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a government-guaranteed, long-term power contract, making the decision to build a biogas plant or put solar on the roof almost as easy as investing in a bond.
While feed-in tariffs have found little traction in the U.S., Wisconsin is one of 29 states with utility renewable energy mandates. Most of the utilities in the state have met, or are on track to meet, the target of generating 10 percent of their energy from renewable sources by 2015, says Gary Radloff, director of Midwest energy policy analysis at the Wisconsin Energy Institute, at University of Wisconsin-Madison.
Along with a lack of mandated demand for renewable energy, the U.S. natural gas boom has driven down electricity prices across the country.
“Biogas has had to compete, just like any market situation,” Radloff says.
Increasing Wisconsin’s renewable energy mandate could give dairy owners considering digesters the prospect of a higher price for power. But Radloff does not see the political will to do that in Wisconsin currently.
Even if there were, digesters—even large ones like Rosendale—are quite small by the standards of modern utility-scale wind and solar projects. Radloff says an expanded renewable energy mandate that carved out a chunk specifically for digesters could help.
In addition to fueling electricity generation, biogas from digesters can be compressed and used as a transportation fuel. “It’s gold if it competes with diesel as opposed to grid electricity,” Afghan says.
It can also be injected into natural gas pipelines, as is the case at some landfills. But both of these options carry heavy up-front costs, and, in the case of transportation fuel, the gas is only useful if you have a properly equipped vehicle fleet that can consume it.
At bottom, energy production alone in the current market is insufficient to make most U.S. digester projects financially successful. They need other revenue streams.
The partnership behind the Rosendale project also includes Madison, WI-based Soil Net and Milan, IL-based Infinity Lawn and Garden. Those companies plan to market clean manure that emerges from the digester as a soil amendment at major home improvement stores. This business line is expected to generate the other half of the revenue needed to make the project pencil out, Afghan says.
Last year, the Innovation Center for U.S. Dairy commissioned a report on the potential market value of all digester products. These include energy; clean manure for animal bedding, soil amendments, and alternatives to peat moss; concentrated fertilizers created from nitrogen and phosphorous recovered from the manure; tipping fees that digesters could receive for taking waste from food production and other sources that would otherwise go to a landfill; and carbon and renewable energy credits.
If digesters were to be built on the 2,647 dairies nationwide where the EPA has deemed them feasible (41-page PDF), these digester products could generate $2.9 billion a year, at mid-range estimates, according to the report, by Informa Economics (119-page PDF).
But it’s not at all clear to digester developers that long-term supplies … Next Page »