Waste Management xxx (2014) xxx–xxx
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Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy C. Riva a, A. Schievano a,b,⇑, G. D’Imporzano a,b, F. Adani a,b,⇑ a b
Gruppo Ricicla, DiSAA, Università degli Studi di Milano, Via Celoria 2, 20133 Milano, Italy Gruppo Ricicla, DiSAA, Biomass and Bioenergy Lab., Parco Tecnologico Padano, Via Einstein, Località Cascina Codazza, 26900 Lodi, Italy
a r t i c l e
i n f o
Article history: Received 3 December 2013 Accepted 16 April 2014 Available online xxxx Keywords: Anaerobic digestion Biogas Renewable energy Energy crops Agriculture Organic waste
a b s t r a c t The purpose of this study was to observe the economic sustainability of three different biogas full scale plants, fed with different organic matrices: energy crops (EC), manure, agro-industrial (Plants B and C) and organic fraction of municipal solid waste (OFMSW) (Plant A). The plants were observed for one year and total annual biomass feeding, biomass composition and biomass cost (€ Mg1), initial investment cost and plant electric power production were registered. The unit costs of biogas and electric energy 1 (€ Sm3 biogas, € kW hEE ) were differently distributed, depending on the type of feed and plant. Plant A showed high management/maintenance cost for OFMSW treatment (0.155 € Sm3 biogas, 45% of total cost), Plant B suffered high cost for EC supply (0.130 € Sm3 biogas, 49% of total cost) and Plant C showed higher impact on the total costs because of the depreciation charge (0.146 € Sm3 biogas, 41% of total costs). The breakeven point for the tariff of electric energy, calculated for the different cases, resulted in the range 120–170 € MW h1 EE , depending on fed materials and plant scale. EC had great impact on biomass supply costs and should be reduced, in favor of organic waste and residues; plant scale still heavily influences the production costs. The EU States should drive incentives in dependence of these factors, to further develop this still promising sector. Ó 2014 Elsevier Ltd. All rights reserved.
1. Introduction Biogas/bio-methane production from anaerobic co-digestion of different biomasses plays an increasingly important role (Iglin´ski et al., 2012; Murphy et al., 2011; Holm-Nielsen et al., 2009), as microbial conversion of biomass under anaerobic digestion (AD) has several economic and environmental advantages (Ponsà et al., 2011). In addition, this process residue valuable organic substrate, i.e. digestate (Tambone et al., 2010), that can be advantageously used in agriculture as fertilizer or soil conditioner (Murphy et al., 2011). Today, in Europe, the generation of biogas by AD of organic materials is a spatially-diffused source of energy, split into a huge number of small-medium enterprises (SMEs), each one operating, above all, in its own territorial context, in agriculture as well as in food-industry or waste-management areas. Biogas industry
⇑ Correspondig authors. Address: Gruppo Ricicla, DiSAA, Università degli Studi di Milano, Via Celoria 2, 20133 Milano, Italy. Tel.: +39 0371 4662 669 (A. Schievano). Tel.: +39 0250316545 (F. Adani). E-mail addresses: [email protected] (A. Schievano), fabrizio.adani@ unimi.it (F. Adani).
induces, also, the diffusion of additional SMEs involved in the construction, monitoring, management and maintenance of biogas plants (Ahring et al., 2002). All this, plays an important effect on local economy and occupation. However, this new important and complex industry need deeper study of its potentialities; this fact requires the accessibility to technical and scientific data, experiences, tools, know-how, technical progress that with the availability of capital investments, allow developing this new economy accompanying its development with adequate policies and public incentive. In this context, above all, there is the need of full-scale data about the real production costs of electric energy (EE) or bio-methane producible through the AD technology. Agricultural biogas plants are currently growing in importance within the EU biogas sector and the substrate supply is increasingly based on the development of energy-dedicated crops (maize, sorghum, wheat, etc.). Nevertheless, if we look for future large-scale diffusion of these kinds of plants, the massive production of dedicated crops poses some energetic, economic and environmental issues. In Italy, the number of biogas plants treating organic waste (44.9% of the total production in 2011) was overtaken by the plants using manure and agricultural and forestry products (53.6%), specifically 10.6% from manure and 42.7% from agricultural and
http://dx.doi.org/10.1016/j.wasman.2014.04.018 0956-053X/Ó 2014 Elsevier Ltd. All rights reserved.
Please cite this article in press as: Riva, C., et al. Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy. Waste Management (2014), http://dx.doi.org/10.1016/j.wasman.2014.04.018
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx
forestry products; biogas from sludge represented only the 1.8% (GSE, 2012). The economical balance of energy-dedicated crops plants, today, is strongly influenced by the prices of agricultural raw materials, which could limit the prospects for further growth in this area (Eurobserv, 2012). Some authors estimated that nearly 20% of the total arable land in the EU can be assumed to be available for purposes other than food-crop production during the coming decades, if the right crop-rotation with food crops is applied (Amon et al., 2007). For farmers, energy-crops cultivation may be an interesting option for the use of set-aside land because the demand for agricultural products often comes to a rest (Hanegraaf, 1998). Besides, today many agricultural facilities have already chosen to co-digest energy-dedicated crops with refused organic materials, by-products or residues of agricultural and industrial productions. Agriculture and food-industry produce and discard huge amounts of organic materials that can be used in biogas plants for mitigating both the costs and the environmental impact of energy-dedicated crop productions. Moreover, the integration of organic fractions of municipal source-separated waste (OFMSW), civil/industrial wastewaters and animal manures would contribute in further integrating or substituting the use of dedicated crops and in decreasing the biogas production costs (Schievano et al., 2009). The use of OFMSW as co-substrate or as substitute for energy crop (EC) and agro-industrial waste (AW) would not modify the AD process, biogas production and digestate characteristics. The farm-biogas plants are good candidates for treating also OFMSW in a costeffective way, facilitating future development of a new agriculture economy and providing territorially diffused electric and thermal power (Pognani et al., 2009). From the economical point of view, the ideal mixture of different organic substrates must guarantee the lowest cost of the biogas producible (€ Sm3), i.e. coupling the highest biogas productivity (Sm3 Mg1) with the lowest biomass supply cost (€ Mg1). The bio-methane potentials (BMP) of substrates fed can be measured in ideal conditions by laboratory-scale tests (Schievano et al., 2009; Pognani et al., 2009; Hansen et al., 2004; Gunaseelan, 2007; Schievano et al., 2008). In a previous study, Schievano et al. (2009) applied the anaerobic bio-gasification potential test (ABP) (equivalent to the BMP) to a series of organic materials, to evaluate the convenience of the use of each feedstock in the process. By combining different organic materials, different solutions in feeding the biogas plant were evaluated by a new indicator, i.e. the cost of the producible biogas (€ Sm3). This indicator can help in comparing the convenience of different materials in the feeding mixture and this previous study provided an overview concerning the feedstock supply costs of biogas plants. Nevertheless, in full-scale biogas facilities the ultimate cost of the energy produced does not depend only on the feedstock supply costs; in fact other contributions must be taken into account, such as the investment depreciation charges, the managementmaintenance costs, etc. In addition, these different contributions to the ultimate production cost may considerably vary, depending on plant size and production capacities. On the other side, positive synergies related to the context and the type of biogas plant may contribute in lowering the overall production costs. As already stated by Schievano et al. (2009), the use of OFMSW as main biomass supply source can bring additional income to biogas plants, as a tariff paid for treating waste. Furthermore, through AD, organic materials are converted to valuable solid–liquid slurry that can be used as fertilizer in agricultural land, because of its highnutrient as well as stabilized organic-matter contents (Tambone et al., 2010; Ahring et al., 2002; GSE, 2012; Eurobserv, 2012; Amon et al., 2007; Hanegraaf, 1998; Schievano et al., 2009;
Pognani et al., 2009; Hansen et al., 2004; Gunaseelan, 2007; Schievano et al., 2008; Verrier et al., 1983; Converti et al., 1999). In agricultural contexts, the nutrient and OM contents of digestate may substitute the artificial or exogenous fertilizer/ amendment supply to soil, allowing the agricultural firm to avoid their supply cost. This study represents the third part of a wider work presenting the results of a 1-year survey on three full-scale biogas plants, operating in the Italian agro-industrial context with different characteristics. In the previous two sections biological processes and plant efficiency in transforming the organic matter into biogas were studied (Schievano et al., 2011a,b). In this study an economic survey of the three full-scale plants has been considered with particular, reference on how biomass-type supplied, the investment and the management/maintenance affected the ultimate biogas and electricity production costs.
