BioCycle March 2008, Vol. 49, No. 3, p. 55
Biomass Energy Outlook
WHILE energy production is the most obvious output of a bioenergy system, it is not the only significant component. Economic success depends on efficient management and marketing of the nonenergy products.
My excitement last month about better utilizing landfill carbon in value-added energy projects was not intended to promote burning over composting. The organic soil amendments and biomass energy markets are two distinctly different, developing markets. As these markets develop independently, biomass suppliers will enter the market with the highest value.
There is an increasing concern that waste carbon is becoming scarce. When people want more of a shrinking good, the price goes up. When the demand for a specific carbon source goes up without an increase in the supply of carbon, the price of that carbon source will also increase. Corn for example, is used for both feed and fuel. This is beginning to happen with waste carbon also.
This will not mean the end of nonenergy organic markets, like compost. To the credit of 50 years of BioCycle and a thriving compost industry, the demand for these valuable composted products continues to grow.
There is a symbiotic role for nonenergy technologies to be nested within the bioenergy conversion technologies. Anaerobic digesters are a great example of the complementary, multiple markets that must be occurring at the same time for a digester to operate in the black. The energy revenue alone does not cover the costs.
Last October USDA-NRCS published, “Analysis of Energy Production Costs from Anaerobic Digestion Systems on US Livestock Production Facilities.” The report makes the case that with installation costs of 7 to 29 cents per kilowatt-hour (kWh), and utilities paying 2 to 6 cents per kWh, it is not easy to make these projects’ cash flow.
Using the lowest digester cost of 7 cents/kWh and the upper utility value of 6 cents/kWh, every kilowatt of power generated will actually cost the producer 1 cent/kWh just for the privilege of producing electricity. This is an extreme interpretation of what happens, but negative returns on investment do not excite a lot of lenders and investors.
Digesters continue to be built, so the average numbers posted above are not the entire story. The two easy ways to influence the costs and revenues are: 1) To receive capital assistance, like a grant; and 2) Get a great contract price for electricity sold. Neither solution is an automatic, but both are occurring with the funded digesters.
Nonenergy markets also need to be developed. These nontraditional markets are not intuitively associated with energy projects, but influence the returns of operating a digester. These markets include: a value-added market for the digested liquids and solids (organic nutrients); taking a “clean” waste for a fee; establishing carbon credit relationship; and developing some positive public relations benefit for being a good neighbor (odor) and environmental steward (air and water).
These nonenergy components define anaerobic digesters as efficient bioenergy systems. If biogas and electricity are generated without development of organic nutrient markets, then a digester does nothing for environmental nitrogen and phosphorus issues. Taking another organic waste like glycerin, used cooking oil or waste beverages – for a fee – provides the service of remediating the waste and also generates the product of energy. The carbon credit markets provide revenue for remediating air quality issues.
I use anaerobic digesters to illustrate this point because the digesters break down the easy carbon. Then the more difficult carbon fibers are available for further processing in a composting enterprise. The value-added markets for digester solids can determine the success of a digester project. So it takes both the energy and nonenergy component for success. It is the success of the increasing demand for organic nutrients that is allowing the digester solids to enter markets.
Anaerobic digester solids have been treated and are full of microbial activity, are saturated with anaerobic microbes, which can be a good thing if you are worried about some aerobic pathogen. In that case the digester solids have been sort of biologically pasteurized. Some end users realize this and are willing to pay a premium for solids saturated with anaerobic microbes.
The flip side is that digester solids are not compost. Quality compost is full of beneficial aerobic microbes. The digester solid markets are enjoying the increased awareness of organic soil amendments established over the decades by BioCycle and the composting industry. However if the digester solids producer wants to enter into the highest valued compost markets, the solids will need to be composted. The compost quality market standards that have been established are based on an aerobic composting process.
Noncomposted digester solids have some value as a generic nutrient source. These solids can enter into a higher-valued compost market if they are further processed into a compost standard-dependent market. There is a third kind of market that hasn’t been mentioned, the disposal market of land application. Land application is an excellent way to utilize digester solids, but it is generally not the highest valued market available.
So, digesters can cost more per kWh than the energy value of the electricity as long as the sum of all the products sold for nonenergy products create a total revenue per kWh that is greater than the cost per kWh. More to the point, composting and other nonenergy markets go hand in hand with bioenergy projects.
Mark Jenner, PhD, operates Biomass Rules, LLC and has over 25 years of biomass utilization expertise. Burning Bio News is Jenner’s monthly scorecard at www.biomassrules.com.
March 19, 2008 | General
Bioenergy Projects Are More Than Energy
BioCycle March 2008, Vol. 49, No. 3, p. 55