Financial aspects of biogas production

Financial costs are very divers and highly depend on the applied technical and capacity level.

There are different sources of risk if the biogas produces for household or industry. If the household is the main user, the major risks identified are of technical, infrastructure and financial nature. Technical Risks include:

Low efficiency (lower than expected) of bioreactors, even if technical requirements are met; and low quality of construction, especially when farmers construct bioreactors themselves. These risks can be mitigated by ensuring that appropriate technologies are supported in different regions of countries and by providing training and technical assistance to farmers. The next one the infrastructural risks, where have to consider the lack of appliances for biogas (gas stoves, gas generators) would limit potential benefits; and the hermophilic bioreactors may produce more biogas than needed by the owner and, if infrastructure is weak and biogas demand is low, then this would not allow biogas use on a full scale. The financial Risks (within economical crisis) due to their

Biogas production

cost. For the same reason, it might be difficult for farmers to repay loans obtained through the local bank.

OECD experience can be summarizing, that bioreactors require very small operational and maintenance costs.

Annual O and M costs can be estimated at 1% of capital costs. Table shows capital and annual O and M costs for a mesophilic model reactor. The costs for 2005 represent current costs, while those for future years are estimations based on expected increases in efficiency.

A small-scale thermophilic bioreactor for farm has a 6-m3 volume and requires the equivalent of waste material from 5 animal unit or more. Capital and Oand M costs have been estimated based on the experience of pilot projects implemented in Eastern-Europe over the last few years. The capital costs of thermophilic bioreactors constructed vary between USD 600 - 750 per cubic metre of bioreactor. This includes administrative and transport costs and consultancy fees. According to the estimations of local experts, the capital costs of small-scale (up to 6-8 m3) thermophilic bioreactors can be reduced by 25 - 35% in case of mass production (about 50 units per year). The annual Oand M cost of thermophilic bioreactors is about 2% of capital costs.

In addition, biogas utilisation will also generate social benefits. People will spend less or no time, energy and finances on wood collection; indoor pollution will be reduced; when biogas is used for electricity production, it will contribute to the improvement of education levels, and better access to information. Monetization of these benefits is difficult and has not been included in the economic calculations.

The efficient use of intensive industrialized farm biogas production not only needs a biogas plant but also an integrated infrastructure such as biogas pipelines, upgrading stations and heat networks, in order to be able to use the heat of the cogeneration units. The agricultural biogas plants normally reach sizes of 100 to 500 kWel (gas production around 28 to 140 m3/h). Larger plants are economic if the input material is readily available in close range, for example cattle breeding, fields of dedicated biogas crops or waste water treatment facilities. The economy of scale especially plays an important role for upgrading the raw biogas to natural gas standards. Due to feed-in regulations (Germany) many equipment suppliers have focused on optimizing 500 kWel units and therefore big biogas plants sometimes consist of several standardised units.

Decentralized plants can deliver the raw gas in biogas pipelines to an upgrading station and injecting the biomethane in a gas grid (Figure.).

The biomethane can be used for cogeneration, transportation fuel or high tech process energy. The upgrading to biomethane is especially interesting to further reduce Europe‘s dependency on imported fossil fuels for transportation and high temperature process energy which cannot be provided with other biomass fuels (Figure.).

The current bottleneck in this area is the cost of biogas upgrading (e.g. via pressure swing adsorption; amine or water scrubber or cryogenic separation treatment of the biogas). It is obvious that the treatment price will be reduced in coming years due to the increasing numbers of upgrading facilities installed and also by the economically downscaling of the upgrading facilities fitting to the modular biogas plants existing in countries like Germany and Austria. The investment costs for units with 1 mio Nm3/year (biomethane) ranges between 3,4 M for standalone plants and 3,9 to 4,7 M for gas grid connected plants, depending on the length of the gas grid to the upgrading station and/or to the biomethane filling stations. The economic sizes of biomethane plant ranges between 1 and 2 millions Nm3 biomethane per year (Austrian Biomass Association, 2007). The German and Italian cost table presented in Figure. and upgrading cost for use as vehicle fuel. In Europe, country by country is changing the feed tariff (Fig).

Biogas production

If the biogas used as vehicle fuel have to consider several advantages and disadvantages thinks (Figure.)

The biogas production cost-benefit ratio also depends on utilization alternatives (Figure.) The effectively used conversion ways show by bold line.

If the biogas is intended to be used as vehicle fuel, an upgrading facility and biomethane filling stations have to be taken into account in addition to the biogas plant.

More European green NGO suggest to make biogas for transport competitive as compared to fossil fuels.

Biomethane for transport competes with fossil natural gas as the vehicle technology is similar. Governments should look for ways to improve this competitiveness for the end users for example by introducing a general CO2 tax, which led to a favorable development in Sweden. Biomethane could receive special subsidies (e.g. a bonus per m³ biomethane used as fuel) in countries where natural gas is detaxed, most prominently Italy (which has by far the highest number of gas driven vehicles). This incentive should bridge the gap between the costs of natural gas and biomethane as transport fuel.

Also suggested, to accept digestate as a replacement of artificial fertilizer to meet crop needs. The nitrate directive limits the organic fertilizer to a maximum of 170 kg N/ha. Unfortunately in some cases mineral nitrogen is used instead of biogas digestate because this limit has been reached. Digestate is an upgraded organic fertilizer with advantages (nitrogen less susceptible to water pollution, homogeneous, better management and storage opportunities) and should be better promoted and used instead of artificial fertilizers.

Support research and development for energy crops , biogas technology, fermentation biology, efficiency of energy use . Biogas is highly productive per ha and is versatile regarding its uses. Still the potential for improvements through research and development are significant (best crops and by-products for fermentation, automatisation, biological process enhancement, cleaning, use in micro-turbines and fuel cell, etc.).

Also help for the biogas industry to adopt design of green certificate systems. The current systems often only aim at the most cost-efficient solutions and do not take into account GHG savings, use of waste or advanced biofuels – all of which favorable to biogas.

4. Lecture