Growing and Sustaining the Ontario Biogas Industry

Transcription

1 Growing and Sustaining the Ontario Biogas Industry December, 2011 Contact: Jennifer Green Agrienergy Producers Association of Ontario Association Des Producteurs d Agrienergie De l Ontario 275 Slater Street, Suite 900, Ottawa, Ontario K1P 5H9 T: exec_coord@apao.ca

2 Contents Executive Summary Introduction Biogas in Ontario Biogas Potential Agricultural Waste Food Waste Municipal Waste Biogas - An Essential Component of Ontario s LTEP Price Manufacturing and Job Creation Supply and Demand Grid Management (Reliability and Operability) Emerging Technology Added Value Other Jurisdictions Germany United States Next Steps - Growing and Sustaining Biogas in Ontario Background Information References i

3 Executive Summary Biogas in Ontario has the potential to generate 250MW of electricity - enough to power approximately 150,000 to 200,000 average Ontario households. Biogas generates reliable, flexible, dispatchable power 24/7 and has the ability to accommodate other forms of intermittent renewable energy sources through gas storage thereby creating a more efficient electrical grid. Biogas systems anaerobically digest organic based inputs that come from farms, food processing facilities, and municipalities to create biogas. Biogas can serve multiple energy forms including: electricity, heat, renewable natural gas (biomethane), and transportation fuels. There is an estimated 12,000,000 tonnes/year of manure and 5,000,000 tonnes/year of reusable food-based organics in Ontario today. This volume of organic feedstock can supply biogas systems. To date, the biogas sector has created 100 jobs in Ontario and over $25 million dollars invested into the rural economy. With a target of 500 biogas systems and the potential to create the equivalent of 5 jobs for every biogas facility constructed, biogas can support another 2,500 jobs and leverage $1-1.5 billion in Ontario. This investment would strengthen Ontario s manufacturing sector for the construction and continued operation of biogas systems. Biogas is a renewable energy source that provides added value to Ontario through additional economic and environmental benefits. Ontario s agriculture, food and municipal sectors can realize billions of dollars in cost savings from conservation measures (i.e. turning waste disposal costs into revenue from energy, commercial fertilizer reductions) that foster sustainable, integrated businesses and enhance efficiency. Furthermore, biogas systems can help achieve Ontario s climate change targets by reducing an estimated 3 million tonnes of CO 2e annually. Biogas has been successfully implemented in other jurisdictions, specifically Germany where over 7,000 biogas facilities produce over 2,700MW of power. In Germany, biogas has contributed over $1 billion into the economy, created over 46,300 jobs and is on target to generate 17% of its total power from biogas. Germany has a similar agricultural base to Ontario; it also has proven technology, experience and a policy framework that could be replicated here. Biogas can build Ontario s agriculture, food and municipal sectors while offering diverse energy opportunities. Solutions need to be brought forward to enable greater biogas development, to strengthen an industry that in turn can provide rural economic development, job creation and EX-1

4 manufacturing, Ontario biogas experience, financial investment, technological advancements, and innovations. APAO advocates for the following next steps to be taken by government and policy makers: 1. 20% of remaining renewable capacity be allocated to biogas 2. Priority access be made available to the electrical grid for biogas projects 3. Priority ranking of FIT applications to expedite biogas projects 4. Improvements made to the REA as it relates to biogas projects and alternative means of attaining such environmental approvals 5. FIT Program specific changes related to CPI, pricing and/or adders and revisions to program rules, definitions and contract provisions (see related FIT Two-Year Program Review APAO Input for greater details) 6. Development of a biogas strategy amongst the four Ministries directly responsible for biogas policy: Energy, Agriculture, Environment and Municipal Affairs EX-2

5 1. Introduction This report intends to describe the potential development of biogas technology as an emerging renewable energy source in Ontario and will outline the growth projections to 2018 and measured steps to attaining success in implementing this plan. This plan may act as a tool for key policy and decision makers to provide the necessary support to developing an overall biogas strategy in the province. The Agrienergy Producers Association of Ontario (APAO) is a member organization that represents the collective voice of Ontario s growing biogas industry. It has worked diligently to promote the development of biogas to its full potential as a clean, green energy source in Ontario and focused on government and agency relations, working through issues related to the implementation of the ground-breaking Green Energy and Green Economy Act, and ensuring decision makers understand the needs and benefits of this new industry. We applaud the Ontario Government for supporting clean, green energy alternatives and request the serious consideration for biogas support in the review of the Feed-In Tariff (FIT) Program Two-Year Review Biogas in Ontario Ontario currently has a very young biogas industry. Biogas development was initially quite high and responsive to government support towards growing a green energy sector in the Province; however, since the launch of OMAFRA s Biogas Financial Assistance Program in 2008 and OPA s FIT program in 2009, interest has tempered. The biogas experience to date can be summarized as follows: There are a total of 10 biogas systems operating in Ontario delivering approximately 5 MW of electricity to the power grid. The majority of biogas projects built to date are sized between 250 to 500kW. An additional 20 biogas projects are in development in any stage of planning, design or construction. Biogas development has been in conjunction with existing farm operations (dairy, greenhouses, beef, other), that are large in size and financially sound businesses capable of supporting the financial security and risk associated with new developments. One known municipal biogas system is operating using wastewater inputs. No additional funding support provided by government to offset the capital investment of biogas projects. 1

