Towards circular economy: Economic feasibility of waste to biomethane injection through proposed feed-in tariff

Abstract

Lately International Energy Agency (IEA) highlighted the vital role the biogas and anaerobic digester (AD) in the advent of circular economy. Organic residues or waste will be converted into high-value products, power, heating and fuel in the future of bio-economy. This study look specifically into the institutional and market factor, of a Feed-in Tariff (FiT) mechanism as a policy instrument to promote integration of biomethane into existing gas grid. In the circumstance where market is not in the favour of bioenergy/biogas, with fossil fuels are subsidised under national economic policy of the case study in Malaysia; this study found that under the current piped natural gas price, the proposed FiT, 34.02–141.79 MYR/GJ (7.13–29.73 EUR/GJ) is economically incompetent for biomethane to be injected into the grid without other policy and mandate support. However, natural gas price rationalisation may close the price gap, this is especially for biomethane derived from palm oil mill effluent (POME) and food waste at 4 MW size. Through Net Present Value (NPV) approach, among the four locally available feedstock assessed in this study: POME, food waste, chicken manures and cattle manures; POME and food waste show lower levelised cost due to minimal competing utilisation value in addition to their higher biogas conversion rate. POME prevails as a feedstock choice for its uniform composition and on-site production advantage. Discussion and recommendations based on the current policy scenarios in Malaysia are provided in the section following results and findings.