growing and sustaining the ontario biogas industry · biogas systems anaerobically digest organic...

December, 2011

Contact:

Jennifer Green

[email protected]

Agrienergy Producers’ Association of Ontario · Association Des Producteurs d’Agrienergie De l’Ontario

275 Slater Street, Suite 900, Ottawa, Ontario K1P 5H9

T: 613 822-1004 www.apao.ca [email protected]

Growing and Sustaining

the Ontario Biogas

Industry

i

Contents Executive Summary ....................................................................................................................................... 1

1. Introduction ........................................................................................................................................... 1

1.1. Biogas in Ontario ........................................................................................................................... 1

2. Biogas Potential ..................................................................................................................................... 2

2.1. Agricultural Waste ......................................................................................................................... 2

2.2. Food Waste.................................................................................................................................... 2

2.3. Municipal Waste ............................................................................................................................ 2

3. Biogas - An Essential Component of Ontario’s LTEP ............................................................................. 3

3.1. Price ............................................................................................................................................... 3

3.2. Manufacturing and Job Creation ................................................................................................... 3

3.3. Supply and Demand ...................................................................................................................... 4

3.4. Grid Management (Reliability and Operability) ............................................................................ 4

3.5. Emerging Technology .................................................................................................................... 4

3.6. Added Value .................................................................................................................................. 4

4. Other Jurisdictions ................................................................................................................................. 5

4.1. Germany ........................................................................................................................................ 5

4.2. United States ................................................................................................................................. 6

5. Next Steps - Growing and Sustaining Biogas in Ontario ........................................................................ 8

6. Background Information ....................................................................................................................... 9

7. References ........................................................................................................................................... 10

EX-1

Executive Summary

Biogas in Ontario has the potential to generate 250MW of electricity - enough to power

approximately 150,000 to 200,000 average Ontario households. Biogas generates reliable,

flexible, dispatchable power 24/7 and has the ability to accommodate other forms of

intermittent renewable energy sources through gas storage thereby creating a more efficient

electrical grid.

Biogas systems anaerobically digest organic based inputs that come from farms, food processing

facilities, and municipalities to create biogas. Biogas can serve multiple energy forms including:

electricity, heat, renewable natural gas (biomethane), and transportation fuels.

There is an estimated 12,000,000 tonnes/year of manure and 5,000,000 tonnes/year of reusable

food-based organics in Ontario today. This volume of organic feedstock can supply 400-500

biogas systems.

To date, the biogas sector has created 100 jobs in Ontario and over $25 million dollars invested

into the rural economy. With a target of 500 biogas systems and the potential to create the

equivalent of 5 jobs for every biogas facility constructed, biogas can support another 2,500 jobs

and leverage $1 - 1.5 billion in Ontario. This investment would strengthen Ontario’s

manufacturing sector for the construction and continued operation of biogas systems.

Biogas is a renewable energy source that provides added value to Ontario through additional

economic and environmental benefits. Ontario’s agriculture, food and municipal sectors can

realize billions of dollars in cost savings from conservation measures (i.e. turning waste disposal

costs into revenue from energy, commercial fertilizer reductions) that foster sustainable,

integrated businesses and enhance efficiency. Furthermore, biogas systems can help achieve

Ontario’s climate change targets by reducing an estimated 3 million tonnes of CO2e annually.

Biogas has been successfully implemented in other jurisdictions, specifically Germany where

over 7,000 biogas facilities produce over 2,700MW of power. In Germany, biogas has

contributed over $1 billion into the economy, created over 46,300 jobs and is on target to

generate 17% of its total power from biogas. Germany has a similar agricultural base to Ontario;

it also has proven technology, experience and a policy framework that could be replicated here.

Biogas can build Ontario’s agriculture, food and municipal sectors while offering diverse energy

opportunities. Solutions need to be brought forward to enable greater biogas development, to

strengthen an industry that in turn can provide rural economic development, job creation and

EX-2

manufacturing, Ontario biogas experience, financial investment, technological advancements,

and innovations.

APAO advocates for the following next steps to be taken by government and policy makers:

1. 20% of remaining renewable capacity be allocated to biogas

2. Priority access be made available to the electrical grid for biogas projects

3. Priority ranking of FIT applications to expedite biogas projects

4. Improvements made to the REA as it relates to biogas projects and alternative means of

attaining such environmental approvals

5. FIT Program specific changes related to CPI, pricing and/or adders and revisions to

program rules, definitions and contract provisions (see related FIT Two-Year Program

Review APAO Input for greater details)

6. Development of a biogas strategy amongst the four Ministries directly responsible for

biogas policy: Energy, Agriculture, Environment and Municipal Affairs

1

1. Introduction

This report intends to describe the potential development of biogas technology as an emerging

renewable energy source in Ontario and will outline the growth projections to 2018 and

measured steps to attaining success in implementing this plan. This plan may act as a tool for

key policy and decision makers to provide the necessary support to developing an overall biogas

strategy in the province.

