Partnering on AD and CHP Projects
Given the current economic situation, public and private organizations are quickly realizing the many advantages offered through partnerships on anaerobic digestion (AD) and combined heat and power (CHP) projects. In addition to financial benefits, partnerships can also offer a positive public image, green credits, additional power sources, solutions for waste reduction, and a way to meet regulative obligations.
These alliances are most often formed by utility companies, producers (e.g. farms and food processors), and AD/CHP technology providers. While they are gaining popularity, many interested parties are holding back for several reasons. Often they lack knowledge and understanding of AD/CHP technology and the technical ability and/or time to operate such systems. In addition, they may have concerns regarding perceived high risks, regulatory obstacles, capital costs, and funding sources. These barriers can be overcome by taking the following steps:
- Get educated
- Expand your existing partnerships
- Identify viable producers
- Work with local county and municipal governments and state universities
- Identify qualified AD/CHP technology providers
- Identify funding sources (e.g. USDA and state programs)
- Identify outside substrate sources
- Answer the question, “Who will operate the system?”
- Answer the question, “Who will own the system?”
- Look at electric utility tariffs. Are they high enough to bring a payback to the system?
For any AD/cogeneration project to mature beyond the preliminary “talk” stage to a viable working project, a cooperative effort and partnership between numerous parties is required. One partnership includes electric utilities, producers, and technology providers as its main players. The center of the model contains the other parties whose involvement is necessary to make the project successful.
In the second model, an AD/CHP system developer takes the place of the AD/CHP technology provider in the first partnership. A AD/CHP developer is interested in more than just providing technology and equipment. Developers will often work with clients to identify viable producers and substrates, help the electric utility negotiate rates, identify funding sources, and may help to answer the questions as to who will operate and own the system. In addition, they often contract with the producer to own and/or operate the system.
In the third model, the AD/CHP technology provider works directly with the AD/CHP developer, while the developer is partnered directly with the utility and the producer. Although this model has the advantage of a developer doing a lot of the footwork for the project and often providing financial funding, this model has the disadvantage that the developer will often dictate to the producer which AD/CHP technology is used and will in most cases, in the short term, assume most of the financial benefits of the system.
Producers and Substrates
Farmers often come to mind when discussing AD/CHP producers. Manure has always been a mainstay substrate for AD systems and, therefore, a number of systems were designed around manure as the major substrate for anaerobic digestion. However, there are many other substrate producers for AD/CHP projects than only farmers.
Typically, agricultural-based and industrial-based producers need each other to create a viable project. The potential biogas produced by manure is low relative to other substrates. The reason is that manure has been digested once already and most of the energy value was used by the source animal. Conversely, “fresh” undigested organic wastes contain all of their original energy value, which can now be employed and used by the anaerobic bacteria in the AD system to create biogas. By combining manure with undigested organic waste, small farm-based producers may be able to make enough biogas for a project to become economically viable, and industrial-based producers may now have somewhere to get rid of their organic wastes.
The process of mixing various types of substrates in a single digester is referred to as “substrate augmentation,” or “codigestion.” Although a codigestion system makes a lot of sense, producers, owners, and developers of AD systems should be aware that there may be various federal, state, and local permits, zoning requirements, and regulatory requirements associated with this type of system. A codigestion system also requires good digester mixing, additional ancillary systems to handle the various waste streams, and an attentive and well prepared substrate feed management system for the digester.
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