Biogas comes of age

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As biogas becomes big business, it’s creating new opportunities for all involved in managing food waste. Iyad Omari from London-based cleantech investor, Frog Capital, and Peter Stepany, Chief Technology Officer of German biogas specialists, agri.capital, set out the choices facing biogas companies and the challenges that need to be met.

 

by Iyad Omari & Peter Stepany

 

A unique source of renewable energy

Despite the recent UN Climate Change Conference in Copenhagen showing how hard it is to build an international consensus, the worldwide drive to find clean, renewable energy sources remains undimmed. This isn’t simply an issue of global warming. Many countries are also keen to cut their reliance on fossil fuels due to concerns over security of supply.

Germany has been a beacon of sustainable energy practice in Europe for 20 years, with a strong regulatory framework to encourage clean energy production. agri.capital is one of the success stories to emerge from Germany’s green wave. Since 2004 it has set up around 50 plants across Germany, Austria and Italy to generate biogas – gas extracted from organic matter including organic waste. The company is the largest biogas producer in Europe and the huge demand for clean energy looks set to underpin its rapid growth for years to come.

To date agri.capital’s model has relied on the use of purpose-grown crops as fuel. But as the biogas sector becomes big business, it is creating a wealth of opportunities for profitable partnerships with those who manage an alternative fuel – food waste. To understand these opportunities, it helps to get a taste of biogas production and the complex choices it offers.

The recent investment in agri.capital by London-based cleantech specialist, Frog Capital, was driven by a belief that biogas has unique advantages. It uses well-proven technology and combines strong green credentials (e.g. its ability to recover energy from biodegradable waste, thus diverting it from landfill) with reliability and ease of storage. These are characteristics that other renewable energies such as solar, wind and wave power find it hard to match.

A technology whose time has come

For many, Germany is the model to follow when it comes to biogas. The German Renewable Energy Act (known as EEG) gives biogas producers a lot of comfort. Producers who burn biogas to generate electricity for the grid earn a tariff that’s guaranteed for 20 years from the plant’s inception. This certainty helps producers obtain the 10-year finance that plants need and supports long-term contracts with feedstock suppliers.

Although most of Germany’s biogas producers currently convert it to electricity, they also have the option of pumping a purified version of the gas directly into the national network. The tariffs for this aren’t guaranteed but they’re not entirely free-moving either; so much gas is ultimately burnt to generate electricity that its price tends to move in line with electricity prices, creating a level of predictability that facilitates long-term gas supply contracts.

Deciding how to use biogas from AD

Several factors have to be weighed up when deciding how to use the biogas. Injecting gas into the grid demands complex processes for scrubbing it. On the other hand, burning it to create electricity involves running an engine and finding a customer for the excess heat emitted by the process; without a customer for the heat, a lot of the primary energy value is wasted.

So far most sites established by agri.capital burn gas to create electricity because they’ve been able to identify local clients for heat, e.g. commercial businesses that operate drying processes. But the number of customers for year-round heat is limited and many are already satisfied. Increasingly, therefore, new plants will inject gas into the mains.

Getting the right mix of inputs

A fundamental decision for a biogas producer is which feedstock to use. Put simply, this comes down to a choice between purpose-grown food crops (biomass) and organic waste generated by households and businesses such as food waste.

For a biogas operator running many plants, an ‘ideal’ feedstock has three characteristics:

  • homogenous – the content is consistent and produces stable outputs and that doesn’t upset the bacteria used
  • high energy density – many cubic metres of biogas are produced per tonne of feedstock
  • no pollutants – it does not contain unwanted elements that will be difficult and costly to dispose of at the end of the process.

 

Under the German framework, each plant needs to specify upfront the broad category of feedstock that it is going to use (e.g. food waste or biomass). agri.capital typically uses feedstock that is roughly 70 % biomass and 30 % animal manure. The crops have high gas yields of around 200 m³ per tonne. The manure’s gas yield is only a tenth of this level, but it contributes useful minerals and makes the overall mix malleable. The feedstock mix also enables it to agree long-term contracts with farmers for the supply of crops and manure, which provides much-needed certainty for everyone.

The challenges of food waste

So how can food waste win a greater share of feedstock? With a gas yield of around 150 m³ per tonne, it has high energy potential, and it’s clearly better to use it for biogas than send it to landfill. However, food waste presents several challenges:

1. Cleaning: Food waste is typically contaminated with non-organic material such as plastics. The biogas operator needs ‘clean’ waste but doesn’t want to do the cleaning, so responsibility for removing pollutants usually rests with the waste collector. The ease of cleaning can vary a lot and it’s notoriously hard (both practically and politically) to implement rigorous standards for household food waste. In contrast, it’s much easier to apply disciplines to a segregated collection from a food processing factory.

2. Long-term contracts: A biogas plant typically has a payback period of 10 years – and financing to match – so feedstock contracts need to be long term. This is relatively simple with crops but harder when the feedstock is food waste. At present, contracts for supplying food waste typically last for a year or two, which doesn’t support the investment needed to get a biogas plant up and running.

3. Predictability: It’s good news if a plant can use a homogenous supply of waste from a single food factory, but often the local need is to supply the plant with waste from many sources. Even when the different waste feedstocks have all been cleaned, this makes life difficult for the plant operator, who needs to ensure a balance between different types of input entering the digester (fat, vegetables, meat, etc.). Bacteria take time to adjust to changes in feedstock composition, so frequent variations are unwelcome. Furthermore, the quality of outputs varies by feedstock; only with detailed knowledge of the inputs is it possible to forecast the outputs and the treatment they will require (e.g. scrubbing of the biogas).

