ECONOMIC ANALYSIS FOR PREPAREDNESS AND ADAPTATION: THE CASE OF LOCAL GREEN ENERGY AND AMMONIA

Transition to low carbon technologies is needed to reduce climate-change disruptions such as food shortages while maintaining vibrant economies. How to evaluate techno-economic feasibility for the combined scientific, policy, and farming communities has been hard to identify. Our study evaluates an approach that integrates cost/benefit analysis with price projection scenarios and debt financing options. The approach is illustrated using an agricultural community case study conducted as part of the NSF FEWtures project. For the case study, 248,188 MT of traditional ammonia are replaced with local wind energy-produced green ammonia for farmers in Southwest Kansas, USA. If applied worldwide, conversion to green ammonia would reduce total CO2 emissions by about 2.5% [1-3] and would provide greater benefit to local communities than the present system. Alternative efficiencies of selected energy-to-ammonia technologies are evaluated for their economic feasibility. Economic feasibility is defined as the ability to accrue enough discounted cash flow at the end of turbines’ 25-year lifespan to enable replacement without new capital infusion. The alternative technologies are traditional Haber-Bosch and the emerging solid oxide electrolyzer cell (SOEC). Results show how economic feasibility sensitivity to technology and financing options are evaluated and communicated to scientists, policy makers, and farmers. The 6.5 MWh/MT energy-to-ammonia SOEC technology presented the best economic results for all price projections. The community’s investment yielded the highest return when debt was used to finance 50% of capital investment. Returns exceeded S&P returns and are thus likely to offer feasible opportunities for investors.

1 European Fertilizer Manufacturers’ Association, Best Available Techniques for Pollution Prevention and Control in the European Fertilizer Industry (European Fertilizer Manufacturers’ Association, 2000), Booklet No. 1.

2 International Fertilizer Industry Association, Production and International Trade Committee, http://www.fssa.org.za/ Journals/2014/deSousa_slides.pdf for “Ammonia Feedstock Evolution,” 2013.

3 IPCC Fourth Assessment Report, https://www.ipcc.ch/pdf/assessment-report/ar4/wg3/ar4_wg3_full_report.pdf for Climate Change (2007), p. 4