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Energetic and economic analysis of biogas plant with using the dairy industry waste
Energy 183 (2019) 1023e1031
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Energetic and economic analysis of biogas plant with using the dairy industry waste Kamil Kozłowski a, Maciej Pietrzykowski b, Wojciech Czekała a, *, Jacek Dach a, zwiakowski c, Michał Brzoski a Alina Kowalczyk-Jusko c, Krzysztof Jo a b c
Institute of Biosystems Engineering, Poznan University of Life Sciences, Wojska Polskiego 50, 60-637, Poznan, Poland Department of International Competitiveness, Poznan University of Economic and Bussines, Al. Niepodległosci 10, 61-875, Poznan, Poland skiego 7, 20-069, Lublin, Poland Faculty of Production Engineering, University of Life Sciences in Lublin, kr. St. Leszczyn
a r t i c l e i n f o
a b s t r a c t
Article history: Received 27 February 2019 Received in revised form 25 May 2019 Accepted 28 June 2019 Available online 1 July 2019
The aim of this study is to analyse the possibilities of use of waste from dairy production to produce electricity and heat in the process of anaerobic digestion. The analysis covers one of the Polish dairies located in Eastern Poland. The amounts of the substrates produced in analyzed dairy plant will enable the production of approx. 14,785 MWh electricity and 57,815 GJ of heat. This will allow the construction of biogas plant with an electrical power of 1.72 MW. The paper has been stated that the construction of biogas plants for environmental and social reasons is beneficial. © 2019 Elsevier Ltd. All rights reserved.
Keywords: Dairy plant Economic analysis Biogas production
1. Introduction The dairy sector is growing fast: World milk production exceed 800 million tonnes and is projected to increase by 177 million tonnes by 2025, at an average growth rate of 1.8% per annum in the next 10 years. Over the same period, per capita consumption of dairy products is projected to increase by 0.8% and 1.7% per year in developing countries, and between 0.5% and 1.1% in developed economies [38]. Cow’s milk production in European Union (EU) is 24% from it [21]. Because of the sheer size of the dairy industry, these growth rates can produce significant amounts of CO2 and can be associated with land degradation, water pollution, losses of biodiversity or deforestation. The dairy herd contributes to greenhouse gas emissions, especially through rumination. Dairy animals produce around 3.1 gigatonnes of CO2 equivalent per year or 40% of global livestock emissions, with dairy cattle accounting for 75% of it. Enteric methane represent 51%e67% of the herd’s emissions, depending on the species and production system [15]. Compared with carbon
* Corresponding author. Institute of Biosystems Engineering, Poznan University of Life Sciences, Wojska Polskiego 50, 60-637 Poznan, Poland. E-mail addresses: [email protected] (W. Czekała), [email protected]. pl (J. Dach). https://doi.org/10.1016/j.energy.2019.06.179 0360-5442/© 2019 Elsevier Ltd. All rights reserved.
dioxide which is long-lived climate pollutant (up to 200 years atmospheric residence time) methane is short-lived but traps 84 times more heat than carbon dioxide over the first two decades after it is released into the air. Therefore, the potential of reducing negative impacts on climate through increased productivity of ruminants is important. Options aiming to reduce emissions per kg of milk exist and mainly target feed use efficiency and manure management. An important element of reducing environmental pollution by dairying is the proper management of waste produced in dairies [16]. It has been estimated that 1.44 L of water is consumed per liter of processed milk for drinking milk. Cheese production is more water-intensive and reaches 1.6e2 L of water per liter of processed milk. Approximately 80e90% of used water become wastewater. The scale of this problem is enormous, as in Poland in the years 2005e2014 the milk production increased from 11.92 to 13.05 million m3. During production processes in dairies a number of types of waste and leachate are produced [39]. These are technological waste, both in liquid and solid form. One of the liquid waste is buttermilk, which is a byproduct of processing cream for butter. However, buttermilk is not a nuisance waste material, as it can be used for secondary processing as an intermediate for food buttermilk production or certain types of melted cheese. The second liquid waste is whey, which is produced from the processing of cheese milk [34]. Whey is a waste that is considered hazardous to
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List of abbreviations BOD5 CHP COD EC E-LCC ERO EU LCA LCC LCIA LCNPV LSU NPV PPE PULS SBR SETAC
5-day Biological Oxygen Demand Combined Heat and Power Chemical Oxygen Demand European Commission Environmental Life-Cycle Costing Energy Regulatory Office European Union Life-Cycle Assessment Life-Cycle Costs Life-Cycle Impact Assessment Life-Cycle Net Present Value Livestock Unit Net Present Value Polish Power Exchange Poznan University of Life Sciences Sequencing Batch Reactor The Society of Environmental Sciences and Chemistry S-LCC Societal Life-Cycle Costing VAT Value Added Tax WIBOR 3 M Warsaw Interbank Offered Rate 3 months
the environment because it can contain about 600 mg/l of nitrogen, and Chemical Oxygen Demand (COD) and 5-day Biological Oxygen Demand (BOD5) can be respectively 60000 and 20000 mgO2/l [7]. In technological processes in dairies, while washing the installation for milk production and other milk products, there are effluents that also contain high levels of organic pollutants [27]. They are typically purified in a traditional way in dairy treatment plants using the activated sludge flow or Sequencing Batch Reactor (SBR) [45,46]. As a result of wastewater treatment are the solid wastes present in the form of degreasers as well as excessive sludge which is generated during the sewage treatment process. Waste materials from the dairy industry do not contain any hazardous substances, therefore none of the listed waste group is classified as hazardous waste. However, physio-chemical properties of dairy industry waste, especially the high content of biodegradable organic substances, can lead to the development of eutrophication and water quality degradation. As a consequence, dairies are considered environmentally harmful and are controlled by the relevant environmental services. In order to reduce the impact of dairies on the environment, it is necessary to take measures that allow the proper disposal of individual waste streams from these plants. Liquid wastes: effluents and leachates from anaerobic stabilization of sewage sludge are increasingly being treated with hydrophilic method [4], which is normally used for domestic effluents [14,23,26,35]. In order to optimize the effects of the removal of biogenic compounds from the dairy effluents, it would be possible to consider the possibility of using non-conventional methods, namely special P-filters filled with carbonate-silica rock [24] or hydrogen peroxide [25]. However, dairy waste is characterized by high organic loading, sometimes reaching even 15 gL-1 COD [1,17], which makes it very difficult to clean them in typical installations. Therefore, anaerobic digestion may be the most suitable method of their neutralization and environmentally safe management [8,33,37,41,44]. At present only two biogas plants, which recycle some dairy waste but only in liquid form, are operating in Poland [5]. The dairy sludge after dehydration and stabilization, eg chemical or biological (aerobic), is usually used as a fertilizer. Its use in agriculture is safer
than in the case of sludge from urban waste water treatment, as these sediments do not contain heavy metals and are characterized by the low presence of pathogenic microorganisms [42]. However, the use of modern biogas technologies enabling the fermentation of a wide range of waste will not only eliminate the dairy problem in a comprehensive way, but also use it for energy purposes and reduce the energy consumption of conventional sources (coal still dominates in Poland). The aim of this study is to analyse the possibilities of use of waste from dairy production (permeate, sewage sludge and grease flotation) to produce electricity and heat in the process of anaerobic digestion. The analysis embraces one of the largest Polish dairy, which plans to build a biogas plant using fermentation of milking waste. In this work, biogas yield of substrates (whey, dairy sludge and fat sludge) were tested (1), their energy potential was calculated (2) and a simplified financial and economic analysis of the construction of a 2 MW biogas plant at a dairy plant (3). 2. Materials and methods 2.1. Materials The waste from dairy production (whey, dairy sludge and fat sludge) used in research experiments has been obtained from the big Polish dairies located in Eastern Poland. These materials were sampled in a representative manner, and then stored under controlled conditions (at temperature of at 4 C, in a designated room). The fermentative inoculum was separated liquid fraction (after dry mass separator) taken from operating agricultural biogas (Poland). The inoculum collected from the reserplant in Działyn voir was stored under anaerobic conditions at room temperature. 2.2. Analysis of basic physicochemical parameters In order to select the proper proportions between the tested substrate and inoculum, the following parameters were examined: Total Solids (PN-75 C-04616/01), Volatile Total Solids (PN-Z-150113), pH (PN-90 C-04540/01) [2]. These parameters enabled the subsequent calculation of the biogas efficiency calculated on Mg of fresh matter, total solids and volatile total solids of the substrate. 2.3. Methodology of biogas efficiency research The research on methane efficiency of the substrates in batch culture technology was carried out in the Laboratory of Ecotechnologies at the Institute of Biosystems Engineering at Poznan University of Life Sciences (PULS) on the basis of internal procedures, based on adapted standards: DIN 38 414-S8 and VDI 4630, commonly used in Europe. Detailed methodology of performed research was presented by Cieslik et al. [2]. The fermentation set-up consisted of 21 biofermentors. Each individual biofermentor (made from glass) had a working volume of 1.8 dm3. The process was carried out under mesophilic conditions at 39 C±1 C. The produced biogas in each fermentor chamber was transported via Teflon pipe to the gas storage. These reservoirs were made from plexiglass as an inverted cylinder immersed in water. Between the water and gas areas, there was a liquid barrier preventing the dissolution of CO2 in the water. The measurement of daily biogas production was taken every 24 h with an accuracy of 0.01 dm3. Qualitative and quantitative composition of the fermentation gases was determined by gas analyser Geotech GA5000 company every time when the gas volume in the tube exceeded 450 ml (due to the analyser demand to measure).
