The economy of local biogas-fired CHP plants

  I. Renewable energy from biomassBiogas Biogas is a product of the fermentation process caused by methane bacteria. It is a mixture of the following gases: 50 - 70% of methane 32 - 37% of carbon dioxide 0,2 - 0,9% of nitrogen 0,1 - 5,5% of hydrogen sulfide

In order to be used as an energysource biogas has to contain atleast 45% of methane.

Biogas composition (medium values)

I.1 Biomass types and biogas production efficiency

Biogas production efficiency in m3 gained from 1 tone of substrate

II. Acquisition of the biomass used to produce renewable energyII.1 Acquisition of the biomass used for biogas production

• From 10 to 20 tons of biomass is acquired yearly in Europe from 1 hectare. In terms of energetic value that equals from 5 to 10 tons of coal!!!

• The potential biogas production in Europe is estimated to be 469 billion m3 of methane yearly, which equals roughly 75% of gas production in Russia (source: Fachagentur für Nachwachsende Rohstoffe).

• High energetic potential organic substrates can be currently acquired at no cost. What is more, it is possible to profit from it as it is considered „waste disposal”.

• The big advantage of vegetable raw material is that it is available all year long for most of localizations. What is more, the production cost is reasonably stable. For example the production cost of 1 tone of corn silage currently varies from 45 to 55 zł.

• Some of the biomass types are only available seasonally. For example molasses as well as fruit or vegetable marc are available only during the processing period.

• A new EU subsidies programme is going to be introduced in Poland. Farmers can receive 45€ on each 1 ha of energetic plants cultivations e.g. corn to be used as raw material for biogas production. The subsidies are going to contribute to the production cost decrease.

III. Biomass energyBiomass is usually processed by:1. Biomass fermentation – biogas, methanol, ethanol and other

substances are produced during the process. All these products can be either processed into other forms of energy or used as fuel.

2. Conversion into gas – gas is produced by processing biomass in special reactors (gas generators). Afterwards it is either combusted in a boiler or it drives directly a gas turbine or internal combustion,

3. Oil esterification– biodiesel,4. Alcohol fermentation - ethanol,5. Combustion.

In traditional power stations during the electric energy production process only 35-38% of the fuel’s primary chemical energy is used.

Cogeneration - the use of a power station to simultaneously generate both electricity and useful heat. It allows to reduce losses while processing energy. The use of fuel’s primary energy is 88%.

III.1 Biogas

1. Biogas can be produced not only from cattle or pig slurry, but also from biomass containing significant amounts of carbohydrates. Various plants can be used as raw material, e.g. corn (entire plants), meadow plants, sugar beet leafs, cereals, green plant matter, fallen tree leafs.

2. Agricultural and food industry wastes are good quality raw material as well. Examples of such wastes could be spirit production residues, juice production residues or glycerin – a byproduct obtained while producing biodiesel from rapeseed oil.

3. Remains of the substrate can be used as an organic fertilizer.

4. Low risk of surface and ground waters contamination is an additional advantage of the use of silage in biogas production.

III.2 Biogas energetic value

1. Biogas energetic value varies from 17 to 25 MJ/m3, which on average equals the energetic value of 0,6 litre of heating oil. While combusting biogas in a power plant with 36% efficiency coefficient one can obtain 1,7 – 2,5 kWh/m3.

2. 25 m3 of biogas can be produced from 1 ton of cattle slurry roughly, whereas while using 1 ton pig slurry one can obtain roughly 36 m3 of biogas.

3. 170-220 m3 of biogas containing 50-55% of methane can be produced from 1 ton of corn silage which contains 35-40% of dry mass.

4. If the corn yield is 45 tons per hectare one can obtain from 7 650 to 9 900 m3 of biogas, which is enough to produce 13,0 - 24,7 MWh of electricity.

5. The mixture of 2 tons of silage and 5,3 m3 of slurry is enough to produce 548 m3 of biogas that contains 54% of methane.

Agricultural biogas plant by EnerCess GmbH, source:J. Kujawski, O. Kujawski, Biogazownie rolnicze – wysoce efektywna metoda produkcji energii z biomasy

utility building

fermentation tanks

heat management unit

post-fermentation remains tank

bunker silo

substrate storage tank

III.3 Biogas plant (CHP) raw material supply

1. Biogas plant should operate all year long. That requires sufficient amount of biomass which needs to be stored.

2. During the vegetation period biomass can be stored in a silage form. The silage should have the same parameters that are required in the case of silage used for cattle feeding.

