The animal waste utility. The Business of Biogas Regulations & Permitting and Best Use for Biogas

Transcription

1 The animal waste utility The Business of Biogas Regulations & Permitting and Best Use for Biogas Biogas: America s homegrown energy Power from Poultry Litter April 16,

2 Project Development Experience Homeland Biogas Energy (Digestion) Developer of AD projects throughout North America Largest animal waste digester in North America (1 bcf gas/yr) currently under development. Operate three AD projects with full asset management services including substrate procurement Fibrowatt LLC (Combustion) Pennsylvania-based developer, builder and operator of poultry litter and agricultural biomass electric power generating plants Over 20 years of experience in generating power from poultry litter: Combusted 8 million tons of agricultural biomass Produced over 7 million megawatt-hours Sold over 1.5 million tons of ash fertilizer 2

3 HBE Digester Development and Operating History: USA Five Star - Elk Mound, WI Rating: 189 mmbtu/day Norswiss - Rice Lake, WI Rating: 188 mmbtu/day Average 2011 Gas Production: 212 mmbtu/day Average 2011 Capacity Factor: 107% Buckeye Ridge, La Farge, WI Rating: 189 mmbtu/day 3

4 Track Record: UK Plants Eye Commissioned: 1992 Design Output: 12.7MW Feedstock: poultry litter & biomass Fuel Usage: 170,000 t/yr Glanford Commissioned: 1993 Design Output: 13.5MW Feedstock: Poultry litter and biomass 1999 converted to combust MBM Thetford Commissioned: 1998 Design Output: 38.5MW Feedstock: poultry litter & biomass Fuel Usage: 500,000 tons/yr 4

5 U.S. Operating Plants Fibrominn Biomass Power Plant Commissioned: October 2007 Design Output: 55MW Feedstock: Poultry Litter & Woody Biomass Fuel Usage: > 600,000 Ton/Yr 5

6 Project Execution Consider the fundamentals of the project? Is it low or high risk, technically and/or commercially? How is the project being funded and what is the funders 'appetite' for risk? If your lender requires an EPC wrap contract, trying to get an EPC wrap for a 'new' technology can be challenging, but can be done. A lot of client side experience helps (grey hairs or none!) Or if you are self-financed? Don't let self-financed deals lure you into thinking you are going to save a lot of money. Too many changes can still be fatal to the project's success. Often it is better to start off thinking about risk as if it is still EPC and then take the economies where they come. In other words you still have to think about the risk... which is fundamental to good project execution. 6

7 EPC (Engineering, Procurement & Construction) Contract Consider this approach if funder is very risk averse or if project size is large (say above $50m). The cost of EPC then reflects the risk that you pass to them. Usually you will seek guarantees (financially backed) for performance and schedule, with absolute guarantees on any environmental emission limits. All for a (usually) fixed price. Consider how detailed a specification you should provide. If your technology is standard adopt more of a 'performance' specification; if non-standard then make sure you cover what it is you actually want. Maybe a hybrid if your project is a mix of standard and 'new'. Process to select EPC needs to be thorough and well managed, as once the EPC is selected it can be very costly in time and money to switch. Get all the processes for managing the project, including payment, clearly defined before the EPC starts work. Obtain outside advice (even if that means spending money) if you do not have the expertise to define it in writing yourself. Manage the EPC properly and fundamentally by checking for and seeking compliance with your specification and by paying contractor when due! Don't introduce changes unless it is absolutely necessary. (Think three times before implementing a change.) Make sure you have performance acceptance tests clearly spelled out early in the process. 7

8 Engineering company and bid out packages This is an approach which works well IF the funder is not very risk averse AND you as the client understand what you are about AND have the expertise to manage the process (or are willing to bring in the people to manage it). This approach can work very well on small to medium size projects (say below $20 million). It should go without saying that in this approach the client is taking on most of the design risk, whether the client does the job himself or hires an engineering company to do it for him. Some design risk can be passed down where equipment can be contracted against a performance spec. What you save on not passing on risks to an EPC can be lost if client doesn't operate a disciplined approach to managing the risk (of pulling together different contracts and making sure they all fit). Be prepared to spend some money on either in-house project and contract management or bring it in. Consider carefully how you split the various elements of the job so that interfaces can be sensibly managed and risks managed. Usually you will want to buy equipment at fixed prices and hire a general contractor (usually on time and materials basis) to put it all together. Schedule can be difficult to guarantee, but you may be able to get the general contractor to take on some risk in this area, if he is asked to manage the deliveries from the equipment vendors. 8

