Several speakers at the recent Midwest Manure Summit in Green Bay, WI, indicated some fine-tuning of the policies and economics associated with on-farm methane digester systems will be necessary before widespread adoption will be seen. According to AgStar data, there are 157 methane digesters currently operating in the United States. Of those, 26 are 1n dairies, 24 1n hog operations, with the remainder divided up between poultry and beef production facilities.
Methane digester systems capture methane from lagoon or manure pit storage systems and use it as fuel to generate electricity or heat. Digesters are more widely used in European countries.
Methane digester technology is still in the early stages of development in the United States. “When it comes to digester use, we’ve only just begun here. The early adopters have taken the pain,” explains Ann Wilkie, associate professor, University of Florida.
The limited adoption of digester technology is simply a matter of economics. Citing AgStar figures, Charles Gould, Michigan State University (MSU) Extension educator specializing in nutrient management and bioenergy/biomaterials, says 90% of the anaerobic digesters currently in place can be found on farms of 500 cows or more. "An average U.S. digester now costs $1.5 million," according to AgStar data. "A small farm is just not going to pay $1.5 million for a digester," he explains.
USDA’s Economic Research Service lists an operation’s manure management methods, start-up and ongoing digester costs, the price at which the farm buys and potentially could sell electricity, and the carbon offset price as factors that impact the profitability of methane digesters. A farm’s size and access to electrical transmission lines also play a role.
Nearly 95% of U.S. dairy farms (about 61,650 farms) have less than 500 cows, so Gould believes more effort should be placed on developing digester systems that benefit smaller dairies.
“We really have an untapped market here. The average herd size in Michigan is 135 cows,” Gould explains. “I have had many conversations with producers who have small dairy farms who want odor control, the potential to produce electricity, and the bedding benefits, but they are not willing to pay the high price.”
Gould shares economic information from a 165-cow dairy in Minnesota with a methane digester as an example. The total investment was $460,000. Grant dollars covered 72% of the cost. With manure input of about 7,000 gal./day, the system produces 430 kilowatts (kW) of electricity daily.
“The farm was paying about 8.5 cents/kW. Under Minnesota’s net metering law, they are able to receive market value for the electricity, so they pay what they get. If we look at this system over time in terms of payback, we discover there is an 11-year payback with a net return of $1,586/year over operation and expenses. This cost is estimated on a 20-year operating life of the digester,” he adds.
“If we have to depend on grant dollars or cost-share dollars in order to put digesters in, there is a finite amount of money available. So we are on a collision course here. Either we make digesters more affordable, or we will have a limited number of digesters in the United States,” he says.
Dana Kirk, manager of the Anaerobic Digester Research and Education Center at MSU, says the economics of bedding and co-feeding are crucial factors that impact the economic sustainability of anaerobic digester use on dairy farms. Many farms use digested manure solids as bedding, which helps offset the bedding costs.
Seeking organic waste from nearby industries that can be used in the on-farm digester is called co-feeding. The waste material is “fed” into the digestion process, not to the cows, and has the potential to increase biogas production, while adding revenue as the on-farm digester owner collects tipping fees for taking the material. Producers need to consider the impacts of co-feeding and use of the manure solids as bedding, while weighing changes that will occur regarding manure management, permits and animal health, Kirk says.
Traditionally, digester profitability has been based on energy produced and sold on the electrical grid. Other factors that have helped drive interest in digesters include manure treatment, odor control, pathogen reduction and managing public perception. “Profitability has been important, but grants and subsidies have helped move digester use forward,” Kirk explains.
He also points out that advancements in digester technology have led to potential benefits beyond just electricity production. For example, one farm turns the biogas into vehicle fuel. And renewable energy certificates can be negotiated and sold back to the open market.
“Carbon credits are real. Digester fiber is showing potential. And there are still manure contributions from odor control, stabilization and pathogen reduction. But when you go to the bank at the end of the day, it has to fit on the balance sheet,” he relates.
The experts agreed that solutions for making methane digesters more appealing to a wider number of livestock producers may lie in changing policy, or in creating systems approaches while increasing digester efficiencies. But the bottom line seems to come back to economics. If a digester isn’t profitable, a farm isn’t going to install one. As Gould summed it up, “It’s going to take a combination of solutions to make digesters work. It isn’t going to be a one-size-fits-all solution.”