Friday July 9 2021
Biogas plants vary significantly in cost depending on scale and the feedstocks they utilise. Small scale farm-based plants utilising manure and supplemented with purpose grown crops, and producing modest quantities of biogas tend to be relatively inexpensive.
At the other end of the scale are large, commercial biogas plants utilising a variety of feedstocks such as food waste, bi-products and purpose grown crops and producing between 1,000m3 and 2,000m3 of biogas per hour. These are multi-million pound investments that supply upgraded gas to the national gas network.
Whatever the biogas system cost, size, and function, it is important that as well as generating energy, it generates a return on the initial investment. To calculate this, it is vital to take into consideration not just the biogas plant project costs, but the lifetime running costs of the plant as well.
Biogas plants are known by several names. Anaerobic digester (AD) plants, waste to energy plants, biogas generators and biogas digesters are just a few. However, whatever they get called, and whatever size they are, they all fulfil the same function – converting organic material or biomass into useful biogas.
Utilising feedstocks such as purpose grown crops, food waste, other plant material, municipal waste, manure, and wastewater biosolids, bacteria in the digester turn this organic matter into methane and carbon dioxide – the main components of biogas.
The biogas created can then be converted into renewable electricity via a combustion engine that powers a generator, to be exported to the National Electricity Grid. Or it can undergo a cleaning process to remove the carbon dioxide, moisture, hydrogen sulphide and any particulates or impurities to create high-quality biomethane.
Once this process has taken place, the biomethane can be exported to the National Gas Grid.
Many older plants employ a CHP (combined heat and power) unit to generate both heat and electricity, but these have fallen out of favour as there are no longer any government incentive schemes available for generating electricity via anaerobic digestion. As a result, biomethane is now the favoured form of energy production.
As the name suggests, anaerobic digestion involves the breaking down of organic matter in a closed system without the presence of oxygen.
Methanogenic organisms digest the organic feedstock to produce biogas as well as a digestate rich in nitrogen, potassium and phosphorus, which is often used by farmers as a fertiliser.
The digestion process involves four different stages to convert the feedstock into biogas, including:
Of these, the final two processes have the most influence on the quality of the biogas produced because these are responsible for the ratio of methane to carbon dioxide. Different feedstocks also significantly affect the concentration of methane created.
Typically, biogas is 50 per cent to 75 per cent methane, with the rest being made up of CO2, water vapour and some other assorted gases in much smaller concentrations. However, scrubbing can produce biomethane of more than 98 per cent methane concentrate, which can then be exported to the National Gas Grid.
There are four key areas where anaerobic digestion is used in the UK – small farm plants, large farm plants, municipal wastewater management, and the commercial waste sector.
Small farm AD
According to the Royal Agricultural Society of England, UK farms produce between 90 and 100 million of tonnes of slurry each year and this has significant environmental consequences including greenhouse gas (GHG) emissions, offensive odour, and the potential to pollute watercourses.
However, this carbon-dense material has potential to generate useful biogas, as well as nutrient rich digestate fertiliser.
This is where small, on-farm AD plants can offer a great investment. They enable a farmer to better manage their slurry, generate usable heat and power, and create fertiliser to use on their farm.
Large farm AD
Large AD plants on farms typically utilise purpose-grown energy crops such as maize, grass silage and other energy sugar beet as their feedstock. The percentage contribution of slurries and manures to gas generation is generally lower than on smaller scale farm plants.
One exception to this is poultry manure, however, as this contains a much higher quantity of dry matter than pig or cattle slurries, and therefore generates more biogas.
Biogas generated from large on-farm AD plants tends to be upgraded to create biomethane and exported to the gas grid.
Municipal wastewater management
Biodegradation has been used in the treatment of sewage for more than 100 years in the UK and reports exist showing that gas used from a septic tank was harnessed to power a destructor lamp in Exeter in 1895. By 2012, 75 per cent of sewage sludge in the UK was processed using AD and today, this figure continues to grow as biogas plants are operated on many sites owned by the UK’s 11 utility companies.
The process uses biosolids recovered from the wastewater stream in a municipal wastewater treatment plant as the feedstock and is a valuable and efficient way of recovering energy from wastewater.
The AD process stabilises the sludge, reducing pathogens and making it safe for recycling, generates useful energy and significantly reduces the final sludge volume. Most biosolids generated in this process are recycled to land providing a useful source oof crop nutrients and humus for soils.