9 Permitting Design and Construction -Air -Runoff Discharge/Effluent Handling Permitting Operations Land Use / Building / Zoning Need for stream-lined permitting, especially for smaller projects; economics can t afford costly and time consuming environmental impact studies need to educate states and specifically regulatory agencies; this could be an added role for organizations such as the American Biogas Council 9

10 General Permitting Location, location, location so much of permitting depends on where a facility is located Sensitive watersheds will be more stringent! Agriculture and industrial facilities allow you to piggy-back onto existing & appropriate permit(s). Etc Perception from regulatory agencies Are you green? Proven technology? Do they care? Strategy Team Building Realistic Milestones Reasonable cost implications 10

11 Water Permitting NPDES National Pollution Discharge Elimination System Authorized by Clean Water Act 1972 Generally state enforced through approved Permit program. Exceptions: Idaho, Massachusetts, New Mexico, New Hampshire Centralized vs. Independent General vs Individual Industrial vs Agricultural Define Substrate: characteristic, volume, mass, source 11

12 Air Permitting Air Pollution Prevention & Control Authorized by Clean Air Act Authority to Construct General / By Rule vs. Individual Usually set to state specific thresholds Point Sources Boiler, Flare, Vent Gas treatment, Gas Dehydrator, Pumps, Compressor, Fugitive Emissions, Engine Stack Criteria Pollutants 12

13 Criteria Pollutants Constituent Exemption Limit Unit Exemption Limit Unit Criteria CO 9 lb/hr 100 TPY NOx 5.7 lb/hr 40 TPY SO2 9 lb/hr 40 TPY PM 5.7 lb/hr 25 TPY PM10 15 TPY PM lb/hr 10 TPY VOC 5.7 lb/hr 40 TPY Pb 0.13 lb/hr 0.6 TPY Flourides 3 TPY H2SO4 (SAM) 7 TPY H2S 10 TPY Total Reduced S (including H2S) 10 TPY Total Reduced S compounds (including H2S) 10 TPY HAPs Formaldehyde 137 TPY Acrolein lb/hr Methanol Acetaldehyde 3.36 lb/hr 13

14 Solid Waste Substrates State Regulated Has basis in EPA Definition of Solid Waste By definition will be Industrial and Individual Example: TX Grease Trap Waste Need a Municipal Solid Waste Type V Registration to Co-digest Class 2 materials only (non hazardous) Example: In CO the regulatory agency considered both their waste-toenergy and compost regulations when developing specific language for AD co-digestion 14

15 Land Use / Building State / Local Regulation Usually only applicable in incorporated areas Usually handled by County office May include/dictate: Fire Safety Building materials Distance to boundaries and other structures Height limits Driveway configuration and road encroachments Can have significant impact on cost of building(s) 15

16 Pipeline Every state is different Based on Department of Transportation: Pipeline and Hazardous Materials Safety Administration Safety Example: The transportation of sour gas is a sensitive issue Operation Construction 16

17 Example List of Permits Needed in California Approvals, Permit and Certifications California Environmental Quality Assessment (CEQA): Mitigated Negative Declaration California Environmental Quality Assessment (CEQA): Mitigated Negative Declaration (2nd Tier) Air Permit - Authority to Construct Air Permit to Operate Waste Discharge Permit Conditional Use Permit Compost Permit Approval of Alternate Gas Pipeline Route Easement to construct pipeline under the San Joaquin River (a state property) Agreement, Permit or Certification Stream Alteration Agreement to construct pipeline under the San Joaquin River National Pollution Discharge Elimination System (NPDES) General Permit for Storm Water Discharges Department of Transportation Encroachment Permit, if applicable Pipeline Safety Boiler Permit to Operate Septic System Permit Local and County Permits - Building Permits Local and County Permits - Grading Permits Local and County Approvals - Hazardous Materials Well Permit, if Required 17

18 Determining the Best Use for Biogas Biogas can be used in many more applications than distributed generation for on-site renewable electricity production CHP application or provide heat or steam directly (i.e. industrial process) Transportation fuel (Renewable Compressed Natural Gas) Use biomethane in existing utility NG generation facilities Specifically a combined cycle facility More efficient use of the gas Generates more RECs (more bang for your buck) Use of existing facility; no need to build additional facilities to back-up intermittent wind and solar 18

19 Conventional AD Biogas Model Feedstock Conversion Uses Organic Waste Various Feedstocks Energy Crop, Manure, Food Waste, Waste Water Sludge Digesters Various Technologies Batch, Continuous, Completemix, Plug-flow, Covered Lagoon Manure & Odor Management On-Site Electricity Farm or waste-water plant equipment, Digester Operation Unconditioned Gas a.k.a Biogas On-Site Heat Farm or waste-water plant equipment, Digester Operation By-Products Fertilizer for Irrigation, Water Management & Reuse 19