2. Materials and methods 2.1. Characteristics of the 3 full-scale biogas plants Three full-scale plants were observed for a one year period starting from April to March 2009; all these plants were operating in an agro-industrial context in the northern Italy. During the year, the main characteristics of the plants were observed: total annual biomass feeding, biomass composition and their cost (€ Mg1), plant initial investment for constructions, management/maintenance costs and electric power production (Table 1). All plants operated by continuously-stirred-tank-reactors (CSTR) in ‘‘wet’’ conditions, i.e. with a total solids (TS) content in the reactors below 100 g kg1 wet weight (w.w.). In all plants, the digestate output is treated with solid–liquid separation (centrifuge) and the liquid fraction is stored into ponds, before its distribution as fertilizer in agricultural fields. The first plant (Plant A) is fed with the organic fraction of the municipal solid waste (OFMSW) (approx. 26,000–28,000 Mg y1), collected separately from five municipalities, which externalize its treatment to this private facility. The plant was located in a farm that re-utilizes the digested slurry as amendment and fertilizer for agricultural land. The OFMSW pre-treatment includes mixing the organic matrix at a ratio of 3/2 (w.w./w.w.) with re-circulated digested slurry, pulping the mix to a slurry and separating the un-degradable and/or heavy fractions such as residual plastic bags, wood, etc.. This material (about the 5–10% w.w. of the total OFMSW) is then transported to be disposed into a landfill. The second plant (Plant B) is located in a farm that re-utilizes the swine manure as liquid substrate in the biogas plant (about 23,000–25,000 Mg y1). The feeding mixture is enriched by co-digesting with pig slurry, various energy crops (maize silage, triticale and sorghum), agricultural residues (barley thresh from beer industry) and industrial organic by-products, such as glycerin (from bio-diesel production plants), molasses (from sugar cane production), bakery-industry waste and olive mill sludge. The details of the mix ratios are specified in Table 1. The crops silage and the other solid substrates are stored and charged once a week by a bulldozer in an automatic loading machine, which mixes every hour the manure with the solids in a batch, chopping the mix to a slurry and pumping it to the digesters. The third plant (Plant C), similarly to Plant B, is located in a farm and its feeding mixture is composed of swine plus cow manure (altogether about 58%) w.w., maize silage 10% w.w., cropped within the farm, milk whey 24% w.w. and rice culture by-products 8% of w.w. (from outside the farm) (Table 1). The solid materials
Please cite this article in press as: Riva, C., et al. Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy. Waste Management (2014), http://dx.doi.org/10.1016/j.wasman.2014.04.018
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx Table 1 Plants characteristics (survey April 2008–March 2009). Plant A Type of process Number and type of digesters Total digestion volume Input mixture composition
Cost of the mixture Pretreatments of the biomass Post-treatment and digestates use Total initial investment Annual feeding capacity CHPb units Total electric power potential a b
Plant B
Plant C
CSTR . thermophilic (55 °C) 5 digestion units 4 digesters in parallel +1 post-digester 5000 (5 1000) OFMSW (60 %)
CSTR. mesophilic (37 °C) 3 digestion units 2 digesters in parallel +1 post-digester 6000 (2 1500 + 3000) Swine manure (63%)
CSTR. thermophilic (55 °C) 1 digestion unit
Recirculated digestate (40%)
Energy crops (Maize silage. triticale and sorghum) mix (15%) Barley thresh from beer-industry (5%) Glycerin from bio-diesel plants (5%) Molasses (2 %) Bakery-industry waste (5%) Olive mill sludge (5%) 15.45 Silage. mixing and chopping
a
m3 % w/w
1600 Swine manure (48%). Cow manure (10%) Maize silage (10%) Milk whey (24%) Rice culture by-products (8%)
€ Mg1
70.00 (income) Mixing. pulping and separating heavy materials and plastics Solid–liquid separation. storage in ponds and distribution on agricultural land as fertilizer
9.57 Silage. mixing and chopping
k€ Mg y1
4180 45,000 2 of 500 kWEE 1000 kWEE
2720 23,000 1 of 500 kWEE 500 kWEE
3869 38,000 2 of 560 kWEE 1120 kWEE
CSTR = continuously stirred tank reactor. CHP = Combined heat and power.
are charged every three days into a tub and mixed with the manure. The automatic dosage of the digesters and chopping of the solids in the solutions is made by an adequate pump. More details are reported by Schievano et al. (2011a,b). 2.2. Characteristics of the AD process The main characteristics of the AD process observed in the three-full scale plants are reported in Table 1. All plants operated by continuously-stirred-tank-reactors (CSTR) in ’’wet’’ conditions, but at different temperature: Plant A and Plants C work in thermophilic condition at 54 °C and 55 °C respectively, and the Plant B works in mesophilic condition (38 °C). The observed plants differ in the number and type of digester. Plant A works with 5 digester, 4 in parallel and 1 post-digester with a total volume of 5000 m3 (5 * 1,000). Plant B has a total volume of 6000 m3 divided in 3 digester, 2 digester in parallel (2 * 1500 m3) and one post-digester (3000 m3). Plant C has only one digester of 1600 m3. Only Plant A in the input mixture composition has a recirculate digestate, i.e. 40% v/v of total digestion volume. The other Plants, i.e. B and C, were fed only swine manure, energy crops and something other agro-industrial under products. Fig. 1 reports the schematic flows of each plant. 2.3. EE and bio-methane productions The total EE generated was recorded as annual production in kW hEE. The average EE production rates (kW hEE d1) and the average electric power generations (kWEE) were calculated by considering 365 d y1 of operation of the combined heat and power (CHP) units. The methane content (% v/v) in the generated biogas was measured constantly by on-line monitoring systems available in the plants. No quantitative measurement of the biogas generated was possible, because no flux-meter was available in the on-line monitoring systems. The total methane generation was calculated from the total EE generation assuming a caloric power of methane of 0.2475 kW h mol1 CH4 and an average EE generation
yield (indicated by the suppliers of the CPH-units) of 35%, as reported in Schievano et al. (2011a). The total biogas productions were then calculated from the observed average methane content. The total methane and biogas productions were reported in volume units, referred to the standard temperature and pressure conditions (25 °C, 1 atm). 3. Results and discussion 3.1. Data survey and economic balances The total investment cost, indicated by the plants owners, were of 4180 k€ for Plant A, 3869 k€ for Plant B and 2720 k€ for Plant C (Table 1). This cost included the design and authorization, the concrete structures, the pumping system, the mixers, the digesters heat-systems, the pre-treatment and post-treatment facilities and technologies, the combined heat and power (CHP) generation units, the start-up costs and the automation software/hardware. The depreciation charge was calculated assuming a rate of 5.5% (average for those applied to Plants A, B and C) and 15 years for the pay-back time. This time coincides with the duration of the Italian state incentives on the EE from renewable sources as biogas, by law AEEG, n. 90/07 (GSE, 2010). The total costs of the input mixtures were calculated by considering the prices and/or the production/transportation costs of all the organic material used, during the observation period. For dedicated crops, the production costs were considered, including soil preparation, seeding, costs of fertilizers, irrigation and plant harvesting. For industrial by-products coming from outside of the biogas facilities, the costs included the transportation and, in some cases, an added price for buying the material; null costs were considered for animal manure, as they were available directly in the farms, with no transportation/management needed. For OFMSW, around 10% (w.w.) (as average) of the materials (heavy and plastic impurities) was transported and disposed into landfill with a cost of around 120 € Mg1. On the other hand, OFMSW-treatment was paid to the plant owner around 70 € Mg1 by the municipalities. Because of the uncertainty of this price to be maintained in the
Please cite this article in press as: Riva, C., et al. Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy. Waste Management (2014), http://dx.doi.org/10.1016/j.wasman.2014.04.018
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx
Fig. 1. Schematic mass/energy flows of the plants.
