Biogas from anaerobic digestionCO2 savings and economics

Technology update

Introduction

Biogas from anaerobic digestion (AD) has a range of potential energy uses across heat, transport and electricity. This technology update describes these different options and compares the carbon savings potential for each. It also discusses the impact incentives might have on the economics of biogas production.

Key points

The Carbon Trust has developed a model that allows •comparison of the carbon savings and economics of different energy uses of biogas from AD.

It is important to consider ‘parasitic’ energy loads when •comparing carbon benefits of different end uses, as these, along with fugitive methane emissions, can have an unexpectedly high impact on the carbon savings.

Based on the assumptions used in the model, •biomethane as a transport fuel has higher carbon savings potential compared to use for heat and electricity.

Biomethane to the gas grid used for renewable heat •has lower carbon saving impact than using the biogas for electricity generation, but it will have an advantage over electricity generation in the future when the electricity grid has been decarbonised, and injection to the gas grid provides flexibility to use the biomethane as a transport fuel elsewhere.

Incentives such as feed in tariffs and the renewable •heat incentive have a major effect on the economics of biogas production and the cost effectiveness between different energy end uses can vary.

Biogas from anaerobic digestionCO2 savings and economics

Technology update

2Biogas from anaerobic digestion

Different uses of biogas and biomethane

There are four alternative options for the use of biogas produced by anaerobic digestion, shown diagrammatically in Figure 1.

Following minimal cleaning (to remove hydrogen sulphide and other impurities that could damage equipment):

The biogas can be burnt in an engine to produce •electricity and heat.

The biogas can be burnt in a boiler to provide on-site •heating or steam/ hot water for a local heating scheme.

Or CO2 and other impurities are removed to leave a pure biomethane:

The biomethane can be injected into the natural gas grid. •

The biomethane can be compressed or liquefied and •used as a transport fuel. Compressed biomethane is the same as compressed natural gas and can be used in internal combustion engines with suitable adjustments.

Currently most AD plants producing energy in the UK combust the gas to generate electricity (frequently the only available use for the heat produced is within the AD plant and only electricity is exported). Trials are planned for the first injection of biomethane into the gas grid (DECC published guidance on this in December 2009) and biomethane has been used on a small scale as a transport fuel.

Definitions

Anaerobic digestion (AD) is a process in which bacteria break down organic material in the absence of oxygen. Anaerobic digestion of sewage sludge is in widespread use in the water industry in the UK. There are also around 20 AD plants operating on food waste (from domestic and industrial sources) and farm waste (slurry, agricultural residues, crops) with more in development.

Biogas, the gas produced directly from anaerobic digestion, contains a mixture of methane and CO2 with some other impurities. This can be burnt directly in a CHP engine or specialised boiler.

Biomethane is purified biogas which has had the CO2 removed and is >97% methane. This can be injected into the gas grid (after odorisation and adjustment of calorific value by adding propane) or compressed and used as a transport fuel.

Figure 1

Resource Use

Anaerobic Digestion

CO2 removal

On-site heat

Biogas-to-grid

Transport fuel

Agricultural waste

Manure

Sewage sludge

Food waste

Biogas

CH4/CO2

Biomethane CH4

CHP/ electricity

H2S etc. removal

3Biogas from anaerobic digestion

Gas clean-up technologies

A number of different clean-up technologies are available to convert biogas to biomethane by removing CO2 and other impurities. Commonly used processes include water washing, chemical scrubbing and pressure swing absorption.

The costs and energy use for gas clean up in the Carbon Trust model were based on chemical scrubbing technology. A review of suppliers’ prices suggested that these costs are representative of other gas cleaning processes, but which technology is most cost effective is likely to depend on the biogas flow rates.

Carbon Trust model

The Carbon Trust commissioned work to compare different uses of biogas for electricity generation, heat and as a transport fuel. Anaerobic digestion experts ORA built a spreadsheet model which allows the carbon savings and economics of different waste streams and different uses of the biogas to be compared and this has subsequently been developed further by the Carbon Trust.

