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PROBIOGAS EIE/04/117/S07.38588
An EIE/Altener project
Co-funded by the EU Commission
National Assessment Report
Assessment of a Centralised co-digestion Plant
hypothetically sited in Noord-Brabant region
The Netherlands
June 2007
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Authors:
Bert van AsseltSenter Novem, The Netherlands
Kurt Hjort-GregersenDanish Research Institute of Food Economics
Henrik B. MøllerDanish Institute of Agricultural Sciences
Sven G. SommerDanish Institute of Agricultural Sciences
Torkild BirkmoseDanish Agricultural Advisory Service
Lars Henrik NielsenRisoe National Laboratory
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Outline
1. Introduction
2. Case description
3. Technical description of the plant
4. Biomass resources, mass balances and methane yields
5. Agricultural and nutrient effects
6. Effect on green house gas emissions
7. Economic performance of the plant
8. Socioeconomic analysis
9. Conclusions
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Preface
Over the last years, the introduction and realisation of digestion and co-digestion plants in the Netherlands has been very difficult. The high density of farms in specific areas resulted in a major surplus of manure in these areas. In the past, treatment of manure (separation and treatment of the thick and the thin fraction) was seen as the main solution for this problem. The development of new techniques for digestion of manure and the use of biogas as a sustainable source of energy gave a new impulse to the digestion of manure in the Netherlands. In de period 2000-2004, it was economically not feasible to operate a digester. Moreover it was very difficult to get the necessary permits for both farm-digesters and industrial-scale digesters. This was the main reason to participate in the Probiogas project. SenterNovem as a governmental organization is involved in the promotion of bio-energy in the Netherlands. As an agency of the Ministry of Economical Affairs, the activities of SenterNovem concern the identification of barriers, information dissemination and the subsidizing of projects which stimulate the production of sustainable energy in the Netherlands The selection of the Dutch-case was based on the following aspects:
- large scale manure treatment/digestion - involvement of a group of farmers.
The incentive which fitted was found near the city of Eindhoven. The region “de Kempen” is an area with intensive agricultural activities (pig, cattle and poultry). The produced manure can not be used as organic fertilizer within the area and a surplus of at least 1 million tons has to be transported to other regions. In order to reduce the costs of manure disposal, a group of farmers has founded the “Bio-Recycling de Kempen” (BRK). The BRK has plans to build and operate a plant for the treatment of manure. In the first stage of the plant, slurry of both pig and cattle manure will be mixed and separated in a thin and thick fraction. The thin fraction will be treated in an aerobic purification plant (dephosphication and denitrification). In the next stage the thick fraction will be digested in combination with poultry manure. The capacity of the plant will be about 225.000 tons of manure. At this moment several farmers, which produce a total of 200.000 tons of manure, have joined the BRK.
Comments During several meetings with the management of BRK, it became clear that getting the required permits is not the main issue at this moment. The Governmental authorities will free BRK of making an environmental impact assessment (in Dutch = MER). The main problem of BRK at this moment is finding a suitable location. BRK has spotted a location (industrial park) where it is allowed to build the plant (no major problems with requiring the necessary permits were foreseen), but the rising prices of land are bothering. This means that a search for an alternative location is one of the main activities during the next months. If a location is found, BRK expects to operate the plant within 2.5 years. At this moment, the activities of the target group networks are limited because the barriers of the BRK-project are restricted to the availability of a location. Because of the stop on subsidizing green electricity from co-digestion the BRK initiative is set on hold to. The farmers are investigating of manure treatment without digestion will be economical feasible. We expect that digestion will be added when green electricity from digestion will be subsidized (possible in the beginning of 2008). Because of the mentioned developments in the Netherlands SenterNovem has decided to widen its view concerning initiatives for large scale digestion.
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Therefore the role of the Probiogas-project for large scale digestion in the Netherlands is not restricted to the Dutch case only.
Conclusions Ad the start of the Probiogas project, projects aiming at digestion of manure were difficult (both economical and because of the required permits). Due to changing policy the climate for digestion of manure has changed in the Netherlands since 2004. This is a result of changing legislation concerning the use of co-products (more products are allowed), the benefit of € 0,097 per kWh produced from manure digestion and the change of acceptance from the local authorities towards digestion. One of the activities of SenterNovem was the organisation of meetings and events to promote co-digestion in the Netherlands. In October 2005, SenterNovem organised a meeting, titled “large scale co-digestion of manure”. More than 300 people applied for this event (we could invite only 150) so it was quite a success. During one of the workshops of this meeting, the BRK-initiative and the Probiogas project were presented. The results of de dissemination of the Dutch case will be welcomed by the farmers as well as within the government. Since a discussion has started to use waste as a co-digestible and the use of digestate as a fertilizer. A main problem is still the use of the heat from the combustion of biogas. Ideas focussed on using the heat for treatment of digestate are getting more important since the costs of the disposal of manure of digestate are rising (up to € 20. - per ton in 2007).
In October 2006 SenterNovem has organized a new event on the co-digestion of manure. Unless the change of climate (no longer a subsidy of € 0,097 per kWh) this conference was a success. The discussions were focussed on the economical feasibility of co-digestion in the Netherlands. One of the conclusions was that in the near future co-digestion will make a second start. Most of the involved parties (farmers, consultants, policy makers and civil officers) expect new opportunities for co-digestion in the Netherlands. It will be very important to use the Danish experience on large scale manure co-digestion for the near future. The results from the Probiogas project made it clear that the feasibility of centralised co-digestion in the Netherlands could be much better if farmers could digest more organic waste and use the digestate as a fertiliser. Besides the probiogas project research on upgrading biogas to natural gas has started in the Netherlands. This might be a new push to centralised large scale co-digestion in the Netherlands since large scale biogas production will be more efficient when injection in the natural gas grid willtake place. The results from the assessment of the Dutch case and the knowledge transfer from the Danish experts will be important for this future development.
Bert van Asselt, SenterNovem, The Netherlands
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1. Introduction
The PROBIOGAS project is an EIE/ALTENER project co-funded by the EU Commission. The objective of ALTENER projects is to stimulate heat and electricity production from biomass in EU countries. Within this general frame, the aim of PROBIOGAS is to asses the economic, environmental and energy aspects of the biogas production by centralised co-digestion in selected areas of six EU countries. The assessment will provide incentives for the implementation of biogas systems in those areas and will help identify and remove the existing non technical barriers.
The EU countries targeted by this project are: The Netherlands, Belgium, France, Ireland, Spain and Greece. In each of the countries a specific case was chosen as case study for the assessment. For each case a livestock intensive area was selected in order to have favorable preconditions for anaerobic digestion.
In the particular case of The Netherlands the Noord-Brabant area was chosen as the case for assessment by the Dutch partner Senter Novem, who is also co-author of this report.
At the beginning of the PROBIOGAS project period, an introductory seminar was held in each of the EU countries mentioned above. In The Netherlands the seminar was held in Eindhoven in may 2005. Invited to the introductory seminars were farmers, companies, organisations and authorities who would eventually be involved if the realization of a co-digestion plant was later initiated. The inten of the seminar was to form a project net-work of parties involved under chairmanship of the Senter Novem, simultaneously being the target for the dissemination of the project results.
The main activity of the project is the assessment of an imaginary centralised co-digestion plant, hypothetically sited in a livestock intensive Dutch region, Noord-Brabant. In other words, the assessments do not concern an existing plant.
The present assessments have been carried out by a group of Danish experts, based on experience from more than 10 years of technology development of co-digestion plants. The assessment is based on data and information specifically from the selected case in Noord-Brabant, collected by Senter Novem in cooperation with the above mentioned network.
Energy production and economic performance in general have been assessed, how farmers are affected, and changes in nutrient utilisation and green house gas emissions are estimated. By the application of socio economic methods derived benefits are taken into account and a basis for an overall evaluation of such a project from the society point of view is found. Questions like, is it economic? Do farmers benefit? Is it beneficial to the environment? Is it generally a good idea? All this can be concluded from the results. Further more, based on the information collected by a questionnaire, the assessment is trying to describe the main incentives and non-technical barriers forthe implementation and development of biogas from centralised co-digestion in the studied areas and to propose some solutions for their removal.
It is hoped that this assessment report will be used as inspiration for the net-work and motivate national authorities to remove barriers for co-digestion in The Netherlands.
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2. Case description
Place: Noord-Brabant region
An area with a surplus of approx. 255.000 ton manure (cattle, pigs and hens/broilers) annually. Roughly divided in 200.000 tonnes of cattle and pig manure and 55.000 tons others (hens/broilers)
This manure is in either case exported to other Dutch regions.
