Evaluation on Large-scale Biowaste Process: Spent Coffee Ground Along with Real Option Approach

Abstract

This study aims to introduce a biowaste processing system that uses spent coffee grounds and implement a real options method to evaluate the proposed process. Energy systems based on eco-friendly fuels lack sufficient data, and thus along with conventional approaches, they lack the techno-economic assessment required for great input qualities. On the other hand, real options analysis can estimate the different costs of options, such as continuing or abandoning a project, by considering uncertainties, which can lead to better decision-making. This study investigated the feasibility of a biowaste processing method using spent coffee grounds to produce biofuel and considered three different valuation models, which were the net present value using discounted cash flow, the Black-Scholes and binomial models. The suggested biowaste processing system consumes 200 kg/h of spent coffee grounds. The system utilizes a tilted-slide pyrolysis reactor integrated with a heat exchanger to warm the air, a combustor to generate a primary heat source, and a series of condensers to harness the biofuel. The result of the net present value is South Korean Won (KRW) -225 million, the result of the binomial model is KRW 172 million, and the result of the Black-Scholes model is KRW 1,301 million. These results reveal that a spent coffee ground-related biowaste processing system is worthy of investment from a real options valuation perspective.