It all starts here

It all starts here

Cows at the Rosendale Dairy.

Photo courtesy of BIOFerm Energy Systems

Under construction

Under construction

The digester at Rosendale Dairy was built in 2013.

Photo courtesy of BIOFerm Energy Systems

Inside the tank

Inside the tank

The cleanest it will ever be.

Photo courtesy of BIOFerm Energy Systems

Energy and more

Energy and more

Digesters produce energy and clean manure, useful as animal bedding, soil amendments, and other products.

Photo courtesy of BIOFerm Energy Systems

Ribbon cutting

Ribbon cutting

It was cold that day in December, but not that cold in retrospect.

Photo courtesy of BIOFerm Energy Systems

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of food waste exist for most dairies, or that there are long-term buyers willing to pay adequate prices for the volume of phosphorous, nitrogen, and other products that would be produced by the hundreds of digesters envisioned in the report.

And, as the Rosendale example shows, assembling all of these revenue streams and packaging them in a way that will make bankers comfortable enough to lend is costly, time-consuming work that has to be done in advance—and may ultimately reveal that a project does not make financial sense. “Who pays the pre-development charges for these projects?” Afghan says.

Farm Power Northwest, which has built five dairy digester projects in the Pacific Northwest, is putting further development on hold.

“There’s just not that many sweet spots where everything works,” says co-founder Kevin Maas.

Unlocking the economics of that next tier of projects requires some combination of higher power prices, better support from utilities, or federal tax grant support, he says.

Dairy digester project economics are even more difficult since a federal tax credit that covered up to 30 percent of eligible project costs expired Dec. 31.

Farm Power is also trying to develop some of the other digester products listed in the Innovation Center report. Working with researchers from Washington State University, the company is testing production of a nitrogen-based fertilizer that is on par with commercial fertilizers at its digester in Enumclaw, WA, Maas says.

“But to actually make it and not lose money on it is difficult,” he says. “I think we can do it. It’s not going to be a huge profit center.”

Rather, it’s a nutrient-management strategy for an area that has too much manure, impacting local water quality. In other places with similar issues—around Chesapeake Bay, for example—this approach gets really interesting. “But I think even there, the stick is not big enough to force farmers to do anything,” he says.

Wisconsin farmers face a stick in the form of phosphorous regulations that could drive them to use digesters to manage their waste. But implementation of the rules has been delayed, says Radloff, the energy policy analyst.

“I still think that some combination of this phosphorous rule coming on line—which requires you to manage your waste differently—and the economic opportunity of the energy and the co-products, at some point, it will come in line, it will make sense,” he says.

BIOFerm’s Afghan is also optimistic.

His company is working on reducing costs through innovation and market expansion. It recently introduced a containerized digester suitable for the smaller herds—as few as 100 head—that characterize most Wisconsin dairies. The units were developed and are manufactured in Europe. Afghan would like to see them manufactured in the U.S. to save shipping costs.

“Innovation is one part of the equation, but how do we get the acceptance and adoption of these technologies,” he says.

BIOFerm’s next project in the works is at a 25,000-cow dairy in California, a state that is perhaps the most promising for digester development—as it is for virtually all renewable energy technologies—thanks to its regulation of carbon pollution. While large industrial emitters are currently the only ones subject to California’s cap and trade rules, their emissions can be offset through investments in projects including dairy digesters.

A dairy owner typically makes an investment if it will provide a return in three to five years, Afghan says. The outlook for a return on digesters can sometimes fit within that window.

“But if you have a long-term outlook on the carbon market—and big institutions in California have that—that creates interest in looking at manure and waste [projects],” Afghan says. He adds: “The U.S. market is a long-term investment we’ve made.”

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