to convert wastewater by-product into biogas. In addition to reducing the tonnages of waste to be disposed of, this process enables QUU to use its waste by-product to offset a proportion of its energy costs.
While the use of digesters by WWTP operators to convert liquid and solid organic waste into energy, through co-digestion with wastewater by-product, is gaining traction in several overseas jurisdictions, its application is currently limited in Australia. QUU is seeking to invest in co-digestion within its Luggage Point WWTP to enable it to accept liquid and solid organic waste from waste service providers.
While QUU does derive a financial benefit from the co-digestion of organic waste with wastewater by-product (e.g. revenue from gate fees, reduction in energy costs), there are also economic impacts that are relevant to assessing the feasibility of investing in the capital works necessary for co-digestion to be viable. QUU subsequently engaged Synergies to, in addition to modelling the net financial impact, undertake a robust cost-benefit analysis of two proposed options – the co-digestion of liquid organic waste and the co-digestion of both liquid and solid organic waste.
The economic feasibility of the co-digestion options was assessed by conducting a comprehensive cost-benefit analysis. The general approach to the analysis was as follows:
A workshop with key personnel from QUU to scope the base case and project options and identify the financial and economic impacts, key parameters required for quantification and potential data and information sources to inform the modelling.
Mapping the identified impacts across key stakeholder groups (i.e. QUU, waste service providers, wider community).
Consultation with QUU personnel and research to identify the parameter estimates necessary for the quantification of economic benefits and costs.
Development of a discounted cashflow model to enable the quantification of the financial revenues and costs and economic benefits and costs under the two project options relative to the base case.
Preparation of a report summarising the results of the analysis.
Identifying, assessing and quantifying the economic benefits of co-digestion required the project team to extend the assessment beyond the initial activity of the co-digestion of organic waste. For example, one of the benefits identified was a reduction in road transport costs. This benefit was identified based on the avoidance of the transportation of liquid and solid organic waste from the origin of the waste to landfill facilities in the Ipswich region. There are significant negative externalities associated with the transportation of organic waste to landfill facilities under the base case (e.g. carbon emissions, road maintenance costs, accident costs, noise and air pollution), which are avoided under the project options.
Extensive sensitivity testing was conducted to assess the impact of changes to key assumptions and parameters on the results of the analysis.
In addition to conducting the financial and economic feasibility assessment, Synergies also advised QUU on the regulatory risks and potential implementation issues associated with the proposal to introduce co-digestion into the
In addition to fully understanding the financial implications of the implementation of co-digestion at its WWTPs, the feasibility study enabled QUU to understand the wider economic impacts of different options under consideration for the implementation of co-digestion at its Luggage Point WTP. These wider impacts were incorporated into QUU’s business case in support of a proposal to invest in the co-digestion of solid organic waste at QUU’s Luggage Point WWTP.
What our client said
Synergies demonstrated a thorough understanding of Urban Utilities’ requirements on the project, engaged with relevant stakeholders in validating the assumptions and provided the required deliverables in a timely manner. In addition to the technical skill sets, Synergies was flexible to Urban Utilities’ needs, easy to work with and proved to be a valuable resource, not just on the specified project they were engaged for, but as an advisor in developing the broader context of expanded resource recovery beyond the project scope. Synergies’ deliverables to date have been a valuable input to Urban Utilities’ business case for expanded resource recovery.