The Agrienergy Producers’ Association of Ontario (APAO) is a member organization that

represents the collective voice of Ontario’s growing biogas industry. It has worked diligently to

promote the development of biogas to its full potential as a clean, green energy source in

Ontario and focused on government and agency relations, working through issues related to the

implementation of the ground-breaking Green Energy and Green Economy Act, and ensuring

decision makers understand the needs and benefits of this new industry. We applaud the

Ontario Government for supporting clean, green energy alternatives and request the serious

consideration for biogas support in the review of the Feed-In Tariff (FIT) Program Two-Year

Review.

1.1. Biogas in Ontario

Ontario currently has a very young biogas industry. Biogas development was initially quite high

and responsive to government support towards growing a green energy sector in the Province;

however, since the launch of OMAFRA’s Biogas Financial Assistance Program in 2008 and OPA’s

FIT program in 2009, interest has tempered.

The biogas experience to date can be summarized as follows:

• There are a total of 10 biogas systems operating in Ontario delivering approximately 5

MW of electricity to the power grid.

• The majority of biogas projects built to date are sized between 250 to 500kW.

• An additional 20 biogas projects are in development in any stage of planning, design or

construction.

• Biogas development has been in conjunction with existing farm operations (dairy,

greenhouses, beef, other), that are large in size and financially sound businesses capable

of supporting the financial security and risk associated with new developments.

• One known municipal biogas system is operating using wastewater inputs.

• No additional funding support provided by government to offset the capital investment

of biogas projects.

2

2. Biogas Potential

Biogas is able to utilize agricultural, food and municipal waste streams to create energy.

Considerable research has been done by various sources to quantify the estimated volume of

organic inputs that can be processed through anaerobic digestion. This section describes these

input sources used to create biogas from which an estimated 250MW of electrical power is

calculated. Reference materials are listed and copies made available upon request.i

2.1. Agricultural Waste

Agricultural waste is predominately comprised of animal manure, but can also include crop

residues, energy crops, and slaughterhouse wastes.

• Ontario livestock farms produce an estimated 12,000,000 t/yr of manure.

• Crop residues are the unused parts of plants that may be gathered after a crop is harvested

for use in an anaerobic digester.

• Energy crops grown for biogas complementing a larger biomass frameworkii

• There are approximately 140 slaughterhouses operating in Ontario today.

2.2. Food Waste

Food waste, also referred to as municipal solid waste (MSW) or source separated organics

(SSO), is made up of residual materials collected from residential green bin programs,

commercial operations such as greenhouses, food processing plants, and institutions (hospitals,

government buildings, schools).

• There are approximately 3,000 food processing plants in Ontario.

• Over 220 greenhouses in operation.

• Estimated 5,000,000 t/yr of useable organic waste.

2.3. Municipal Waste

Other sources of municipal waste, excluding MSW (categorized above as food waste), include

landfill gas and wastewater treatment systems.

• Prior to recycling and source separation practices, landfills received all of wastes including

organic materials. Some municipalities with closed landfills are capturing the gas that is

generated from these organics that are naturally breaking down in a similar anaerobic

digestion process. Environment Canada indicates a total of 19 landfill gas projects in Ontario.

• Municipalities have long been applying anaerobic digestion principles in their treatment of

wastewaters collected through sewers.

3

3. Biogas - An Essential Component of Ontario’s LTEP

Biogas provides an economical and environmentally sustainable form of renewable energy in

Ontario and has the potential to contribute to Ontario’s target of 10,700MW of renewable

energy by 2018 as outlined Ontario’s Long-Term Energy Planiii.

As outlined in Ontario’s Supply Mix Directive (Feb, 2011)iv, considerations of energy demand,

supply, transmission, reliability and operability are at the forefront of the government’s

planning initiatives. In addition to these elements, a balance must be maintained for cost-

effective planning with the interests of ratepayers, manufacturers and developers in mind in

today’s economy.

Biogas has the ability to provide integrated measures to support the government’s targets and

planning criteria while also achieving economic balance to multiple stakeholders. Outlined

below are examples of where biogas can add value to Ontario’s energy equation.