future, the cash flow of Plant A was re-calculated considering a minimum waste-disposal tariff of only 12 € Mg1 of OFMSW, i.e. enough to cover the cost of impurities (10% of OFMSW at 120 € Mg1) disposal into landfill. The management/maintenance costs were considered by including the following details: biogas plant maintenance, CHP unit maintenance, substrate pre-treatment and loading, digestate post-treatments, storage and distribution on agricultural field, labor and biological process supervision. The cost of the auto-consumed EE was also accounted (as approximately 10%, 5% and 6% of the total EE produced by Plant A, B and C, respectively, and priced 93.7 € MW h1). For all the plants, costs were reduced by the additional value of the digestate, used as a fertilizer and amendment for agricultural land. The use of digestate in substitution to the corresponding mineral fertilizers was accounted as avoided cost of purchasing chemical fertilizers. The values were obtained from the avoided cost for inorganic N, P and K fertilizers, substituted by the N, P and K contained in the digestates used in the three farms, previously reported (Schievano et al., 2011a). In this calculation, the prices of specific fertilizers for N, P and K supply were considered of 0.30, 0.32 and 0.35 € kg1 respectively for urea (46% N content), per-phosphate (46% P2O5 content) and potassium chloride (60% K2O content). For Plants B and C, the fraction of digestate used as fertilizer for energy crops cultivation was detracted from the total digestate. The total income was calculated by considering that the total EE produced was sold to the national network. The income calculations were made by using the price (280 € MW h1) for the renewable EE production in Italy (by law AEEG, n. 280/07, D.L. n.222, 29/ 11/2007), which benefit from the public incentives. Furthermore, in order to evaluate the possible scenario without the state incentive-system, the calculation was repeated taking into account a price of the EE of 93.7 € MW h1 (i.e. without the incentive) (GSE, 2010). In both cases, a null income was considered from the heat
co-generation, because in all of the three biogas plants there was no possibility of heat-exploitation. Only plant A profited by an additional income because the municipalities pay the private facility about 70 € Mg1 for treating and disposing the waste (Table 1). As described in Table 2, Plant A spent, in one year, around 324 k€ for the disposal of plastic and heavy fractions separated from OFMSW (around 2500–2800 Mg y1), while, for the biomass supply (dedicated crops and by-products), Plant B and C spent 596 and 218 k€, respectively. However, Plant A showed considerably higher costs (596 k€) for the management, the pre-treatments of the raw OFMSW, including the consumed electricity for pulping/ separating the undesirable impurities (heavy and plastic materials), and this accounted for the 45% of the total cost (Table 2), while the management of the other two plants fed with crops and industrial by-products was markedly less expensive. The depreciation charge was also slightly higher for Plant A, compared to Plant B, due to the additional machinery for OFMSW pre-treatments, but with equal influence on total cost (Table 2). For Plant C, instead, the investment depreciation charge accounted for over 40% of the total cost (Table 2), denoting a scale effect for smaller scale plants. The total costs were, also, calculated per Mg of input mixture and the result was very similar for Plants B and C, while for Plant A, when calculated on the Mg of OFMSW input (i.e. 27,000 Mg y1), the cost per biomass unit was higher (Table 2). Synergies and advantages were accounted: i) as income for waste treatment service and ii) as avoided costs in the hypothesis of substituting commercial fertilizers (N, P and K) and organic matter with the digestate. The avoided costs corresponding to the added value of the digestate as substitution of commercial fertilizers counted as 182, 215 and 87 k€ y1, for plant A, B and C respectively (Table 2). For Plant A, the costs for (i) waste pre-treatments, (ii) plant management/maintenance and (iii) disposal of plastics and heavy impurities, were completely covered by the municipal-
Please cite this article in press as: Riva, C., et al. Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy. Waste Management (2014), http://dx.doi.org/10.1016/j.wasman.2014.04.018
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx Table 2 Economic balances for the three full-scale biogas facilities studied (1-year survey) (survey April 2008–March 2009). Plant A
Plant B
Costs (outlay) Organic materials supply costs Management/maintenance costs Depreciation charge (15 years. interest 5.5%)
k€ y1 k€ y1 k€ y1
324 596 409
592 240 380
Total annual cost Total unit cost (per Mg of input biomass)
k€ y1 € Mg1
1329 49.2
1212 31.4
Plant A Sinergies-advantages Income from waste-treatment tariffs (municipalities) Avoided costs for fertilizers (N, P, K and organic matter) Net annual costs Income and profit Income from EE a Margin (net profit per year) a b c
k€ y1 1
k€ y k€ y1 € Mg1 k€ y1 k€ y1
b
+1890 +182 +743 +27.5 +1773 +2516
Plant A
Plant C 218 160 267 645 28.4
c
+324 +182 822 30.4
Plant B
Plant C
–
–
+215 997 26.2
+1773 +950
+2335 +1338
+87 558 24.3 +924 +366
Incentive on EE (tariff = 280 € MW h1 EE ). Waste-treatment charge of 70 € Mg1. Minimum waste-treatment charge of 12 € Mg1.
