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Biogas energy by the numbers

It seems these days that everything green is turning into gold. Green energy, that is, and anaerobic digesters like the one proposed by Bio-En Inc. in Woolwich are fighting for their slice of the renewable energy pie.
Wind and solar have traditionally been viewed as the green energy alternatives available to the average citizen, but increasingly anaerobic digestion is becoming a viable option as well.

From Feb. 8 to 10, biogas production will be the topic of a three-day conference in Cambridge organized by Ridgetown Campus of the University of Guelph. The talks will focus on the safe and effective operation of a biogas facility, with an emphasis on farm-level digesters that are much smaller than the 2.8-megawatt facility proposed for Elmira.

With biogas nudging its way into the renewable energy talks along with more conventional sources, where does biogas stack up at both the industrial level and at the farm level? And is it economically viable? Given that there are more than 1,400 farms in Waterloo Region, and the Ontario government’s plan to phase out coal-burning power plants by 2014, it’s an important question to ask.

“It’s not as simple as putting gas in a vehicle and it starts and you drive it,” said Earl Jenson, an expert on anaerobic digestion from the research group Alberta Innovates – Technology Futures and one of the keynote speakers at the biogas conference in Cambridge.

“Anaerobic digestion facilities are capital intensive, there is no doubt about it.”

DOES IT MAKE DOLLARS AND SENSE? Robert Anderson, a master’s student at the University of Guelph, is writing a thesis paper and developing a spreadsheet to analyze the economic viability of farm-level biogas plants in Ontario. He will present his early findings at a biogas conference in March.

Even with Ontario’s incentive pricing, many smaller producers just might not be able to make the economics work, particularly if they are relying on their own manure or crop wastes to power the digester. Jenson says most would have to rely on food waste from restaurants, for instance, and tipping fees – a fee levied by the owner of the digester to the company dumping the waste – to make it work.
Chuck Martin agrees. He is the president of Woolwich Bio-En Inc. and has proposed building a biogas facility in the north end of town providing 2.8 mW of electricity – enough to power 2,200 homes – and 3.4 mW of heat.

“The price that they’ve established just doesn’t work on manure and energy crops alone. They’re not paying enough money,” Martin said.

Ten to 15 years ago he first looked into the biogas option here in Canada after seeing it in action in places like Germany. He said that over in Europe the government was paying an incentive fee, much like Ontario is now, to develop the technology. At the time the government and hydro companies were paying 18 euro cents per kW/h – about 27 cents Canadian at the time – but when he applied the technology to the Canadian system, the numbers didn’t add up.

“It just did not work at the price of electricity, which at the time if you were supplying Hydro One, was somewhere in the three to four cent range per kilowatt, and it just did not make sense,” Martin said.

But when the province introduced the Standard Offer Program in an effort to spur on the development of renewable energy back in 2006, the government said that it would pay 12.25 cents per kW/ h, which led Martin to revisit the idea of biogas.

The Standard Offer Program has since been replaced by the Feed In Tariff program under the Ontario Green Energy Act, and Martin’s digester will sell energy back to the grid at 14.7 cents per kW/h under the FIT agreement.

Martin’s proposed $12-million facility will actually be comprised of two smaller facilities, each producing between one and 1.5 megawatts of power. They have designed the holding tanks to be the most efficient size as possible, as well as including computer monitoring systems to ensure that the digestion is occurring at peak efficiency – and to improve the bottom line.

Part of the reason why Martin believes that smaller farmers would have a tougher time making the economics of biogas work is because of the high start-up costs associated with the project. However, he added that some farmers could make it work if they already possessed some of the items that many startups would not.

“If you have a farmer who already has a liquid manure tank, a tractor, and a liquid manure spreader, and he just looks at the incremental additional costs versus the additional revenue, then he might be able to make it work. They’re able to do small-scale projects on a much lower budget and they’re able to justify it because they already have a lot of these things anyway.”

However, Martin also agreed that without the Ontario government’s FIT program, the tipping fees his company will charge, and the revenue from heat generated at the facility, he wouldn’t be able to make the business work either.

For farmers trying to crunch the numbers to decide whether or not anaerobic digestion is right for their business, there is some help out there. OMAFRA has a number of resources available to help farmers out, but new research out of the University of Guelph is trying to make it even easier.

Robert Anderson is in his first year of a two year master’s program at Guelph in food, agriculture, and resource economics. He is focusing much of his research on the economics of renewable energy, and right now is looking at the business of biogas.

On Mar. 1 he will be presenting some of his early findings at a biogas conference in London.
“I’ve always been interested in the environment and economics,” explained Anderson of his interest in renewable energy. “When I found out that I would be able to work on a project like this one I was interested because agriculture and renewable energy are both strongly linked to the environment.”

What Anderson is hoping to achieve is a spreadsheet that farmers can use to do an economic analysis on anaerobic digesters or biogas systems for farms in Ontario. He hopes the research can be applied to policy research and as a first step for farmers looking to invest in anaerobic digesters and to do an assessment of whether or not it would be a good investment.

Anderson notes that OMAFRA has a similar spreadsheet developed by Don Hilborn a number of years ago, but that it was based on an estimation of power production, capacity and the basic costs of the systems. Anderson hopes that with dozens of these facilities now operating throughout Ontario, he can take the data from those existing plants to refine the spreadsheet.

“There are still a lot of unknowns in the project right now, so we’ll just have to wait and see. I can see a lot of good if it is economically feasible for more people, but it is still too hard to say,” he said.

Despite some of the uncertainty surrounding the economic side of the green energy boom, Jenson – who worked for five years in the oil and gas industry before making the switch to biofuels – said that renewable energy is certainly the future of energy production, and that governments need to support the switch through initiatives like the Feed In Tariff program.

“It’s not just giving money away to people. It is building an industry and there’s jobs being created because of it. The time to figure out how to make all these alternative energy forms work is not the day you run out of the other stuff, right? You have to be somewhat proactive and that’s where the government comes in.”

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