An economic and functional tool for assessing the financial feasibility of farm-based anaerobic digesters

Abstract

Anaerobic digester (AD) technology is a form of renewable energy with significant upside potential and little public resistance. However, previous studies have generally found ADs to be a poor investment for private firms without public assistance. The mixed results on the financial feasibility of ADs could be due to the site of the analysis since results vary with size, geographic location or the type of AD system, which are not standardized but rather customized to the individual situation. Given the public and private interest in AD technology and the need to assess the feasibility by site, a decision-making tool that can be adapted for each location and system would aid assessing the investment. This paper presents a freely available workbook to determine the financial feasibility of a farm-based AD and to demonstrate its use. The decision-making tool identifies the technical and financial parameters affecting the returns to an AD and the sensitivity of the assumption to changes in the value of those parameters. An application of the workbook for the Ontario livestock sector demonstrates its usefulness. Investment in an AD is financially feasible only for the largest dairy farms in Ontario under current electricity prices, which are approximately six times greater than the wholesale price. Shifting to a duel fuel continuous system would improve returns, as would the availability of additional substrate material in the form of solid grease and vegetative waste. Reductions in capital cost and improvements in the efficiency of the technology are probable given the relatively infant status of the biogas sector but these future enhancements would likely only alter the investment decisions for large commercial dairy farms.