ities, by the payment of a charge of about 70 € Mg1 (Table 2), for a total income of 1890 k€ y1, which exceeded the costs of about 743 k€ a1 (case Ab). In the hypothesis of a minimum payment of 12 € Mg1 (case Ac), Plant A would show a net cost of 822 k€ y1, i.e. 30.4 € Mg1. This was lower than the net cost of Plant B, even if the unit cost resulted lower (26.5 € Mg1, Table 2). Plant C, with 558 k€ y1 of net cost, resulted in even lower unit cost (24.3 € Mg1, Table 2). The main income, for all the three plants, came from the EE generation (Table 2), benefited of the public incentive on renewable energy (280 € MW h1). During the monitored year, Plant A produced 6331 MW h y1 (from 3845808 Sm3biogas y1); Plant B produced 8339 MW h y1 (from 4565892 Sm3biogas y1) and Plant C produced 3299 MW h y1 (from 1823650 Sm3biogas y1) (Schievano et al., 2011b). Plant A, B and C showed incomes of 1773, 2335 and 924 k€ and resulted in positive cash flows (net profit) of 2516 (case Ab), 950 (case Ac), 1338 and 366 k€, respectively (Table 2). 3.2. Unit costs of biogas and EE The unit costs of biogas and EE are reported in Table 3. The biomass supply costs were generally acceptable, as compared to those presented by Schievano et al. (2009). In that contribution, the cost of energy crops and by-products was considered as price on the market and the resulting unit costs of the biogas were generally higher (0.11–0.28 € Sm3 biogas) than those found in this article, i.e. 0.084–0.13 € Sm3 biogas (Table 3). This is because the biomass supply in plants B and C was guaranteed by autonomous production of energy crops and their cost was related only to production costs. Additionally, relatively consistent percentage (63% and 58% for plant B and C respectively) of manures (null cost) were used (Table 1) and the by-product were generally low cost, so that the whole feeding mixtures resulted relatively cheap (15.45 and 9.57 € Mg1) as compared to those presented by Schievano et al. (2009) (up to 31 € Mg1). Regarding the OFMSW, (Schievano et al., 2009) did not take all pre-treatment costs into account as supply cost and, additionally, they considered the income from waste treatment tariff as a negative cost for the calculation of the unit cost of biogas. This makes the results here obtained from Plant A incomparable. Compared to Plants A and B, Plant C showed higher impact on the total costs because of the depreciation charge (41% of the total costs), as influence of a scale-factor. On the contrary, Plant A
suffered higher impact because of the management/maintenance costs (45% of the total costs) and Plant B because of the organic materials supply costs (49% of the total costs). The total costs of biogas resulted 0.346 € Sm3 biogas for plant A, 3 0.265 € Sm3 biogas for plant B and 0.354 € Smbiogas for plant C (Table 3). Reported on EE unit, the total costs for the three plants resulted 0.210 € kW h1 for plant A, 0.145 € kW h1 for plant B and EE EE 0.195 € kW h1 for plant C (Table 3). Table 3 also shows the net cost EE of biogas and EE generated, these were calculated by summing the synergies-advantages and incomes to total costs. Comparing these costs with the potential costs reported in Schievano et al. (2009), in that work energy-crops resulted in high impacts on the costs of the EE generation, while agro-industrial residues and waste were shown to have the potential of mitigating these costs. In the observed full-scale plants, biomass supply still accounts for the 40% of the total cost. This highlights the importance of reducing biomass supply cost for overall cost limitation. 3.3. Profit margin linked to EE tariff The profit margins of biogas plants are related to the incentive on EE tariffs that is paid for the production of electricity from renewable sources. All the three plants perceived a EE tariff equal to 280 € MW h1. Assuming a decrease in the incentive trend, the EE was recalculated in order to understand profit margin trend for the three plants (Fig. 2), following the equation:
Marginðnet profit per yearÞ ¼ itEE þP EE þ Iwt þ ACf C b C m Ci where the considered variable is itEE = incentive tariff for Electric Energy (€ MW h1 EE ), and the following constants: PM = Profit margin (k€ MW h1 PEE = Electric Energy Production (MW hEE y1); EE ); Iwt = income from waste-treatment tariff (k€ y1); ACf = avoided costs for fertilizers (k€ y1); Cb = annual costs for biomass supply (k€ y1); Cb = annual costs for management/maintenance (k€ y1); Cb = annual costs for depreciation charge of initial investment (k€ y1). Fig. 2 shows that Plant A have a profit trend line always above the x-axis (Fig. 2), because in this case (case Ab) the high waste treatment charge (70 € Mg1) guarantees minimum annual profit of 743 k€ also in case of null price on EE generated. Instead, plant Ac, (payment of 12 € Mg1 by the municipalities for OFMSW treatment), has a breakeven point when EE price is equal to
Please cite this article in press as: Riva, C., et al. Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy. Waste Management (2014), http://dx.doi.org/10.1016/j.wasman.2014.04.018
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx
Table 3 Unit costs/margins of EE (per kW hEE) and biogas (per Sm3 biogas). Biogas Organic materials supply costs Management/maintenance costs Depreciation charge (15 years, interest 5.5%) Total costs
Income from waste-treatment tariffs (municipalities) Avoided costs for fertilizers (N, P, K and organic matter) Net costs biogas generated Margin (net profit)
Electric energy Organic materials supply costs Management/maintenance costs Depreciation charge (15 years, interest 5.5%) Total costs
Income from waste-treatment tariffs (municipalities) Avoided costs for fertilizers (N, P, K and organic matter) Net costs of the EE generated Margin (net profit per kWhEE) a b
€
Sm3 biogas,
% of total cost
€ € € €
Sm3 biogas Sm3 biogas Sm3 biogas Sm3 biogas
€ kW h1 EE , % of total cost
€ kW h1 EE € kW h1 EE € kW h1 EE € kW h1 EE
Plant A
Plant B
Plant C
0.084 (24%) 0.155 (45%) 0.106 (31%) 0.346
0.130 (49%) 0.053 (20%) 0.083 (31%) 0.265
0.120 (34%) 0.088 (25%) 0.146 (41%) 0.354
Plant Aa
Plant Ab
Plant B
Plant C
+0.492 +0.047 +0.193 +0.654
+0.085 +0.047 0.214 +0.247
– +0.047 0.218 +0.293
– +0.048 0.306 +0.201
Plant A
Plant B
Plant C
0.051 (24%) 0.094 (45%) 0.065 (31%) 0.210
0.071 (49%) 0.029 (20%) 0.046 (31%) 0.145
0.066 (34%) 0.048 (25%) 0.081 (41%) 0.195
Plant Aa
Plant Ab
Plant B
Plant C
+0.298 +0.029 +0.117 +0.397
+0.051 +0.029 0.130 +0.150
+0.025 0.120 +0.160
+0.026 0.169 +0.111
Waste-treatment charge of 70 € Mg1. Minimum waste-treatment charge of 12 € Mg1.
to rely on energy dedicated crops would generally lead to increased supply costs, as compared to residues and by products, and thereby to increased overall production cost. Especially, waste treatment, relying on a treatment-tariff, is very interesting for biogas plants. On the other hand, the high public incentive on EE, paid by Italian State and by many EU governments, could tend to sustain crop massive use, thereby demotivating the transformation of residues and waste into resources. There is space for a slight reduction of incentives and the tariffs should favor the use of by-product and waste. The trend of the market will be to stimulate smaller plants scale in order to replace energy crops with the use of agro-industrial waste.
References
Fig. 2. Margin (net profit per year) with different incentive on EE.
130 € MW h1. Plant B and Plant C showed breakeven point with EE price of respectively 120 and 170 € MW h1. The scale effect on Plant C (500 kWEE instead of 1000 kWEE) results evident from this plot, especially because of the investment cost, which counted for over 40% of the costs (Table 3). Besides, Plant B was also more efficient in terms of biogas/EE productivity, showed lower unit costs (Table 3) that allowed lower breakeven point.
4. Conclusions In this work, the production costs of biogas and EE were relatively high and the cost of biomass supply, heavily counts in the overall cost. As previously demonstrated (Schievano et al., 2009),
Ahring, B.K., Mladenovska, Z., Iranpour, R., Westermann, P., 2002. State of the art and future prospectives of thermophilic anaerobic digestion. Water Sci. Technol. 45, 298–308. Amon, Th., Amon, B., Kryvoruchko, V., Machmuller, A., Hopfner-Sixt, K., Bodiroza, V., Hrbeck, R., Friedel, J., Potsch, E., Wagentristl, H., Shreiner, M., Zollitsch, W., 2007. Methane production through anaerobic digestion of various energy crops grown in sustainable crop rotations. Bioresource Technol. 98, 3204–3212. Converti, A., Del Borghi, A., Zilli, M., Arni, S., Del Borghi, M., 1999. Anaerobic digestion of the vegetable fraction of municipal solid refuses: mesophilic versus thermophilic conditions. Bioproc. Biosyst. Eng. 21, 371–376. Eurobserv’ER (2012) – Biogas baromoter, 2012 – . GSE – Gestore Servizi Elettici, 2010, (Accepted 10.02.10). GSE (2012) – Rapporto statistico 2011 impianti a fonti rinnovabili. Gunaseelan, V.N., 2007. Regression models of ultimate methane yields of fruits and vegetable solid wastes, sorghum and napiergrass on chemical composition. Bioresour. Technol. 98, 1270–1277. Hanegraaf, M.C., 1998. Environmental performance indicators for nitrogen. Environ. Pollut. 102, 711–715. Hansen, T.L., Schmidt, J.E., Angelidaki, I., Marca, E., Jansen, J.I.C., Mosbaek, H., Christensen, T.H., 2004. Method for determination of methane potentials of solid organic waste. Waste Manage. 24, 393–400. Holm-Nielsen, J.B., Al, Seadi T., Olskowicz-Popiel, P., 2009. The future of digestion and biogas utilization. Bioresource Technol. 100, 5478–5484. Iglin´ski, B., Buczkowski, R., Iglin´ska, A., Cichosz, M., Piechota, G., Kujawski, W., 2012. Agricultural biogas plants in Poland: Investment process, economical and environmental aspects, biogas potenzial. Renew. sustain. Energy Rev. 16, 4890– 4900.