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3, Technical description of the plant
The biomass resources in this project consist from manure.
Table 3.1 Composition of biomass resources
Type of biomass resources Tonnes
Cattle manure 100000
Pig manure 100000
Poultry manure 20000
Organic waste 0
Total 220000
Liquid manure is assumed transported to the plant in vacuum tankers with a 40 tonnes load. Solid manures and deep litter is assumed transported on trucks with a 20 tonnes load.
From this biomass 6,4 mil m3 CH4 production is calculated. In the Combined Heat and Power (CHP) plant this energy is converted into electricity and heat. The electricity production which may amount to 23 mil kwh is sold to the grid, heat production, which may amount to 34 mil kWh, can not be utilised apart from what is needed for process heating.
The centralised anaerobic digestion plant will have a treatment capacity of 220000 tonnes on a yearly basis or 600 tonnes per day. The plant is operated at thermophillic temperatures, which means 52-55oC and 15 days retention time. The plant is equipped with 70oC pre sanitation step, heat exchanging, biogas cleaning facilities, odour control system, storage facility for biogas and CHP plant for heat and power production. Figure 1 shows a diagram of the plant.
The manure and organic waste is unloaded in the unloading hall and entered into the pre storage tank. From there it is pumped to the mixing tank in which the biomass is properly stirred and the optimal composition is ensured. From the mixing tank the biomass is pumped to one of the sanitation tanks. It is pumped through the heat exchangers, in order to recover heat from hot, sanitized or digested manure that is simultaneously pumped out of the other sanitation tank or the digesters. By this it is heated to 70oC and kept inside the sanitation tank for one hour. After that it is pumped through the heat exchangers once again, and into the digesters (9000 m3), where the biogas production takes place. After 15 days in the digester, the now digested manure for the last time is pumped trough the heat exchangers and into the manure storage tank. From the storage tank, the manure is loaded on to trucks and returned to storage tanks at the farms.
The biogas is cleaned in a biogas cleaning tank in a biological process and sent to the CHP plant for conversion into heat and power. The electricity production capacity of the CHP plant is estimated to 2500 kWh electricity.
Odour emissions from the plant are controlled by sucking away air from the unloading hall, the pre storage and mixing tanks, and cleaning it in a biological odour filter.
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Diagram of CAD plant
Truck Loading &unloading
hall
Mixingtank
Manurestorage tank
Digester 1
Digester 2
Biogas storage
Technical installatons
Repair shop
CHP plant
Office
Staff room
Pre storage tank
Sanitation tanks
Odour filter
Biogas cleaningtank
Heat exchangers
Gas room
Figure 3.1 Diagram of the CAD plant
Source: P. Thygesen
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4. Biomass resources, mass balances and methane yields
The biomass resources are listed in the following and the total mass flow and gas yield is calculated.
The biogas production has been calculated by using specific CH4 yield listed in appendix. The biogas output has been calculated by assuming that no nutrients are lost during the biogas process and 50% of the organic nitrogen is converted to NH4-N. Furthermore the dry matter (DM) and volatile solids (VS) content in the biogas output is calculated by subtracting the amount of VS converted to gas from the input by assuming that VS converted is 2 kg VS for each m3 CH4
produced from manure and non fatty wastes and 1 kg of VS for each m3 CH4 of fat rich wastes.
In the figure input and output are given and in appendix the assumptions for the calculations are given. In The Netherlands addition of waste product is not permitted, thus no waste product is included. A high amount of solid broiler manure is available (55000 tons/year), but since the average DM exceeds a level which can be handled, only 20.000 tons is included.
Table 4.1 Categories, types amount and gas yield from different biomass
Biomass Type Amount DM DM VS CH4 yield
ton year-1
g/kg kg year-1
kg year-1
nm3 CH4 year
-1
Cattle total slurry 100000 298 7800000 6240000 1248000Pig total slurry 100000 152 10300000 8240000 2472000Cattle Total 100000 7800000 6240000 1248000
Pig Total 100000 10300000 8240000 2472000Other animals Total 20000 9600000 7680000 2688000Waste Total 0 0 0 0
Manure and waste Total 220000 27700000 22160000 6408000
Figure 4.1. Biomass input/output and key process figures
Biogasinput total Manure
220000 tonnes/year 220000 tonnes/year
27700000 kg TS/year 27700000 kg TS/year
22160000 kg VS/year 14480000 kg VS/year
2057800 kg N/year 1600000 kg N/year
1125000 kg NH4/year 925000 kg NH4/year
767000 kg P/year 440000 kg P/year
1431600 kg K/year 1072000 kg K/year
Pretank Biogas
12,6 %DM 6408000 Nm3 CH4
Biogasoutput
220000 tonnes/year
9344000 kg TS/year
9344000 kg VS/year
2057800 kg N/year
1591400 kg NH4/year
767000 kg P/year
1431600 kg K/year
Key proces figures
29 m3 CH4/tonnes
9 g total N/l (dig. Efl.)
7 g TAN/l (dig. Efl.)
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Figure 4.2 Methane yields from biomass
The level of NH4-N in the process will be very high and with the given biomass is it doubtful if the process will be stable at termophilic conditions. A mesophilic plant thus should be considered. The DM content of pig slurry and cattle slurry is assessed to respectively 10,3% and 7,8%.
0
1.000.000
2.000.000
3.000.000
4.000.000
5.000.000
6.000.000
7.000.000
Netherlands
Nm
3 C
H4/y
ea
r
Waste Total
Broilers Total
Pig Total
Cattle Total
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5. Agricultural and nutrient effects
According to common sense and good agricultural practice, manure must be utilised as a fertiliser in the fields. Digestion of manure in a biogas plant has a substantial effect on the fertiliser value of the manure. The composition and the fertiliser effect of digested slurry are changed compared to the untreated pig or cattle manure the farmers are used to use in the fields. There are at least two reasons for that:
1. At the biogas plant pig slurry, cattle slurry and solid manure are mixed 2. Organic material (including organic nitrogen) is broken down in the biogas process, and the
amount of plant available nitrogen (ammonium) is increased.
These changes must be considered when making fertiliser plans on the farms receiving digested slurry from the biogas plant. If doing so, a significant saving on buying mineral fertiliser can be realized, as well as a reduction in the negative impact on the environment.
Method
All manure from the farms delivering manure to the biogas plant is transported to another area in The Netherlands. The area needed for the manure is calculated by assuming that the phosphorus in the manure will precisely cover the demand for phosphorus in the manure. The crop rotation in the area is estimated according to experience of the area.
The area of each crop is summarized and the total demand of nitrogen, phosphorus and potassium is calculated according to the general fertiliser recommendations in the area. The need for purchase of mineral fertiliser is calculated by subtracting the actual fertiliser value of the manure spread.
The fertiliser effect of nitrogen in manure and digested slurry is assumed to be a full utilisation ofammonium. In practice this is a relatively high fertiliser effect and can only be obtained by a optimal use, according to spreading time, spreading method etc. This will normally require a storage capacity of 6-9 month.
Main results
On the farms with animal production and the arable farms about 308,000 EUR in total can be saved in mineral fertiliser, which is equivalent to 25 EUR per hectare. The saving is reached by a mineralization of organic nitrogen in the manure, so the same amount of digested instead of untreated manure can replace a higher amount of nitrogen in mineral fertiliser.
The same utilisation of phosphorus and potassium is reached as no waste is added and the manure is spread on the same area today and in a situation with a biogas plant.
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Table 5.1 Manure and fertiliser application Today - untreated
slurry Area with biogas plant
Farms with manure to biogas plant Amount Area Amount Area
Total area with crops, hectare 12,411 12,411
Amount of manure collected, tonnes 220,000 220,000
Amount of manure spread in the area, tonnes 220,000 220,000
Amount of waste spread in the area, tonnes 0 0
Amount of manure out of area, tonnes 0 0
Mineral fertiliser, tonnes 5,239 3,589
Mineral fertiliser, EUR 1,259,119 951,322
Mineral fertiliser, kg N 1,309,663 897,128
Mineral fertiliser, kg P2O5 345,150 345,150
Mineral fertiliser, kg K2O 273,156 273,156
Savings in mineral fertiliser
Savings in mineral fertiliser, all together, EUR 307,797
Saved per hectare, EUR 25
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6. Effect on green house gas emissions
Environmental hazards that may be related to animal manure management are greenhouse gas emission, ammonia emission, odor and nitrate leaching. Green House Gases (GHG) can be efficiently reduced by processing manure in a biogas plant. Studies have shown that ammonia emission may be higher during storage of fermented slurry but that simple covers can mitigate that problem (Sommer 1997). Ammonia emission from applied slurry is not affected by fermentation of the slurry (Rubæk et al. 1996). Odour may be reduced by biogas production especially if the biogas plant is properly build and emission of gases from the plant reduced with air filters etc. Leaching and erosion losses of nitrogen and phosphorous can be reduced due to more efficient use of nitrogen in manure and a better distribution and use of manure plant nutrients.