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2.4. Situation of analyzed dairy plant This paper described situation of a big scale dairy plant located in Eastern Poland. Actually, the dairy plant uses the electric energy from national grid (connector 4 MW of electric power) and heat generated by own coal furnace with heat power 12 MW. Part of the heat energy is transformed in cold by “icy water” technology (efficiency 60%). Dairy plant produces daily over 1200 m3 of the liquid biowaste called “white water” which goes to the factory’s waste water treatment plant. This waste, after treatment e is transformed in 26 Mg of dairy sludge produced daily, rich in proteins. Another waste produced by factory is whey (400 m3/day). The whey creates some problems for its management because actually it is used by farmers for animal feed. If the farmers needs are lower than production, than excess of whey is transported to biogas plants placed 60 km around. However, this is quite expensive for factory. It should be underlined that whey cannot be pumped out directly to the environment (it is forbidden) or even to factory’s waste water treatment plant because of extremely high BOD5 and COD. COD for analyzed whey has reached 124500 mg O2/l e so it is over 4 times higher value than slurry (20000e30000 mg O2/l) and over 50 times higher than typical urban waste water (1800e2200 mg O2/l). This high value of COD is the result of whey thickening process by ultrafiltration. The last biowaste produced by analyzed dairy factory is fat sludge. This is very energetic product, however its amount is very low (0.8 Mg/day). There are 3 main problems for dairy plant development. First e caused by Russian embargo for milking products export, was practically solved by finding another markets for export. Second e related to proper biowaste management e is growing because of strict legislation for environmental protection and should be solved in a stable way in near future. Third problem is related to electric power supply from the national grid. The highest electric energy consumption during working period can reach 3.8 MW per hour and this is over 90% of maximum power which can be offered by connector with grid. Thus e lack of available power let the factory to look for optimization of electricity usage and to build own source of energy: biogas plant working on dairy waste. 2.5. Energetic calculations Based on the conducted fermentation tests, calculations of the energy potential of substrates (whey, dairy sludge and fat sludge) were made. The calculation methodology based on the formulas presented by Cieslik et al. [2]. To determine the amount of electricity and heat produced from combined heat and power (CHP), equations (1) and (2) were used.
EE ¼ VCH4 x ReCH4 x he
(1)
where: EE e produced energy amount [MWh/Mg FM], VCH4 evolume of produced methane [m3/Mg FM], ReCH4 e energy efficiency ratio of methane [0.00917 MWh/m3], he e electrical efficiency of CHP (for the purposes of these calculations, the efficiency of 43% was assumed for the unit offered by PAKTOMA, a Polish manufacturer of modern co-generation units for biogas plants). Heat produced in CHP unit can be calculated from equation (2):
EH ¼ VCH4 x ReCH4 x ht
(2)
where: EH e produced heat amount [MWh/Mg FM], VCH4 e volume of produced methane [m3/Mg FM], ReCH4 - energy efficiency ratio of methane [0.00917 MWh/m3], ht e heat efficiency of CHP (for the
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purposes of these calculations, the efficiency of 45% was assumed for the unit offered by PAKTOMA, a Polish manufacturer of modern co-generation units for biogas plants). Table 1 shows data on the selling price of electricity, certificates of origin and heat generated from the use of agricultural biogas in cogeneration in Poland. This data was used to conduct a financial analysis. 3. Results and discussion 3.1. Biogas efficiency of the substrate The first step of the research was preparation of basic physical and chemical parameters, which are necessary to calculate energetic potential of the substrate. The parameters were: pH, total solids and volatile solids content. The results of analyses of these parameters for microbial inoculum and substrate are presented in Table 2. Waste materials from the dairy industry are characterized by considerable hydration. The content of dry matter in whey, dairy sludge and fatty sludge amounted respectively 6.38% FM, 12.42% FM and 45.67% FM. The biogas during the fermentation process is produced from decomposed organic matter, decreased by the amount consumed by the fermentation bacteria. Consequently, the comparison of energy potential was possible after determining the content of dry matter of every substrate. The tested substrates were characterized by high volatile total solids content, which amounted to 92.32% TS, 82.86% TS and 65.86% TS. The fermentation process of the analyzed substrates proceeded correctly. Fig. 1 shows the dynamics of cumulated methane production calculated on the fresh substrate mass, while Fig. 2 shows the graph of cumulated methane production calculated on dry organic mass. The time of decomposition of the dairy industry waste was in the range of 13 (for whey) to 30 days (for fat sludge). At the stage of planning of the future investment, this parameter allows to preestimate the size of the fermentation tank. However, in order to define more specific technical parameters of the planned installation, it is important to determine the organic load rate (OLR) and hydraulic retention time (HRT), which allows the process run in a continuous mode [28,31,36]. However, it should be marked that a decrease of HRT of less than 15 days can contribute to the acidification of the fermentation reactor, which is why the rate of leaching of methanogens is too rapid [9,32]. For dairy waste materials with low dry matter content (whey) it is significantly important, as it has been shown in research of Kozłowski et al. [29], where the OLR process collapsed at 3 kg VS/m3 per day. Table 3 presents the biogas efficiency and methane concentration in biogas from dairy waste treated with methane fermentation process under mesophilic conditions. The highest efficiency of biogas and methane from 1 Mg fresh mass was found in fatty deposits (349.61 m3/Mg FM). The significantly lower efficiency of biogas from whey and dairy sludge, calculated on the fresh mass of the substrate, was directly related to
Table 1 Prices of certificate of origin and heat determined from Polish Power Exchange and Energy Regulatore Office of 04 July, 2017 [11,12,40]. Parameter
Price
Unit
Electricity price Blue certificate price Yellow certificate price Heat price Euro exchange rate
54.65 73.46 25.09 15.55 4.30
EUR/MWh EUR/MWh EUR/MWh EUR/GJ PLN
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Table 2 Physical and chemical parameters of substrates.
Whey Dairy sludge Fat sludge
pH
Total Solids [% FM]
Volatile Total Solids [% TS]
4.56 6.41 5.02
6.38 ± 0.036 12.42 ± 0.038 45.67 ± 0.617
92.32 ± 0.188 82.86 ± 0.413 65.86 ± 0.252
(over 90% of grid connector capacity is already taken). The biogas plant working on dairy factory biowaste can supply the factory with over 45% of consumed power. It has to be underlined that COD measured in digestate was less than 4000 mg O2/l so it is over 30 times lower value than concentrated whey. This value is even significantly smaller than for slurry. That is why digestate after dairy biowaste methane fermentation can be without environmental problems spread on fields as valuable fertilizer. 3.3. Cost analysis
Fig. 1. Cumulated biogas production for dairy wastes calculated on Mg Fresh Matter.
Fig. 2. Cumulated biogas production for dairy wastes calculated on Mg Volatile Total Solids.