3. Corn silage is particularly useful as its quality parameters are stable. That makes the amount of produced gas invariable. Corn silage is a good component of the sludge, spirit production residue and silage mixture.

4. It is estimated that in the case of silage-run biogas plant, a power plant of 1 MW capacity requires yearly as much as 20 thousand tons of raw material, which equals crops from 400-440 hectares.

III.4 Biogas plant (CHP) products

1. Electric energy – sold to the national electric grid 2. Heat energy – sold on the local market3. Certificate of origin - green certificates- distributors4. Organic fertilizer– farmers

Prices of biogas plant products

Product Unit Price in PLN

Electric energy MWh 160 - 180

Heat energy GJ 30 - 35

Certificate of origin MWh 240 - 260

IV. Economic performance of a biogas plant (CHP)

Model of a 0,72 MWe and 0,68 MWt biogas-run CHP plant operating in a meat processing plant

Biogas-run CHP plant investment cost are estimated to be 4,0-4,5 mln EUR calculated on 1 MWe.

Yearly income

• Sell of electric energy to the distributor’s grid (7,5% is going cover own needs) 5 300 MWh*160 zł = 848 000 zł

• Sell of green certificates 5 730 MWh*250zł =1 432 000 zł

• Sell of heat surplus (15% is going to cover own needs)

4 608 MWh*100 zł =461 000 zł

4. Utilization of post-slaughter waste

7 300 t * 300 zł = 2 190 000 zł

Total income 4 931 000 zł

Yearly costs

1. Corn silage acquisition 5 500 t * 80 zł =440 000 zł

2. Engineering services 300 000 zł

3. Biogas plant operation, 2 employees 80 000 zł

4. Cost of fertilizer distribution 193 000 zł

5. Additional costs 60 000 zł

Total costs 1 073 000 zł

EBITDA 2 741+2190–1073= 3 851 000 zł

Amortization 675 000 zł

Gross profit 3 176 000 zł

Source: J. Buzek, presentation during the Baltic Ecoenergetic Forum

IV.4.2 IRR indicator

If assuming that the „green energy” price is 272 -308 zł (currently 400-440 zł) the effectiveness of electric energy production is as follows:

Technology type IRR of own capital

Small size water power-plant 4,02-6,18%

Wind power plant 8,13-19,79%

Large size water power-plant 7,90-10,17%

Biogas-fired CHP plant 19,15-22,82%

Biomass co-combustion in a cogeneration power station

80,08-100,33%

V. Incentive systemSubsidies

1. Task 9.1 Infrastructure and Environment Operational Programme provides up to 30 mln zł to support a cogeneration investment. The subsidy amount depends on the location on regional aid map. The subsidy cannot exceed 50% of investment’s eligible costs (60% for middle size enterprises and 70% for small size enterprises). In wealthy voivodships these amounts are proportionally 10% lower

2. Task 9.4 Infrastructure and Environment Operational Programme provides up to 40 mln zł to support production of energy from renewable energy sources

3. Regional Operational Programmes

4. The National Fund for Environmental Protection and Water Management loans

The Subsidies

1. The amended act of parliament on energetic law assumes that from January 2010 there are going to be improvements implemented in the system that supports agricultural biogas production. The act introduces two types of certificate:

• For biogas to be used in a gas network (agricultural biogas only)

• For biogas obtained from biomass, to be used in highly efficient cogeneration units to produce electric energy and heat In this case a producer may obtain two types of certificate – a green one (renewable sources energy) and the yellow one (cogeneration ).That applies both to agricultural biogas as well as to biogas produced from municipal waste, wastewater sludge and generated on dumping sites.

1. Thanks to the implementation of EU regulations the production of gas in biogas plants in the years 2004-2007 has been developing. Each year the total production in EU countries has been increasing by 50%. Currently there are 4 thousand biogas plants in Germany. They operate successfully and produce electricity for roughly 3 mln households.

2. Currently there are five agricultural biogas plants operating in Poland with a total capacity of 6 MW. The situation is quite different when it comes to sewage treatment plants and dumping sites. There are 151 of them operating and they produce 271,5 thousand MWh of energy yearly (source: Polish Biogas Association).

3. One biogas plant can produce yearly as much as 4-8 thousand MWh. That amount is sufficient to supply with energy from 2 to 4 thousand of middle-size households. According to the government’s programme there are going to be 2-2,5 thousand biogas plants built in Poland.

VI. Biogas plants development

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