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx Murphy, J., Braun, R., Weiland, P., Wellinger, A., 2011. Biogas from crop digestion. IEA Bioenergy, Task 37 – Energy from biogas, September 2011. Pognani, M., D’Imporzano, G., Scglia, B., Adani, F., 2009. Substituting energy crop with organic fraction of municipal solid wate for biogas production at farm level: a full-scale plant study. Proc. Biochem. 44, 817–821. Ponsà, S., Gea, T., Sànchez, A., 2011. Anaerobic co-digestion of the organic fraction of municipal solid waste with several pure organic co-substrates. Biosyst. Eng. 108, 352–360. Schievano, A., Pognani, M., D’Imporzano, G., Adani, F., 2008. Predicting anaerobic biogasification potential of ingestates and digestates of a full-scale biogas plant using chemical and biological parameters. Bioresource Technol. 99, 8112–8117. Schievano, A., D’Imporzano, G., Adani, F., 2009. Substituting energy crops with organic wastes and agro-industrial residues for biogas production. J. Environ. Manage. 90, 2537–2541.
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Schievano, A., D’Imporzano, G., Salati, S., Adani, F., 2011a. On-field study of anaerobic digestion full-scale plants (Part I): an on-field methodology to determine mass, carbon and nutrients balance. Bioresource Technol. 102, 7735– 7744. Schievano, A., D’Imporzano, G., Orzi, V., Adani, F., 2011b. On-field study of anaerobic digestion full-scale plants (Part II): new approaches in monitoring and evaluating process efficiency. Bioresounce Technol. 102, 8814–8819. Tambone, F., Scaglia, B., D’Imporzano, G., Schievano, A., Orzi, V., Salati, S., Adani, F., 2010. Assessing amendment and fertilizing properties of digestates from anaerobic digestion through a comparative study with sewage sludge and compost. Chemosphere 81, 577–583. Verrier, D., Ray, F., Florentz, M., 1983. Two stage anaerobic digestion of solid vegetable wastes: bench-scale studies. In: Proceedings of the 3rd International symposium of Anaerobic Digestion, Boston, USA, 17–19 August 1983.
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Contents lists available at ScienceDirect
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Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy C. Riva a, A. Schievano a,b,⇑, G. D’Imporzano a,b, F. Adani a,b,⇑ a b
Gruppo Ricicla, DiSAA, Università degli Studi di Milano, Via Celoria 2, 20133 Milano, Italy Gruppo Ricicla, DiSAA, Biomass and Bioenergy Lab., Parco Tecnologico Padano, Via Einstein, Località Cascina Codazza, 26900 Lodi, Italy
a r t i c l e
i n f o
Article history: Received 3 December 2013 Accepted 16 April 2014 Available online xxxx Keywords: Anaerobic digestion Biogas Renewable energy Energy crops Agriculture Organic waste
a b s t r a c t The purpose of this study was to observe the economic sustainability of three different biogas full scale plants, fed with different organic matrices: energy crops (EC), manure, agro-industrial (Plants B and C) and organic fraction of municipal solid waste (OFMSW) (Plant A). The plants were observed for one year and total annual biomass feeding, biomass composition and biomass cost (€ Mg1), initial investment cost and plant electric power production were registered. The unit costs of biogas and electric energy 1 (€ Sm3 biogas, € kW hEE ) were differently distributed, depending on the type of feed and plant. Plant A showed high management/maintenance cost for OFMSW treatment (0.155 € Sm3 biogas, 45% of total cost), Plant B suffered high cost for EC supply (0.130 € Sm3 biogas, 49% of total cost) and Plant C showed higher impact on the total costs because of the depreciation charge (0.146 € Sm3 biogas, 41% of total costs). The breakeven point for the tariff of electric energy, calculated for the different cases, resulted in the range 120–170 € MW h1 EE , depending on fed materials and plant scale. EC had great impact on biomass supply costs and should be reduced, in favor of organic waste and residues; plant scale still heavily influences the production costs. The EU States should drive incentives in dependence of these factors, to further develop this still promising sector. Ó 2014 Elsevier Ltd. All rights reserved.
1. Introduction Biogas/bio-methane production from anaerobic co-digestion of different biomasses plays an increasingly important role (Iglin´ski et al., 2012; Murphy et al., 2011; Holm-Nielsen et al., 2009), as microbial conversion of biomass under anaerobic digestion (AD) has several economic and environmental advantages (Ponsà et al., 2011). In addition, this process residue valuable organic substrate, i.e. digestate (Tambone et al., 2010), that can be advantageously used in agriculture as fertilizer or soil conditioner (Murphy et al., 2011). Today, in Europe, the generation of biogas by AD of organic materials is a spatially-diffused source of energy, split into a huge number of small-medium enterprises (SMEs), each one operating, above all, in its own territorial context, in agriculture as well as in food-industry or waste-management areas. Biogas industry
⇑ Correspondig authors. Address: Gruppo Ricicla, DiSAA, Università degli Studi di Milano, Via Celoria 2, 20133 Milano, Italy. Tel.: +39 0371 4662 669 (A. Schievano). Tel.: +39 0250316545 (F. Adani). E-mail addresses: [email protected] (A. Schievano), fabrizio.adani@ unimi.it (F. Adani).
induces, also, the diffusion of additional SMEs involved in the construction, monitoring, management and maintenance of biogas plants (Ahring et al., 2002). All this, plays an important effect on local economy and occupation. However, this new important and complex industry need deeper study of its potentialities; this fact requires the accessibility to technical and scientific data, experiences, tools, know-how, technical progress that with the availability of capital investments, allow developing this new economy accompanying its development with adequate policies and public incentive. In this context, above all, there is the need of full-scale data about the real production costs of electric energy (EE) or bio-methane producible through the AD technology. Agricultural biogas plants are currently growing in importance within the EU biogas sector and the substrate supply is increasingly based on the development of energy-dedicated crops (maize, sorghum, wheat, etc.). Nevertheless, if we look for future large-scale diffusion of these kinds of plants, the massive production of dedicated crops poses some energetic, economic and environmental issues. In Italy, the number of biogas plants treating organic waste (44.9% of the total production in 2011) was overtaken by the plants using manure and agricultural and forestry products (53.6%), specifically 10.6% from manure and 42.7% from agricultural and
http://dx.doi.org/10.1016/j.wasman.2014.04.018 0956-053X/Ó 2014 Elsevier Ltd. All rights reserved.