6 2. Biogas Potential Biogas is able to utilize agricultural, food and municipal waste streams to create energy. Considerable research has been done by various sources to quantify the estimated volume of organic inputs that can be processed through anaerobic digestion. This section describes these input sources used to create biogas from which an estimated 250MW of electrical power is calculated. Reference materials are listed and copies made available upon request. i 2.1. Agricultural Waste Agricultural waste is predominately comprised of animal manure, but can also include crop residues, energy crops, and slaughterhouse wastes. Ontario livestock farms produce an estimated 12,000,000 t/yr of manure. Crop residues are the unused parts of plants that may be gathered after a crop is harvested for use in an anaerobic digester. Energy crops grown for biogas complementing a larger biomass framework ii There are approximately 140 slaughterhouses operating in Ontario today Food Waste Food waste, also referred to as municipal solid waste (MSW) or source separated organics (SSO), is made up of residual materials collected from residential green bin programs, commercial operations such as greenhouses, food processing plants, and institutions (hospitals, government buildings, schools). There are approximately 3,000 food processing plants in Ontario. Over 220 greenhouses in operation. Estimated 5,000,000 t/yr of useable organic waste Municipal Waste Other sources of municipal waste, excluding MSW (categorized above as food waste), include landfill gas and wastewater treatment systems. Prior to recycling and source separation practices, landfills received all of wastes including organic materials. Some municipalities with closed landfills are capturing the gas that is generated from these organics that are naturally breaking down in a similar anaerobic digestion process. Environment Canada indicates a total of 19 landfill gas projects in Ontario. Municipalities have long been applying anaerobic digestion principles in their treatment of wastewaters collected through sewers. 2

7 3. Biogas - An Essential Component of Ontario s LTEP Biogas provides an economical and environmentally sustainable form of renewable energy in Ontario and has the potential to contribute to Ontario s target of 10,700MW of renewable energy by 2018 as outlined Ontario s Long-Term Energy Plan iii. As outlined in Ontario s Supply Mix Directive (Feb, 2011) iv, considerations of energy demand, supply, transmission, reliability and operability are at the forefront of the government s planning initiatives. In addition to these elements, a balance must be maintained for costeffective planning with the interests of ratepayers, manufacturers and developers in mind in today s economy. Biogas has the ability to provide integrated measures to support the government s targets and planning criteria while also achieving economic balance to multiple stakeholders. Outlined below are examples of where biogas can add value to Ontario s energy equation Price Biogas is a reasonably priced energy alternative to Ontario ratepayers. Current FIT prices range from 10.4 /kwh for larger systems up to 19.5 /kwh for smaller systems. An increase in the consumer price index (CPI), nominal increase in price and/or dedicated price adders for biogas would stimulate interest and development in the sector while maintaining protection of the consumer Manufacturing and Job Creation Biogas has the ability to contribute to rural economic development and job creation boosting Ontario as a clean energy leader. With an average capital investment of $4,500 per kilowatt installed, or average of $2.25 million per project, this equates to approximately $25 million dollars worth of business in Ontario today and a projected $1 to 1.5 Billion over 20 years. There are currently around 25 reputable businesses providing biogas related services in engineering, design, technological expertise and consulting. Further to that an estimated 250 trades-people are involved in physical construction such as excavation, concrete, plumbing, structural, landscaping, biogas system and CHP suppliers/installers/commissioners. Upon commissioning biogas systems, there remains a demand for on-going support staff post construction. These jobs are tailored to biogas operators, service technicians, electricians, microbiologists and accredited laboratories. It is estimated that biogas can create the equivalent of 5 jobs for every biogas facility constructed. All told, biogas can contribute the equivalent of 2,500 direct full-time, long-term jobs in Ontario. 3