3.1. Price

Biogas is a reasonably priced energy alternative to Ontario ratepayers. Current FIT prices range

from 10.4 ¢/kWh for larger systems up to 19.5 ¢/kWh for smaller systems. An increase in the

consumer price index (CPI), nominal increase in price and/or dedicated price adders for biogas

would stimulate interest and development in the sector while maintaining protection of the

consumer.

3.2. Manufacturing and Job Creation

Biogas has the ability to contribute to rural economic development and job creation boosting

Ontario as a clean energy leader. With an average capital investment of $4,500 per kilowatt

installed, or average of $2.25 million per project, this equates to approximately $25 million

dollars worth of business in Ontario today and a projected $1 to 1.5 Billion over 20 years.

There are currently around 25 reputable businesses providing biogas related services in

engineering, design, technological expertise and consulting. Further to that an estimated 250

trades-people are involved in physical construction such as excavation, concrete, plumbing,

structural, landscaping, biogas system and CHP suppliers/installers/commissioners. Upon

commissioning biogas systems, there remains a demand for on-going support staff post

construction. These jobs are tailored to biogas operators, service technicians, electricians,

microbiologists and accredited laboratories. It is estimated that biogas can create the equivalent

of 5 jobs for every biogas facility constructed.

All told, biogas can contribute the equivalent of 2,500 direct full-time, long-term jobs in Ontario.

4

3.3. Supply and Demand

Biogas is able to produce clean, renewable power that is dependable, consistent and distributed

locally. Biogas is capable of supporting energy demands to rural areas farthest served by

centralized energy supply. APAO estimates that 250MW of electricity can be available from

biogas generation.

From the perspective of electricity transmission, biogas systems generally connect at the

distribution level. They are also constructed in proximity to source of inputs, typically in rural

areas, where improvements to infrastructure at the distribution level is required. Solutions for

cost effective grid connection of biogas systems have been piloted and proven to be reliable and

cost effective. Infrastructure investment in rural areas is currently realized through private

investment where biogas projects are developed.

3.4. Grid Management (Reliability and Operability)

Biogas is a reliable, flexible, dispatchable source of electricity. Biogas is a synchronous form of

electricity generation which provides controlled power factor and improved power quality. It is able to

meet local distribution company requirements and strengthen the power supplied locally.

It can also offer flexibility in power production given the potential storage capability of gas (up

to 4hours). The ability for biogas to moderate its electricity generation can go a long way to

accommodating other forms of intermittent renewable energy sources, address capacity

constraints and create a more efficient electrical grid. These forms of grid management are

echoed by the Independent Electrical System Operator (IESO) looking for maximum flexibility

from all resources to successfully manage operations and costs, thus helping IESO manage

surplus base load when renewable generation is high.v

3.5. Emerging Technology

Biogas systems have not had a wide uptake in Ontario and are deemed by certain stakeholders

as an emerging technology. Biogas has the potential to create innovation and leadership on

farm and in rural communities; and, provide research and development opportunities for

universities and learning centres.

3.6. Added Value

Biogas can offer the following added value to Ontarians:

• Reduce environmental footprint through waste reutilization, renewable fertilizers, GHG

capture, and clean water;

• Provide self sustaining farm practices

• Alternative energy source to fossil fuel based energy demands on

• Expanded life span for landfills with diversion of organics to bi

• Increased farm incomes and succession opportunities to attract for youth in agriculture

• Green products and marketing opportunities

4. Other Jurisdictions

Biogas has developed substantially

of the United States. Relevant highlights from these areas

described further below. Reference materials are listed and copies made available upon

request.

4.1. Germany

The German biogas experience

model. Some key facts and statistics

The German Biogas Association has produced a

arguments and potentialvii. A recent delegation from Germany and representatives of the

German Biogas Association provided the following recommendation to Ontario’s FIT review:

• keep proposed changes short, simple and easy to use

Ge

rma

ny •Over 7,000 biogas facilities

•2,700 MW of electricity

•60 plants producing biomethane

•On target to generate 17% of total power from biogas

•$1 billion directly invested by biogas industry in German economy

•46,300 direct jobs created

•FIT tariffs ranging from 6€ct/kWh to 25€ct/kWh

•Adders for raw materials, manure, emission reduction, technology, heat, CHP

Provide self sustaining farm practices and stronger nutrient management;

Alternative energy source to fossil fuel based energy demands on-site

Expanded life span for landfills with diversion of organics to biogas systems

Increased farm incomes and succession opportunities to attract for youth in agriculture

