How profitable is a biogas system for farmers and food processing companies?
Farmers, food processing companies and other stakeholders will have an important role to play when it comes to reducing food waste via the biogas generator. Food waste is one of the biggest contributors to climate change. If food waste were a country, it would come in third after the United States and China in terms of impact on global warming.
Food waste generated in the supply chain of producing any food product can be disposed off easily through a biogas generator. Biogas offers a win-win solution when it comes to food waste disposal and improving a brand of a specific farmer or food processing company.
However, not all situations will be profitable depending on site-specific characteristics of the biogas generator to be installed or the feedstock in question. As such, it is worth it, to take time to conduct a pre-feasibility analysis to determine how profitable the biogas plant will be from a life-cycle perspective. For instance, the input and output parameters will need to be considered against the dollar value.
1. How does the capital invested compare to the income being generated by the plant:
Capital investment and the expected income to be generated with time will help to shed the light about the viability of the project in the long-term. Data analysis of the equipment and raw material cost plus transportation will help to determine the cost of the biogas generator.
However, in some cases the raw material may be zero cost, especially if the farm or your food processing plant is generating enough waste or feedstock to feed into the Anaerobic Digester (AD). As a result, the return on investment (ROI) as well as the payback period will be established to determine the cost effectiveness of the biogas generator.
Capital costs and raw material inputs will vary depending on the size of the biogas generator. Capital costs will also include all costs relating to regulatory and permits, grid interconnection, project development cost etc.
2. What value addition is added by biogas and income streams
The biogas generator will provide the farmer or the food processing company with various income streams which when quantified will shed light on the potential of the biogas plant. Some of the most important income streams will include:
- Electricity costs avoided when it comes to electricity generated via the biogas generator
- Electricity sold to the utility company through net-metering
- Heating costs avoided by using the biogas generated by biogas plant
- Artificial fertilizer costs avoided by using the bio-fertilizer from the biogas generator.
- Renewable energy credits generated by the biogas plant resulting from the methane (CH4) emissions reduced by biogas and the bio-fertilizer.
3. Savings on waste disposal cost
Since the biogas generator is helping to solve the food waste problem for you by adding value to the waste, you don’t need to worry about the disposal of your organic waste. Disposal of your waste using biogas technology has more environmental and economic benefits than composting or disposal in a landfill. You also save on transportation and other disposal costs related to food waste disposal.
4. Financing cost for the biogas generator
Because of the many benefits associated with biogas and the technology still being considered as new; the investment cost for small, medium and large sizes are to the tune of over 1 million dollars. As such, it is worthwhile to consider the cost of your financing to improve your ROI & payback period. For instance, what will be the debt cost, equity cost etc. It will help to reduce costs of your biogas plant if you understand the implications of getting a fair deal or a least cost option that will not add extra costs to your overall investment. Taking time to consider these costs is an important factor to reducing the capital cost.
5. Operation and maintenance costs of the biogas generator
Operation and maintenance costs will be variables that will depend on where the biogas generator is located and whether a sustained or continuous supply of feedstock is within reach. Hence, before the start of the biogas project, it will be important to make a critical inventory of the available organic feedstock types from the food waste in order to avoid transportation or collection costs for the feedstock in question.
In conclusion, depending on the site-specific features of your farm or food processing company, it is worth it to conduct a pre-feasibility study to determine the cost, revenues and viability of your biogas project. You can contact us at email@example.com to learn more about a pre-feasibility study to investigate whether your farm or food processing company has a good potential for developing a biogas generator from food waste or organic waste.
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