Please cite this article in press as: Riva, C., et al. Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy. Waste Management (2014), http://dx.doi.org/10.1016/j.wasman.2014.04.018
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx
forestry products; biogas from sludge represented only the 1.8% (GSE, 2012). The economical balance of energy-dedicated crops plants, today, is strongly influenced by the prices of agricultural raw materials, which could limit the prospects for further growth in this area (Eurobserv, 2012). Some authors estimated that nearly 20% of the total arable land in the EU can be assumed to be available for purposes other than food-crop production during the coming decades, if the right crop-rotation with food crops is applied (Amon et al., 2007). For farmers, energy-crops cultivation may be an interesting option for the use of set-aside land because the demand for agricultural products often comes to a rest (Hanegraaf, 1998). Besides, today many agricultural facilities have already chosen to co-digest energy-dedicated crops with refused organic materials, by-products or residues of agricultural and industrial productions. Agriculture and food-industry produce and discard huge amounts of organic materials that can be used in biogas plants for mitigating both the costs and the environmental impact of energy-dedicated crop productions. Moreover, the integration of organic fractions of municipal source-separated waste (OFMSW), civil/industrial wastewaters and animal manures would contribute in further integrating or substituting the use of dedicated crops and in decreasing the biogas production costs (Schievano et al., 2009). The use of OFMSW as co-substrate or as substitute for energy crop (EC) and agro-industrial waste (AW) would not modify the AD process, biogas production and digestate characteristics. The farm-biogas plants are good candidates for treating also OFMSW in a costeffective way, facilitating future development of a new agriculture economy and providing territorially diffused electric and thermal power (Pognani et al., 2009). From the economical point of view, the ideal mixture of different organic substrates must guarantee the lowest cost of the biogas producible (€ Sm3), i.e. coupling the highest biogas productivity (Sm3 Mg1) with the lowest biomass supply cost (€ Mg1). The bio-methane potentials (BMP) of substrates fed can be measured in ideal conditions by laboratory-scale tests (Schievano et al., 2009; Pognani et al., 2009; Hansen et al., 2004; Gunaseelan, 2007; Schievano et al., 2008). In a previous study, Schievano et al. (2009) applied the anaerobic bio-gasification potential test (ABP) (equivalent to the BMP) to a series of organic materials, to evaluate the convenience of the use of each feedstock in the process. By combining different organic materials, different solutions in feeding the biogas plant were evaluated by a new indicator, i.e. the cost of the producible biogas (€ Sm3). This indicator can help in comparing the convenience of different materials in the feeding mixture and this previous study provided an overview concerning the feedstock supply costs of biogas plants. Nevertheless, in full-scale biogas facilities the ultimate cost of the energy produced does not depend only on the feedstock supply costs; in fact other contributions must be taken into account, such as the investment depreciation charges, the managementmaintenance costs, etc. In addition, these different contributions to the ultimate production cost may considerably vary, depending on plant size and production capacities. On the other side, positive synergies related to the context and the type of biogas plant may contribute in lowering the overall production costs. As already stated by Schievano et al. (2009), the use of OFMSW as main biomass supply source can bring additional income to biogas plants, as a tariff paid for treating waste. Furthermore, through AD, organic materials are converted to valuable solid–liquid slurry that can be used as fertilizer in agricultural land, because of its highnutrient as well as stabilized organic-matter contents (Tambone et al., 2010; Ahring et al., 2002; GSE, 2012; Eurobserv, 2012; Amon et al., 2007; Hanegraaf, 1998; Schievano et al., 2009;
Pognani et al., 2009; Hansen et al., 2004; Gunaseelan, 2007; Schievano et al., 2008; Verrier et al., 1983; Converti et al., 1999). In agricultural contexts, the nutrient and OM contents of digestate may substitute the artificial or exogenous fertilizer/ amendment supply to soil, allowing the agricultural firm to avoid their supply cost. This study represents the third part of a wider work presenting the results of a 1-year survey on three full-scale biogas plants, operating in the Italian agro-industrial context with different characteristics. In the previous two sections biological processes and plant efficiency in transforming the organic matter into biogas were studied (Schievano et al., 2011a,b). In this study an economic survey of the three full-scale plants has been considered with particular, reference on how biomass-type supplied, the investment and the management/maintenance affected the ultimate biogas and electricity production costs.
2. Materials and methods 2.1. Characteristics of the 3 full-scale biogas plants Three full-scale plants were observed for a one year period starting from April to March 2009; all these plants were operating in an agro-industrial context in the northern Italy. During the year, the main characteristics of the plants were observed: total annual biomass feeding, biomass composition and their cost (€ Mg1), plant initial investment for constructions, management/maintenance costs and electric power production (Table 1). All plants operated by continuously-stirred-tank-reactors (CSTR) in ‘‘wet’’ conditions, i.e. with a total solids (TS) content in the reactors below 100 g kg1 wet weight (w.w.). In all plants, the digestate output is treated with solid–liquid separation (centrifuge) and the liquid fraction is stored into ponds, before its distribution as fertilizer in agricultural fields. The first plant (Plant A) is fed with the organic fraction of the municipal solid waste (OFMSW) (approx. 26,000–28,000 Mg y1), collected separately from five municipalities, which externalize its treatment to this private facility. The plant was located in a farm that re-utilizes the digested slurry as amendment and fertilizer for agricultural land. The OFMSW pre-treatment includes mixing the organic matrix at a ratio of 3/2 (w.w./w.w.) with re-circulated digested slurry, pulping the mix to a slurry and separating the un-degradable and/or heavy fractions such as residual plastic bags, wood, etc.. This material (about the 5–10% w.w. of the total OFMSW) is then transported to be disposed into a landfill. The second plant (Plant B) is located in a farm that re-utilizes the swine manure as liquid substrate in the biogas plant (about 23,000–25,000 Mg y1). The feeding mixture is enriched by co-digesting with pig slurry, various energy crops (maize silage, triticale and sorghum), agricultural residues (barley thresh from beer industry) and industrial organic by-products, such as glycerin (from bio-diesel production plants), molasses (from sugar cane production), bakery-industry waste and olive mill sludge. The details of the mix ratios are specified in Table 1. The crops silage and the other solid substrates are stored and charged once a week by a bulldozer in an automatic loading machine, which mixes every hour the manure with the solids in a batch, chopping the mix to a slurry and pumping it to the digesters. The third plant (Plant C), similarly to Plant B, is located in a farm and its feeding mixture is composed of swine plus cow manure (altogether about 58%) w.w., maize silage 10% w.w., cropped within the farm, milk whey 24% w.w. and rice culture by-products 8% of w.w. (from outside the farm) (Table 1). The solid materials
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx Table 1 Plants characteristics (survey April 2008–March 2009). Plant A Type of process Number and type of digesters Total digestion volume Input mixture composition
Cost of the mixture Pretreatments of the biomass Post-treatment and digestates use Total initial investment Annual feeding capacity CHPb units Total electric power potential a b
Plant B
Plant C
CSTR . thermophilic (55 °C) 5 digestion units 4 digesters in parallel +1 post-digester 5000 (5 1000) OFMSW (60 %)
CSTR. mesophilic (37 °C) 3 digestion units 2 digesters in parallel +1 post-digester 6000 (2 1500 + 3000) Swine manure (63%)
CSTR. thermophilic (55 °C) 1 digestion unit
Recirculated digestate (40%)
Energy crops (Maize silage. triticale and sorghum) mix (15%) Barley thresh from beer-industry (5%) Glycerin from bio-diesel plants (5%) Molasses (2 %) Bakery-industry waste (5%) Olive mill sludge (5%) 15.45 Silage. mixing and chopping
a
m3 % w/w
1600 Swine manure (48%). Cow manure (10%) Maize silage (10%) Milk whey (24%) Rice culture by-products (8%)
€ Mg1
70.00 (income) Mixing. pulping and separating heavy materials and plastics Solid–liquid separation. storage in ponds and distribution on agricultural land as fertilizer
9.57 Silage. mixing and chopping
k€ Mg y1
4180 45,000 2 of 500 kWEE 1000 kWEE
2720 23,000 1 of 500 kWEE 500 kWEE
3869 38,000 2 of 560 kWEE 1120 kWEE
CSTR = continuously stirred tank reactor. CHP = Combined heat and power.
