Is It For You?
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The current economics of an anaerobic digester project in Canada are uncertain. The development of such a project is a complex process even under more favourable conditions (Europe). A high degree of due diligence is therefore required before undertaking such a venture.
The first stage of the decision-making process involves addressing a range of issues, including the scale of the digester, the use and markets for the full range of products of digestion (heat, electricity, spent digestate), the availability of feedstocks (on-farm and off-farm), the anaerobic digester designs that could be employed, and the regulatory issues that need to be addressed.
The selection of an appropriate site, construction and operation of an anaerobic digestion facility will need to meet regulations on waste processing, air emissions, and output product quality. Since anaerobic digestion is a relatively new technology in North America, regulatory and approvals processes governing its use are not yet well defined. Project approval factors include (but are not limited to):
- Municipal level planning laws
- Applicable electrical safety codes
- Provincial grid connection standards (if electricity is to be sold)
- Environmental assessments - Provincial
- Environmental Protection Act - Federal
- Environmental Assessment Act (EAA) - Federal
- Applicable water regulations
- Overall project licensing
- Regulations attached to the feedstocks being used
Once preliminary decisions have been made, a comprehensive feasibility study must be commissioned. The cost of this process will depend primarily on the scale of the project and the complexity of the feedstock mix being under consideration. If the scale of the project requires significant funding, a more detailed study, addressing the complete range of issues of importance to potential investors, will be required. However, most on-farm digesters projects will not call for this level of detail.
It is important to note that the issue of community acceptance can come into play, especially if the use of some of the more regulated feedstocks, such as dead animals, industrial organics or human waste, is being contemplated. It is always prudent to develop a plan to consult community stakeholders on an potential anaerobic digester project and to inform them on a regular basis.
The economic feasibility of the project will be determined by the following factors:
- The supply of feedstock and the security of this supply
- Viable and sustainable markets: uses for the spent digestate, either as a whole or separated into liquid and solid components.
- Viable and sustainable markets: uses for the electricity produced through the combustion of biogas. The cost of connecting to the grid will need to be considered if the sale of electricity is being contemplated.
- Viable and sustainable markets: uses for the heat produced through the combustion of biogas. On-farm projects will rarely have outside markets for this product; internal applications for this gas must be found.
- Transportation costs and logistics
The ability to generate revenue through tipping fees charged for accepting off-farm feedstocks (if applicable).
Large scale projects. Under the present environment for anaerobic digestion in Canada, large scale projects may be viable on purely financial terms, but will almost certainly require a significant revenue stream from tipping fees in order to achieve an attractive rate of return.
On-farm projects. In most cases, under the present environment for anaerobic digestion in Canada, an on-farm project makes sense only if it is needed as part of an operation’s manure management plan. If full use can be made of all the anaerobic digester’s outputs (fertilizer, heat, electricity) or if these products can generate or profitable sales, then the economics are improved, although stringent due diligence is always required to ensure the project will deliver sufficient overall value to the farm operation.
Given the increasing cost of energy for many years and the likelihood that this trend will continue in the coming years, the economic viability of these projects should improve with time.
Modified: 02-19-2008