high hydration. Consequently, it is necessary to take into account the performance of Mg Volatile Total Solids in order to compare the energy potential of the substrates. For these calculations, the highest yield of biogas and methane was obtained from the fatty sludge (1162.37 m3/Mg VS). Whereas, whey and dairy sludge were characterized by a biogas efficiency of 859.56 m3/Mg VS and 476.61 m3/Mg VS respectively. 3.2. Energetic analysis Furthermore, based on the amount of waste produced per year and its biogas efficiency, we calculated energy parameters for the planned biogas plant. The parameters of analyzed installations as well as the value of produced energy are shown in Table 4. Calculation of installation parameters based on the amount of waste produced and the efficiency of biogas production suggests that the planned biogas plant working on the waste from dairy production will generate 14,785 MWh of electricity and 57,815 GJ of heat energy. It has been stated that this can strongly improve the profitability of analyzed dairy plant. Fig. 3 shows a block scheme of the installation. But the most important value of the research is the solution of third problem for the dairy plant: the barrier for available power
3.3.1. Assumptions of the analysis When constructing a biogas plant, the initial analysis should include such elements as the plant’s capacity, operating period, operating costs, production costs, energy prices, existing support and tax system, and above all the demand and the cost of substrates. Generally it is assumed that a standard 100 kWel biogas plant requires about 45 ha of agricultural land for the production of substrate and 164.10 livestock units1 [47]. In the analyzed case, the company has an advantage in that it does not have to acquire substrate for biogas production because it can use its own production waste. As previously calculated, the dairy can generate 14 785 MWh of electricity and 57 815 GJ of heat from its production waste, which corresponds to approximately 2 MW of nominal capacity. It is assumed [47] that a 2 MW installation is capable of generating 15,453.06 kWh of electricity and 57,917.03 GJ of thermal energy, which means that in the analyzed case there is still approx. 5% power reserve for a potential increase in waste processing. Thus, in the subsequent analyses, the example of a 2 MW installation is used to calculate financial performance indicators. The assumptions are presented in Table 5 [47]. It has been assumed that 9% of the energy obtained from the plant will be used for the needs of the installation; whereas, as regards heat, the figure will be as high as 24%. The depreciation rate for biogas installations is 10% (Classification of Tangible Assets, gr. 2, type 211, including distribution pipelines, telecommunications and power lines, distribution lines), and although the biogas plant consists of various elements that can be assigned to different categories, its main elements are included in this category and according to tax interpretations such a designation is regarded as correct.2 Hence, the residual value will amount to 0.00 PLN after 20 years of operation. It has also been assumed that after 10 years, replacement investment amounting to 15% of the initial investment will be necessary. Constant prices were adopted, the reference rate was set at 4%, and the analysis was conducted at net prices: the dairy, being a private entity and a Value Added Tax (VAT) payer, can recover VAT on such an investment. The analysis also assumes that the dairy will take out an investment loan amounting to 50% of the project’s value. The following loan parameters were used in the estimations: Loan period e 10 years Commission e 1.5% Margin e 2.5%
1 As defined by the European Commission (Regulation of the European Parliament and of the Council (EC) No. 1166/2008 of 19 November 2008), 1 LSU (livestock unit) is a dairy cow weighing 600 kg and producing 3 thousand litres of milk per year, without additional concentrated foodstuffs. Other animals are assigned specific coefficients, which allows the aggregation of livestock from various species (e.g. a broiler ¼ 0.007 LSU). In Poland, one livestock unit denotes an animal weighing 500 kg. 2 See, for example, an individual interpretation by the Director of the Tax Chamber in Warsaw, reference number IPPB3/423-124/12-4/MS.
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Table 3 Biogas efficiency of dairy wastes in mesophilic fermentation. Fresh matter Sample Whey Dairy sludge Fatty sludge
Volatile Total Solids
Methane percent [%] Cumulated methane [m3/Mg FM] Cumulated biogas [m3/Mg FM] Cumulated methane [m3/Mg VS] Cumulated biogas [m3/Mg VS] 52.78 24.03 ± 0.371 45.53 ± 0.680 454.40 ± 6.857 859.56 ± 12.573 57.43 28.16 ± 0.944 49.04 ± 2.640 273.73 ± 9.176 476.61 ± 25.655 61.89 216.36 ± 1.222 349.61 ± 8.613 719.35 ± 4.061 1162.37 ± 28.636
Table 4 Possible electricity and heat production from dairy wastes. Parameter
Unit
Whey
Dairy sludge
Fat sludge
Daily production Yearly production Biogas efficiency CH4 concentration CH4 production Total CH4 production Electric energy Heat Electric power Heat power Electric energy value Heat value
Mg/d Mg/a m3/Mg % m3/a m3/a MWh GJ MW MW Euro/a Euro/a
400 146000 45.53 52.78 3508487 3 838 941 14 785 57 815 1.72 1.84 2 269 621 341 255
26 9490 49.04 57.43 267273
0.8 292 349.61 61.89 63181
WIBOR 3 M (Warsaw Interbank Offered Rate 3 months) e 1.70% (quoted on 24th May 2018).
3.3.2. Revenue from the project The construction of a biogas plant can generate the following kinds of revenue for the company: 1) Revenue from the sale of electricity, 2) Revenue from the sale of heat, 3) Revenue from the sale of property rights (certificates). Currently, the dairy uses mains electricity. When the biogas plant has been built it will be able to use its own electricity, although formally it will have to sell it, so it is possible to estimate revenues from the sale of electricity on the free market. The situation is similar with the heat that will be produced. The adopted prices are those quoted by the Energy Regulatory Office (ERO) as rates “on the competitive market.” In a sense, the revenues from the
Fig. 4. Relationships between conventional, environmental and societal LCC [20].
sale of energy carriers represent savings resulting from not having to buy electricity and heat from transmission systems. As mentioned earlier, this solution is all the more important because the company has reached the limit of its mains power capacity which prevents its further development and significantly increases the risk of its operations. The analysis omitted this aspect, although it is obviously quantifiable and important in regard to the risks connected with the company’s further development. In view of the dynamic changes occurring on the renewable energy market, it is difficult at this time to make any definite assumptions about the benefits from the sale of property rights. That is why two scenarios were adopted: an optimistic one, based on the current system (blue and yellow certificates); and a pessimistic one, which assumes no revenues from property rights. In the analyzed case, there will also be savings from reduced
Fig. 3. Block scheme of biogas plant at dairy plant.
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K. Kozłowski et al. / Energy 183 (2019) 1023e1031 Table 5 Technological assumptions regarding energy production in a 2 MW biogas plant. Items Value of investment project (m PLN)a Gross electrical energy production (MWh)b Net electrical energy production (MWh)c Gross thermal energy production (w GJ)b Net thermal energy production (w GJ)c Annual operating costsc Operating period (in years)
31.00 14,785.00 13,454.35 57,815.00 43,939.40 10.0% of investment project’s value 20
a e Data from the Energy Market Information Center, http://www.cire.pl/item,67859,1,0,0,0,0,0,ekspercikoszt-jednego-mw-mocy-biogazowni-to-ok-15-16-mln-zl.html, accessed 20 02 2018. b e own calculations based on the technological parameters of production waste. c e own assumptions.
sewage disposal into the municipal sewage treatment plant. Because the current cost connected with sewage disposal is unknown, this aspect was omitted, but it should be noted that this kind of savings would also improve the profitability of the project. A summary of the revenues is presented in Table 6. 3.3.3. Analysis results Table 7 shows the results of the cost analysis. The calculations clearly show that even in a situation when the company has its own substrate, and it does not have to source this from the outside, without the support of the property rights sale system the profitability of the undertaking is negative. 3.3.4. Sensitivity analysis It is also worth investigating how the profitability of the venture changes when the key parameters of the project change. The calculations were made only for the optimistic scenario. The results are presented in Table 8. The revenues generated by the project have the most significant impact on the financial indicators; which, however, does not mean that the project is unprofitable. It would be unprofitable if the revenues decreased by approximately 45,6%, in which case the Net Present Value (NPV) would fall to around 0. At the same time, a simulation was carried out to determine by how much the price of electricity would have to increase on the competitive market in order to achieve the project’s profitability level if a property rights sale (certificate system) was not possible. It was found that the price would have to increase by 30.17% to balance the project. It should be remembered, however, that the calculation was made for an entity that does not have to purchase substrate for biogas production on the open market because it uses its own waste. Having to buy substrate would significantly reduce the profitability of the project. This means that a biogas plant without public funding is difficult to balance. Thus, it was calculated what amount of financial support was needed for the company to achieve a so-called “reasonable profit,” which was assumed to be at the level of 6% with current energy prices on the competitive market. Such a
Table 7 Results of cost analysis. Items
Optimistic scenario
Pessimistic scenario
NPV (PLN) IRR (%) Payback period (years)
65,729,252.94 22.94 4.36
9,161,626.26 0.43 233.02
Table 8 Sensitivity analysis. Items
NPV (PLN)
IRR (%)
PP (years)
Output value A 10% decline in revenues A 10% increase in investment costs A 10% increase in operating costs
65,729,252.94 51,344,377.00 62,315,115.60 61,657,731.73
22.94 19.20 20.65 21.89
4.36 5.21 4.84 4.57
support system would have to provide approximately PLN 1,150,000.00 annually, though a sum of PLN 700,000.00 each year would make it possible to balance the project. Therefore, it can be assumed that regardless of what kind of support system the state adopts (certificates, auctions or other), its existence is essential for companies to consider the construction of such installations under current technological and market conditions. It is also worth noting that as such projects are planned over many years, the financial support system must also be long-term. 3.4. Economic analysis Financial analyses do not take into account the external effects that investment projects generate as part of their interaction with the environment or their impact on the well-being of society. However, in the case of projects which use renewable energy sources such an analysis is recommended. The public funding system, which subsidizes projects that by their very nature or due to existing technological limitations are often unprofitable, is based on benefits that are not included in the cost analysis. Therefore,
Table 6 Project revenues [11,12,40]. Items
Optimistic scenario
Pessimistic scenario
Volume of electricity for sale (MWh) Price of electricity (PLN/MWh) Revenue from electricity sales (in PLN) Volume of heat for sale (GJ) Price of heat (PLN/GJ) Revenue from heat sales (in PLN) Revenue from blue certificates (in PLN) Revenue from yellow certificates (in PLN) Revenue (savings) from reducing the volume of waste disposed of
13,454.35 171.85 2,312,130.05 43,939,40 66.87 2,938,227.68 4,250,363.71 1,451,724.37 Not available
