Electricity purchase agreements and distributed energy policies for anaerobic digesters

Anaerobic digestion is increasingly recognized for its ability to produce renewable energy and reduce greenhouse gas emissions from livestock operations. In 2010, there were 2645 U.S. dairy farms with herd sizes large enough to support anaerobic digesters, yet only 156 systems were in operation (U.S. Environmental Protection Agency (U.S. EPA), 2010a. Market Opportunities for Biogas Recovery Systems at U.S. Livestock Facilities. AgSTAR Program; U.S. Environmental Protection Agency (U.S. EPA), 2011. Operational Anaerobic Digesters, Sorted by State (Dairy). AgSTAR Program.).11The EPA AgSTAR program considers farm sizes of least 500 cows to be feasible to support an anaerobic digester. This study analyzes the net present value of digester systems under alternative electricity purchase agreements and how returns are affected by standby charges, net metering policies and the use of feed-in-tariffs. In order for digester potential to be fully realized on a state or national level, changes to distributed energy policy are required. Results indicated that standby charges can reduce revenues from offsetting electricity by an average of nearly 20%. Net metering rules limit participation among larger farms and negatively affect profitability by restricting engine–generator size. Lastly, the effectiveness of a fixed price feed-in-tariff policy for digesters is significantly affected by project size differentiation. Digester energy policies are similar nationwide, making this study useful for government regulatory agencies and digester owners throughout the U.S.