are charged every three days into a tub and mixed with the manure. The automatic dosage of the digesters and chopping of the solids in the solutions is made by an adequate pump. More details are reported by Schievano et al. (2011a,b). 2.2. Characteristics of the AD process The main characteristics of the AD process observed in the three-full scale plants are reported in Table 1. All plants operated by continuously-stirred-tank-reactors (CSTR) in ’’wet’’ conditions, but at different temperature: Plant A and Plants C work in thermophilic condition at 54 °C and 55 °C respectively, and the Plant B works in mesophilic condition (38 °C). The observed plants differ in the number and type of digester. Plant A works with 5 digester, 4 in parallel and 1 post-digester with a total volume of 5000 m3 (5 * 1,000). Plant B has a total volume of 6000 m3 divided in 3 digester, 2 digester in parallel (2 * 1500 m3) and one post-digester (3000 m3). Plant C has only one digester of 1600 m3. Only Plant A in the input mixture composition has a recirculate digestate, i.e. 40% v/v of total digestion volume. The other Plants, i.e. B and C, were fed only swine manure, energy crops and something other agro-industrial under products. Fig. 1 reports the schematic flows of each plant. 2.3. EE and bio-methane productions The total EE generated was recorded as annual production in kW hEE. The average EE production rates (kW hEE d1) and the average electric power generations (kWEE) were calculated by considering 365 d y1 of operation of the combined heat and power (CHP) units. The methane content (% v/v) in the generated biogas was measured constantly by on-line monitoring systems available in the plants. No quantitative measurement of the biogas generated was possible, because no flux-meter was available in the on-line monitoring systems. The total methane generation was calculated from the total EE generation assuming a caloric power of methane of 0.2475 kW h mol1 CH4 and an average EE generation
yield (indicated by the suppliers of the CPH-units) of 35%, as reported in Schievano et al. (2011a). The total biogas productions were then calculated from the observed average methane content. The total methane and biogas productions were reported in volume units, referred to the standard temperature and pressure conditions (25 °C, 1 atm). 3. Results and discussion 3.1. Data survey and economic balances The total investment cost, indicated by the plants owners, were of 4180 k€ for Plant A, 3869 k€ for Plant B and 2720 k€ for Plant C (Table 1). This cost included the design and authorization, the concrete structures, the pumping system, the mixers, the digesters heat-systems, the pre-treatment and post-treatment facilities and technologies, the combined heat and power (CHP) generation units, the start-up costs and the automation software/hardware. The depreciation charge was calculated assuming a rate of 5.5% (average for those applied to Plants A, B and C) and 15 years for the pay-back time. This time coincides with the duration of the Italian state incentives on the EE from renewable sources as biogas, by law AEEG, n. 90/07 (GSE, 2010). The total costs of the input mixtures were calculated by considering the prices and/or the production/transportation costs of all the organic material used, during the observation period. For dedicated crops, the production costs were considered, including soil preparation, seeding, costs of fertilizers, irrigation and plant harvesting. For industrial by-products coming from outside of the biogas facilities, the costs included the transportation and, in some cases, an added price for buying the material; null costs were considered for animal manure, as they were available directly in the farms, with no transportation/management needed. For OFMSW, around 10% (w.w.) (as average) of the materials (heavy and plastic impurities) was transported and disposed into landfill with a cost of around 120 € Mg1. On the other hand, OFMSW-treatment was paid to the plant owner around 70 € Mg1 by the municipalities. Because of the uncertainty of this price to be maintained in the
Please cite this article in press as: Riva, C., et al. Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy. Waste Management (2014), http://dx.doi.org/10.1016/j.wasman.2014.04.018
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx
Fig. 1. Schematic mass/energy flows of the plants.
future, the cash flow of Plant A was re-calculated considering a minimum waste-disposal tariff of only 12 € Mg1 of OFMSW, i.e. enough to cover the cost of impurities (10% of OFMSW at 120 € Mg1) disposal into landfill. The management/maintenance costs were considered by including the following details: biogas plant maintenance, CHP unit maintenance, substrate pre-treatment and loading, digestate post-treatments, storage and distribution on agricultural field, labor and biological process supervision. The cost of the auto-consumed EE was also accounted (as approximately 10%, 5% and 6% of the total EE produced by Plant A, B and C, respectively, and priced 93.7 € MW h1). For all the plants, costs were reduced by the additional value of the digestate, used as a fertilizer and amendment for agricultural land. The use of digestate in substitution to the corresponding mineral fertilizers was accounted as avoided cost of purchasing chemical fertilizers. The values were obtained from the avoided cost for inorganic N, P and K fertilizers, substituted by the N, P and K contained in the digestates used in the three farms, previously reported (Schievano et al., 2011a). In this calculation, the prices of specific fertilizers for N, P and K supply were considered of 0.30, 0.32 and 0.35 € kg1 respectively for urea (46% N content), per-phosphate (46% P2O5 content) and potassium chloride (60% K2O content). For Plants B and C, the fraction of digestate used as fertilizer for energy crops cultivation was detracted from the total digestate. The total income was calculated by considering that the total EE produced was sold to the national network. The income calculations were made by using the price (280 € MW h1) for the renewable EE production in Italy (by law AEEG, n. 280/07, D.L. n.222, 29/ 11/2007), which benefit from the public incentives. Furthermore, in order to evaluate the possible scenario without the state incentive-system, the calculation was repeated taking into account a price of the EE of 93.7 € MW h1 (i.e. without the incentive) (GSE, 2010). In both cases, a null income was considered from the heat
co-generation, because in all of the three biogas plants there was no possibility of heat-exploitation. Only plant A profited by an additional income because the municipalities pay the private facility about 70 € Mg1 for treating and disposing the waste (Table 1). As described in Table 2, Plant A spent, in one year, around 324 k€ for the disposal of plastic and heavy fractions separated from OFMSW (around 2500–2800 Mg y1), while, for the biomass supply (dedicated crops and by-products), Plant B and C spent 596 and 218 k€, respectively. However, Plant A showed considerably higher costs (596 k€) for the management, the pre-treatments of the raw OFMSW, including the consumed electricity for pulping/ separating the undesirable impurities (heavy and plastic materials), and this accounted for the 45% of the total cost (Table 2), while the management of the other two plants fed with crops and industrial by-products was markedly less expensive. The depreciation charge was also slightly higher for Plant A, compared to Plant B, due to the additional machinery for OFMSW pre-treatments, but with equal influence on total cost (Table 2). For Plant C, instead, the investment depreciation charge accounted for over 40% of the total cost (Table 2), denoting a scale effect for smaller scale plants. The total costs were, also, calculated per Mg of input mixture and the result was very similar for Plants B and C, while for Plant A, when calculated on the Mg of OFMSW input (i.e. 27,000 Mg y1), the cost per biomass unit was higher (Table 2). Synergies and advantages were accounted: i) as income for waste treatment service and ii) as avoided costs in the hypothesis of substituting commercial fertilizers (N, P and K) and organic matter with the digestate. The avoided costs corresponding to the added value of the digestate as substitution of commercial fertilizers counted as 182, 215 and 87 k€ y1, for plant A, B and C respectively (Table 2). For Plant A, the costs for (i) waste pre-treatments, (ii) plant management/maintenance and (iii) disposal of plastics and heavy impurities, were completely covered by the municipal-
Please cite this article in press as: Riva, C., et al. Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy. Waste Management (2014), http://dx.doi.org/10.1016/j.wasman.2014.04.018
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx Table 2 Economic balances for the three full-scale biogas facilities studied (1-year survey) (survey April 2008–March 2009). Plant A
Plant B
Costs (outlay) Organic materials supply costs Management/maintenance costs Depreciation charge (15 years. interest 5.5%)
k€ y1 k€ y1 k€ y1
324 596 409
592 240 380
Total annual cost Total unit cost (per Mg of input biomass)
k€ y1 € Mg1
1329 49.2
1212 31.4
Plant A Sinergies-advantages Income from waste-treatment tariffs (municipalities) Avoided costs for fertilizers (N, P, K and organic matter) Net annual costs Income and profit Income from EE a Margin (net profit per year) a b c
k€ y1 1
k€ y k€ y1 € Mg1 k€ y1 k€ y1
b
+1890 +182 +743 +27.5 +1773 +2516
Plant A
Plant C 218 160 267 645 28.4
c
+324 +182 822 30.4
Plant B
Plant C
–
–
+215 997 26.2
+1773 +950
+2335 +1338
+87 558 24.3 +924 +366
Incentive on EE (tariff = 280 € MW h1 EE ). Waste-treatment charge of 70 € Mg1. Minimum waste-treatment charge of 12 € Mg1.