In this project the objective is to assess the direct effects of the biogas treatment on environmentalhazards related to livestock farming and the direct effect are primarily on the emission of the greenhouse gas methane. The effect of biogas production on methane are high (Sommer et al. 2004) and we have models that can be used globally to assess this effect. For the moment we do not have the necessary information available for ammonia and odor emission - and nutrient losses. Models needed to give an acceptable estimate of the effect of the introduction of biogas production in the manure treatment are also lacking.
Methane emission from animal manure
Methane emission from animal slurry systems is calculated using the dynamic models of Sommer et al. (2004)
))/1(exp(ln))/1(exp(ln)( 21 RTEAbVSRTEAbVSTF ndd ×−××+×−××= (1)
In Eq. (1), F is the emission rate (kg CH4 d-1), b1 and b2 are rate correcting factors (no dimensions),
A is the Arrhenius parameter (kg CH ton-1 VS h-1), E the apparent activation energy (J mol-1), R the gas constant (J K-1 mol-1), and T the temperature (K). The parameters used in the calculations are presented in the article of Sommer et al. (2004).
Methane emission from solid manure is calculated using the tier 2 model presented by IPCC (IPCC, 1996).
F = VS x B0 x MCF x 0.67 (2)
F is the annual emission kg year-1, B0 is the maximum methane production capacity (0.24 m3 kg VS for cattle) and MCF is the methane conversion factor typical for the climate region (2%).
In the calculations of methane emission from the scenario with biogas production it is assumed that the management of manure during housing and outside is not changed significantly, i.e. emptying manure from houses, duration of storage time etc., apart from having included biogas production. For solid manure assuming the manure is diluted with water and stored after biogas treatment.
The air temperature will provide a very precise estimate for slurry temperature as shown in the article of Hansen et al. (2006). Therefore, the temperature used to estimate CH4 emission from slurry stored in house is related to the air temperature in the housing systems in the regions for
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which there is provided activity data on livestock and manure management. Ambient air temperature is used to assess the temperature of outside stored slurry.
Management of manure in animal houses and in outside manure store
In the Netherland scenario are included dairy cows, pig and poultry producers (Table 6.1). In the region most manure is stored as slurry and it is seen that the high amounts of animal manure reflects a high density of livestock producers.
Table 6.1 Amount of manure excreted by animals
DM VS
tonne year-1 tonne year-1
Cattle Slurry 7800 6240
Pig Slurry 10300 8240
In the region the cattle and pig slurry stores are partly buried into the ground and often beneath theanimal houses. The stores inside the dairy cow and pig houses are emptied at 65 days intervals. The pattern of removing pig slurry is presented in figure 6.1.; a similar pattern is seen for dairy cow slurry (not depicted). It is assumed that the manure is spread on the fields in April at the start of the growth season. The temperature in slurry stored in the dairy cow houses (not depicted) is not significantly different from the temperature in slurry stored in pig houses (Figure 6.1).
Temperature
Day of year
0 100 200 300
Temperature, oC
0
5
10
15
20
25
Houses
Slurry stores
Pig slurry
Day of year
0 100 200 300
Accumulated slurry, VS ton
0
1000
2000
3000
4000
5000
6000In-house
Outside slurry store
Figure 6.1 Annual temperature variation in pig houses and in slurry stores and variation in
amount of pig slurry stored in animal houses and in outside stores.
The temperature in the house varies between 20 and 23oC and in the outside store between 15 and 16oC. The emission of methane from slurry stored inhouse is high due to high slurry temperatures indoor and the 65 day storage periods of slurry indoor (Figure 6.2.). Thereby, relatively large amounts of digestible organic matter is transformed to methane gas and lost reducing the amount of organic matter that could be used for energy production in a biogas plant. Reducing the indoor storage period would reduce methane emission significantly. Outdoor storage of slurry is a much smaller source of methane, because temperature in the outdoor stored slurry is lower than in indoor stored slurry.
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Methane emission
Day of year
0 100 200 300
CH4 emission, kg
0,0
200,0x103
400,0x103
600,0x103
800,0x103
1,0x106
1,2x106
1,4x106 Pig houses
Outside slurry stores
Total
Figure 6.2 Accumulated methane emission from pig slurry
Table 6.2 depicts the methane emission from manure. The methane emission from animal houses is not affected by biogas treatment of the slurry; therefore, the total methane emission is reduced only about 20%. For chicken manure there is no valid model for calculating methane emission therefore this biomass have been left out of these calculations. The biogas treatment of slurry in this scenariowill reduce GHG emission with 7308,9 tonnes CO2 eq. Table 6.2 also contains estimates for N2O emission reduction.
Table 6.2 Estimated yearly emission of methane and N2O from the manure
Reduction
tonne CH4 or tonne N2O
Reduction
tonne CO2eq.*
CH4: Animal manure 348.0 7309
CH4: Organic waste
N2O: Animal manure and organic waste 21.7 6737
*Methane conversion factor of 21 and N2O conversion factor 310 (Derwent et al. 2002; IPCC 2001)
Results show considerable N2O reductions due to the mineralization of nitrogen during the AD process. However the reliability of the models used for the latter is relatively poor due to the difference in climate and agricultural practice between Denmark and The Netherlands, as they are based on Danish data.
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7. Economic performance of the plant
General comments on economic calculations
The economic calculations are carried out as a difference analysis based on a system analysis. The system analysis contains the whole system from manure pre storage tanks on the farms to nutrients are utilised as a fertiliser in the fields. This means that all the farms connected to the CAD plant are included, also crop farms that are assumed to receive surplus manure in the CAD plant situation. So what we do is to calculate all relevant costs for the whole system, in a reference situation, and in aCAD plant situation, where the CAD plant is assumed established. When the results for the two systems are compared, benefits and disadvantages appear. Looking at the system as a whole, benefits for individual farmers can not be isolated.
The calculations are carried out in integrated spread sheet models based on Danish experience. Input data have been provided by Senter Novem when it comes to defining the case study and input of manure, waste and sales prices for heat and electricity. Costs are calculated in Danish 2005 pricesin the first place, and then transformed to Dutch 2005 prices, by using Comparative Price Levels from Eurostat. As the price levels were consumer prices, they were adjusted for variations in VAT. The used interest rate is 5,5 % p.a.
Basic preconditions
Table 7.1 presents a number of important assumptions and preconditions that have been used in the calculations.
Table 7.1 Basic preconditions
Required storage capacity solid manure in months, reference 11
Required storage capacity liquid manure in months, reference 11
Required storage capacity liquid manure in months, alternative 11
Price, electricity sold, EUR per kWh 0,06
Price, electricity purchased for process purposes, EUR per kWh 0,2
Price, heat sold, EUR per MWh 0
Treatment fee, organic waste, EUR per tonne 0
Capacity of trucks in use, tonnes 40
Average speed, transport vehicles local roads, km/h 40
Average speed, transport vehicles long distance transport, km/h 60
Average distance from storage to land, km 0,75
Average distance from farm to CAD plant, km 20
Average distance, long distance transport, km 100
Length of biogas pipeline, km 0
Economic consequences for farmers
We talk about a livestock intensive area with a total of more than 900,000 tonnes of manure on a yearly basis. For the case study 200,000 tonnes liquid and 20,000 tonnes solid manure from poultry have been pointed out for digestion. These amounts represent a surplus, which farmers need to export to other Dutch regions. In the case of realization of the CAD plant, it is assumed that the company takes care of that. Consequently, farmers obtain a considerable cost saving in long distance manure transport, which amount to just above 1 mil EUR on a yearly basis, according to the calculations. Storage costs are not affected, as it is assumed that manure producers bear the costs
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of that in any case. Spreading costs are reduced a little, due to the transmission from partly solid to an only liquid system.