20 Renewable Portfolio Standards As of July 13, 2009, 35 states (including Colorado) plus the District of Columbia have enacted a renewable portfolio standard (RPS), a legislative requirement for utilities to generate or sell a certain percentage of their electricity from renewable energy sources, or a renewable portfolio goal (RPG), States with RPS States with RPG (i.e., non-mandated) Source: U.S. EPA 20

21 Pipeline Injection Biogas Model Feedstock Conversion Use Large Dairy Manure-Based Complete-Mix Digesters Gas Conditioning Pipeline Injection Biogas RNG National and Local Substrate Partnerships 21

22 Natural Gas Pipeline System RNG can be transported using the existing natural gas pipeline system, making available virtually every U.S. market including those with Renewable Portfolio requirements 22

23 Off-Take Options - RNG Renewable Natural Gas (RNG ) H 2 S, CO2 & Moisture Removed Pipeline Quality Natural Gas Replacement 1000 Btu / CuFt Readily Marketable & Useable Carbon Neutral Attributes To Market Transportation Natural Gas Pipelines Unlimited Availability Unlimited End-Users To Market Customers Electric Utilities (REC s) Natural Gas Companies Individual Consumers Retail Market Public and Private Sector 23

24 Northwest Digester Opportunities within Large Dairy States 24 Highlighted Counties indicate large dairy concentrations. Source: 2007 USDA/NASS data ( 100 mile radius buffers around large metropolitan areas. Source: 2005 US Census Bureau 24

25 Wisconsin Dairies & Natural Gas HRE Credentials

26 Renewable Compressed Natural Gas (RCNG) Federal Renewable Fuel Standard - renewable natural gas qualifies as an Advanced Biofuel and if used as a transportation fuel, can be assigned a D5 Renewable Identification Number (RIN). As of January 12 th, 2012, a D5 RIN credit had a value of 75 cents. Note that 1 MMBtu of RNG qualifies for approximately 12 Advanced Biofuel RIN credits. At 75 cents per RIN credit, 1 MMBtu of biogas is valued at $9. California Air Resource Board (CARB) implemented a low carbon fuel standard (LCFS), which will reduce greenhouse gas emissions by reducing the full fuel-cycle, carbon intensity of the transportation fuel pool used in California. Numerous renewable fuel and alternative low carbon fuel options are applicable including compressed natural gas (CNG) from dairy digesters. CARB declared that biogas from digesters or landfills has the lowest carbon intensity value (gco2e/mj) for dairy biogas versus 68 for compressed natural gas. The CARB LCFS program is intended to work in concert with the Federal Renewable Fuel Standard. 26

27 Off-Take Options - RCNG Renewable Compressed Natural Gas (RCNG ) H 2 S, CO2 & Moisture Removed CNG / LNG Replacement Readily Marketable & Useable Carbon Neutral Attributes To Market Transportation Infrastructure In Place Limited Availability Limited End-Users To Market Customers Inject into Natural Gas Pipeline Contract to Vehicle Dispensing Stations Individual Consumers Fleet Vehicles (i.e.: Fair Oaks Dairy) 27

28 CNG/LNG Market CNG as a fuel is approximately 40 to 50% cheaper than diesel depending on location ($4 per diesel gallon versus $ $2.20 per diesel gallon equivalent for CNG), By the end of 2016 the Dept of Energy projections are that 2,000 CNG and LNG stations (mostly CNG), representing a 100% increase over current Shale gas plays will increase infrastructure and market development thereby creating even further economies Environmental Benefits Emission mitigation/lower carbon intensity than diesel (20% reduction with CNG, 90% reduction with RCNG) Growing and multi-level policy drivers are requiring vehicle manufacturers and fuel providers to convert fleets, increase purchasing of CNG and develop infrastructure. RCNG competes with CNG through RIN credits 28

29 Potential to Produce RCNG in WI Considering only 1/4 of the State s largest dairies 7,500,000 MMBtu/yr of RCNG could be produced considering the addition of substrates The Diesel Gallon Equivalent (DGE) is equal to approximately 55 million gallons per year Upgrading 2/3 of the existing State s digesters 1,500,000 MMBtu/yr of RCNG could be produced considering upgrades to the systems and the addition of substrates The DGE is equal to approximately 10 million gallons per year A conservative estimate of RCNG that could be produced from onfarm digester systems is approximately 65 million diesel gallon equivalents per year 29

30 Contact Information Mike Casper Vice President Project Development FIBROWATT LLC One Summit Square, Suite Langhorne-Newtown Road Langhorne, PA Ph: Fax: