higher risk if the recovered commodities enter volatile markets; the risk is not so great for low capital investment alternatives. Thus, the fuel recovery systems carry a lower risk than say composting. Of course, any municipality is likely to attempt to "lock up" contractually its recovery products to minimize revenue uncertainties. Actual total operating costs would not vary greatly with throughput volume or period of operation (although per ton costs would vary widely). The main variable affecting actual operating costs is plant size or throughput capacity (lower costs per unit as plant size increases). However, the principal variables that affect economic viability of resource recovery systems turns on those factors affecting revenues. These are: throughput tonnage, product value, recovery efficiency and marketable quantity. Since actual operating costs do not decline significantly with these variables, an unfavorable situation in any of them leads to both higher unit costs and lower revenues, and the result could be very high unit costs under adverse combinations. For instance, a 1,000-TPD plant processing only 500-TPD and selling only half its normal recovery quantity at half the expected price would lead to net unit operating costs of more than four times the costs at full capacity. This would not be expected to happen in actual practice since each installation would be carefully planned but the point is that variables affecting income on a high capital investment and high operating cost systems are very sensitive. The industrial plant manager knows this well and most capital intensive industrial operations running above 90 percent capacity and selling products are profitable whereas if volume or price drops the operation turns unprofitable very quickly. The results of this sensitivity analysis serve simply to emphasize the necessity for a thorough market study prior to undertaking any resource recovery project. Some of the major considerations to look for in the various system concepts are summarized as follows: 3.4.1 Fuel recovery. Minimum capital investment is required and the waste preparation does not need to be converted to a synthetic "solid" fuel. The fuel value is relatively low, but costs are lower than other systems; the operating requirements are less dependent on skilled labor than other systems. Since waste could be used as a supplemental fuel, there is minimum disruption to local fuel markets. The limitations are that normally a single prospective customer is involved--the local utility and local fuel costs or furnace configurations may prevent use of this recovery process. In some areas, cement kilns may offer a second market for recovered fuel. 3.4.2 Pyrolysis. Oils or gas suitable as commercial fuel have universal salability and market potential, coupled with strong price stability, assuming that they perform adequately as a synthetic fuel in existing equipment; the principal inorganics (ferrous metal, aluminum and glass) have good market potential within geographic and quality limitations. 3.4.3 Materials recovery. In general, materials have the highest potential product value of any recovery concept. However, the paper fraction recovered appears to have somewhat limited and uncertain markets, although there are fair to good potential markets within the geographic and quality limitations that determine market demand. The inorganics that would be recovered (ferrous metals, aluminum, and glass) have good market potential within geographic and quality limitations. 3.4.4 Incineration and residue recovery. The principal inorganics have good market potential within geographic and quality limitations. However, the product quality of several of the incinerator residue recovery fractions indicates that upgrading will be necessary to achieve good marketability. The technical and economic requirements for upgrading are under development, but uncertain. The ferrous fraction as now produced is highly suitable for copper precipitation use, but not steel making. 3.4.5 Incineration and electrical generation: There is a universal market for electricity; yet there are substantial institutional barriers to acceptance. Also, the value of electricity varies widely over the nation and would, therefore, return an adequate revenue in some installations, but not in others. 3.4.6 Composting: In general, the yield of usable product per input ton is the highest for any recovery technique except the energy options. Humus or compost has a long and dismal past record for marketability. There are millions of tons of other wastes available that have the technical performance of compost without being converted by process technology; many humus applications would have to displace other low-value wastes now being utilized. Market potential for compost is very limited but could improve. The inorganics have the same potential as indicated in pyrolysis. 3.4.7 Incineration and heat recovery. Steam has universal value as an energy source. However, there are severe limitations under which it can be marketed. Favorable conditions could exist in a number of instances but widespread applications of this sort do not appear practical at this time. In general, there must be a customer within a short distance of steam generation who is able to purchase steam at or above the prices used in this analysis. 3.5 Municipal Vs Private Ownership Some of the economic advantages of municipal ownership of waste disposal or resource recovery processes were cited earlier, where the impact of ownership on annual capital charge rates was noted (Table 1). The additional charges that must be applied to the various categories of invested capital have an important effect on the ultimate net operating costs of solid waste recovery processes. The effect is most pronounced on processes having relatively high capital requirements. In addition to incurring out-of-pocket costs for taxes related to property values, the private owner-operated of a resource recovery process suffers several other economic disadvantages when compared with a municipal owner. Tax-free municipal bonds can provide financing for a municipal facil-' ity at interest rates of some 3 percent less than can be obtained by a private firm either through industrial bonds or conventional borrowing procedures. The private firm, too, must satisfy its owners by providing an adequate return on its invested capital. To obtain a 10 percent net aftertax return requires that a firm in a typical 50 percent tax bracket earn a pretax return of 20 percent. If the facility in question is financed by both internal (equity) and external (debt) capital, the average interest cost will lie somewhat between the rates applying to these different sources of funds. For example, if the project were financed 30 percent with equity capital and 70 percent with debt capital, having 20.0 percent and 8.0 percent interest rates, respectively, the firm's composite cost of capital would be 11.6 percent. In this case, interest charges applied to various investment categories would be 11.6 percent for a private owner instead of only 5.0 percent for a municipal owner, resulting in the substantial increases in fixed costs shown previously in Table 1. The effect of the additional fixed costs on net operating costs are summarized in Table 29 for a 1,000-TPD, 300,000-TPY resource recovery facility. The additional fixed costs that would be incurred by the various systems because of private ownership range from $480,000 (or $1.60 per ton) for the low-capital fuel recovery system, to $1,125,000 (or $3.75 per ton) for the capital-intensive electric generation option. Overall, net operating costs are increased by 30 to 60 percent by private ownership. Or, stated another way, a municipality should be able to process its wastes for some 20 to 40 percent less than if it were to contract the operations to a private firm, assuming operations of comparable efficiency. However, it should also be noted that a municipality or other political jurisdiction may be unable to or may not choose to burden its taxpaying citizens with the debt loads required for resource recovery and may instead opt for private ownership and higher annual operating costs. |