0.00 0.00 Not available
K. Kozłowski et al. / Energy 183 (2019) 1023e1031
other methodologies should be looked for that would make it possible to evaluate them and a number of external effects that are important for the environment and society should be included in the analysis, regardless of who bears the costs and who benefits from the implementation of the project. One of the methodologies that are used to analyse the profitability of installations in the field of renewable energy is the Life-Cycle Assessment (LCA), which includes Life-Cycle Costs (LCC). LCA is a technique that assesses environmental impacts associated with all the stages of a product’s or service’s life, identifying the raw materials and energy used as well as the waste streams generated, and then assessing the impact of these processes on the environment. Conventional LCC methods can be found in a number of financial analyses, used in both the public and private sectors; it is also extensively discussed in the literature (by among others [6,13,19,20,22,30,43]. The Society of Environmental Sciences and Chemistry (SETAC), a nongovernmental organization, has developed a new methodology, consistent with LCA e Environmental Life-Cycle Costing (E-LCC), and outlined a methodological framework for Societal Life-Cycle Costing (S-LCC) [20]. E-LCC takes into account the costs incurred by all the entities that have come into contact with a product throughout its life cycle, and not only by its producers and direct users, as is the case with conventional LCC (Fig. 4). It also includes external costs related to, broadly understood, environmental protection; including hidden costs and less tangible costs [22]. These effects are monetized through economic policy tools (for example state subsidies, environmental subsidies, fees for the emission of harmful substances, etc.). S-LCC additionally takes into account all external costs that may appear in the short and long term, including those related to society. Public fund transfers are removed from the cash flow to avoid double counting. Relationships between the specific methodologies are presented in Fig. 3. Including in the methodology all the external effects important from the point of view of society and the environment is significant for designing an economic policy and the proper application of the tools of this policy. The comprehensive inclusion and monetization of external effects makes it possible to assess the effectiveness of solutions beneficial from the point of view of the well-being of society, as well as comparing alternatives. The final measure of an investment project’s performance assessment is the Life-Cycle Net Present Value (LCNPV), calculated on the basis of cash flows in a given reference period, taking into account environmental issues. The LCNPV value is calculated in a standard manner, but the cash flows include all the described environmental costs and benefits:
LCNPV ¼
n X i¼0
CFi 1 þ ri
(3)
where: CF e cash flow in a given year “i”, n e number of years (taking into account the product’s life cycle), r e discount rate. The discount rate can take those values recommended by the European Commission, determined on the basis of benchmark bond yields, or by means of the weighted average cost of capital method [22]. The reference period is slightly longer due to the longer life cycle of products. The economic interpretation of the indicator is standard and specifies that the higher the LCNPV value, the more profitable the project is. A negative value means that at a given discount rate the project is unprofitable. Performing a full life-cycle analysis is complicated and requires a knowledge of many methodologies that enable the calculation and subsequent monetization of environmental effects, such as the emission of harmful substances. Therefore, various models, methodologies and databases are used for such calculations; for example Eco-Indicator 99, IWM-2, WISARD, WRATE (UK), EPIC/CSR
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(Canada), MSW-DST (USA), ORWARE (Sweden), EASEWASTE (EU), or LCA-IWM (EU) [18]. The models permit the quantification of both economic and environmental aspects. After the modelling parameters are entered and analyzed (input and output system), the program makes it possible to determine the flows of waste fractions in individual processes. It also serves to determine the effects of substance emissions in terms of impacts or eco-points. A cash flow statement and profitability assessment are also generated, which helps in making a decision whether to proceed with implementing a given investment project or look for alternatives. It should be noted that there is no single commonly used methodology or model, and that the results depend to a large extent on the assumptions adopted by a given expert and thus may vary. Performing a full life-cycle analysis for the case presented in this article is an extremely difficult task and one which goes far beyond the scope of this study. A full Life-Cycle Impact Assessment (LCIA) would require taking into account and estimating in terms of environmental costs the following processes: Raw material stage 1: the environmental costs of preparing the raw material (milk), i.e. all costs related to milk production at the volume projected for the biogas: including animal feed, energy, fertilizers, crop protection chemicals, water, labour costs, emissions (from engines in the feed production and transport processes; or produced in the manufacture process and the application of fertilizers; as well as emissions from dairy cattle), and waste; Raw material stage 2: the environmental costs of preparing substrate for the biogas plant. In this case, the processing of milk into whey, milk sludge and fat deposits (energy, water, fuels, reagents, labour costs, emissions, waste); Technological stage: the environmental costs of the processes relating to the production of biogas, electricity and heat; as well as the emissions and waste from technological processes. The assessment of the environmental aspects ought to be complemented by an assessment of societal costs. Thus, the analysis would cover all the elements included within the framework of the E-LCC and S-LCC methodologies developed by SETAC. Alternatively, one also could use the categories of damage and impacts as specified in the Eco-Indicator 99 methodology. Within this methodology, three basic categories have been selected in which potential damage is estimated [3,10,18]: Human health (climate change, radiation, depletion of the ozone layer, carcinogenic substances, substances harmful to the respiratory system), Quality of the ecosystem (acidification, eutrophication, soil erosion, ecotoxicity); Resources (damage resulting from the extraction of solid fuels and minerals). Within these categories, over 200 eco-indicators were calculated for the most frequently used materials and processes. In the analyzed case, in addition to the cost analysis, a simplified economic analysis could be performed. Currently, the dairy plant processes the raw material (milk) using energy from the national transmission system and heat produced in the factory’s coal furnace, which generates waste that is processed at the municipal sewage treatment plant. Implementing a project to build a biogas plant would mean that the waste could be used for generating electricity and heat, which would considerably reduce the volume of sewage. For this reason, it is not necessary to analyse the raw material stage 1 because the implementation of the project will not affect it in any way. Therefore, an analysis can be conducted for the
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Table 9 Comparison of environmental and societal costs for the non-investment and investment variants. Item
Non-investment variant
Investment variant
Electrical energy production
Supply of electricity from the national energy and transmission system. As the greatest volume of electricity is produced from coal, the emission costs are estimated for coal.
Thermal energy production
Heat is produced at the dairy plant using a 12 MW coal furnace. This generates costs associated with CO2 and dust emissions.
Biogas production
No costs
Emissions
Emissions related to electricity production in the national energy and transmission system, heat production in the on-site coal furnace, as well as waste disposal. Waste is first pre-treated at the factory sewage treatment plant and then discharged to a municipal treatment plant.
Electricity is produced by the biogas plant. The savings and environmental benefits include the elimination of CO2 and the dust emissions connected with the production of energy from coal. Benefits in all the areas indicated in Eco-Indicator 99, in particular reduced depletion of the ozone layer, reduced adverse climate change, lower emissions of substances harmful to the respiratory system, and lower consumption of fossil fuels Thermal energy is produced by the biogas plant. The savings and environmental benefits include the elimination of CO2 and the dust emissions connected with the production of energy from coal. Other benefits are the same as those for electricity. Environmental costs resulting from technological processes. Electric and thermal energy is neutral as it is generated as a result of the system’s operation. Other costs that should be taken into account include the costs of the reagents used as well as the costs incurred during the construction of the biogas plant and its subsequent operation. Emissions related to biogas production and waste disposal (but reduced in comparison to the non-investment variant)
Waste
non-investment and investment variants in the proposed form as well as estimating the environmental and societal costs. A summary of this analysis is presented in Table 9. The cost analysis showed that if the support system based on the sale of property rights or auctions is discontinued, and in view of the current energy prices, the biogas plant project will not be viable (although the dairy does not have to buy substrate for biogas production). However, it can be stated with certainty that in environmental and societal terms this project could be extremely beneficial and should be implemented. This also means that if the system of certificates, or auctions for larger installations, is discontinued, other public funding systems should be created so that such environmentally and socially beneficial projects can be implemented. In order for such projects to be implemented, however, the support should be steady and long-term because otherwise the projects will not be “bankable” e no financial institution will want to finance a project that does not show a positive NPV value, and without external support it is difficult to implement projects which require such a high level of investment. 4. Conclusion On the basis of performed research and analyses, several conclusions have been made: 1. The biowaste from dairy plant have high energy potential and may serve as a good substrate for biogas and methane production. 2. Dairy waste management in the process of methane fermentation allows to decrease significantly the costs of its utilization related directly to high load of BOD and COD. 3. The amounts of the substrates produced in afore-mentioned dairy plant will enable the production of approx. 14 785 MWh electricity and 57 815 GJ of the heat in cogeneration unit, which can be directly transferred into annual income at the level of 1 221 013 Euro. 4. Moreover, next to the dairy plant producing daily approx. 400 Mg whey, 26 Mg dairy sludge and 0.8 Mg fatty sludge, a
The amount of waste is significantly reduced due to the utilization of its main and most harmful part. This creates significant benefits for both the environment and society
biogas installation with electricity power of 1.72 MW and heat 1.84 MW can be constructed. This can replace 45% of factory maximum power demand supplied by national grid. 5. The creation of a system for the production of electricity and heat from a biogas plant without financial government support is economically unjustified. 6. For environmental and social reasons, the construction of a biogas plant is beneficial and should be implemented.