Table 7.2 Estimated effects for the farmer’s economy (manure suppliers)
Farmer’s cost savings, 1000 EUR per year
Manure storage 0
Manure spreading 16
Long distance transport surplus manure 1054
Total cost savings, 1000 EUR per year 1070
In other words manure producing farmers gain cost savings from the participation in the biogas plant of approx. 1.1 mil EUR on a yearly basis, that is, if the CAD plant is able to cover the costs. In addition, considerable cost savings are found in fertiliser purchase by crop producers receiving surplus digested manure, due to improved fertiliser value. This amounts to approx 0.3 mil EUR on a yearly basis.
Transportation costs
Liquid and solid manure is transported in trucks from the farms to the plant. Transportation costs are assumed to be covered by the company in the CAD plant situation. Table 7.3 shows calculated transportation costs. In this case trucks with a capacity of 40 tonnes are used locally. Trucks may beowned by the plant or hired by external suppliers. In fact it may be cheaper to own the trucks, but optimising the capacity is difficult but important. The calculations work as if the haulage is hired from external suppliers.
Table 7.3 Transportation costs
1000 EUR per
year
EUR per tonne
Liquid manure transportation to the CAD plant 433 2
Solid manure transportation to the CAD plant 57 2,9
Long distance transportation 1050 4,8
Transport costs in total 1540
Transportation costs are calculated with an average distance of 20 km from farms to plant, and 100 km when long distance transported, and trucks of 40 tonnes capacity.
Investment costs
Investment costs have been estimated as follows: 1000 EUR
Biogas plant 6130 CHP facility 2112
Estimated break down of investment costs of the co-digestion plant is showed in table 7.4.
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Table 7.4 Investment cost break down, 1000 EUR
Site 148
Excavation 148
Fences 179
Driveway 100
Buildings 428
Pre-storage tank 92
Stirrer pre-storage tank 72
Mixing tank 88
Stirrer mixing tank 72
Sanitation tank 74
Stirrer sanitation tank 31
Storage tank 107
Stirrer storage tank 69
Digesters 801
Stirrers digesters 115
Heat exchangers 190
Biogas filtre 105
Biogas storage 477
Biogas flare 113
Pipeline 155
Heat accumulation tank 50
Boiler 35
Odour filtre 145
Pumps (biogas) 223
Biogas system 223
Automatisation 282
Pumps (biomass) 23
Help pumps 18
Construction 1306
Waste pre-storage 0
On farm investments 261
Total investments 6130
Profitability of the biogas plant
Based on assumptions and preconditions the models calculate sales and costs of the CAD plant. Table 7.5 shows the break down of calculated sales and costs on a yearly basis, in average 2005 prices.
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Table 7.5 Sales and costs of the CAD plant, average 2005 prices, 1000 EUR
Electricity sales 1372
Heat sales 0
Treatment fees 0
Sales in total 1372
Electricity purchase for process -236
Maintenance -300
Sand removal -6
Insurance -22
Other costs -43
Staff costs -124
Premises -16
Administration -54
Capital costs -595
Costs in total -1396
Net result of the plant -24
Calculations indicate that a CAD plant in the Dutch case would not be economically feasible given the actual preconditions and the biomass supplied. Consequently the plant can not cover transport costs.
Economic performance of the CAD plant
The calculated net result of the biogas plant is compared to transportation costs covered by the CAD plant in order to analyse if the system as a whole is profitable. These results are shown in table 7.6. Price level is Dutch 2005 prices.
Table 7.6 Average yearly profit of the CAD plant including transportation costs in 2005 prices
1000 EUR per year
Transportation costs -1540
Net result of the biogas plant -24
Profit -1564
Profit if biogas production was increased by 10 % -884
Profit if biogas production was decreased by 10 % -2578
Calculations show that a CAD plant in the Dutch case would not be economically feasible given the actual preconditions. The biogas production does not seem to be sufficient to cover production and transport costs at the actual conditions for electricity sales. A small increase in biogas production will improve this, but not change the overall picture. However, if the benefits of the farmers are seen in connection with the profit from the CAD plant, the system as a whole is approaching the point of break even.
The relatively poor economic performance occur in spite of excellent preconditions regarding the biomass resources. A relatively high dry matter content in the manure, combined with the application of poultry manure results in relatively high biogas production. Biogas yields have been calculated to 44,5 m3 biogas per m3 manure digested, which is a very attractive figure. The problem is the obtainable electricity price which is relatively poor, and the fact that heat production can not
21
be utilised. If this is altered, and/or organic waste admixture is allowed, this picture is very likely to change.
Non technical barriers
Very strict Dutch regulations make co-digestion with manure and most industrial wastes impossible. But according to Dutch tradition, slurry is produced with relatively high dry matter, which largely compensates for the non existing possibility to use organic waste. In addition, if poultry manure can be supplied as it is in the selected case, the need for waste is limited. However, the potential for Dutch co-digestion would increase significantly by the allowance of using unproblematic organic wastes.
Lack of heat markets is a disadvantage for Dutch co-digestion.
Financing of plants could be difficult if pay back time exceed 10 years.
Electricity sales prices are relatively poor.
Recommendations
It is recommendable to widen the range of organic wastes that can be used for co-digestion in the Netherlands. By proper input, controlled waste admixture is considered harmless to environment and food security by Danish authorities, but it increases the potential for biogas production dramatically.
National schemes to encourage establishment of district heating systems in combination with biogas based heat and power would support the development of biogas plants, industrial use of heat production is another option.
Electricity sales prices need to be increased to support investor’s incentives.
References
Nielsen, L.H., Hjort-Gregersen, K., Thygesen, P., Christensen, J., 2002. (Socio-economic analysis of centralised Biogas Plants – with technical and corporate economic analysis. In Danish.): Samfundsøkonomiske analyser af biogasfællesanlæg - med tekniske og selskabsøkonomiske baggrundsanalyser. Fødevareøkonomisk Institut, Frederiksberg, rapport nr. 136
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8. Socio-economic analysis
The socio-economic analysis looks at the biogas-scheme from the point of view of the society at large. Therefore all consequences of the scheme in any sector of society should in theory be taken into account - including externalities. Externalities
Conventional economic analyses and corporate investment analyses of projects do not take the so-called externalities into account (Lesourne, 1975). Externalities, or external effects, imply neither expenses nor income for the corporate or private investor. However, a project may inflict burdens or contribute gains for the society relative to the reference activity, which must be taken into account when evaluating a project from the point of view of the society. A socio-economic analysis looks at the project or activity in question including externalities.
Biogas projects have implications not only for the agricultural sector, but also for the industrial and energy sectors. For the environment, mitigation of greenhouse gas (GHG) emissions and e.g. eutrophication of ground water etc. are important external effects. In this study, efforts have been put into the quantification and monetisation of some of the biogas scheme externalities.
Objectives and analytical approach
The objective of the analysis is to estimate the socio-economic feasibility of best practice centralised biogas technology via the assessment of an imaginary centralised co-digestion project scheme. Furthermore, the objective has been to estimate consequences for the GHG emission and to estimate GHG emission reduction costs associated with using this biogas technology.
The analysis is carried out as a difference project analysis, in which an alternative activity is compared with its reference activity. The socio-economic evaluation of the alternative, the biogas scheme, relative to its reference or ‘business as usual’ involve quantification and monetising of impacts of the alternative for a number of reference activities, - in theory in all sectors affected by the biogas scheme.
The present socio-economic analysis is carried out at different levels, each new level taking into account still more of the external effects related to the biogas scheme. Four levels are included in the analysis, termed Result 0,1,2,3, where the base level do not include any externalities and the analysis at a higher level includes all effects of lower levels, as illustrated in Table 8.1.
The socio-economic levels of analysis are characterised by:
• Result 0: Energy production (e.g. biogas, heat and electricity) from biogas plants. Externalities not included.
• Result 1: Benefits for agriculture and industry are added to the analysis.
• Result 2: Environmental externalities concerning GHG emission (CO2, CH4, N2O) is added, if quantified.
• Result 3: A monetised value of reduction in obnoxious smells is furthermore added.
Table 8.Table 8.1 lists a number of aspects relevant for the extended socio-economic analysis. All such aspects should in theory be quantified and monetised for the analysis.
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Table 8.1 Socio-economic aspects included in the different levels of the analysis
Level of analysis: Result 0 Result 1 Result 2 Result 3
Aspects included:
Energy and resources:Value of energy production (biogas, electricity) R0 R0 R0 R0
Capacity savings related to the natural gas grid R0 R0 R0 R0
Security of energy supplies and political stability issues (R3)
Resource savings (energy and nutrients)
Global balance of trades
Increased road/infrastructure costs
..
