Decision Making of The Very Small-Scale Biomass Power Plant Investment in Phimai District Nakhon Ratchasima Province

Abstract

This study aims to investigate the management of raw materials for find ways to purchase raw materials to have lowest cost and the financial feasibility to analyze investment in small-scale biomass power plant projects with a capacity of 1 megawatt in the Phimai District, Nakhon Ratchasima Province. The study utilizes primary data obtained through in-depth interviews with five biomass power plants to understand about production technology and raw material management, including interviews with farmers in the area and cassava processing factories in the Phimai district area, to obtain local raw material information, it incorporates secondary data sourced from academic literature, online resources of governmental and non-governmental organizations. Both qualitative and quantitative analyses are employed to interpret the data. By setting investment decision conditions at Current value of the project Net Present Value (NPV) > 0, Internal Rate of Return (IRR) > Financial costs, ratio of benefits to capital, Benefit/Cost Ratio (BCR) > 1, Discounted Payback Period (DPB) < Life of the project. The analysis aimed to determine the most suitable proportions that would result in the lowest raw material costs and the highest returns. It was found that to achieve the lowest raw material costs by using sugarcane, rice bran and cassava residue. The total annual raw material cost was calculated to be 13,458,000 Baht. The financial analysis of the project yielded a net present value (NPV) of 112,132,870 Bath, indicating a positive return on investment. The payback period was determined to be 3.60 years (3 years and 8 months). The internal rate of return (IRR) for the project was calculated at 31.36%, surpassing the long-term loan interest rate. Additionally, the benefit-cost ratio was found to be 1.39, indicating that for every unit of capital invested. This study will be beneficial for entrepreneurs in making investment decisions regarding small-scale biogas power plant projects using agricultural residues in the Phimai district of Nakhon Ratchasima province and other potential areas.