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Energetic and economic analysis of biogas plant with using the dairy industry waste Kamil Kozłowski a, Maciej Pietrzykowski b, Wojciech Czekała a, *, Jacek Dach a, zwiakowski c, Michał Brzoski a Alina Kowalczyk-Jusko c, Krzysztof Jo a b c
Institute of Biosystems Engineering, Poznan University of Life Sciences, Wojska Polskiego 50, 60-637, Poznan, Poland Department of International Competitiveness, Poznan University of Economic and Bussines, Al. Niepodległosci 10, 61-875, Poznan, Poland skiego 7, 20-069, Lublin, Poland Faculty of Production Engineering, University of Life Sciences in Lublin, kr. St. Leszczyn
a r t i c l e i n f o
a b s t r a c t
Article history: Received 27 February 2019 Received in revised form 25 May 2019 Accepted 28 June 2019 Available online 1 July 2019
The aim of this study is to analyse the possibilities of use of waste from dairy production to produce electricity and heat in the process of anaerobic digestion. The analysis covers one of the Polish dairies located in Eastern Poland. The amounts of the substrates produced in analyzed dairy plant will enable the production of approx. 14,785 MWh electricity and 57,815 GJ of heat. This will allow the construction of biogas plant with an electrical power of 1.72 MW. The paper has been stated that the construction of biogas plants for environmental and social reasons is beneficial. © 2019 Elsevier Ltd. All rights reserved.
Keywords: Dairy plant Economic analysis Biogas production
1. Introduction The dairy sector is growing fast: World milk production exceed 800 million tonnes and is projected to increase by 177 million tonnes by 2025, at an average growth rate of 1.8% per annum in the next 10 years. Over the same period, per capita consumption of dairy products is projected to increase by 0.8% and 1.7% per year in developing countries, and between 0.5% and 1.1% in developed economies [38]. Cow’s milk production in European Union (EU) is 24% from it [21]. Because of the sheer size of the dairy industry, these growth rates can produce significant amounts of CO2 and can be associated with land degradation, water pollution, losses of biodiversity or deforestation. The dairy herd contributes to greenhouse gas emissions, especially through rumination. Dairy animals produce around 3.1 gigatonnes of CO2 equivalent per year or 40% of global livestock emissions, with dairy cattle accounting for 75% of it. Enteric methane represent 51%e67% of the herd’s emissions, depending on the species and production system [15]. Compared with carbon
* Corresponding author. Institute of Biosystems Engineering, Poznan University of Life Sciences, Wojska Polskiego 50, 60-637 Poznan, Poland. E-mail addresses: [email protected] (W. Czekała), [email protected]. pl (J. Dach). https://doi.org/10.1016/j.energy.2019.06.179 0360-5442/© 2019 Elsevier Ltd. All rights reserved.
dioxide which is long-lived climate pollutant (up to 200 years atmospheric residence time) methane is short-lived but traps 84 times more heat than carbon dioxide over the first two decades after it is released into the air. Therefore, the potential of reducing negative impacts on climate through increased productivity of ruminants is important. Options aiming to reduce emissions per kg of milk exist and mainly target feed use efficiency and manure management. An important element of reducing environmental pollution by dairying is the proper management of waste produced in dairies [16]. It has been estimated that 1.44 L of water is consumed per liter of processed milk for drinking milk. Cheese production is more water-intensive and reaches 1.6e2 L of water per liter of processed milk. Approximately 80e90% of used water become wastewater. The scale of this problem is enormous, as in Poland in the years 2005e2014 the milk production increased from 11.92 to 13.05 million m3. During production processes in dairies a number of types of waste and leachate are produced [39]. These are technological waste, both in liquid and solid form. One of the liquid waste is buttermilk, which is a byproduct of processing cream for butter. However, buttermilk is not a nuisance waste material, as it can be used for secondary processing as an intermediate for food buttermilk production or certain types of melted cheese. The second liquid waste is whey, which is produced from the processing of cheese milk [34]. Whey is a waste that is considered hazardous to
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List of abbreviations BOD5 CHP COD EC E-LCC ERO EU LCA LCC LCIA LCNPV LSU NPV PPE PULS SBR SETAC
5-day Biological Oxygen Demand Combined Heat and Power Chemical Oxygen Demand European Commission Environmental Life-Cycle Costing Energy Regulatory Office European Union Life-Cycle Assessment Life-Cycle Costs Life-Cycle Impact Assessment Life-Cycle Net Present Value Livestock Unit Net Present Value Polish Power Exchange Poznan University of Life Sciences Sequencing Batch Reactor The Society of Environmental Sciences and Chemistry S-LCC Societal Life-Cycle Costing VAT Value Added Tax WIBOR 3 M Warsaw Interbank Offered Rate 3 months
the environment because it can contain about 600 mg/l of nitrogen, and Chemical Oxygen Demand (COD) and 5-day Biological Oxygen Demand (BOD5) can be respectively 60000 and 20000 mgO2/l [7]. In technological processes in dairies, while washing the installation for milk production and other milk products, there are effluents that also contain high levels of organic pollutants [27]. They are typically purified in a traditional way in dairy treatment plants using the activated sludge flow or Sequencing Batch Reactor (SBR) [45,46]. As a result of wastewater treatment are the solid wastes present in the form of degreasers as well as excessive sludge which is generated during the sewage treatment process. Waste materials from the dairy industry do not contain any hazardous substances, therefore none of the listed waste group is classified as hazardous waste. However, physio-chemical properties of dairy industry waste, especially the high content of biodegradable organic substances, can lead to the development of eutrophication and water quality degradation. As a consequence, dairies are considered environmentally harmful and are controlled by the relevant environmental services. In order to reduce the impact of dairies on the environment, it is necessary to take measures that allow the proper disposal of individual waste streams from these plants. Liquid wastes: effluents and leachates from anaerobic stabilization of sewage sludge are increasingly being treated with hydrophilic method [4], which is normally used for domestic effluents [14,23,26,35]. In order to optimize the effects of the removal of biogenic compounds from the dairy effluents, it would be possible to consider the possibility of using non-conventional methods, namely special P-filters filled with carbonate-silica rock [24] or hydrogen peroxide [25]. However, dairy waste is characterized by high organic loading, sometimes reaching even 15 gL-1 COD [1,17], which makes it very difficult to clean them in typical installations. Therefore, anaerobic digestion may be the most suitable method of their neutralization and environmentally safe management [8,33,37,41,44]. At present only two biogas plants, which recycle some dairy waste but only in liquid form, are operating in Poland [5]. The dairy sludge after dehydration and stabilization, eg chemical or biological (aerobic), is usually used as a fertilizer. Its use in agriculture is safer
than in the case of sludge from urban waste water treatment, as these sediments do not contain heavy metals and are characterized by the low presence of pathogenic microorganisms [42]. However, the use of modern biogas technologies enabling the fermentation of a wide range of waste will not only eliminate the dairy problem in a comprehensive way, but also use it for energy purposes and reduce the energy consumption of conventional sources (coal still dominates in Poland). The aim of this study is to analyse the possibilities of use of waste from dairy production (permeate, sewage sludge and grease flotation) to produce electricity and heat in the process of anaerobic digestion. The analysis embraces one of the largest Polish dairy, which plans to build a biogas plant using fermentation of milking waste. In this work, biogas yield of substrates (whey, dairy sludge and fat sludge) were tested (1), their energy potential was calculated (2) and a simplified financial and economic analysis of the construction of a 2 MW biogas plant at a dairy plant (3). 2. Materials and methods 2.1. Materials The waste from dairy production (whey, dairy sludge and fat sludge) used in research experiments has been obtained from the big Polish dairies located in Eastern Poland. These materials were sampled in a representative manner, and then stored under controlled conditions (at temperature of at 4 C, in a designated room). The fermentative inoculum was separated liquid fraction (after dry mass separator) taken from operating agricultural biogas (Poland). The inoculum collected from the reserplant in Działyn voir was stored under anaerobic conditions at room temperature. 2.2. Analysis of basic physicochemical parameters In order to select the proper proportions between the tested substrate and inoculum, the following parameters were examined: Total Solids (PN-75 C-04616/01), Volatile Total Solids (PN-Z-150113), pH (PN-90 C-04540/01) [2]. These parameters enabled the subsequent calculation of the biogas efficiency calculated on Mg of fresh matter, total solids and volatile total solids of the substrate. 2.3. Methodology of biogas efficiency research The research on methane efficiency of the substrates in batch culture technology was carried out in the Laboratory of Ecotechnologies at the Institute of Biosystems Engineering at Poznan University of Life Sciences (PULS) on the basis of internal procedures, based on adapted standards: DIN 38 414-S8 and VDI 4630, commonly used in Europe. Detailed methodology of performed research was presented by Cieslik et al. [2]. The fermentation set-up consisted of 21 biofermentors. Each individual biofermentor (made from glass) had a working volume of 1.8 dm3. The process was carried out under mesophilic conditions at 39 C±1 C. The produced biogas in each fermentor chamber was transported via Teflon pipe to the gas storage. These reservoirs were made from plexiglass as an inverted cylinder immersed in water. Between the water and gas areas, there was a liquid barrier preventing the dissolution of CO2 in the water. The measurement of daily biogas production was taken every 24 h with an accuracy of 0.01 dm3. Qualitative and quantitative composition of the fermentation gases was determined by gas analyser Geotech GA5000 company every time when the gas volume in the tube exceeded 450 ml (due to the analyser demand to measure).
