Cost-Benefit Analysis of Investment in Enhancing Alternative Fuel Utilization Capacity in Cement Production

Abstract

This study aims to analyze the financial and economic costs and benefits of investments to enhance the use of alternative fuels in cement production. The findings are intended to serve as guidelines for cement industry operators in planning and evaluating future investment projects. The results of the study for three cement kilns, each with different production capacities and proportions of alternative fuel usage, indicate that all kilns are profitable. The overall Net Present Value (NPV) is 3,218,617,440.14 THB, with an Internal Rate of Return (IRR) of 32.92%, a Benefit-Cost Ratio (B/C) of 2.89, and a payback period of 3 years and 1 month. Kiln 2 achieved the highest NPV due to its larger production capacity and the use of the lowest-cost alternative fuels. Kiln 3, despite having the largest capacity, relied mainly on Refuse Derived Fuel, which incurs higher costs, while Kiln 1 yielded the lowest returns due to its limited production scale. When externalities from greenhouse gas emissions were considered, the project remained economically viable overall, with an NPV of 2,715,957,030.69 THB and an IRR of 30.07%. Kilns 2 and 3 remained feasible, though with reduced NPVs, while Kiln 1 became unprofitable due to high investment costs relative to its scale and increased greenhouse gas offsets. In conclusion, investments in alternative fuel capacity are both financially and economically viable, particularly for larger kilns, and represent a practical pathway for improving sustainability and reducing reliance on fossil fuels in the cement industry.