Tool developed with assistance from ORA (Organic Resource Agency Ltd)

Figure 2 Model inputs and outputs

Outputs: • Carbon savings

• Economic potential (returns, NPV etc)

Tool developed with assistance from Organic Resource Agency Ltd (ORA)

Feedstock • Type (manure, sewage, food

waste, energy crops) • Flowrate

Financial assumptions • Energy prices • Incentives • Gate fees

Technical data • Carbon conversion factors • Efficiencies

Biogas modelling tool

• Selects AD plant type

• Calculates biogas yield

4Biogas from anaerobic digestion

Parasitic energy use

The model includes consideration of ‘parasitic power’; the heat to run the AD plant and electricity to run the gas clean up process are subtracted from the energy produced. The CO2 equivalent of fugitive methane emissions for each process are also included and these vary for different energy production routes. Charts 1 and 2 above show the breakdown in CO2e for two cases – electricity generation and biomethane to grid. For electricity production the effect of the parasitic load and fugitive methane is to reduce the carbon benefit by about a third, for biomethane production the reduction is nearly half.

Carbon savings from different options

The model sizes an AD plant for a selected waste stream and calculates the CO2 savings for different end uses of the biogas produced by the plant, based on the following assumptions:

A CHP plant replacing grid electricity (the kg CO• 2/kWh of the electricity produced can be varied in the model) and producing heat used locally, which is assumed to replace natural gas heating. The ‘electricity only’ case is where the CHP heat usage is set to 0% and the only use for the heat produced is in heating the AD plant. The baseline assumption was that electricity was generated at an efficiency of 35%.

Biomethane to gas grid (replacing natural gas with •a factor of 0.185 kg CO2/kWh).

Transport fuel displacing diesel, assuming vehicle •engine efficiency is unchanged i.e. the km per MJ of fuel are the same for diesel and compressed biomethane. (In practice the actual efficiency will vary depending on engine type.)

In the discussion that follows figures are presented based on an AD plant processing 25,000 tonnes pa of commercial food waste. This is a typical scale for plants proposed for industrial and commercial food waste in the UK and is processing an amount equivalent to the food waste from around 70,000 households.

Chart 1 Electricity production parasitic loads Chart 2 Biomethane production parasitic loads

2,025

100

3,133

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Methanelost

Gasclean up

537

Netsaving

ADplantelec

CO2displaced

471

t CO

2e p

a 1,567

14453

3,059

0

500

1,000

1,500

2,000

2,500

3,000

3,500

ADplantheat

489

ADplantelec

CO2displaced

335

471

Methanelost

Gasclean up

Netsaving

Addedpropane

t CO

2e p

a

5Biogas from anaerobic digestion

2020 carbon savings

In future it is expected that the carbon intensity of the electricity grid will reduce, so the impact of generating electricity will be less. Using the Committee on Climate Change’s target of 0.31 kg CO2/kWh for 2020, and assuming at this date the transport fuel displaced will be 90% diesel and 10% zero carbon biofuel:

The highest carbon saving is for biomethane as a •transport fuel.

Biomethane to the grid saves more carbon than both •electricity only generation and CHP with high heat utilisation.

Benefits of biomethane

The carbon savings from using biomethane as a transport fuel compare well with other energy uses both now and in the future with a lower carbon intensity electricity grid. It should be noted that the ‘biomethane to grid’ option is compatible with using that biomethane as a transport fuel delivered by the grid at a different location. Installing equipment to convert biogas to biomethane also allows flexibility between injecting to grid and using as a transport fuel at the same site.

2010 carbon savings

Chart 3 shows a comparison of net CO2 savings (after parasitic power and fugitive methane has been taken into account) assuming electricity is displaced at the current grid electricity generation mix of 0.54kg CO2/kWh. The hierarchy of savings, based on the assumptions listed above, is:

Biomethane as a transport fuel, or a CHP plant with •heat utilisation of 50% or more, saves most carbon.