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2.4. Situation of analyzed dairy plant This paper described situation of a big scale dairy plant located in Eastern Poland. Actually, the dairy plant uses the electric energy from national grid (connector 4 MW of electric power) and heat generated by own coal furnace with heat power 12 MW. Part of the heat energy is transformed in cold by “icy water” technology (efficiency 60%). Dairy plant produces daily over 1200 m3 of the liquid biowaste called “white water” which goes to the factory’s waste water treatment plant. This waste, after treatment e is transformed in 26 Mg of dairy sludge produced daily, rich in proteins. Another waste produced by factory is whey (400 m3/day). The whey creates some problems for its management because actually it is used by farmers for animal feed. If the farmers needs are lower than production, than excess of whey is transported to biogas plants placed 60 km around. However, this is quite expensive for factory. It should be underlined that whey cannot be pumped out directly to the environment (it is forbidden) or even to factory’s waste water treatment plant because of extremely high BOD5 and COD. COD for analyzed whey has reached 124500 mg O2/l e so it is over 4 times higher value than slurry (20000e30000 mg O2/l) and over 50 times higher than typical urban waste water (1800e2200 mg O2/l). This high value of COD is the result of whey thickening process by ultrafiltration. The last biowaste produced by analyzed dairy factory is fat sludge. This is very energetic product, however its amount is very low (0.8 Mg/day). There are 3 main problems for dairy plant development. First e caused by Russian embargo for milking products export, was practically solved by finding another markets for export. Second e related to proper biowaste management e is growing because of strict legislation for environmental protection and should be solved in a stable way in near future. Third problem is related to electric power supply from the national grid. The highest electric energy consumption during working period can reach 3.8 MW per hour and this is over 90% of maximum power which can be offered by connector with grid. Thus e lack of available power let the factory to look for optimization of electricity usage and to build own source of energy: biogas plant working on dairy waste. 2.5. Energetic calculations Based on the conducted fermentation tests, calculations of the energy potential of substrates (whey, dairy sludge and fat sludge) were made. The calculation methodology based on the formulas presented by Cieslik et al. [2]. To determine the amount of electricity and heat produced from combined heat and power (CHP), equations (1) and (2) were used.
EE ¼ VCH4 x ReCH4 x he
(1)
where: EE e produced energy amount [MWh/Mg FM], VCH4 evolume of produced methane [m3/Mg FM], ReCH4 e energy efficiency ratio of methane [0.00917 MWh/m3], he e electrical efficiency of CHP (for the purposes of these calculations, the efficiency of 43% was assumed for the unit offered by PAKTOMA, a Polish manufacturer of modern co-generation units for biogas plants). Heat produced in CHP unit can be calculated from equation (2):
EH ¼ VCH4 x ReCH4 x ht
(2)
where: EH e produced heat amount [MWh/Mg FM], VCH4 e volume of produced methane [m3/Mg FM], ReCH4 - energy efficiency ratio of methane [0.00917 MWh/m3], ht e heat efficiency of CHP (for the
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purposes of these calculations, the efficiency of 45% was assumed for the unit offered by PAKTOMA, a Polish manufacturer of modern co-generation units for biogas plants). Table 1 shows data on the selling price of electricity, certificates of origin and heat generated from the use of agricultural biogas in cogeneration in Poland. This data was used to conduct a financial analysis. 3. Results and discussion 3.1. Biogas efficiency of the substrate The first step of the research was preparation of basic physical and chemical parameters, which are necessary to calculate energetic potential of the substrate. The parameters were: pH, total solids and volatile solids content. The results of analyses of these parameters for microbial inoculum and substrate are presented in Table 2. Waste materials from the dairy industry are characterized by considerable hydration. The content of dry matter in whey, dairy sludge and fatty sludge amounted respectively 6.38% FM, 12.42% FM and 45.67% FM. The biogas during the fermentation process is produced from decomposed organic matter, decreased by the amount consumed by the fermentation bacteria. Consequently, the comparison of energy potential was possible after determining the content of dry matter of every substrate. The tested substrates were characterized by high volatile total solids content, which amounted to 92.32% TS, 82.86% TS and 65.86% TS. The fermentation process of the analyzed substrates proceeded correctly. Fig. 1 shows the dynamics of cumulated methane production calculated on the fresh substrate mass, while Fig. 2 shows the graph of cumulated methane production calculated on dry organic mass. The time of decomposition of the dairy industry waste was in the range of 13 (for whey) to 30 days (for fat sludge). At the stage of planning of the future investment, this parameter allows to preestimate the size of the fermentation tank. However, in order to define more specific technical parameters of the planned installation, it is important to determine the organic load rate (OLR) and hydraulic retention time (HRT), which allows the process run in a continuous mode [28,31,36]. However, it should be marked that a decrease of HRT of less than 15 days can contribute to the acidification of the fermentation reactor, which is why the rate of leaching of methanogens is too rapid [9,32]. For dairy waste materials with low dry matter content (whey) it is significantly important, as it has been shown in research of Kozłowski et al. [29], where the OLR process collapsed at 3 kg VS/m3 per day. Table 3 presents the biogas efficiency and methane concentration in biogas from dairy waste treated with methane fermentation process under mesophilic conditions. The highest efficiency of biogas and methane from 1 Mg fresh mass was found in fatty deposits (349.61 m3/Mg FM). The significantly lower efficiency of biogas from whey and dairy sludge, calculated on the fresh mass of the substrate, was directly related to
Table 1 Prices of certificate of origin and heat determined from Polish Power Exchange and Energy Regulatore Office of 04 July, 2017 [11,12,40]. Parameter
Price
Unit
Electricity price Blue certificate price Yellow certificate price Heat price Euro exchange rate
54.65 73.46 25.09 15.55 4.30
EUR/MWh EUR/MWh EUR/MWh EUR/GJ PLN
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Table 2 Physical and chemical parameters of substrates.
Whey Dairy sludge Fat sludge
pH
Total Solids [% FM]
Volatile Total Solids [% TS]
4.56 6.41 5.02
6.38 ± 0.036 12.42 ± 0.038 45.67 ± 0.617
92.32 ± 0.188 82.86 ± 0.413 65.86 ± 0.252
(over 90% of grid connector capacity is already taken). The biogas plant working on dairy factory biowaste can supply the factory with over 45% of consumed power. It has to be underlined that COD measured in digestate was less than 4000 mg O2/l so it is over 30 times lower value than concentrated whey. This value is even significantly smaller than for slurry. That is why digestate after dairy biowaste methane fermentation can be without environmental problems spread on fields as valuable fertilizer. 3.3. Cost analysis
Fig. 1. Cumulated biogas production for dairy wastes calculated on Mg Fresh Matter.
Fig. 2. Cumulated biogas production for dairy wastes calculated on Mg Volatile Total Solids.
