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Biogas Profitability – Investing Into Sustainable Heating

biogas profitability uses

07/20/2020

In the early 20th century many daily necessities such as energy, food, fodder, fertiliser and fibres were derived from agricultural biomass. As the 20th and 21st century progressed, however, the traditional role of agriculture in energy supply diminished. Petrol and diesel driven vehicles replaced horses. However, with the progressive depletion of fossil fuels and the requirement for sustainable renewable energy, biomass is again an important raw material. Biomass may be converted to energy, by producing  – among others – biogas. But just how risky is the investment, and what biogas profitability can you expect – and what are the possible uses of biogas?

Biogas profitability: production from a financial point of view

From practical experience, financially viable operation of a crop digestion system can only be achieved if high crop and biogas yields can be combined with reasonably low crop costs, low capital and operating costs of the biogas facility and appropriate feed-in tariffs. That is why energy crops, such as Arundo donax are recommended for biomass and biogas production purposes. 

Economic viability must be carefully evaluated at an early stage of a project. Experience would suggest that the sale of heat is paramount to a successful biogas facility based on CHP (combined heat and power plant. The CHP market needs to be assessed and ensured for the duration of the project. For example, a CHP facility in Denmark has over 100 domestic users of thermal energy; these users are contracted to a group distribution scheme. Entry to the scheme involves a nominal charge and an annual payment for thermal energy that is cheaper than the fossil fuel equivalent. However, to leave the scheme a significant financial contribution must be paid. In facilities where crops are digested financial viability may be difficult to achieve. If it is considered for example crop costs are approximately around €25/tonne and produces about 140 mn3 of biogas, then the feedstock cost is of the order of about €7.7/kWe/hour. Germany has an advantage in that the NaWaRo bonus gives €76/kWe/hour for crops on top of a basic compensation of €9/kWe/hour. As opposed to grass, one tonne of giant reed chips costs about 16, and is able to yield high amounts of biomass: 50-80 dry tonnes of biomass per hectare per year, depending on the climate and agricultural technology used. 

arundo profitability mindmap

In countries which do not have a bonus for crops and have a relatively low feed-in tariff it may be difficult to achieve financial sustainability, however other uses of biogas are available:

biogas profitability investment

The possible uses to maximise biogas profitability

Grid injection offers significant advantages in optimisation of use of biogas, in particular in the area of transport. Biomethane when blended with natural gas (termed bioCNG) can provide a low cost transport fuel. The world’s annual energy demand stood at about 12,000 Mtoe (503 EJ) in 2010. A rough calculation underlines the potential of crop digestion. Assuming a net biogas energy yield of 150 GJ per hectare per year produced on 10% of all arable land (1.4106 km2 or  1.4 108 ha) the potential production is 21 EJ from biomethanation of crops; this is 4.2% of world energy demand. This does not include the contribution from pasture land and from marginal lands, where Arundo donax can be cultivated, and the production and use of biogas further exploited. 

The world’s annual energy demand stood at about 12,000 Mtoe – million tons of oil equivalent  (503 EJ) already back in 2010. A rough calculation underlines the potential of crop digestion. Assuming a net biogas energy yield of 150 GJ per hectare per year produced on 10% of all arable land (1.4106 km2 or  1.4108 ha) the potential production is 21 EJ from biomethanation of crops; this is 4.2% of world energy demand. This does not include the contribution from pasture land. In a country such as Ireland where 91% of land is under pasture, grass can make a very significant contribution. Using 2.5% of pastureland a biomethane yield equivalent to 5% renewable energy supply in transport can be supplied.

Click here and read more about the use of biogas or see how we contribute to green energy production!

References:

J., Murphy, R., Braun, P., Weiland, A., Welling. Biogas from Crop Digestion. 2012. IEA Bioenergy

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