Electricity only generation is the next best option.•

Biomethane to grid savings are the lowest, as it •displaces gas (a comparatively low carbon fossil fuel) and has a relatively high parasitic load.

The carbon savings for electricity generation are very sensitive to the value assumed for the electrical efficiency of the generator. If this is increased to 40% from the baseline assumption of 35%, electricity generation saves the same amount of carbon as biomethane transport fuel.

Another important assumption is the engine efficiency for the vehicle using compressed biomethane. If, instead of taking the same efficiency for diesel and methane, a 10% drop in efficiency is assumed, the transport fuel net CO2 savings in 2010 are slightly higher than the electricity only option.

Chart 3 2010 net CO2 savings for 25,000tpa food waste Chart 4 2020 net CO2 savings for 25,000tpa food waste

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

Biomethaneto gas grid

Electricity onlyCHP 50%heat use

Transport fuel

parasitic CO2net CO2

t CO

2e p

a

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

Electricity onlyCHP 50%heat use

Transport fuel Biomethaneto gas grid

t CO

2e p

a

parasitic CO2net CO2

6Biogas from anaerobic digestion

Carbon prize

Chart 5 above shows estimated carbon savings for biogas from AD based on accessible waste resource. The total potential carbon savings from injecting biomethane from anaerobic digestion into the gas grid, making realistic assumptions about the amount of waste which is accessible for AD, is of the order of 1.2 Mt CO2 pa, equivalent to 6.5 TWh of renewable heat. If the same amount of biomethane is used as a transport fuel the carbon prize is 1.9 Mt CO2 pa. The second bar on the chart includes estimates of the benefits of avoided methane emissions (converted to CO2 equivalent).

The calculation is very sensitive to assumptions about how much of the waste stream could be made available for AD, for example about how much source segregated food waste can be collected in practice. The assumptions used for the chart are listed in the appendix. The analysis did not include full lifecycle emissions or consideration of other possible destinations for the waste such as composting.

Avoided methane

The discussion so far has concentrated on direct CO2 savings benefits, but additional GHG savings are available from anaerobic digestion because of reductions in methane emissions. These avoided emissions differ between waste streams. When food waste is diverted from landfill, the avoided methane benefit is significant. Avoided landfill emissions do not apply to sewage sludge and manure/slurry, but alternative uses of these (e.g. spreading to land) will lead to direct methane emissions.

Chart 5 GHG savings from biogas from accessible UK waste resource, assuming end use is biomethane to grid

0.20

0.20

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Including avoided methane

2.52

1.21

1.11

1.23

0.45

0.58

Food wasteManure and farm wasteSewage/waste water

Mt

CO

2e

pa

Direct CO2

7Biogas from anaerobic digestion

Economics

The model developed for the Carbon Trust allowed the costs of different end uses to be compared and the effect of various financial assumptions to be investigated. It is not intended to be an accurate costing tool as actual AD plant costs will be site specific, but does allow comparison of main items of plant across different waste streams and different plant scales.

Chart 6 shows the proportional breakdown of costs and revenues for a 25,000tpa food plant, with an assumed gate fee of £40/tonne. The model shows clearly that when a gate fee is payable for the waste being processed in the AD plant, this has a significant impact on the profitability of the AD plant. It also illustrates the significance of the energy incentives in overall energy revenue (these parameters can be varied within the model).

The overall returns for a plant developer for a plant developer are similar for the three different options – as can be seen from the internal rates of return (IRR) calculated from the model, shown in Chart 7. It should be noted that, in practice, site specific costs e.g. for grid connection will impact on the relative costs of the different options.