high hydration. Consequently, it is necessary to take into account the performance of Mg Volatile Total Solids in order to compare the energy potential of the substrates. For these calculations, the highest yield of biogas and methane was obtained from the fatty sludge (1162.37 m3/Mg VS). Whereas, whey and dairy sludge were characterized by a biogas efficiency of 859.56 m3/Mg VS and 476.61 m3/Mg VS respectively. 3.2. Energetic analysis Furthermore, based on the amount of waste produced per year and its biogas efficiency, we calculated energy parameters for the planned biogas plant. The parameters of analyzed installations as well as the value of produced energy are shown in Table 4. Calculation of installation parameters based on the amount of waste produced and the efficiency of biogas production suggests that the planned biogas plant working on the waste from dairy production will generate 14,785 MWh of electricity and 57,815 GJ of heat energy. It has been stated that this can strongly improve the profitability of analyzed dairy plant. Fig. 3 shows a block scheme of the installation. But the most important value of the research is the solution of third problem for the dairy plant: the barrier for available power
3.3.1. Assumptions of the analysis When constructing a biogas plant, the initial analysis should include such elements as the plant’s capacity, operating period, operating costs, production costs, energy prices, existing support and tax system, and above all the demand and the cost of substrates. Generally it is assumed that a standard 100 kWel biogas plant requires about 45 ha of agricultural land for the production of substrate and 164.10 livestock units1 [47]. In the analyzed case, the company has an advantage in that it does not have to acquire substrate for biogas production because it can use its own production waste. As previously calculated, the dairy can generate 14 785 MWh of electricity and 57 815 GJ of heat from its production waste, which corresponds to approximately 2 MW of nominal capacity. It is assumed [47] that a 2 MW installation is capable of generating 15,453.06 kWh of electricity and 57,917.03 GJ of thermal energy, which means that in the analyzed case there is still approx. 5% power reserve for a potential increase in waste processing. Thus, in the subsequent analyses, the example of a 2 MW installation is used to calculate financial performance indicators. The assumptions are presented in Table 5 [47]. It has been assumed that 9% of the energy obtained from the plant will be used for the needs of the installation; whereas, as regards heat, the figure will be as high as 24%. The depreciation rate for biogas installations is 10% (Classification of Tangible Assets, gr. 2, type 211, including distribution pipelines, telecommunications and power lines, distribution lines), and although the biogas plant consists of various elements that can be assigned to different categories, its main elements are included in this category and according to tax interpretations such a designation is regarded as correct.2 Hence, the residual value will amount to 0.00 PLN after 20 years of operation. It has also been assumed that after 10 years, replacement investment amounting to 15% of the initial investment will be necessary. Constant prices were adopted, the reference rate was set at 4%, and the analysis was conducted at net prices: the dairy, being a private entity and a Value Added Tax (VAT) payer, can recover VAT on such an investment. The analysis also assumes that the dairy will take out an investment loan amounting to 50% of the project’s value. The following loan parameters were used in the estimations: Loan period e 10 years Commission e 1.5% Margin e 2.5%
1 As defined by the European Commission (Regulation of the European Parliament and of the Council (EC) No. 1166/2008 of 19 November 2008), 1 LSU (livestock unit) is a dairy cow weighing 600 kg and producing 3 thousand litres of milk per year, without additional concentrated foodstuffs. Other animals are assigned specific coefficients, which allows the aggregation of livestock from various species (e.g. a broiler ¼ 0.007 LSU). In Poland, one livestock unit denotes an animal weighing 500 kg. 2 See, for example, an individual interpretation by the Director of the Tax Chamber in Warsaw, reference number IPPB3/423-124/12-4/MS.
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Table 3 Biogas efficiency of dairy wastes in mesophilic fermentation. Fresh matter Sample Whey Dairy sludge Fatty sludge
Volatile Total Solids
Methane percent [%] Cumulated methane [m3/Mg FM] Cumulated biogas [m3/Mg FM] Cumulated methane [m3/Mg VS] Cumulated biogas [m3/Mg VS] 52.78 24.03 ± 0.371 45.53 ± 0.680 454.40 ± 6.857 859.56 ± 12.573 57.43 28.16 ± 0.944 49.04 ± 2.640 273.73 ± 9.176 476.61 ± 25.655 61.89 216.36 ± 1.222 349.61 ± 8.613 719.35 ± 4.061 1162.37 ± 28.636
Table 4 Possible electricity and heat production from dairy wastes. Parameter
Unit
Whey
Dairy sludge
Fat sludge
Daily production Yearly production Biogas efficiency CH4 concentration CH4 production Total CH4 production Electric energy Heat Electric power Heat power Electric energy value Heat value
Mg/d Mg/a m3/Mg % m3/a m3/a MWh GJ MW MW Euro/a Euro/a
400 146000 45.53 52.78 3508487 3 838 941 14 785 57 815 1.72 1.84 2 269 621 341 255
26 9490 49.04 57.43 267273
0.8 292 349.61 61.89 63181
WIBOR 3 M (Warsaw Interbank Offered Rate 3 months) e 1.70% (quoted on 24th May 2018).
3.3.2. Revenue from the project The construction of a biogas plant can generate the following kinds of revenue for the company: 1) Revenue from the sale of electricity, 2) Revenue from the sale of heat, 3) Revenue from the sale of property rights (certificates). Currently, the dairy uses mains electricity. When the biogas plant has been built it will be able to use its own electricity, although formally it will have to sell it, so it is possible to estimate revenues from the sale of electricity on the free market. The situation is similar with the heat that will be produced. The adopted prices are those quoted by the Energy Regulatory Office (ERO) as rates “on the competitive market.” In a sense, the revenues from the
Fig. 4. Relationships between conventional, environmental and societal LCC [20].
sale of energy carriers represent savings resulting from not having to buy electricity and heat from transmission systems. As mentioned earlier, this solution is all the more important because the company has reached the limit of its mains power capacity which prevents its further development and significantly increases the risk of its operations. The analysis omitted this aspect, although it is obviously quantifiable and important in regard to the risks connected with the company’s further development. In view of the dynamic changes occurring on the renewable energy market, it is difficult at this time to make any definite assumptions about the benefits from the sale of property rights. That is why two scenarios were adopted: an optimistic one, based on the current system (blue and yellow certificates); and a pessimistic one, which assumes no revenues from property rights. In the analyzed case, there will also be savings from reduced
Fig. 3. Block scheme of biogas plant at dairy plant.
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K. Kozłowski et al. / Energy 183 (2019) 1023e1031 Table 5 Technological assumptions regarding energy production in a 2 MW biogas plant. Items Value of investment project (m PLN)a Gross electrical energy production (MWh)b Net electrical energy production (MWh)c Gross thermal energy production (w GJ)b Net thermal energy production (w GJ)c Annual operating costsc Operating period (in years)
31.00 14,785.00 13,454.35 57,815.00 43,939.40 10.0% of investment project’s value 20
a e Data from the Energy Market Information Center, http://www.cire.pl/item,67859,1,0,0,0,0,0,ekspercikoszt-jednego-mw-mocy-biogazowni-to-ok-15-16-mln-zl.html, accessed 20 02 2018. b e own calculations based on the technological parameters of production waste. c e own assumptions.
sewage disposal into the municipal sewage treatment plant. Because the current cost connected with sewage disposal is unknown, this aspect was omitted, but it should be noted that this kind of savings would also improve the profitability of the project. A summary of the revenues is presented in Table 6. 3.3.3. Analysis results Table 7 shows the results of the cost analysis. The calculations clearly show that even in a situation when the company has its own substrate, and it does not have to source this from the outside, without the support of the property rights sale system the profitability of the undertaking is negative. 3.3.4. Sensitivity analysis It is also worth investigating how the profitability of the venture changes when the key parameters of the project change. The calculations were made only for the optimistic scenario. The results are presented in Table 8. The revenues generated by the project have the most significant impact on the financial indicators; which, however, does not mean that the project is unprofitable. It would be unprofitable if the revenues decreased by approximately 45,6%, in which case the Net Present Value (NPV) would fall to around 0. At the same time, a simulation was carried out to determine by how much the price of electricity would have to increase on the competitive market in order to achieve the project’s profitability level if a property rights sale (certificate system) was not possible. It was found that the price would have to increase by 30.17% to balance the project. It should be remembered, however, that the calculation was made for an entity that does not have to purchase substrate for biogas production on the open market because it uses its own waste. Having to buy substrate would significantly reduce the profitability of the project. This means that a biogas plant without public funding is difficult to balance. Thus, it was calculated what amount of financial support was needed for the company to achieve a so-called “reasonable profit,” which was assumed to be at the level of 6% with current energy prices on the competitive market. Such a
Table 7 Results of cost analysis. Items
Optimistic scenario
Pessimistic scenario
NPV (PLN) IRR (%) Payback period (years)
65,729,252.94 22.94 4.36
9,161,626.26 0.43 233.02
Table 8 Sensitivity analysis. Items
NPV (PLN)
IRR (%)
PP (years)
Output value A 10% decline in revenues A 10% increase in investment costs A 10% increase in operating costs
65,729,252.94 51,344,377.00 62,315,115.60 61,657,731.73
22.94 19.20 20.65 21.89
4.36 5.21 4.84 4.57
support system would have to provide approximately PLN 1,150,000.00 annually, though a sum of PLN 700,000.00 each year would make it possible to balance the project. Therefore, it can be assumed that regardless of what kind of support system the state adopts (certificates, auctions or other), its existence is essential for companies to consider the construction of such installations under current technological and market conditions. It is also worth noting that as such projects are planned over many years, the financial support system must also be long-term. 3.4. Economic analysis Financial analyses do not take into account the external effects that investment projects generate as part of their interaction with the environment or their impact on the well-being of society. However, in the case of projects which use renewable energy sources such an analysis is recommended. The public funding system, which subsidizes projects that by their very nature or due to existing technological limitations are often unprofitable, is based on benefits that are not included in the cost analysis. Therefore,
Table 6 Project revenues [11,12,40]. Items
Optimistic scenario
Pessimistic scenario
Volume of electricity for sale (MWh) Price of electricity (PLN/MWh) Revenue from electricity sales (in PLN) Volume of heat for sale (GJ) Price of heat (PLN/GJ) Revenue from heat sales (in PLN) Revenue from blue certificates (in PLN) Revenue from yellow certificates (in PLN) Revenue (savings) from reducing the volume of waste disposed of
13,454.35 171.85 2,312,130.05 43,939,40 66.87 2,938,227.68 4,250,363.71 1,451,724.37 Not available
0.00 0.00 Not available
