Abstract
This study assesses the investments, energy outputs, and financial returns of on-farm anaerobic digester systems (ADS) by farm size through a case study in Vermont and discusses the potential policy implications. Detailed data on the initial investments, production of electricity and other marketable products, operational expenses, and income, collected through surveys of eight operating ADS on dairy farms in Vermont, are used to estimate the return on equity (ROE), return on assets (ROA), and other financial indicators for small, medium, and large farms. The primary survey data indicate that the average investment was $1.35 million for small and medium farms (75-500 cows) and $2.44 million for large farms (>500 cows). Financial analysis indicates that the ROE and ROA were 12.54% and 13.50% for large farms but only 0.73% and 1.07% for small and medium dairy farms, respectively. Whereas the technology of ADS developed in the United States seems to favor large farms in terms of both energy production and financial returns, the centralized ADS developed in Europe and low-cost mini digesters developed in China may have potentials for small and medium farms to develop more economically viable ADS in the United States.
Highlights
Many American dairy farms, especially small and medium farms, have been struggling to stay in business and, as a result, the number of dairy farms has declined steadily across the United States in the past three decades
While some economic benefits such as the revenue from electricity sales were directly from farm records, other benefits such as the reduction in fuel cost as a result of the use of hot water from the generator were based on inputs from farmers, extension specialists, and others who are knowledgeable about the anaerobic digester systems (ADS) and dairy operations
Plug-flow designs have been found in general to be the most effective digester design for the cold climate of the northeastern United States [17], the experience of Vermont suggests that other designs work in the northeastern United States
Summary
Many American dairy farms, especially small and medium farms, have been struggling to stay in business and, as a result, the number of dairy farms has declined steadily across the United States in the past three decades. Detailed data on the initial investments, production of electricity and other marketable products, operational expenses, and income, collected through surveys of eight operating ADS on dairy farms in Vermont, are used to estimate the return on equity (ROE), return on assets (ROA), net present value (NPV), and internal rate of return (IRR) by farm size These financial indicators are expected to help farmers who are interested in ADS assess the feasibility and potential financial returns on the basis of their herd size and other factors and to help energy planners and policy makers create and refine policies concerning ADS deployment in Vermont and other regions
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