8 3.3. Supply and Demand Biogas is able to produce clean, renewable power that is dependable, consistent and distributed locally. Biogas is capable of supporting energy demands to rural areas farthest served by centralized energy supply. APAO estimates that 250MW of electricity can be available from biogas generation. From the perspective of electricity transmission, biogas systems generally connect at the distribution level. They are also constructed in proximity to source of inputs, typically in rural areas, where improvements to infrastructure at the distribution level is required. Solutions for cost effective grid connection of biogas systems have been piloted and proven to be reliable and cost effective. Infrastructure investment in rural areas is currently realized through private investment where biogas projects are developed Grid Management (Reliability and Operability) Biogas is a reliable, flexible, dispatchable source of electricity. Biogas is a synchronous form of electricity generation which provides controlled power factor and improved power quality. It is able to meet local distribution company requirements and strengthen the power supplied locally. It can also offer flexibility in power production given the potential storage capability of gas (up to 4hours). The ability for biogas to moderate its electricity generation can go a long way to accommodating other forms of intermittent renewable energy sources, address capacity constraints and create a more efficient electrical grid. These forms of grid management are echoed by the Independent Electrical System Operator (IESO) looking for maximum flexibility from all resources to successfully manage operations and costs, thus helping IESO manage surplus base load when renewable generation is high. v 3.5. Emerging Technology Biogas systems have not had a wide uptake in Ontario and are deemed by certain stakeholders as an emerging technology. Biogas has the potential to create innovation and leadership on farm and in rural communities; and, provide research and development opportunities for universities and learning centres Added Value Biogas can offer the following added value to Ontarians: Reduce environmental footprint through waste reutilization, renewable fertilizers, GHG capture, and clean water; 4

9 Provide self sustaining farm practices and stronger nutrient management; Alternative energy source to fossil fuel based energy demands on on-site Expanded life span for landfills with diversion of organics to bi biogas systems Increased farm incomes and succession opportunities to attract for youth in agriculture Green products and marketing opportunities 4. Other Jurisdictions Biogas has developed substantially ubstantially in other jurisdictions, specifically Germany and notable areas of the United States. Relevant highlights from these areas and how they compare to Ontario are described further below. Reference materials are listed and copies made available upon request Germany Over Over 7,000 biogas facilities 2,700 MW of electricity plants producing biomethane On On target to generate 17% of total power from biogas $1 $1 billion directly invested by biogas industry in German economy 46,300 direct jobs created FIT tariffs ranging from 6 ct/kwh ct/kwh to 25 ct/kwh Adders Adders for raw materials, manure, emission reduction, technology, heat, CHP Ontario Germany The German biogas experience is one that has had wide recognition and which Ontario can model. Some key facts and statistics from Germany compared to Ontariovi: operating biogas systems 5MW of electricity Target of 12% for all renewables by 2025 Similar Similar agricultural base The German Biogas gas Association has produced a reference document that illustrates biogas facts, arguments and potentialvii. A recent delegation from Germany and representatives of the German Biogas Association provided the following recommendation to Ontario s FIT review: keep proposed changes short, simple and easy to use 5

10 keep the review term of programs (like FIT) to a minimum five years to accommodate the planning, approvals, financing and construction of any renewable energy project the framework needs to provide a profitable business for investors In a report published by the Pembina Institute viii, several lessons learned from Germany and recommendations for policy makers were proposed to help advance biogas as part of the clean energy sector in Ontario. The most significant points to note include: An aging grid presents an opportunity for innovation Farmers can contribute to an energy solution which embraces climate change and a reduced carbon economy Consistent support of renewable energy opens doors to manufacturing, export opportunities and job creation Develop a biogas roadmap for Ontario 4.2. United States Several states have developed biogas systems as a means of creating wealth, jobs and building energy sustainability for their regions. Two states, including Wisconsin and Vermont, have installed biogas systems and created programs to help support renewablee energy in their respective areas. Some key facts about Wisconsin and Vermont relative to biogas: Wisconsin Wisconsin Dairy sector compatible with Ontario ~1,000 food processing facilities 30 operating digesters, 222 of which are on farm Approx. 11.6MW of electricity generated in 2009 Currently have a Renewable Portfolio Standard Vermont larger dairy farms averaging 1,212 cows Cow Power program According to the Wisconsin Bioenergy Initiative ix, biogas has the opportunity to transform the state. In their 2011 Strategic Plan, the Wisconsin Bioenergy Initiative presented the case for further biogas development, noting that biogas can: instill sustainable energy practices locally providing added energy security 6

11 create an industry value chain that supports all aspects of biogas development support the agriculture and food sectors while potentially expanding economic growth provide renewable energy solutions that address social and environmental issues and contribute non-energy benefits including: reduced odours, high quality fertilizer, reduced surface and ground water contamination, pathogen reduction utilize waste products as feedstocks reducing pressures on other municipal facilities The potential for development is possible so long as: transparent, long lasting and clear policy is in place economics are sufficient to address investment and attract development different models, size and scale are provided equal opportunities In Vermont, research has been conducted on the economies of biogas systems on four large dairy farms x, xi. Relevant findings drawn from these studies concluded: Biogas systems have an average capacity of 355kW Average capital was $2,028,488 US, equivalent to an installed capacity of $5,705/kW Approximately 23 /kwh is required to provide the return on investment targeted by Vermont law 7

