Biogas Finance - the Cost of Building and Operating an Anaerobic Digestion Plant
Introduction
Before deciding to build an AD plant, the financial aspects of AD must be carefully considered and understood.
These include:
- capital costs in building the plant
- operating costs in running and operating the plant
- which must be balanced against the sources of income.
Capital Costs
 The capital costs are dependent on factors such as plant size and engineering, location, and waste composition
It is thus difficult to provide accurate costs without the specifications of the plant. Moreover each case is specific.
For instance, plants treating MSW need to have expensive pre-treatments and these can differ regarding the degree of segregation you want to achieve or the goal of the project. Don’t forget that you may need to have a sorting process before the digester, for removal of unsuitable constituents within the feedstock or for recycling, such as in a MRF, and to allow the costs of that within your budgets.
AD Plants may be set up with differing primary goals which might include recovery of recyclables, production of combustibles or high quality digestate.
Operating Costs and Sources of Income
Operating costs include costs associated with recruiting and paying the employees who will run the digester, insurance, transportation, annual licenses, pollution abatement and control, and all maintenance.
Sources of income are likely to include revenue from the sale of electricity, heat sales, digestate (liquor and fibre) and gate fees. If you intend to clean the methane and process it for use outside the plant, he methane itself can be a source of income. Heat sales will require the presence of a user for your waste heat, and you will need to set up a CHP project to deliver the otherwise waste heat to a user or many users, such a nearby housing estate or factories where this might for example be used for work-space and living-space heating.
Gate fees are charges made per tonne when the feedstock arrives for processing waste and are especially relevant to CAD plants. It is likely that it would need to be competitive with alternative waste management solutions available locally.
Operators of AD plants should ensure at planning stage that they will have sufficient feedstock material to operate their plant at optimum capacity, in order to maximise the potential sources of revenue. Don’t take this last point lightly.
Setting up a profitable AD business is ALL about having a plentiful supply of the right feedstock and either receiving it free as a waste material, or at the right (low) price. Your AD plant project may be technically brilliant but lose your ability to gain the right feedstock at the right time and price, will make or break your project.
If you are not yourself creating the feedstock as a by-product of another part of your process, the possession of long-term contracts for the reception of waste (i.e. feedstock) will be essential to give you a “bankable” business plan.
The rule of thumb for MSW AD has been in the past that you should seek to break even within the business plan. The sale of energy and other by-products should provide your profit and add a robust contribution to maximising the sources of income which taken together, even in bad times will ensure the continuing viability of the AD operation.
Now you have read this go to the Estimated Anaerobic Digestion Plant Costs page.
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