Environment Value of GHG reduction (CO2, CH4 and N2O) R2 R2
Other emissions (SO2, NOx,..)
Savings related to organic waste treatment and recycling R1 R1 R1
Value of reduced N-eutrophication of ground water: R2* R2*
Value of reduced obnoxious smells R3
..
Agriculture
Storage, handling and distribution of liquid manure: R1 R1 R1
Flexibility gains at farms
Value of improved manurial value (NPK) R1 R1 R1
Veterinary aspects
..
Investments and O&M-costs:Investments. Biogas Plant R0 R0 R0 R0
O&M of Biogas Plant , incl. CHP unit for process heat R0 R0 R0 R0
Investments and O&M for liquid manure transport R0 R0 R0 R0
..
Other aspectsEmployment effects
Working environment aspects, helth and comfort
..
* Data for the Danish case is used.
Only aspects in Table 8.1 that have been marked with a ‘R‘ are taken into account in the present case study. All the remaining issues have not been quantified and monetised for the analysis due to lack of data relevant for the present case.
Important issues or aspects which have not been taken into account in any of the PROBIOGAS project country case-studies includes e.g.:
Veterinary aspects of introducing biogas plants in a region are not quantified and monetised for any of the socio-economic analyses carried out in the present project.
The list shown in Table 8.1 does of course not exhaust the list of consequences and externalities thatin principle ought to be taken into account when a project scheme should be evaluated from the point of view of society at large. Often the patterns of consequences ‘upstream and downstream’ of an activity are very difficult to assess, and many issues therefore are often not taken thoroughly into account in conventional analyses. The present project of course face the same difficulties, important issues have had to be omitted, and generally a number of ‘cut offs’ in the level of detail of the analysis have been done. However, in the present extended socio-economic analysis we have tried to sum up some of the above issues.
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Fuel price forecasts
Fuel price development assumptions on coal, oil and natural gas covering the period 2005-2025, are based on the International Energy Agency’s (IEA) price assumptions from 2004, World Energy Outlook, October 2004. IEA’s prices are based on the assumption of a global annual economic growth of ca. 3.2 %. This implies an expected growth in the global energy consumption of ca. 1.7 % p.a., which means that the oil price is assumed to increase beyond year 2010. IEA expects that oil resources will be sufficient until 2030, and that oil prices will approach 32 USD/bbl in 2030 (in 2005-price level).
IEA underlines that the price assumption are uncertain, and that these primarily should be interpreted as assumptions on the long term prices. Furthermore it is underlined that oil prices on short term can deviate considerable from the long term level.
The price assumption expressed in EURO are based on a dollar-EURO exchange rate of 1.25 which is close the present rate1. High crude oil prices seen presently, in spite of the relative low EURO-dollar exchange rate, means that the actual oil prices in EURO is considerably above what has been expected according to IEA.
In order to bring the IEA assumptions in accordance with the fuel price developments actually seen until 2005, the Danish Energy Authority (DEA) has assumed that the oil price will decrease from the present level linearly towards the IEA price level from 2006 to 2010. From 2010 and onwards the IEA oil price assumptions will be applied.
Figure 8.1 shows the IEA and DEA assumptions on the crude oil price development. The DEA crude oil development forms the basis for DEA’s prices assumed on natural gas, diesel, heavy fuel oil and electricity.
The DEA price developments for socio-economic analyses will be used in the present project.
1 Danish Energy Authority, May 2005. (In Danish) Energistyrelsen, maj 2005. Rettet juni 2005. Appendiks: Forudsætninger for samfundsøkonomiske analyser på energiområdet.
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Figure 8.1 Crude oil price development assumed: DEA 2005.
As seen from Figure 8.1 only a moderate increase in the crude oil price has been assumed up to year 2030. It should be underlined, of course, that considerable uncertainty is associated with these long term assumptions.
The corresponding prices for the transport fuels, diesel and gasoline, are shown in Figure 8.2.
Transport fuel prices assumed for the socio-economic analysis.
Price level 2005. Source: DEA, June 2006.
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2005 2010 2015 2020 2025
Year
Tra
nsp
ort
fu
el
pri
ce,
EU
R/G
J diesel an
consumer
gasoline an
consumer
Figure 8.2 Transport fuel price development assumed.
The price on natural gas is assumed to follow the same rate as assumed for the oil price. And, sale of biogas is assumed to get a price equal to the socio-economic natural gas purchase price at locations of large consumers or plants using natural gas.
Oil (Brent)
0
20
40
60
80
2004 2009 2014 2019 2024 2029
2005-$/bl
IEA 2005
DEA 2005
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Figure 8.3 shows the socio-economic price developments assumed for natural gas. The sales price for biogas in the period 2006-2025 has been assumed to equal (in energy terms) the specific price development for natural gas, which in the figure is labeled ‘an plant’.
Natural gas prices assumed for the socio-economic analysis.
Price level 2005. Source: DEA, June 2006.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2005 2010 2015 2020 2025
Year
Natu
ral
pri
ce ,
EU
R/G
J
an power plant
an plant
an consumer
Figure 8.3 Natural gas price developments assumed for the socio-economic analysis.
Electricity prices and CO2
In cases where the national partners have not been able to provide assumptions on the regional electricity price development covering the period 2005-2025, assumptions made by the Danish Energy Authority (DEA) are used as basis for the socio-economic analysis. DEA has published (June 2006) recommendations for socio-economic analyses, in which electricity price assumptions are included for an expected development the Nordpool electricity market price up to year 2030. These prices (in un-weighted annual average) are shown in Figure 8.4.
Socio-economic electricity prices. Price level 2005.
Source: Danish Energy Authority, June 2006.
Nordpool ex. CO2 price includes own assumptions.
0
10
20
30
40
50
60
70
80
90
2005 2010 2015 2020 2025
Year
Ele
ctr
icity
pri
ce E
UR
/MW
h
Nordpool
ab 10 kV-grid
ab 0,4 kV-grid
Nordpool ex. CO2
Figure 8.4 Socio-economic electricity price development assumed for the analysis.
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Purchase and sale of electricity are assumed to have different pricing. The present analysis assumes that a biogas plant has to pay the socio-economic electricity price ab the 10kV-grid for purchased electricity. Electricity generated at the biogas plant, however, is sold to the market price, and in this analysis it has been assumed that the electricity market is the Nordpool spot market.
As seen from Figure 8.4 a considerable price difference has been assumed between purchase and sale of electricity. This is due to costs associated with using the grid for market access. It could be argued that electricity generated and sold from the biogas plant and supplied into the grid at the lower voltage level should benefit from being closer to the consumer, and thus does not use and does not constrain the transmission capacity of the high voltage part of the overall grid. And further, distributed generation might (to the contrary) contribute benefits to the grid e.g. by postponing the time for investments otherwise needed for upgrading the transmission grid capacity. However, such arguments need further analysis and detailed information on the regional electricity supply in question, and such analyses are beyond the scope of the present project.
CO2 and electricity
In 2004 the EU has implemented the emission trading directive which means that large parts of the energy sector, and a number of corporations in the EU with large energy consumptions, were issued CO2 emission quotas for the period 2005-2007.
The issued quotas are tradable and may as such be traded among corporations, dealers etc. The aim of the quota system is to achieve CO2 emission reduction where this is most cost effective, and to have a system to regulate the overall emission. The period 2005-2007 is regarded as a test period in the EU before the actual Kyoto period, 2008-2012, in which period the emission reduction commitments of member states are binding.
The quota system means that a market and a price are being formed for CO2 emission reduction in the EU.
When a CO2 quota system is in force, the net overall CO2 emission (i.e. emission reduction achieved and increased emission) in the electricity system and in the sectors within the quota system will ad up exactly to the quota issued or set for the period for a region. CO2 emission allowances are tradable and actors within the EU will buy and sell emission allowances, and the overall amount of emission allowances in the market equals the set up overall commitments and constraints on the overall regional emission.
Biogas based electricity sold and delivered to the grid gets the market price for electricity, which includes the costs of the associated CO2 emission allowance for the marginal electricity producer in the market. Thus, a biogas plant within the EU can not sell its CO2 emission reduction as a separate product at the CO2 allowance market (e.g. at Nordpool). And thus, the quantification of a particular CO2 emission substitution (e.g. via biogas based electricity) in the power system becomes less relevant at the regulating or political level.
CO2 emission reductions achieved outside quota regulated emissions are however very relevant and are monetised via the market value of CO2 emission allowances.
