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Economic analysis of small-scale agricultural digesters in the United States

Katherine H. Klavon, Stephanie A. Lansing, Walter Mulbry, Andrew R. Moss, Gary Felton
Biomass and bioenergy 2013 v.54 pp. 36-45
anaerobic digesters, dairy cows, carbon dioxide, viability, biogas, carbon markets, costs and returns, cash flow analysis, animal manure management, herd size, dairy manure, farm capital, anaerobic digestion, dairies, case studies, food waste, farm size, United States
Anaerobic digestion (AD) is an economically viable manure treatment option for large dairies (>500 cows) in the U.S. However, roughly 90% of U.S. dairies have less than 200 cows, making this technology economically inaccessible to the vast majority of U.S. dairies. While there have been case studies of individual small dairies with anaerobic digesters, there are no comparative studies using cost data from these systems. The objectives of this study were to (1) determine the economic viability of small-scale U.S. digesters using cost data from nine existing 100 to 250-cow dairies and seven theoretical systems and (2) reevaluate the minimum size dairy farm needed for economically feasible AD in the U.S. Cash flow analysis results showed that total capital costs, capital costs per cow, and net costs per cow generally decreased with increasing herd size in existing systems. Among existing revenue streams, use of digested solids for bedding generated the highest revenue ($100cow−1year−1), followed by biogas use for heating and/or electrical generation ($47 to $70cow−1year−1) and CO2 credits ($7cow−1year−1). No system had a positive cash flow under the assumed conditions (8% discount rate, 20-year term). However, six of the 16 systems had positive cash flows when 50% cost sharing was included in the analysis. Our results suggest that, with cost sharing, economically viable AD systems are possible on 250-cow dairies. Additional revenue streams, such as tipping fees for food waste, may reduce the minimum size to 100-cow dairies.