Cost analysis and economic evaluation of on-farm biogas projects: a Canadian perspective

Samizadeh Mashhadi, Arash (2022) Cost analysis and economic evaluation of on-farm biogas projects: a Canadian perspective. Masters thesis, Memorial University of Newfoundland.

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Abstract

Livestock manure and organic agriculture wastes are an environmental challenge because they contribute to climate change by emitting greenhouse gases. Converting these organic wastes to biogas and bioenergy is a sustainable solution. Farmers, investors, and governmental departments involved in developing on-farm biogas projects need an informed decision-making process to fund such projects. Therefore, estimating the costs of biogas plant components and the required initial investment for a farm-based biogas plant is essential. This study develops two methods to estimate the cost of farm-based biogas projects, determine their economic viability, predict the cost of each part of the plant, and analyze its related risks. The models base on available cost data of current on-farm biogas plants for dairy farms in Canada. First, by using regression analysis, cost predicting models are developed and used to indicate the costs related to biogas plant construction based on the number of cows (CN) housed in a farm. Furthermore, risk analysis is applied to investigate the most probable outcome of the cost models and the dataset with the help of Monte Carlo simulation. In general, the dataset included two groups of farms (less than or greater than 1000 cows). The capital cost is predicted mathematically based on the number of cows (CN) and hydraulic retention time (HRT). In addition, the study developed detailed models for major components of a biogas plant (anaerobic digester, pumping unit, upgrading unit, CHP unit). The result of the Monte Carlo simulation shows that the average cost for on-farm- biogas plants based on the currently available dataset would be about $4.3 million, with an average of 960 cows per farm. Finally, the results of this study have been applied on an actual farm (Lester’s Dairy Farm) located in St. John’s, Newfoundland, as a case study. Almost $2.5 million investment is required to develop such a biogas plant on this farm, considering a herd of 550 cows housed in the farm.

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