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Anaerobic Digestion of farm and food processing residues GoodPractice Guidelines Page27 Economics Costs The main financial costs of establishing an AD project are likely to include capital costs, project development costs and training costs. Capital costs The equipment has to be manufactured to a high standard to prevent corrosion, and the resulting high capital costs may only be justified if the equipment has a long active life. In this respect, a digester may be regarded more as a mortgageable infrastructural project like a house than a piece of equipment like a tractor. Construction of the plant and associated site works, including any landscaping required under planning permission, will also incur costs. The capital costs for an AD plant will vary between £3,000 to £7,000 per kWe of electricity generating capacity. For example: • A small digester of 10kWe capacity, using residues from 100 head of cattle or 1000 pigs (requiring a digester with a capacity of 150 m3 ), is likely to cost £60,000 to £70,000. • A CAD plant of 1MWe capacity (requiring a digester with a capacity of 10,000 m3 ) is likely to cost £3 million to £4 million. Project development costs These can be very significant and may include: • Technical, legal and planning consultants’ fees, and the farmer or developer’s own time, in negotiations with legal and statutory bodies (for example in obtaining planning permission and consulting the Environment Agency) • Financing and legal costs, including the costs of arranging finance • Electrical connection costs • Costs of licences (for example, if imported food processing residues are used, a Waste Management Licence will be required, which will involve an initial charge and an annual fee) Running costs The running costs vary enormously depending on variations in design and operating circumstances. They are likely to be in the order of £7,000 - £10,000 per year for an on-farm project, or up to £100,000 per year for a CAD project. Running costs will include: • Staff costs: management of an on-farm digester with power generating equipment is likely to require two staff days per week • Insurance • Transport costs • Annual fees for licenses and pollution control measures • Other maintenance and operating costs. Training costs The people who run AD projects, of whatever size, need to be fully trained in the safety, financial and environmental implications of the project. These skills will need to be updated as technology and knowledge develop. Income The largest revenue streams from AD are likely to be from electricity (including avoided cost and sales) and fibre sales. Markets for all the products will need to be developed and balanced for the project to be economically viable. The way the project develops depends on the priority product for the developer (that is, energy, fibre or liquor), which will have implications for the technology which should be chosen. In summary, income streams are likely to include: • Electricity sales (or displaced purchases); energy from renewable sources is likely to continue to command premium rates • Heat sales (or displaced purchases) • Fibre sales (or displaced fertiliser costs) • Liquor sales (or displaced fertiliser costs) • Gate fees: charges made for processing wastes (this mainly applies to CAD projects using food processing wastes; gate fees are increasing as charges for alternative waste management methods, such as landfill taxes, also increase) • Savings on slurry handling and other waste management costs. It is important for all those involved in the industry to be in touch with the relevant networks so they are aware of the latest market developments. British Biogen is a good first point of contact. Financing the project An AD scheme, whether single farm or CAD, will require a large amount of capital investment and, in most cases, developers will require finance from an external source. There are two types of loan: those secured against the developer’s existing assets (on-balance sheet financing),PDF Image | Anaerobic Digestion Of farm and food Processing residues The development of a sustainable industry
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