K. Kozłowski et al. / Energy 183 (2019) 1023e1031
other methodologies should be looked for that would make it possible to evaluate them and a number of external effects that are important for the environment and society should be included in the analysis, regardless of who bears the costs and who benefits from the implementation of the project. One of the methodologies that are used to analyse the profitability of installations in the field of renewable energy is the Life-Cycle Assessment (LCA), which includes Life-Cycle Costs (LCC). LCA is a technique that assesses environmental impacts associated with all the stages of a product’s or service’s life, identifying the raw materials and energy used as well as the waste streams generated, and then assessing the impact of these processes on the environment. Conventional LCC methods can be found in a number of financial analyses, used in both the public and private sectors; it is also extensively discussed in the literature (by among others [6,13,19,20,22,30,43]. The Society of Environmental Sciences and Chemistry (SETAC), a nongovernmental organization, has developed a new methodology, consistent with LCA e Environmental Life-Cycle Costing (E-LCC), and outlined a methodological framework for Societal Life-Cycle Costing (S-LCC) [20]. E-LCC takes into account the costs incurred by all the entities that have come into contact with a product throughout its life cycle, and not only by its producers and direct users, as is the case with conventional LCC (Fig. 4). It also includes external costs related to, broadly understood, environmental protection; including hidden costs and less tangible costs [22]. These effects are monetized through economic policy tools (for example state subsidies, environmental subsidies, fees for the emission of harmful substances, etc.). S-LCC additionally takes into account all external costs that may appear in the short and long term, including those related to society. Public fund transfers are removed from the cash flow to avoid double counting. Relationships between the specific methodologies are presented in Fig. 3. Including in the methodology all the external effects important from the point of view of society and the environment is significant for designing an economic policy and the proper application of the tools of this policy. The comprehensive inclusion and monetization of external effects makes it possible to assess the effectiveness of solutions beneficial from the point of view of the well-being of society, as well as comparing alternatives. The final measure of an investment project’s performance assessment is the Life-Cycle Net Present Value (LCNPV), calculated on the basis of cash flows in a given reference period, taking into account environmental issues. The LCNPV value is calculated in a standard manner, but the cash flows include all the described environmental costs and benefits:
LCNPV ¼
n X i¼0
CFi 1 þ ri
(3)
where: CF e cash flow in a given year “i”, n e number of years (taking into account the product’s life cycle), r e discount rate. The discount rate can take those values recommended by the European Commission, determined on the basis of benchmark bond yields, or by means of the weighted average cost of capital method [22]. The reference period is slightly longer due to the longer life cycle of products. The economic interpretation of the indicator is standard and specifies that the higher the LCNPV value, the more profitable the project is. A negative value means that at a given discount rate the project is unprofitable. Performing a full life-cycle analysis is complicated and requires a knowledge of many methodologies that enable the calculation and subsequent monetization of environmental effects, such as the emission of harmful substances. Therefore, various models, methodologies and databases are used for such calculations; for example Eco-Indicator 99, IWM-2, WISARD, WRATE (UK), EPIC/CSR
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(Canada), MSW-DST (USA), ORWARE (Sweden), EASEWASTE (EU), or LCA-IWM (EU) [18]. The models permit the quantification of both economic and environmental aspects. After the modelling parameters are entered and analyzed (input and output system), the program makes it possible to determine the flows of waste fractions in individual processes. It also serves to determine the effects of substance emissions in terms of impacts or eco-points. A cash flow statement and profitability assessment are also generated, which helps in making a decision whether to proceed with implementing a given investment project or look for alternatives. It should be noted that there is no single commonly used methodology or model, and that the results depend to a large extent on the assumptions adopted by a given expert and thus may vary. Performing a full life-cycle analysis for the case presented in this article is an extremely difficult task and one which goes far beyond the scope of this study. A full Life-Cycle Impact Assessment (LCIA) would require taking into account and estimating in terms of environmental costs the following processes: Raw material stage 1: the environmental costs of preparing the raw material (milk), i.e. all costs related to milk production at the volume projected for the biogas: including animal feed, energy, fertilizers, crop protection chemicals, water, labour costs, emissions (from engines in the feed production and transport processes; or produced in the manufacture process and the application of fertilizers; as well as emissions from dairy cattle), and waste; Raw material stage 2: the environmental costs of preparing substrate for the biogas plant. In this case, the processing of milk into whey, milk sludge and fat deposits (energy, water, fuels, reagents, labour costs, emissions, waste); Technological stage: the environmental costs of the processes relating to the production of biogas, electricity and heat; as well as the emissions and waste from technological processes. The assessment of the environmental aspects ought to be complemented by an assessment of societal costs. Thus, the analysis would cover all the elements included within the framework of the E-LCC and S-LCC methodologies developed by SETAC. Alternatively, one also could use the categories of damage and impacts as specified in the Eco-Indicator 99 methodology. Within this methodology, three basic categories have been selected in which potential damage is estimated [3,10,18]: Human health (climate change, radiation, depletion of the ozone layer, carcinogenic substances, substances harmful to the respiratory system), Quality of the ecosystem (acidification, eutrophication, soil erosion, ecotoxicity); Resources (damage resulting from the extraction of solid fuels and minerals). Within these categories, over 200 eco-indicators were calculated for the most frequently used materials and processes. In the analyzed case, in addition to the cost analysis, a simplified economic analysis could be performed. Currently, the dairy plant processes the raw material (milk) using energy from the national transmission system and heat produced in the factory’s coal furnace, which generates waste that is processed at the municipal sewage treatment plant. Implementing a project to build a biogas plant would mean that the waste could be used for generating electricity and heat, which would considerably reduce the volume of sewage. For this reason, it is not necessary to analyse the raw material stage 1 because the implementation of the project will not affect it in any way. Therefore, an analysis can be conducted for the
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Table 9 Comparison of environmental and societal costs for the non-investment and investment variants. Item
Non-investment variant
Investment variant
Electrical energy production
Supply of electricity from the national energy and transmission system. As the greatest volume of electricity is produced from coal, the emission costs are estimated for coal.
Thermal energy production
Heat is produced at the dairy plant using a 12 MW coal furnace. This generates costs associated with CO2 and dust emissions.
Biogas production
No costs
Emissions
Emissions related to electricity production in the national energy and transmission system, heat production in the on-site coal furnace, as well as waste disposal. Waste is first pre-treated at the factory sewage treatment plant and then discharged to a municipal treatment plant.
Electricity is produced by the biogas plant. The savings and environmental benefits include the elimination of CO2 and the dust emissions connected with the production of energy from coal. Benefits in all the areas indicated in Eco-Indicator 99, in particular reduced depletion of the ozone layer, reduced adverse climate change, lower emissions of substances harmful to the respiratory system, and lower consumption of fossil fuels Thermal energy is produced by the biogas plant. The savings and environmental benefits include the elimination of CO2 and the dust emissions connected with the production of energy from coal. Other benefits are the same as those for electricity. Environmental costs resulting from technological processes. Electric and thermal energy is neutral as it is generated as a result of the system’s operation. Other costs that should be taken into account include the costs of the reagents used as well as the costs incurred during the construction of the biogas plant and its subsequent operation. Emissions related to biogas production and waste disposal (but reduced in comparison to the non-investment variant)
Waste
non-investment and investment variants in the proposed form as well as estimating the environmental and societal costs. A summary of this analysis is presented in Table 9. The cost analysis showed that if the support system based on the sale of property rights or auctions is discontinued, and in view of the current energy prices, the biogas plant project will not be viable (although the dairy does not have to buy substrate for biogas production). However, it can be stated with certainty that in environmental and societal terms this project could be extremely beneficial and should be implemented. This also means that if the system of certificates, or auctions for larger installations, is discontinued, other public funding systems should be created so that such environmentally and socially beneficial projects can be implemented. In order for such projects to be implemented, however, the support should be steady and long-term because otherwise the projects will not be “bankable” e no financial institution will want to finance a project that does not show a positive NPV value, and without external support it is difficult to implement projects which require such a high level of investment. 4. Conclusion On the basis of performed research and analyses, several conclusions have been made: 1. The biowaste from dairy plant have high energy potential and may serve as a good substrate for biogas and methane production. 2. Dairy waste management in the process of methane fermentation allows to decrease significantly the costs of its utilization related directly to high load of BOD and COD. 3. The amounts of the substrates produced in afore-mentioned dairy plant will enable the production of approx. 14 785 MWh electricity and 57 815 GJ of the heat in cogeneration unit, which can be directly transferred into annual income at the level of 1 221 013 Euro. 4. Moreover, next to the dairy plant producing daily approx. 400 Mg whey, 26 Mg dairy sludge and 0.8 Mg fatty sludge, a
The amount of waste is significantly reduced due to the utilization of its main and most harmful part. This creates significant benefits for both the environment and society
biogas installation with electricity power of 1.72 MW and heat 1.84 MW can be constructed. This can replace 45% of factory maximum power demand supplied by national grid. 5. The creation of a system for the production of electricity and heat from a biogas plant without financial government support is economically unjustified. 6. For environmental and social reasons, the construction of a biogas plant is beneficial and should be implemented.
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