ities, by the payment of a charge of about 70 € Mg1 (Table 2), for a total income of 1890 k€ y1, which exceeded the costs of about 743 k€ a1 (case Ab). In the hypothesis of a minimum payment of 12 € Mg1 (case Ac), Plant A would show a net cost of 822 k€ y1, i.e. 30.4 € Mg1. This was lower than the net cost of Plant B, even if the unit cost resulted lower (26.5 € Mg1, Table 2). Plant C, with 558 k€ y1 of net cost, resulted in even lower unit cost (24.3 € Mg1, Table 2). The main income, for all the three plants, came from the EE generation (Table 2), benefited of the public incentive on renewable energy (280 € MW h1). During the monitored year, Plant A produced 6331 MW h y1 (from 3845808 Sm3biogas y1); Plant B produced 8339 MW h y1 (from 4565892 Sm3biogas y1) and Plant C produced 3299 MW h y1 (from 1823650 Sm3biogas y1) (Schievano et al., 2011b). Plant A, B and C showed incomes of 1773, 2335 and 924 k€ and resulted in positive cash flows (net profit) of 2516 (case Ab), 950 (case Ac), 1338 and 366 k€, respectively (Table 2). 3.2. Unit costs of biogas and EE The unit costs of biogas and EE are reported in Table 3. The biomass supply costs were generally acceptable, as compared to those presented by Schievano et al. (2009). In that contribution, the cost of energy crops and by-products was considered as price on the market and the resulting unit costs of the biogas were generally higher (0.11–0.28 € Sm3 biogas) than those found in this article, i.e. 0.084–0.13 € Sm3 biogas (Table 3). This is because the biomass supply in plants B and C was guaranteed by autonomous production of energy crops and their cost was related only to production costs. Additionally, relatively consistent percentage (63% and 58% for plant B and C respectively) of manures (null cost) were used (Table 1) and the by-product were generally low cost, so that the whole feeding mixtures resulted relatively cheap (15.45 and 9.57 € Mg1) as compared to those presented by Schievano et al. (2009) (up to 31 € Mg1). Regarding the OFMSW, (Schievano et al., 2009) did not take all pre-treatment costs into account as supply cost and, additionally, they considered the income from waste treatment tariff as a negative cost for the calculation of the unit cost of biogas. This makes the results here obtained from Plant A incomparable. Compared to Plants A and B, Plant C showed higher impact on the total costs because of the depreciation charge (41% of the total costs), as influence of a scale-factor. On the contrary, Plant A
suffered higher impact because of the management/maintenance costs (45% of the total costs) and Plant B because of the organic materials supply costs (49% of the total costs). The total costs of biogas resulted 0.346 € Sm3 biogas for plant A, 3 0.265 € Sm3 biogas for plant B and 0.354 € Smbiogas for plant C (Table 3). Reported on EE unit, the total costs for the three plants resulted 0.210 € kW h1 for plant A, 0.145 € kW h1 for plant B and EE EE 0.195 € kW h1 for plant C (Table 3). Table 3 also shows the net cost EE of biogas and EE generated, these were calculated by summing the synergies-advantages and incomes to total costs. Comparing these costs with the potential costs reported in Schievano et al. (2009), in that work energy-crops resulted in high impacts on the costs of the EE generation, while agro-industrial residues and waste were shown to have the potential of mitigating these costs. In the observed full-scale plants, biomass supply still accounts for the 40% of the total cost. This highlights the importance of reducing biomass supply cost for overall cost limitation. 3.3. Profit margin linked to EE tariff The profit margins of biogas plants are related to the incentive on EE tariffs that is paid for the production of electricity from renewable sources. All the three plants perceived a EE tariff equal to 280 € MW h1. Assuming a decrease in the incentive trend, the EE was recalculated in order to understand profit margin trend for the three plants (Fig. 2), following the equation:
Marginðnet profit per yearÞ ¼ itEE þP EE þ Iwt þ ACf C b C m Ci where the considered variable is itEE = incentive tariff for Electric Energy (€ MW h1 EE ), and the following constants: PM = Profit margin (k€ MW h1 PEE = Electric Energy Production (MW hEE y1); EE ); Iwt = income from waste-treatment tariff (k€ y1); ACf = avoided costs for fertilizers (k€ y1); Cb = annual costs for biomass supply (k€ y1); Cb = annual costs for management/maintenance (k€ y1); Cb = annual costs for depreciation charge of initial investment (k€ y1). Fig. 2 shows that Plant A have a profit trend line always above the x-axis (Fig. 2), because in this case (case Ab) the high waste treatment charge (70 € Mg1) guarantees minimum annual profit of 743 k€ also in case of null price on EE generated. Instead, plant Ac, (payment of 12 € Mg1 by the municipalities for OFMSW treatment), has a breakeven point when EE price is equal to
Please cite this article in press as: Riva, C., et al. Production costs and operative margins in electric energy generation from biogas. Full-scale case studies in Italy. Waste Management (2014), http://dx.doi.org/10.1016/j.wasman.2014.04.018
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C. Riva et al. / Waste Management xxx (2014) xxx–xxx
Table 3 Unit costs/margins of EE (per kW hEE) and biogas (per Sm3 biogas). Biogas Organic materials supply costs Management/maintenance costs Depreciation charge (15 years, interest 5.5%) Total costs
Income from waste-treatment tariffs (municipalities) Avoided costs for fertilizers (N, P, K and organic matter) Net costs biogas generated Margin (net profit)
Electric energy Organic materials supply costs Management/maintenance costs Depreciation charge (15 years, interest 5.5%) Total costs
Income from waste-treatment tariffs (municipalities) Avoided costs for fertilizers (N, P, K and organic matter) Net costs of the EE generated Margin (net profit per kWhEE) a b
€
Sm3 biogas,
% of total cost
€ € € €
Sm3 biogas Sm3 biogas Sm3 biogas Sm3 biogas
€ kW h1 EE , % of total cost
€ kW h1 EE € kW h1 EE € kW h1 EE € kW h1 EE
Plant A
Plant B
Plant C
0.084 (24%) 0.155 (45%) 0.106 (31%) 0.346
0.130 (49%) 0.053 (20%) 0.083 (31%) 0.265
0.120 (34%) 0.088 (25%) 0.146 (41%) 0.354
Plant Aa
Plant Ab
Plant B
Plant C
+0.492 +0.047 +0.193 +0.654
+0.085 +0.047 0.214 +0.247
– +0.047 0.218 +0.293
– +0.048 0.306 +0.201
Plant A
Plant B
Plant C
0.051 (24%) 0.094 (45%) 0.065 (31%) 0.210
0.071 (49%) 0.029 (20%) 0.046 (31%) 0.145
0.066 (34%) 0.048 (25%) 0.081 (41%) 0.195
Plant Aa
Plant Ab
Plant B
Plant C
+0.298 +0.029 +0.117 +0.397
+0.051 +0.029 0.130 +0.150
+0.025 0.120 +0.160
+0.026 0.169 +0.111
Waste-treatment charge of 70 € Mg1. Minimum waste-treatment charge of 12 € Mg1.
to rely on energy dedicated crops would generally lead to increased supply costs, as compared to residues and by products, and thereby to increased overall production cost. Especially, waste treatment, relying on a treatment-tariff, is very interesting for biogas plants. On the other hand, the high public incentive on EE, paid by Italian State and by many EU governments, could tend to sustain crop massive use, thereby demotivating the transformation of residues and waste into resources. There is space for a slight reduction of incentives and the tariffs should favor the use of by-product and waste. The trend of the market will be to stimulate smaller plants scale in order to replace energy crops with the use of agro-industrial waste.
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Fig. 2. Margin (net profit per year) with different incentive on EE.
130 € MW h1. Plant B and Plant C showed breakeven point with EE price of respectively 120 and 170 € MW h1. The scale effect on Plant C (500 kWEE instead of 1000 kWEE) results evident from this plot, especially because of the investment cost, which counted for over 40% of the costs (Table 3). Besides, Plant B was also more efficient in terms of biogas/EE productivity, showed lower unit costs (Table 3) that allowed lower breakeven point.
4. Conclusions In this work, the production costs of biogas and EE were relatively high and the cost of biomass supply, heavily counts in the overall cost. As previously demonstrated (Schievano et al., 2009),
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