Costs include opex and capex on a simple payback basis

Chart 7 IRR for 25,000 tpa food waste plant £40 gate fee, FIT 9p/kWh, RTFC 30 p/l

Chart 6 Revenues and costs for 25,000 tpa food waste plant £40 gate fee, FIT 9p/kWh, RTFC 30 p/l

transport cost

transport revenue

gas to grid cost

gas to grid

revenue

electricity cost

electricityelectricty revenue

Gate fee revenue AD other products

AD cost

energy incentive energy sales

gas clean up cost

Net revenue

£679k

Net revenue

£710k

Net revenue

£726k

transport (RTFC 30p/l)

4.7%

13.2%

8.4%

electricity (FIT 9p/kWh)

12.6%

6.2%

12.8%

biomethane to grid (RHI

4p/kWh)

no subsidy with incentive

8Biogas from anaerobic digestion

Relating incentives to carbon savings

Using the output from the model the impact of various incentives was compared by dividing the revenue from the incentive by the net tonnes CO2 saved to compare the cost effectiveness of carbon savings delivered by the different incentives across the different energy uses for biogas. Chart 8 above shows a comparison between an RHI of 4p/kWh for biomethane to grid (as proposed in the DECC consultation), the current electricity incentive (FIT of 9p/kWh or double ROC at £90/MWh) and the approximate value of the 2009/10 transport fuel incentive (30p/l including 20p/l duty exemption).

Chart 8 Effect of different incentives – cost per tonne of CO2 saved

Conclusions

Biogas from anaerobic digestion offers worthwhile carbon savings if used for either transport, heat or electricity. Site specific factors such as ease of grid connection and availability of customers for heat and transport fuel will in practice have an important influence on the most appropriate use for the biogas. Based on the assumptions used in the modelling, using biomethane as a transport fuel enables the highest carbon savings, suggesting that this option should be encouraged. Changes in carbon intensity of the electricity grid over time mean that the benefit of electricity generated from biogas is likely to reduce in the future compared to heat and transport use.

When setting the balance of incentives for renewable heat, electricity and transport fuel, the different carbon savings available for each option should be considered. The parasitic power required to run the AD plant and clean up the biogas has a significant impact on overall carbon savings.

Biomethaneto gas grid

Transport fuel

Electricity only

FIT 9p/kWh

RTFC 30p/l

RHI biomethane 4p/kWh

£211

£355

£184

9Biogas from anaerobic digestion

Appendix

Assumptions to calculate carbon savings potential.

Feedstock Unit Sewage Manure/slurry/ag. residuea

Food waste

Total

Total waste arisings Mtpa 15b 32c 18d

% Total used for ADe % 90% 50% 40%

Waste processed in AD plants Mtpa 13.5 16 7.2

CO2 multiplier assuming biomethane to gridf kgCO2 /t waste in

15 36 63

CO2 saving Mtpa 0.20 0.58 0.45 1.23

CH4 avoided Mtpa CO2e 0g 1.07h 0.76i

GHG saving including CH4 Mtpa CO2e 0.20 1.65 1.96 3.06

a Plants operating on slurry have higher yields when a proportion of agricultural residue (e.g. brassica stalks, straw) is added. A plant with a mix of manure and slurry representing the overall mix of these available, with an additional 6.7% agricultural waste was modelled to estimate average yield for an ‘on farm’ plant. There is a large amount of agricultural waste arisings not accounted for in this calculation, but since these arisings are typically fairly dry, they are not suitable for AD except when mixed with a wet feedstock such as slurry, and other conversion processes e.g. gasification may be more appropriate

b From Ernst and Young work for National Grid (2009) The Potential for Renewable Gas in the UK c E4tech (2009) Biomass supply curves for the UKd WRAP (includes domestic, commercial and industrial food waste)e Carbon Trust estimatesf Using net CO2 savings from Carbon Trust modelg It is assumed that the sewage sludge is already treated by AD so there is no additional methane benefith Derived from AEA (2005) Assessment of Methane Management and Recovery Options for Livestock Manures and Slurries i Assumes 75% of food waste would have gone to landfill with 75% methane capture

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Published in the UK: March 2010.

© The Carbon Trust 2010. All rights reserved.

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