Case study #5: Combined Heat and Power using Biogas & Biomass Combustion at a Dairy Farm

Case Study #5: Combined Heat and Power using Biogas and Biomass Combustion at a Dairy Farm

A dairy farm near Pulaski having 150 head of milking cows and a calf operation is considering using biogas from manure to generate heat and power for its operations.

Currently the farmer burns wood in a 60% efficient biomass boiler to provide heat and hot water. The operation needs to heat around 15,000 ft² of space with a peak heating load of 20 (BTU/h)/ft². About 20% of the operation’s heating requirements are for hot water; this demand remains constant throughout the year. Wood for the boiler costs around $80 per ton.

The farm requires around 45 kW of electricity most of the time, but during the three summer months, electricity requirements average 60 kW. The maximum requirement for electric power at any time during the year is just under 80 kW. Electricity is purchased from the grid at $0.10/kWh.

Biogas would be fed into a 65 kW reciprocating engine/generator specially designed for biogas. Heat rejected from the engine water jacket would be used to supply hot water and heating.

The 65 kW engine/generator requires 13,000 BTU of fuel to supply 1 kWh of electricity. About 40% of total heat being rejected by the engine could be recovered for use. To avoid excessive wear, the genset should never be operated with an electric output under 20 kW. When the generator is out of service for maintenance (around 5 % of the time) the grid and the biomass boiler would supply energy.

The system could produce around 1 million BTU/hr of biogas.  Any excess gas would be flared.  The genset would operate at its full power output; excess heat would be dumped to the radiator and  electricity generated in excess of the farm’s requirements could be sold to the grid at $0.10/kWh.

The system will cost $260,000. Of this, 50% would be paid for with a 10 year loan at a 5% interest rate. Maintenance costs will be $2,500 annually. All biomass, electricity, and maintenance costs are expected to rise at 2% annually. The system would have a 20 year lifetime.

Questions:

1)      Is this a profitable project? Based on the simple payback would you invest in it? Based on the pre-tax return on equity?

2)      Save your work, then search the project database for a case study of a very similar real project.

 

Additional questions if you finish early:

3)      Does the manure handling system supply enough gas to operate the engine?

4)      What is the most profitable operating strategy? What is the most efficient operating strategy?

5)      If the farm could not export excess electricity to the grid (no “net metering”), how would the project profitability be affected?

6)      Why is the “remaining electricity requirement” not zero when for the power load following and full power capacity output operating strategies?

7)      Why does the heat load following strategy have a higher remaining heat requirement than the power load following strategy?