Green products and marketing opportunities

ubstantially in other jurisdictions, specifically Germany and

Relevant highlights from these areas and how they compare to Ontario are

Reference materials are listed and copies made available upon

is one that has had wide recognition and which Ontario can

and statistics from Germany compared to Ontariovi:

gas Association has produced a reference document that illustrates biogas facts,

recent delegation from Germany and representatives of the


short, simple and easy to use

Over 7,000 biogas facilities

60 plants producing biomethane

On target to generate 17% of

$1 billion directly invested by biogas industry in German

ct/kWh

Adders for raw materials, manure, emission reduction, technology,

On

tari

o •10 operating biogas systems

•5MW of electricity

•Target of 12% for all renewables by 2025

•Similar agricultural base

5

Increased farm incomes and succession opportunities to attract for youth in agriculture

and notable areas

compare to Ontario are

Reference materials are listed and copies made available upon

and which Ontario can

that illustrates biogas facts,

recent delegation from Germany and representatives of the


10 operating biogas systems

Similar agricultural base

• keep the review term of programs (like FIT)

planning, approvals, financing and construction of any renewable energy project

• the framework needs to provide a profitable business for investors

In a report published by the Pembina Institute

recommendations for policy makers were proposed to help advance biogas as part of the clean

energy sector in Ontario. The most significant points to

• An aging grid presents an opportunity for innovation

• Farmers can contribute to an energy solution which

carbon economy

• Consistent support of renewable energy opens doors to manufacturing, export

opportunities and job creation

• Develop a biogas roadmap for Ontario

4.2. United States

Several states have developed biogas systems

energy sustainability for their regions. Two states

installed biogas systems and created programs to help support renewable energy

respective areas. Some key facts about Wisconsin and Vermont relative to biogas:

According to the Wisconsin Bioenergy Initiative

state. In their 2011 Strategic Plan,

further biogas development, noting that biogas can

• instill sustainable energy practices locally providing added energy security

Wis

con

sin •Wisconsin Dairy sector

compatible with Ontario

•~1,000 food processing facilities

•30 operating digesters, 22 of which are on farm

•Approx. 11.6MW of electricity generated in 2009

•Currently have a Renewable Portfolio Standard

programs (like FIT) to a minimum five years to accommodate the


the framework needs to provide a profitable business for investors

In a report published by the Pembina Instituteviii, several lessons learned from Germany and


The most significant points to note include:

An aging grid presents an opportunity for innovation

bute to an energy solution which embraces climate change and a reduced

onsistent support of renewable energy opens doors to manufacturing, export

opportunities and job creation

Develop a biogas roadmap for Ontario

developed biogas systems as a means of creating wealth, jobs and building

energy sustainability for their regions. Two states, including Wisconsin and Vermont

and created programs to help support renewable energy

Some key facts about Wisconsin and Vermont relative to biogas:

According to the Wisconsin Bioenergy Initiativeix, biogas has the opportunity to

state. In their 2011 Strategic Plan, the Wisconsin Bioenergy Initiative presented the case for

development, noting that biogas can:

instill sustainable energy practices locally providing added energy security

~1,000 food processing facilities

30 operating digesters, 22 of

Approx. 11.6MW of electricity

Currently have a Renewable Ve

rmo

nt •larger dairy farms averaging

1,212 cows

•Cow Power program

6

years to accommodate the


rned from Germany and


embraces climate change and a reduced

onsistent support of renewable energy opens doors to manufacturing, export

as a means of creating wealth, jobs and building

including Wisconsin and Vermont, have

and created programs to help support renewable energy in their

Some key facts about Wisconsin and Vermont relative to biogas:

, biogas has the opportunity to transform the

resented the case for

larger dairy farms averaging

7

• create an industry value chain that supports all aspects of biogas development

• support the agriculture and food sectors while potentially expanding economic growth

• provide renewable energy solutions that address social and environmental issues and

contribute non-energy benefits including: reduced odours, high quality fertilizer, reduced

surface and ground water contamination, pathogen reduction

• utilize waste products as feedstocks reducing pressures on other municipal facilities

The potential for development is possible so long as:

• transparent, long lasting and clear policy is in place

• economics are sufficient to address investment and attract development

• different models, size and scale are provided equal opportunities

In Vermont, research has been conducted on the economies of biogas systems on four large

dairy farmsx, xi. Relevant findings drawn from these studies concluded:

• Biogas systems have an average capacity of 355kW

• Average capital was $2,028,488 US, equivalent to an installed capacity of $5,705/kW

• Approximately 23 ¢/kWh is required to provide the return on investment targeted by

Vermont law

8

5. Next Steps - Growing and Sustaining Biogas in Ontario

Based on the successes realized in other jurisdictions like Germany and growing interests in

parts of the United States, Ontario has the potential of a much stronger, larger biogas industry.