12 5. Next Steps - Growing and Sustaining Biogas in Ontario Based on the successes realized in other jurisdictions like Germany and growing interests in parts of the United States, Ontario has the potential of a much stronger, larger biogas industry. With comparable agricultural sectors, and untapped food and municipal processes for available feedstock, Ontario is on the verge of growth given the right environment created by government and agencies. APAO advocates for the following next steps to be made by government and policy makers: 1. 20% of remaining renewable capacity be allocated to biogas 2. Priority access be made available to the electrical grid for biogas projects 3. Priority ranking of FIT applications to expedite biogas projects 4. Improvements made to the REA as it relates to biogas projects and alternative means of attaining such environmental approvals 5. FIT Program specific changes related to CPI, pricing and/or adders and revisions to program rules, definitions and contract provisions (see related FIT Two-Year Program Review APAO Input for greater details) 6. Development of a biogas strategy amongst the four Ministries directly responsible for biogas policy: Energy, Agriculture, Environment and Municipal Affairs Biogas needs to be treated differently given that it offers diverse energy opportunities along with environmental and social benefits. Solutions need to be brought forward to enable greater biogas development, to strengthen an industry that in turn can provide: rural economic development, job creation and manufacturing, Ontario biogas experience, financial investment, technological advancements, and innovations. 8

13 6. Background Information Who We Are APAO is the collective voice of Ontario s growing biogas industry APAO looks to develop biogas to its full potential as a clean, green energy source in Ontario A not for profit, member driven organization founded by a collective of farmers that has since broadened to encompass representation from all components of the biogas sector including owners/operators, technology suppliers, financial and learning institutions, utilities, waste industry APAO supports the activities and needs of its members by guiding policy and regulatory developments; building knowledge through exchange of information; raising awareness; and creating networks. What is Biogas? Biogas is a type of fuel created when organic matter breaks down in an oxygen-free environment This biological process is referred to as anaerobic digestion Biogas systems involve engineering design and technical components that address: organic storage and pre-treatment; pumps, mixers, and piping; heating and gas collection; and other equipment needs for the specific end use (i.e. electricity, biomethane, transportation). Biogas: A Multi-Type Energy Source Biogas can fuel a generator to produce electricity and heat Biogas can be compressed and cleaned for injection into the natural gas pipeline, as biomethane, delivering a green source of energy through existing infrastructure Biogas can be used as a transportation fuel Quality of Power biogas generates reliable, flexible power 24/7 Biogas is distributed small scale power generation throughout rural Ontario Potentially improves/supports grid capacity and increases power quality Biogas generation is cheaper than solar; competitive with wind Environmental Benefit Biogas improves the environment: Clean Water: Processes animal manure reducing pathogens and protecting source water while capturing energy value Clean Air/GHG Reduction: captures and uses methane a greenhouse gas that is 21 times more potent than CO 2 as a GHG; reduces odour in digestate (treated manure output) Waste Diversion: diverts organic waste, including grease trap and other food production, wastewater pre-treatment residuals away from landfill while capturing its energy Farm/Community Benefits Value Added Nutrients: enhanced fertilizer value for crops from processed manure New revenue source for farmers while implementing strong nutrient management practices Local job creation and rural economic development No NIMBY factor 9

14 7. References i APAO: Biogas Potential in Ontario Briefing Note, January ii PPD Inc.: Literature Review and Study Energy Market Alternatives for Commercially Grown Biomass in Ontario, March 15, iii Ministry of Energy: Ontario s Long-Term Energy Plan Building Our Clean Energy Future, iv Ministry of Energy: Ontario Supply Mix Directive MC , February v IESO: 18-Month Outlook Update From September 2011 to February 2013, August 24, vi German Biogas Association: Biogas Segment Statistics, 2011 vii Fachverband Biogas e.v.: Biogas Can Do It, Facts, arguments and potentials, December 2011 viii The Pembina Institute, Heinrich Boll Stiftung, Climate Action Network Canada and United Church of Canada: Harvesting Clean Energy on Ontario Farms A Transatlantic Comparison, June, ix Wisconsin Bioenergy Initiative: The Biogas Opportunity in Wisconsin 2011 Strategic Plan. x Rogers, G.F: Journal of the NACAA, The Economics of On-Farm Dairy Methane Digesters on Vermont Dairy Farms, November 7, xi Wang, Q., Thomspon, E., Parsons, R., Rogers, G., Dunn, D.: American Dairy Science Association, Economic feasibility of converting cow manure to electricity: A case study of the CVPS Cow Power program in Vermont,