Considerations for Biogas Projects
The past several years have been good for the biogas industry. States are passing favorable legislation toward organic waste diversion, the permitting process is becoming more navigable, projects are utilizing nontraditional feedstocks, anaerobic digester-derived energy has become more attractive, and some very large systems are getting realized in notoriously difficult-to-permit areas and urban environments. Biogas industry awareness has grown, resulting in increased lobbying power and a shift in the perception of waste-to-energy projects.
Unfortunately, even with all the positive momentum, a project’s success is still dependent on its sole quality. A well-developed project does not just come together; it takes a great deal of planning, design and execution.
Location, permits and distances. A well-developed biogas system begins with the project site. It should be secured in a long-term agreement, either a lease or purchase, in an area that can be permitted. It is highly recommended to introduce your organization to the permitting agencies and incorporate them into development plans. Environmental permitting bodies can provide a roadmap or blueprint on how to turn an idea into reality.
Distance from potential feedstock sources is another factor to consider. The greater distance from the organic waste the higher the transport costs, as well as the risk for competition. A project in development must consider transport costs at preliminary stages, as the financing party will bring this up during due diligence.
Feedstock volume, availability and quality. To avoid the risk of developing a system based on volumes that may not be available in the future, create a matrix or spreadsheet of available feedstocks and design around multiple blends based on readily available organics. If a system is dependent on a single or only a few sources of material, it increases project risk.
Feedstock quality and composition are also vital to a project’s success, as undesirable contaminants or inert material will hinder production or efficiency. Relatively clean feedstocks that are high in volatile solids percentage, consistent and possess high biogas yield per unit will help a facility operate at optimum levels.
Organic material should be secured under a long-term agreement or multiple agreements. Ideally, a contract can be realized with an entity that generates the requisite composition and volume of materials for a successful anaerobic digester. This entity will vary depending on the location, biogas technology and economics driving the project. For example, in some recently developed systems, the primary feedstock was biosolids, while it has been manure, food waste or green waste in others.
Build your team for success. Once a suitable site and feedstocks are identified and secured, assemble a team. The biogas technology provider, biogas utilization technology provider, engineering firm and construction company may all be one organization, or each may be different. Choosing the right team is essential. The financeability, success history and references for each organization must be considered by a prudent developer.
Attractive outcomes, biogas conversion. There are two primary byproducts from an anaerobic digester system: digestate and biogas. Digestate may or may not be a commodity, depending on the feedstocks, location, digestion process and market conditions. Biogas is typically more valuable, but utilization varies and carries significant impact on a project’s success. Traditionally, biogas has been converted into electricity via combined-heat-and-power technology. Electricity can either be used on site or sold under a power purchase agreement (PPA) to a utility. Recently, upgrading biogas into compressed natural gas equivalent has gained interest. Upgraded biogas may be utilized as vehicle fuel or injected into the pipeline. When utilized as vehicle fuel, a PPA is not required, making this option a viable alternative. Additionally, several states have regulations in place favoring natural gas as vehicle fuel, which can lead to additional project funds.
Financing. Following federal, state and local funding opportunities such as grants, loans or tax incentives is encouraged. New programs are being developed for biogas systems and should be applied for. There are several grant writing and accounting agencies that specialize in biogas programs and can be a great aid.
In summary, the biogas industry is burgeoning and will witness an explosion of systems in the second half of this decade. Successful projects will have the same characteristics: site control, sourced feedstocks, a capable team, secured financing and an ambitious, entrepreneurial spirit bringing it all together. These systems are not easy to realize, but nothing worthwhile ever is.
Author: Kyle Goehring
Regional Sales Manager, Eisenmann