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Among the green house gasses only CO2 is presently handled by the quota system. Other important green house gasses (GHG) such as CH4 and N2O are not yet included in quota systems, and such emissions, therefore, should be separately calculated as in conventional inventories. And for the extended socio-economic analysis such GHG reductions should be monetised in accordance with the prices assumed at the CO2 emission allowance market.
CO2eq emission estimates
Thus, quantification of CO2 emission consequences (in units of ton CO2/year) of e.g. energy projects within quota regulated sectors is in fact not needed for the socio-economic analysis. The fixed overall quota can be expected, under all circumstances, to be used or bought of some actor within the quota system, and reductions achieved by one actor will be utilised or emitted by another.
Seen from the overall socio-economic point of view the quantification of the physical CO2 emission of a quota regulated scheme is not relevant. However, seen from the point of view of the plant owner or investors, who must know the annual project costs for emission allowances needed to run the plant, the actual emissions in units of ton CO2/year is very relevant. The same is the case, of course, for investors looking for CDM projects outside the EU.
In the present analysis, therefore, an estimation of the CO2 emission consequences of the biogas schemes is carried out as far as the available data makes this possible. Furthermore, to the extent possible from the data available, the overall GHG emission consequence of the biogas scheme will be estimated.
In a Kyoto perspective all GHG emissions are relevant. And the CO2 emission only does not cover all consequences of a biogas project on the GHG emission scale. A detailed analysis (Nielsen et al. 2002) of biogas projects in Denmark showed that the direct CO2 emission reduction part was about 40% of the total GHG emission reduction achievable using the biogas solution compared to the business as usual activity. Important GHG emission reduction was related to reduced emission of methane CH4 (about 50%) and N2O (about 10%).
The electricity market price reduced from its CO2 price content
The overall CO2eq emission reduction costs are estimated in the present analysis. To do this estimation the electricity sales price (and the income from electricity sale to the biogas project) must not contain indirect payments due to CO2.
Biogas based electricity sold and delivered to the grid gets the market price for electricity, which includes the costs of the associated CO2 emission allowance for the marginal electricity producer in the market.
Therefore the electricity prices assumed for this part of the analysis has been reduced according to the assumed CO2 price content or element included in the Nordpool price development assumed covering the period 2005-2025.
As basis for this correction the following assumptions has been made. The marginal electricity production is assumed to be CO2 neutral in 50% of the time. In the remaining 50% of the time a CO2-emission cost is assumed present in the marginal price at the Nordpool market. For this CO2-emission it is assumed that the marginal production plant is a coal based condensing plant with an overall electric efficiency of 45%. Furthermore, it has been assumed that the CO2 emission
29
allowance market price throughout the period 2006-2025 is 20 EUR/tonne CO2 (or 150 DKK/tonne CO2). In 2005 fixed prices this assumption amounts to a CO2 related electricity price element of 7.67 EUR/MWh.
CO2eq emission reductions achieved are monetised via the assumed market value of the CO2
emission allowances (20 EUR/tonne CO2).
Quantification of CO2eq reductions
Electricity generated from biogas substitutes electricity otherwise generated at (the marginal) power plants in the overall system. It is, however, not a strait forward task to estimate the corresponding CO2 reduction achieved. This would, as already indicated, require a comprehensive analysis of the regional and overall electricity system.
To overcome this problem in the present analysis, it has been chosen, not to focus on the electricity
generated from biogas and the CO2 emission substituted in the power system due to this production,
but rather to focus on the biogas generated.
It is assumed, therefore, that biogas produced (net) and used for electricity production substitute
natural gas (by energy content). The corresponding CO2 substitution or reduction is assigned to the
electricity production part of the biogas plant output.
Methane (CH4) emission consequences in agriculture are described in chapter 5. Furthermore, un-burned CH4 emitted via exhaust gasses from the motor/generator system generating electricity from biogas at the plant is included. Un-burned methane emitted is assumed to be 1% of the CH4 fuel.
The relevant gases, CO2, CH4 and N2O, differ with respect to their global warming potential (GWP); for a time horizon of 100 years, the Global Warming Potential (GWP) of CH4 is 21 times higher than that of CO2 (on a weight basis)2, whereas the GWP of N2O is 310 times higher than that of CO2 (Houghton et al., 2001). In the analysis, CH4 and N2O emissions are expressed as CO2
equivalents.
Purchase and sales prices of energy at location of the biogas plant
Electricity:
Electricity purchase is assumed at the socio-economic price that includes costs for transmission and distribution. Sale of electricity, however, is assumed to get the spot market price for electricity. Thus, there is an asymmetry due to distribution and transmission costs.
Biogas:
Biogas sold from the plant is assumed to get the natural gas price (in energy terms). However, not the sales price of natural gas when delivered from (ab) the distribution grid, but the price level when natural gas is delivered from (ab) the transmission grid. The argument is that biogas injected at the distribution level does not constrain the transmission part of the natural gas grid (and upstream). Only the transport capacity of the distribution part of the natural gas grid is assumed required to market the biogas.
Diesel and gasoline
Prices ‘an consumer’ shown in Figure 8.2 have been assumed.
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Heat sales from the biogas plant
In the Dutch case a socio-economic sales price for heat of 5.55 EUR/GJ has been assumed throughout the period analysed.
General socio- economic assumptions
All prices in the socio-economic analysis are expressed as so-called factor-prices that do not includetaxes, subsidies etc. A socio-economic rate of calculation of 6% p.a. (real, inflation not included) is used, the base year is 2005 and the analysis covers the plant operation period 2006-2025.
Identical reinvestments are included when the technical lifetime of an investment reach below 2025. Termination values of investments or reinvestments with lifetimes going beyond the time horizon 2025 are determined via annuity calculation.
Prices are expressed in year 2005 factor prices (i.e. exclusive tax, subsidies etc.).
Sensitivity analyses
The analyses are carried out using socio-economic rates of calculation of 4.0% p.a., 6.0% p.a. and 10.0 % p.a. The central scenario or Base Case will assume a socio-economic rate of calculation of 6.0% p.a. (See Figure 8.5).
Break-even biogas production costs and break-even GHG reduction costs are calculated based on different (Result 0 to Result 3) socio-economic assumptions (See Table 8.5 and Table 8.6).
Results for the Noord-Brabant region, The Netherlands.
In this Dutch case a CAD plant or biogas plant of a treatment capacity of 600 ton biomass per day has been considered. The plant is assumed to treat about 220000 ton biomass annually.
CAD energy production The CAD plant is combined with a CHP-plant (Combined Heat and Power) that utilises all the biogas produced. Energy output from the facility is electricity and heat in the amounts and with a calculated socio-economic value as shown in Table 8.2
Table 8.2 Energy production and related socio-economic values
CAD-plant: Annual Energy production and its socio-economic value
Noord-Brabant region, The Netherlands.Base Case
MWh/year mio.EUR/year
Net biogas-production sold 0 0.000
Net heat-production (not sold) 28519 0.000
Net el-production sold 23068 0.785
The assumed sales price electricity covering the period 2006-2025 are shown in Figure 8.4 (termed Nordpool ex. CO2). The price of heat has been assumed constant (in fixed 2005-prices) at the socio-
31
economic price of 20 EUR/MWh. Electricity sales are assumed to get the Nordpool price minus the assumed CO2-price element (Figure 8.4). The substituted CO2 related to electricity sales is taken into account explicitly as shown in Table 8.3 below.
GHG emission reduction
Table 8.3 gives an overview of the expected overall GHG balance for a 152 tonnes per day capacity biogas plant based on Dutch conditions. As pointed out earlier the relevant GHG gases, CO2, CH4, and N2O, differ with respect to their global warming potential (GWP); for a time horizon of 100 years, the GWP of CH4 is 212 times higher than that of CO2 (on a weight basis), whereas the GWP of N2O is 310 times higher than that of CO2 (Houghton et al., 1996). In the GHG emission overview, CH4 and N2O emissions are expressed in units of CO2 equivalents.
The main input for the estimation of effects of the biogas scheme on CH4 emissions come from the detailed calculations described in chapter 6.
Focusing on the relative contributions to GHG emission reduction shown in the right-hand column of Table 8.3, it is seen that ‘Electricity-sales’ accounts for 49% of the (average) annual GHG reduction calculated. The electricity generated based on biogas produced is assumed to substitute (fossil) NG that would otherwise emit about 15,386 tonnes CO2 annually.