With comparable agricultural sectors, and untapped food and municipal processes for available

feedstock, Ontario is on the verge of growth given the right environment created by

government and agencies.

APAO advocates for the following next steps to be made by government and policy makers:

1. 20% of remaining renewable capacity be allocated to biogas

2. Priority access be made available to the electrical grid for biogas projects

3. Priority ranking of FIT applications to expedite biogas projects

4. Improvements made to the REA as it relates to biogas projects and alternative means of

attaining such environmental approvals

5. FIT Program specific changes related to CPI, pricing and/or adders and revisions to

program rules, definitions and contract provisions (see related FIT Two-Year Program

Review APAO Input for greater details)

6. Development of a biogas strategy amongst the four Ministries directly responsible for

biogas policy: Energy, Agriculture, Environment and Municipal Affairs

Biogas needs to be treated differently given that it offers diverse energy opportunities along

with environmental and social benefits. Solutions need to be brought forward to enable greater

biogas development, to strengthen an industry that in turn can provide: rural economic

development, job creation and manufacturing, Ontario biogas experience, financial investment,

technological advancements, and innovations.

9

6. Background Information

Who We Are

• APAO is the collective voice of Ontario’s growing biogas industry

• APAO looks to develop biogas to its full potential as a clean, green energy source in Ontario

• A not for profit, member driven organization founded by a collective of farmers that has since

broadened to encompass representation from all components of the biogas sector including

owners/operators, technology suppliers, financial and learning institutions, utilities, waste industry

• APAO supports the activities and needs of its members by guiding policy and regulatory

developments; building knowledge through exchange of information; raising awareness; and

creating networks.

What is Biogas?

• Biogas is a type of fuel created when organic matter breaks down in an oxygen-free environment

• This biological process is referred to as ‘anaerobic digestion’

• Biogas systems involve engineering design and technical components that address: organic storage

and pre-treatment; pumps, mixers, and piping; heating and gas collection; and other equipment

needs for the specific end use (i.e. electricity, biomethane, transportation).

Biogas: A Multi-Type Energy Source

• Biogas can fuel a generator to produce electricity and heat

• Biogas can be compressed and cleaned for injection into the natural gas pipeline, as ‘biomethane’,

delivering a “green” source of energy through existing infrastructure

• Biogas can be used as a transportation fuel

Quality of Power

• biogas generates reliable, flexible power 24/7

• Biogas is distributed small scale power generation throughout rural Ontario

• Potentially improves/supports grid capacity and increases power quality

• Biogas generation is cheaper than solar; competitive with wind

Environmental Benefit

Biogas improves the environment:

• Clean Water: Processes animal manure reducing pathogens and protecting source water while

capturing energy value

• Clean Air/GHG Reduction: captures and uses methane a greenhouse gas that is 21 times more potent

than CO2 as a GHG; reduces odour in digestate (treated manure output)

• Waste Diversion: diverts organic waste, including grease trap and other food production, wastewater

pre-treatment residuals away from landfill while capturing its energy

Farm/Community Benefits

• Value Added Nutrients: enhanced fertilizer value for crops from processed manure

• New revenue source for farmers while implementing strong nutrient management practices

• Local job creation and rural economic development

• No NIMBY factor

10

7. References i APAO: Biogas Potential in Ontario Briefing Note, January 2011.

ii PPD Inc.: Literature Review and Study Energy Market Alternatives for Commercially Grown Biomass in Ontario,

March 15, 2011.

iii Ministry of Energy: Ontario’s Long-Term Energy Plan Building Our Clean Energy Future, 2010.

iv Ministry of Energy: Ontario Supply Mix Directive MC-2011-625, February 2011.

v IESO: 18-Month Outlook Update From September 2011 to February 2013, August 24, 2011.

vi German Biogas Association: Biogas Segment Statistics, 2011

vii

Fachverband Biogas e.V.: Biogas Can Do It, Facts, arguments and potentials, December 2011

viii

The Pembina Institute, Heinrich Boll Stiftung, Climate Action Network Canada and United Church of Canada:

Harvesting Clean Energy on Ontario Farms A Transatlantic Comparison, June, 2011.

ix Wisconsin Bioenergy Initiative: The Biogas Opportunity in Wisconsin 2011 Strategic Plan.

x Rogers, G.F: Journal of the NACAA, The Economics of On-Farm Dairy Methane Digesters on Vermont Dairy Farms,

November 7, 2011.

xi Wang, Q., Thomspon, E., Parsons, R., Rogers, G., Dunn, D.: American Dairy Science Association, Economic

feasibility of converting cow manure to electricity: A case study of the CVPS Cow Power program in Vermont, 2011.

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