External gas tank at the biogas plant in Lüchow.

Although food waste offers challenges, it also has upsides. From the perspective of the biogas operator, transportation is an area where food waste scores well. The ‘polluter pays’ principle applies, so food waste transportation is part of the costs of disposal and doesn’t affect the economics of the biogas plant. In contrast, biomass can only be moved in line with its energy content and transport has to be paid for via the contracts with farmers. This limits the distances that biomass can travel.

A complete biogas plant, producing biomethane for the public grid in Germany.

In addition, using food waste avoids the political issues that can arise with biomass. In Germany, growing crops for fuel is relatively uncontroversial as the country has surplus agricultural land. In other countries, including the USA, growing crops for fuel has become a subject of heated debate.

An opportunity for partnership

The challenges presented by food waste can be overcome but they require co-operation from everyone – those who generate waste, through to the authorities and haulers who manage it, and the biogas producers who use it to generate energy.

By the time a plant is up and running, it’s too late to make a fundamental shift in its feedstock profile – practical and regulatory factors rule this out. Therefore the key issue is to identify in advance how each new plant can use food waste and how it will handle the challenges that this presents.

In Germany, at least, the decision on whether to use biomass or food waste is broadly neutral from a financial standpoint. Waste-generated electricity attracts a lower tariff than electricity from crops, but the difference is evened out by the fact that food waste costs less than crops. Therefore, with the financial factors in balance, the question is essentially one of utility.

Perhaps the greatest need is the introduction of 10-year contracts for supplying food waste to biogas producers to match plants’ financing and payback periods. The authorities that oversee waste disposal typically manage this via 2–3 year contracts with waste haulers. This makes it difficult for the haulers themselves to form 10-year contracts with biogas producers.

In theory, local authorities could strike 10-year contracts with biogas producers directly. After all, waste flows are predictable and lend themselves to such long-term planning. In practice, however, authorities will only issue contracts once plants have been built, while biogas operators can’t get plants funded until authorities have issued contracts. It’s a chicken-and-egg situation that needs to be overcome if food waste is to fulfil its potential.

Spreading the model across Europe

These are the criteria companies such as agri.capital need to look at when branching out into other countries:

  • a predictable regulatory framework and tariff – so that 10-year investment in plants will be safe
  • sufficient supplies of feedstock
  • well-developed infrastructure – in the form of gas and electricity grids.

 

Although few countries currently meet all three criteria fully, there is likely to be considerable development and convergence as they study Germany’s success.

Biogas and manure thermo- and flow meters.

One country that has established a favourable regime, albeit with shorter guaranteed tariffs than Germany, is Italy where agri.capital has already established operations. The UK, which has a well-developed national grid, is another country where opportunities are being explored. But perhaps the greatest opportunities, at least in the short term, are offered by Eastern Europe. Not only does the region have a large agricultural base, it also has a relatively immature food waste disposal industry – creating a need which biogas production is well-placed to satisfy.

Biogas is a global growth energy of the future. All countries throw away large volumes of food, so they can all benefit. The opportunities are substantial. Issues along the food waste value chain remain to be addressed, but there’s no doubt that the rise of biogas is good news – not only for biogas producers and the environment, but for waste management specialists with vision.

Iyad Omari is a partner at Frog Capital, London, UK.
e-mail: Iyad.Omari@frogcapital.com

Peter Stepany is Chief Technology Officer at agri.capital, Münster, Germany.
e-mail: peter.stepany@de.agri-capital.eu

This article is on–line. Please visit www.waste-management-world.com

About biogas production

 

An overview

Biogas is a mix of gases produced by anaerobic digestion. Anaerobic digestion converts organic matter into useful products in the absence of air – typically in sealed tanks (digesters). Inside the digester, materials experience a series of stages in which different types of bacteria break them down and convert them into useful outputs. The gases produced typically consist of 60 % methane and 40 % carbon dioxide (CO2). For commercial use, this is often ‘upgraded’ to pure methane by removing the CO2. In addition to biogas, the process also yields a nutrient-rich digestate.

The inputs

Biogas inputs (known as feedstock) come from a wide variety of organic sources. Farm crops (known as biomass) are a common feedstock; they are either crops traditionally grown for food (such as maize and corn) or crops specifically developed for energy purposes. Animal manure is another common feedstock. So is food waste, either from commercial operators (e.g. food processing factories, restaurants and retailers) or from domestic households. Human sewage can be used but is typically limited to the captive operations of wastewater management companies.

The outputs

The biogas can be burnt to create electricity, which can be fed into the grid. This process also generates heat, which can be captured and used locally (e.g. for heating and drying). Alternatively, biomethane can be distributed through a gas pipe network, effectively being used in the same way as natural gas from fossil fuels.

The digestate is a valuable fertilizer for farmers and is particularly useful in countries where soil quality has become degraded through over-intensive farming.

The benefits

Biogas replaces the use of fossil fuels and helps to reduce the emission of methane into the atmosphere. As a greenhouse gas, methane is 20–25 times more harmful than CO2. Digestate production avoids the environmental hazards associated with industrially produced fertilizers.

Using biomass to create biogas creates a carbon neutral cycle, in which the carbon emitted from burning the gas is absorbed by new crops grown as feedstock. Creating biogas from food waste means that fewer waste treatment facilities are needed and less organic matter goes into landfill sites (which typically release methane into the atmosphere over time).

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