2 According to reference: CLIMATE CHANGE 1995, The science of climate change; Contribution of the Working Group I to the Second Assessment Report of the Intergovernmental Panel on Climate Change; Houghton et al.; Cambridge University Press; ISBN 0 521 56436 0. Published 1996. The report has been approved by the COP, which is not the case for the later issue ‘CLIMATE CHANGE 2001’.
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Table 8.3 CAD deployment and consequences on GHG emission
Comments to individual elements in Table 8.3:
• CO2-emission reduction due to electricity sales is calculated based on the assumption that biogas substitutes natural gas.
• For the CO2 reduction due to NPK substitution the following upstream specific energy and CO2 contents have been assumed: (38 MJ/kg pure N) 9.36 kg CO2/kg pure N, (17 MJ/kg pure P) 2.67 kg CO2/kg pure P, and (6 MJ/kg pure K) 0.80 kg CO2/kg pure K (Data from Refsgaard et al 1997). Data from Søren Kolind Hvid et al, 2004, have been used as basis for the CO2eq. emission calculation.
• Increased transport fuel (diesel) consumption in the biogas-alternative means an increased emission of CO2 of about 531 tonnes CO2 per year.
• Methane emission reductions achieved at farms associated with the CAD plant amounts to about 348 tonnes CH4 per year.
• Un-burnt CH4 in the exhaust gas from the CHP-motor system has been assumed to be 1% of the methane used in the motor. This means an increased CH4 emission of about 75 tonnes CH4 per year. This emission element is specific for the combustion technology applied, and technology capable of reducing or completely eliminate the emission of un-burnt CH4 exists.
• Consequences on the N2O emission are quantified based on general assumptions. It should be emphasized, however, that this estimation is very uncertain due to lack of detailed data for the actual situation. The general assumptions made in the present analysis are described in chapter 6.
Noord-Brabant region, The Netherlands.Base Case
Consequence on annual GHG emissionEquivalent CO2
Alternative - Reference %-split %-split
CO2:Gas-sales 0 tonne CO2 0 0
EL-sales -15386 tonne CO2 82 49
Heat-sales 0 tonne CO2 0 0NPK substitution -3932 tonne CO2eq 21 13
Transport fuel 531 tonne CO2 -3 -2
CO2-equivalent.: -18787 tonne CO2 100 60
Equivalent CO2
CH4: Alternative - Reference %-split %-split
Animal manure -348 tonne CH4 128 23Organic waste 0 tonne CH4 0 0.00
CHP-plant unburnt 75 tonne CH4 -28 -5.06 Total CH4 -273 tonne CH4 100
CO2-equivalent.: -5726 tonne CO2 equivalent 18
Equivalent CO2
N2O: Alternative - Reference %-split %-split Total N2O / Manure, Waste -21732 kg N2O 100
CO2-equivalent.: -6737 tonne CO2 equivalent 22
GHG in total
Reduction in CO2-equivalent: -31250 tonne CO2 equivalent 100
Specific CO2-reduction: -0.142 tonne CO2 equivalent/ tonne biomass
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Via converting the GHG emission to units of CO2 equivalent emission it is seen from the table thatthe annual GHG emission reduction due to the introduction of CAD in this Dutch case has been calculated to 31250 tonnes CO2eq per year. Seen relative to the annual amount of biomass treated in the CAD-plant this GHG emission reduction is about 142 kg CO2eq per tonne of biomass supplied to the plant.
The present analysis indicates that the direct CO2 reduction contributes of about 60% of the GHG emission reductions achieved.
Previous studies (Nielsen L.H. et al, 2002) have shown that GHG emission reductions achieved due to CAD utilisation in Danish cases are almost evenly distributed on CO2 and CH4 reductions. N2O emission reductions contribute about 10% of the overall CO2-eq reduction. The overall specific CO2-reduction seen in the Danish studies is about 90 kg CO2-equivalent per ton of biomass supplied to the CAD plants analysed.
It should be emphasized, that important CO2eq contributions as mentioned before have not been quantified for the present analysis. Results, therefore, should be interpreted accordingly.
Annual costs and benefits
An overview of the annual costs and benefits entering the socio-economic calculation is given in Table 8.4. As described earlier in this chapter the analysis has been carried out in 4 levels termed Result 0, Result 1, Result 2, and Result 3. Further income elements are added to the analysis when going from the Result 0 level to Result 3, as shown explicitly in the table. All quantified and monetised consequences available for the present analysis are included in the overall socio-economic result termed Result 3.
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Table 8.4 Annual socio-economic costs and benefits for the CAD alternativeSocio-economic results Biogas plant:Annual costs and benefits Noord-Brabant region, The Netherlands.Base Case
Costs (levellised annuity) Result 0 Result 1 Result 2 Result 3
mio.EUR/year
Invesments:
Biogas-plant 0.574 0.574 0.574 0.574
Transport materiel 0.000 0.000 0.000 0.000
CHP-plant 0.184 0.184 0.184 0.184
Operation and maintenance:
Biogas production / biogas plant 0.566 0.566 0.566 0.566
Transport materiel 0.071 0.071 0.071 0.071
Sum: 1.395 1.395 1.395 1.395
Benefits (levellised annuity) Result 0 Result 1 Result 2 Result 3
mio.EUR/year
Energy production:
Biogas sale 0.000 0.000 0.000 0.000
Electricity sale 0.785 0.785 0.785 0.785
Heat sale 0.000 0.000 0.000 0.000
Agriculture:
Storage and handling of liquid manure -0.037 -0.037 -0.037
Value of improved manurial value (NPK) 0.308 0.308 0.308
Distribution of liquid manure -1.374 -1.374 -1.374
Transport savings at farms 1.066 1.066 1.066
Veterinary aspects n.a.
Industry:
Savings related to organic waste treatment 0.000 0.000 0.000
Environment:Value of GHG reduction (CO2, CH4, N2O-reduction) 0.631 0.631
Value of reduced N-eutrophication of ground water: 0.347 0.347
Value of reduced obnoxious smells 0.108
Sum: 0.785 0.747 1.725 1.833
Result 0 Result 1 Result 2 Result 3
mio.EUR/year
Difference as annuity: Benefits - costs -0.610 -0.648 0.330 0.438
The annual costs (levelised annuity) for investments, reinvestments, and operation and maintenance of the CAD and CHP facility has been calculated using a socio-economic interest rate of 6.0% p.a.. This annual cost amounts to 1,395,000 EUR/year for the facility in question in this Dutch case as seen in Table 8.4..
The annual income elements for society or the benefits achieved are composed of benefits achieved in different sectors of society. In Table 8.4 these are grouped into net environmental benefits, benefits in industry, and in agricultural, and (net) energy production benefits.
Comments to benefits listed in Table 8.4:
• Energy: The basic assumption on energy prices are described in previous sections.
• Agriculture: o Transport cost elements are both positive and negative as described in chapter 7.
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o A socio-economic value of the achieved reduction in obnoxious smells from fields due to degassing manure in CAD-plants has been included. The monetisation is based on the cost difference (0.5 EUR/tonne liquid manure) between soil injection of liquid manure and direct application on soil. The argument for such monetisation is, that the degassed manure has reduced obnoxious smells equivalent to soil injected liquid manure in the reference situation.
o Data on veterinary aspects have not been available for the analysis.
• Industry: A treatment fee of 0 EUR/tonne organic waste supplied to the plant has been assumed.
• A quantification and monetisation for reduction in N-leakage to ground water have been assumed based on Danish general assumptions:
It should be emphasized that considerable uncertainty is associated with these assumptions and these may not apply fully in the Dutch case. Specific data for the Dutch case have not been available for the present analysis.
When the sum of the monetised annual benefits exceeds the costs the proposed scheme is of-course attractive for society based on the assumptions made. From Table 8.4 it is seen from the positive net benefit Result 2 value, that the CAD scheme in question is attractive for the society and that a socio-economic annual surplus of about 330,000 EUR/year could be expected. Including Result 3 assumptions, and the monetised value of the externality ‘reduced obnoxious smells’, the estimated socio-economic surplus increases to about 438,000 EUR/year.
Again, it should be emphasized, that a number of important issues for the socio-economic evaluation of the scheme have not been quantified for the present analysis.
Socio-economic electricity production costs
The socio-economic results expressed via the key-number, electricity production cost (for project break-even), are shown in Table 8.5.
To achieve socio-economic break-even for the CAD-scheme the price for electricity generated at the facility and fed into the local electricity grid should be as shown in Table 8.5.
