Cost-Benefit Analysis of Palm Kernel Shells as a Diesel Fuel Substitution for Hot-Mixed Asphalt

Indonesia is one of the biggest oil palm producing countries. Solid waste from processing palm oil into crude palm oil (CPO) includes palm shells. This palm shell waste can be used as an alternative to diesel fuel for aggregate heating. This study aims to analyze the investment of the use of palm shells as an asphalt burner replacing diesel. Primary data were obtained from field and laboratory identification. In contrast, secondary data were obtained from relevant agencies, the Department of Public Development and Public Housing, PT Bara Energi Biomass and PT Damai Citra Mandiri. The method used is a quantitative descriptive analysis by calculating the annual costs and benefits over the machine’s life, ten years. This study uses the Cost-Benefit Analysis. Four investment criteria are calculated: (1) Net Present Value (NPV), (2) Benefit-Cost Ratio (BCR), (3) Payback period (PbP), (4) Internal rate of return (IRR). The results found that palm shells’ use as an asphalt burner for diesel substitutes showed high costs and top benefits. The calculation of economic feasibility with investment criteria shows that the NPV has a positive value, which means it is feasible. BCR shows a ratio of costs and benefits is more than one; it indicates that investment in asphalt production activities is feasible. The calculation of investment in replacing diesel fuel with palm shells shows a positive value of PbP since the first year. The internal rate of return shows that the investment value has met the minimum standard of general interest or replacement.