By the end of 2018, there were a total of 175 operational plants treating wastewater, collectively generating around 210MW of energy.
Sadly, as a nation, we create far too much food waste – around 19m tonnes per year. UK households are not responsible for all of this as just under half is generated by the food manufacturing and retail sectors.
In the past, a significant proportion of this material was sent to landfill where it naturally broke down into methane and carbon dioxide – two potent greenhouse gases. Now, thankfully, many commercial AD plant operators have set up and take food waste and waste from other industries to use as a feedstock.
These plants are large scale, multi-million pound investments that produce significant amounts of electric and biomethane to power thousands of homes and businesses.
Anaerobic digestion system cost is highly dependent on the size and complexity of the plant. Complexity is generally determined by the types of feedstocks to be treated. For example, a plant treating slurries and manure that includes a simple digester and CHP unit could cost in the region of £750,000 – £1m.
Naturally, larger systems increase in cost relative to their size and biogas generating capacity, as well as design constraints require from planning and permitting authorities.
A plant generating 1,000m3 of biomethane, which employs a biomethane upgrading facility and is connected to the national gas grid, will be considerably more and investments sums of around £15m should be expected, and large plants treating food waste and requiring significant investment on waste reception and pre-treatment systems would come at a higher cost.
As a result, it is advisable to employ an anaerobic digestion cost calculator in the planning stage of any proposed plant to evaluate the ROI. There are a number that can be found online.
Each individual AD plant is different in terms of feedstocks, location, outputs, and technology employed, meaning an accurate quote can only be determined from an experienced AD plant system supplier.
However, it is not just the upfront investment that needs to be considered when looking at the cost of setting up a biogas plant. For a fuller picture, the following is a good starting place:
Capital expenditure (CAPEX)
Capex breaks down into several components including feasibility study, costs associated with achieving planning consent, project conception, ground preparation works, system components and installation, the gas utilisation system and grid and service connection.
Unsurprisingly, therefore, capex is the biggest single component of the overall investment in an AD plant. However, it is not the only component.
AD plants take time to run at their most efficient. Once the plant is operational, the owner must learn how it works, how it must be adjusted for different feedstocks and generally ensure the plant is set up properly.
For a large commercial plant using food waste, there may be issues getting hold of enough feedstock in the early months to run the plant at its most efficient.
However, the costs at this point are high relative to the return. Staff need to be paid, as do all the other ongoing costs of running the plant. This is what are known as the commissioning costs or ramping up costs.
Generally, the ramping period will last a minimum of six months, but it is not unusual for it to be closer to 12 months for a commercial plant needing to procure a regular supply of feedstock.
Of course, once the plant is up and running, the costs don’t stop there. There are ongoing costs to consider, including:
Operational expenditure (OPEX)
Opex is made up of the day-to-day costs of keeping the plant running. It includes costs such as recruiting and paying staff, maintenance, transport, and other general business costs.
It also includes the cost of the feedstock, which although might not mean paying for the material directly, is likely to encompass other costs such as handling and transportation.
Generally, opex should be budgeted annually at around two per cent of capex.
Capacity factor takes into consideration the efficiency at which the digester performs. Generally, a plant operated by inhouse employees will return a capacity factor of around 85 per cent.
However, this figure may be increased by outsourcing the day-to-day running of the plant to a trusted O&M partner. Not only does this mean a reduction in the number of staff you will need to employ, but the right partner will also carry out an extensive plant optimisation process, ensuring it is as productive as it possibly can be. This can be the difference between a capacity factor of 85 per cent vs one of 95 per cent.
Another significant factor effecting the viability of an AD plant as an investment is lifetime. An AD plant should last in excess of 20 years but if you are investing primarily to see a return, you need to consider if this is too long or not, and if the ROI will be great enough after this time.
The biggest overall factor when it comes to ROI is managing the feedstock well. If you don’t produce your feedstocks in another part of your process, then securing regular feedstock at the right price is key. This can be the difference between paying off the cost of the biogas plant construction in five years or 15 years.
It is essential that you enter into long term contracts to receive waste from relevant businesses and how you will source this material needs to form part of the planning stage.
For more information on AD plants as an investment, or on maintenance or optimisation of an existing plant, get in touch.