Reduced N leakage to ground water: ESTIMATE based on the assumptions.Reduced leakage is about 25% of saved chemical N fertilizer. (Ref.: Brian Jacobsen, SJFI).Monetised value: 3.36EUR/kg N reduced leakage. (ref.: Ruth Grant, [email protected])Reduced leakage : 103,3 ton N per yearMonetised value of reduced N-leakage: 347000 EUR/year
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Table 8.5 Electricity production costs. Or, Break-Even electricity price for the CAD-scheme Socio-economic results
Noord-Brabant region, The Netherlands.Base Case
Electricity production cost :
Result 0 : 0.060 EUR/kWh
Result 1 : 0.062 EUR/kWh
Result 2 : 0.020 EUR/kWh
Result 3 : 0.015 EUR/kWh
From the table it is seen that based on Result 2 assumptions the achieved socio-economic sales price should amount to 0.020 EUR/kWh to achieve break-even. Taking into account income from the assumed value of reduced obnoxious smells, looking at the Result 3, a socio-economic break-even is attained at an electricity sales price of about 0.015 EUR/kWh. Such break-even production cost of electricity, of course, indicate that the project is attractive for society at large based on both Result 2 and Result 3 assumptions, given that the (levelised) average sales price at the Nordpool market assumed is 0.034 EUR/kWh covering the period 2006-2025.
GHG emission reduction costs
The socio-economic results can likewise be expressed via the key-number, GHG-reduction cost achieved via the CAD-scheme (for project break-even). For this analysis, of course, income elements from the GHG reduction achieved must not enter the calculation. On this basis the key number can be calculated as shown in Table 8.6.
Based on Result 3 assumptions the CO2 reduction cost achieved via the project is about 6EUR/tonne CO2eq reduced. As mentioned earlier, the assumed value of CO2eq emission reduction (or emission allowance) is 20 EUR/ tonne CO2eq reduced. Thus indicating that the society at large has a surplus of about 14 EUR per tonne of CO2eq reduced using CAD-plants in this particular case.
Table 8.6 Break-even GHG reduction costs Socio-economic results
Noord-Brabant region, The Netherlands.Base Case
Green House Gas reduction costs :
Result 0 : 20 EUR/ton CO2
Result 1 : 21 EUR/ton CO2
Result 2 : 10 EUR/ton CO2
Result 3 : 6 EUR/ton CO2
The above calculations are based on a socio-economic rate of interest of 6.0% p.a. (real, inflation not included). The sensitivity of the GHG-reduction cost calculated when changing the socio-economic interest rate is illustrated in Figure 8.5.
In Figure 8.5 the GHG emission reduction cost has been calculated assuming an interest rate of 4%, 6% and 10% p.a. respectively. It is seen that results of the socio-economic analysis are very sensitive to the interest rate assumed.
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GHG emission reduction costs Euro/ton CO2
-10
0
10
20
30
40
Result 0 Result 1 Result 2 Result 3
Eu
ro / e
q. to
n C
O2
Interest rate4% p.a.
Interest rate6% p.a.
Interest rate10% p.a.
Figure 8.5 Socio-economic GHG emission reduction costs. Noord-Brabant region, The
Netherlands.
It should be noted that Result 0 results are relatively low. This is because consequences at farmers associated to the CAD-plant have not been included in the analysis at Result 0 level. Increased transport fuel consumption here increases costs and GHG emission reduction costs slightly.
Going from the 4% p.a. case to the 10% p.a. case the GHG reduction costs calculated based on Result 3 assumptions change from about 2 EUR/tonne CO2eq to about 16 EUR/tonne CO2eq reduced.
Conclusion of the socio-economic analysis
The main conclusions of the socio-economic analysis of the proposed CAD-plant project for Noord-Brabant region, The Netherlands (Base Case) are:
• Based on Result 0 assumptions the plant is close to break-even. Thus, the socio-economic value of energy production alone can justify the deployment of the proposed biogas plant project.
• Based on Result 1 assumptions, where net agricultural benefits and benefits for industry concerning treatment of organic waste are included in the analysis, this proposed project is still favorable for society at large.
• Based on Result 2 assumptions where the calculated environmental implications (net benefits) on Green House Gas emissions (CO2, CH4, and N20) and N-eutrophication of ground water furthermore are taken into account, the annual socio-economic surplus is calculated as 330,000 EUR/year.
• Including furthermore the estimated externalities related to reduction of obnoxious smells (Results 3), the annual socio-economic surplus increase to about 438,000 EUR/year for the biogas plant in the configuration considered.
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A number of externalities relevant for the socio-economic analysis have not been included due to lack of data, as it has been pointed out both in previous sections of this chapter and in Table 8.3 and Table 8.4. These aspects can be expected to contribute effects in favor of the biogas alternative withthe exception of some potential negative veterinary effects which may involve socio-economic costs.
References
Lesourne, J., 1975. Cost-benefit analysis and economic theory. North-Holland.
Houghton, J.T. et al. (ed.), 1996. ‘CLIMATE CHANGE 1995, The science of climate change’; Contribution of the Working Group I to the Second Assessment Report of the Intergovernmental Panel on Climate Change; Cambridge University Press; ISBN 0 521 56436 0. Published 1996.
Danish Energy Agency, 2006. (in Danish) Forudsætninger for samfundsøkonomiske analyser på energiområdet. Available at: http://www.ens.dk/graphics/Publikationer/Energipolitik/opd_braendselsprisforuds.pdf
Nielsen, L.H., Hjort-Gregersen, K., Thygesen, P., Christensen, J., 2002. (Socio-economic analysis of centralised Biogas Plants – with technical and corporate economic analysis. In Danish.): Samfundsøkonomiske analyser af biogasfællesanlæg - med tekniske og selskabsøkonomiske baggrundsanalyser. (Fødevareøkonomisk Institut, Frederiksberg, 2002) (Fødevareøkonomisk Institut, rapport nr. 136) 130 p.
Sommer, S.G., Petersen, S.O., Møller, H.B., 2002. A new model for calculating the reduction in greenhouse gas emissions through anaerobic co-digestion of manure and organic waste. In: Petersen, S.O., Olesen, J.E. (Eds.) Greenhouse Gas Inventories for Agriculture in the Nordic Countries. DIAS Report No. 81, Danish Institute of Agricultural Sciences, pp. 54-63.
Sommer, S.G., Petersen, S.O., Møller, H.B., 2004. Algorithms for calculating methane and nitrous oxide emissions from manure management. Nutrient Cycling in Agroecosystems 69: 143–154, 2004. Kluwer Academic Publishers.
Refsgaard, K, Halberg, N, Kristensen, E. S,1997. Energy Utilisation in Crop and Dairy Production in Organic and Conventional Livestock Production Systems.
Søren Kolind Hvid, Bo Weidema, Ib Sillebak Kristensen, Randi Dalgaard, Anders Højlund Nielsen. (In Danish) Miljøvurdering af landbrugsprodukter. Miljøstyrelsen. Miljøprojekt Nr. 954, 2004.
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9. Conclusions
The significant manure surplus situation in the Noord – Brabant region in The Netherlands form excellent preconditions for CAD plants in this region. Farmers would largely benefit economically as they may achieve considerable cost savings in transport and fertiliser purchase. Relative high dry matter contents in the manure forms a large potential for biogas production. However, the estimates for the economic performance of an imaginary CAD plant in the region, based on the assumptions made, shows that the system is not economically feasible by the existing preconditions. Electricity price is relatively low in a European context, lack of heat utilisation options is a serious disadvantage and organic waste admixture is not allowed. These are the most important non technical barriers that should be removed if CAD plants are to enlarge in The Netherlands.
Socio-economic assessments show that CAD plants, again based on the assumptions made, are indeed attractive for society as multifunctional tools for solution of agricultural, energy and environmental problems in livestock intensive areas in The Netherlands like the Noord – Brabant region.
Appendix: Mass balances and biogas production
The Netherlands
Amount DM DM VS CH4 yield Total N
NH4-N P K
tonne year-1
g/kg kg year-1
% of DM nm3 CH4 kgVS
-1nm
3 CH4 year
-1g/l g/l g/l g/l
Agricultural biomass
Dairy cattle slurry 100000 78 7800000 80 0,2 1248000 8,5 4 1,4 4,5
Fattening pigs slurry 100000 103 10300000 80 0,3 2472000 7,5 5,25 3 6,22
Laying hens/broilers
deep litter 20000 480 9600000 80 0,35 2688000 22,89 10 16,35 17,98