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Anaerobic Digestion Cost – Gate Fees and Other Rules of Thumb

anaerobic costThe cost of anaerobic digestion varies widely according to many factors which include the technology used, the purity to which the products are produced, and the sources of the feedstocks/ and purpose of the AD plant. There is a general lack of information available to the casual onlooker about anaerobic digestion plant and process costs. As in many other industries, this information is usually held by the plant operators, and the contractors that design and build these plants. In both cases, they seldom (if ever) release their costs to the public, and regard the information as commercial, preferring to negotiate their prices with potential organic waste disposers, on a case by case basis.

One area in which anaerobic digestion costs are available is in the form of the gate fees charged by biogas plant operators, to those that wish to dispose of the organic waste to their plants.

What is a Gate Fee?

Wikipedia provides a good definition of the concept of a gate fee:

“In the case of a landfill it is generally levied to offset the cost of opening, maintaining and eventually closing the site. It may also include any landfill tax which is applicable in the region. The gate fee differs from the waste removal fee which is the charge levied on people in areas, such as Ireland, where waste collection is not covered as part of local taxes.”

https://en.wikipedia.org/wiki/Gate_fee

But surprisingly, this definition does not mention one very important part of any gate fee, which is also the profit margin which all landfill operators will, of course, seek to maximise. The element of profit within any gate fee will be a function of the local market, and in particular, the cost of competing methods of waste disposal.

Waste fed, anaerobic digestion plant business economics are usually based on a charge being made to the organisation which deposit waste at the AD Plant gate for disposal. Thats also known as the “gate fee“. AD Plant operators do also usually also make additional income from the sale of energy, and wherever possible, other by-products such as biogas, and digestate.

Anaerobic Digestion Cost to Organic Waste Disposers as Represented by AD Plant Gate Fees

To gain an up to date UK perspective on the relative “gate fee” cost of anaerobic digestion we recommend a visit to www.letsrecycle.com and then click on their prices menu.

The UK government also reports on UK Gate Fees (updating their data approximately annually), including AD plant gate fees, as shown in the purple line in the chart below:

anaerobic digestion cost - gate fees and ways to calculate costs

For the latest UK government data the updates to the above chart, should be available here.

One thing about the above chart stood out to us. We suggest that you look at the above chart, and also read the bullet point notes beneath it. If you do that, you will see that for those that wish to dispose of solid biomass, sending it to an AD plant at below £40/tonne, is far cheaper than landfill disposal at over £100/tonne.

US Cost Estimates for Installing Manure-fed On-farm Anaerobic Digester Systems

While writing this article we searched for other sources for approximate rules of thumb methods for assessing anaerobic digestion costs, and we found the following cost information, provided in the Biomass Magazine:

For the right farm business or operator of any process which produces as a by-product a consistent organic waste, an anaerobic digester producing biogas coupled to a generator, can be an excellent long-term investment. The methane biogas will cost less as a fuel than a diesel generator or a standard natural gas generator. The best examples of implementing an anaerobic digester can mean a facility pays nothing for fuel. Facilities that need to replace a life-expired genset should consider all options, and include a biogas digester model within their energy options. The decision should ultimately be based on what works best for a particular site and operator when the balance between investment risk incurred by adopting an Anaerobic Digestion process, against the benefits.

Cost estimates for installing anaerobic digester systems [given as follows] have been based on manure-fed on-farm digesters. The estimated anaerobic digestion cost for a digester alone is between $400 and $700 per 1000 pounds of livestock weight to install. For dairy farms producing electricity, the installed cost is estimated at $800 to $1200 per cow for anaerobic digester system installation. The engine-generator can be up to half the cost of the project. Besides installation, it is important to consider insurance, operation and maintenance costs. Annual operation and maintenance costs can range from $11,000 for a small digester to $51,000 for a large system. via Biomassmagazine.com/barrels-of-biogas

More US Anaerobic Digestion Cost Data

Washington State University has a page which provides further AD cost data. It asks; “Does Anaerobic Digestion Cost Too Much? and refers readers to a pdf document which discusses AD process costs:

Anaerobic Digester Project and System Modifications: An Economic Analysis is a new WSU Extension Fact Sheet (EM090E) that breaks down a more comprehensive AD project scenario analysis into distinct pieces to help readers understand the economic considerations of an AD project.

Biogas Plant Prices – A Conclusion

The bottom line is that yes, AD systems are really expensive technology. However, for most AD projects, the capital cost of the core AD unit is really a minor concern relative to the capital and operating costs of the biogas utilization aspect of a project. So, finding alternative materials to steel and concrete, or reducing the process time don’t really make a big difference in the profitability of a project.

Second, recovering value from the non-energy co-products (e.g. fiber, nutrients, carbon credits) really do matter and can often be the difference between a project that is profitable or not. That indicates that the potential opportunities provided by carbon offset markets (or similar environmental credits) can play a critical role in the development and adoption of digesters.

Lastly, doing something, or anything, else with the biogas in regions with low electrical power rates (e.g. US Northwest) can be very compelling, but also add additional costs and hurdles that need to be negotiated carefully.

In the past decade, we really have made good progress in terms of the adoption of digesters in both the Northwest and the US, in spite of a marketplace and policy environment that has not been extraordinarily favorable. In the past couple of years, though, we seem to have hit something of a wall with the development of new projects.

It’s not completely clear how or whether we’ll break through this wall and see another round of AD projects installed, but we can clearly put to bed the idea that “AD is too expensive”.

The reality is, that like many other investments, the answer to whether AD can be profitable in any given case is “it depends”. via Does an anaerobic digester cost too much?

Biogas Plant Prices Article Download Reference: AD Costs eBook/pdf

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