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Anaerobic Digestion Technology - Economics
Cost recovery: Payback on digesters varies widely. For manure-based systems, the number of animals on the farm will dictate energy output. In general, the current generation of digester systems will be only cost effective on farms with over 500 cows. However, as technology improves, it has become feasible on smaller farms, and in some cases as few as 300 cows can produce a reasonable cost recovery period.

A farm should only consider a digester if the payback is less than seven years, since the equipment is expected to have major maintenance needs about every 10 years. A rule of thumb for maintenance cost spread out over the life of a digester is 3% to 5% of the total installation cost each year.

Electricity for sale: Besides producing electricity that can be used on the farm, digesters can produce saleable electricity by selling the excess to a power company. With net metering, the farm generator runs at a fairly constant output, and the connection to the power company is made to permit metering of power in either direction. When the farm is producing more power than it uses, the excess is “banked” in the grid and can be used when the farm is producing less power than it uses. Farms are also allowed to aggregate all of the farm’s meters to use this power. Vermont has good net metering rules, and for medium-sized farms that will make a good, cost effective system. Currently, net metering input is limited to 1% of a utility’s peak power, so farms serviced by a small utility may not be able to take full advantage of their generating capacity.

Environmental credits: Electricity is now looked at as having two components -- the actual energy, and the way in which it was produced. When the power is produced from a renewable source, the environmental attributes of the power can be sold as a separate commodity. There are several names for these that have subtly different meanings. “Carbon credits” are the reduction in carbon emissions the system represents when compared to fossil fuels. “Green Tags” generally refer to all of the environmental advantages of the generation system. The most common one today is renewable energy credits (REC). REC's are the environmental benefit of the generator converting methane to the less potent greenhouse gases of CO and CO2 The RECs are tradable across utilities throughout New England if they go through the certification process.

Co-products: After digestion, manure can be separated into fibrous solids and a concentrated, nutrient-rich liquid. The solids can be dried to produce a high-quality bedding or used as a base for saleable compost, and the liquid can replace whole manure or commercial fertilizers on crop fields. Co-products can help pay for the cost of handling manure.

Special systems: It is expected that in the near future, systems will be available and cost effective for farms with fewer cows, especially if they have other energy needs and/or feedstocks that might boost biogas output (such as a farmstead cheese operation to produce heat for processing milk and has whey to digest along with the manure).

At present, biodigester systems are seldom profitable through use or sale of energy alone; it is the use or sale of co-products, and the sale of green attributes, along with the energy, that give biodigesters a net return on investment.

Feasibility Analysis: AgSTAR is an EPA-USDA-DOE joint program located at the EPA. They have a number of tools available to help in the decision of what,if any, digester to select. One of those tools is a software package that can be downloaded that will do a detailed economic analysis of a farm. You need to input farm ype, location, manure handling system, energy costs and other information and it will give a preliminary answer to what a system payback will be. The software can be downloaded at: http://www.epa.gov/agstar/resources/handbook.html#farmware

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