Ontario Canada:Open for Biogas Business!

Chris DukeEnvironmental Management Branch

Ontario Ministry of Agriculture, Food and Rural AffairsGuelph, Ontario, Canada

Harrisonburg Virginia Biogas Workshop

31 March 2010

Today’s Presentation• Introduction to Ontario, Canada• Ontario’s Feed-In Tariff and Green Energy Act• Ontario’s biogas approvals process• Considerations for doing biogas in Ontario

• Biogas Business in Ontario1. Best Feed-In Tariff in North America2. Clear approvals processes designed for green

energy systems

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$ GDP of various countries and the Province Ontario

Ontario’s GDP Compared to Other Countries Larger than most other countries

Why Biogas?• Odour reduction• Pathogen reductions• Reduced GHG emissions• Renewable energy production• Manage society’s waste• Utilize food byproducts• Improve fertilizer value of manure• New revenue on the farm• 3600 MW coal-fired power plant

– Largest pile of coal in the world– Ontario to phase out coal by 2014!

Early Days of Biogas in Ontario

• Early 1980s – several small systems built for electricity and single-cell protein

• Net-metering• Renewable Energy Standard Offer Program

– Mainly developed on wind price– Included biomass

• Anaerobic digestion [AD] of manure

Where have we been??2005• One energy-based digester in Ontario,

running on manure• No funding• No knowledge on blending off farm

source material• No clear legal pathway to accept off farm

material• Only net metering option – 50 kW max

(increased to 500 kW)

Where are we now?Industry is developing• Good knowledge on utilizing off farm

materials• Ability to sell power on grid at 14.7 to 19.9

¢/kWh • Clarity on ability to connect to electrical grid

Ontario Biogas Systems Financial Assistance Program

• $11+ million funding• 28 Systems (13 generating power, remainder

under construction)• Agri-Energy Producer’s Association

(www.apao.ca) • Training with German expertise

Biogas Activity in Ontario Today• 11 operating agrifood biogas systems

– from 100 kWe to 1,600 kWe plus one for heat• 1 municipal source-separate organics pilot system (Toronto)• Several food/beverage wastewater cleaning systems

• 13 projects near completion – Farm-based, mostly dairy farms, mostly 250-500 kWe– Most have funding through Ontario Biogas Systems Financial

Assistance Program

• 2-3 projects starting construction 2011

• Several non-farm projects proposed, in design/approvals– Biggest proposed is 2.8 MW centralized system– Several municipal source-separated organics projects being

considered

Biogas Companies in Ontario• Manure and food waste as primary inputs• 4-5 established Ontario-based design/construction

companies building systems (all are small)• Both “turn-key” and farmer-managed project

development• 8 biogas companies Ontario-based companies

have built biogas systems– Several consulting firms, laboratories, electrical

companies, equipment manufacturers, etc

Ontario Biogas Systems Financial Assistance Program

• $11.2 M Grant Program to kick-start the industry– 46 feasibility studies (70%, up to $35,000)– 21 construction projects (40% up to $400,000)

• Lots of construction to go with 2 months left

– Industry development • Ontario Biogas Operators’ Training Course with IBBK• Agri-Energy Producer’s Association of Ontario www.apao.ca • Grid connections project to overcome

hurdles• GHG measurements and protocols

• Program ended 31 March 2010

Key Drivers for Biogas in Ontario1. Feed-In Tariff program under the Green Energy Act

a) New, clear, long term economic returns

2. Clear approval processes for Green Energy: a) Ability to mix food-byproducts at on-farm and

non-farm biogas plantsb) Grid connections

Green Energy and Green Economy Act(a.k.a. ‘Green Energy Act’)

• Introduced September 2009• Key elements include:

• Feed-In-Tariff system to provide guaranteed electricity prices for renewable energy projects

• Streamlined approvals for renewable energy projects• Developing a smart grid which will support this new

energy supply. • Focus on communities and aboriginal groups

• Underlying this:• Economic stimulus• Jobs

Feed-In Tariff (FIT) Biogas Priceshttp://fit.powerauthority.on.ca

Location Restriction Size Contract Price (¢/kWh) CDN$

On-Farm ≤ 100 kW 19.5On-Farm >100 kW ≤ 250 kW 18.5

- ≤ 500 kW 16- >500 kW ≤ 10 MW 14.7- >10 MW 10.4

• “On-Farm” means a Nutrient Management Regulated Mixed AD system• Additional biogas bonuses for community projects (0.4 ¢/kWh) and for

projects with aboriginal participation (0.6 ¢/kWh).• “Contract Price” reflects on-peak hours 11:00 am to 7:00 pm during

business days, and off-peak hours are any other time, assuming 75% operating capacity. • 1.35 X price on-peak (~20% of time), 0.9 X price off-peak

Implications of Biogas FIT Price• A good price, developed with an 11% return-on-investment

– Developed with manure and food-waste in mind• Will get early adopters moving• Will get people to reconsider (for projects that did not appear to

be economical in the past)– Former prices was 11 ¢/kWh ($CDN)

• 20 year contract at current price• Program review every 2 years

– Review includes evaluation of uptake, success

Ability to Mix Off-farm Materials

1. If > 75% agricultural source material, and if > 50% of ag material is manure, and system is on a farm, then can apply for “Regulated Mixed Anaerobic Digestion Facility” (RMADF) rules:– Prescriptive checklist, prescriptive list of off-farm materials, clear

requirements (e.g. max 10,000 m3/year, 200 m3 stored on-site)– Approved by Ontario Ministry of Agriculture, Food and Rural Affairs

or2. If can’t satisfy RMADF rules, or want more flexibility, then new

“Renewable Energy Approval” (REA) through Green Energy Act: – Flexibility (location, different quantities or blend of materials)– Additional review (consultations, natural feature setbacks)– Approved by Ontario Ministry of Environment

and for both of these:If > 50% of input material is agricultural, then all the digestate can be land-

applied with manure’s nutrient management rules

Quantities of Biogas Inputs in Ontario• Agricultural Resources:

– OMAFRA estimate : ~1 million tonnes manure/year reasonably available for biogas system

• ~7,500 Dairy Farms (average size ~85 dairy cows)• ~19,000 Beef Farms, 375 farms > 300 Animals• ~3,000 Finishing Hog Farms, 225 farms >1800 hogs

– 3.3 million hectares of crop production

• Food and Waste Resources:– >3000 food processing facilities

• $32.5 billion/year business– Producing ~ 5 million tonnes/year of by-products suitable for biogas– > 500,000 tonnes/year of organic material currently going to landfill

Grid Connections• Old infrastructure, lack of 3-phase lines in many rural areas

• New fast-track entry to approvals process for smaller renewable systems– <250 kW on <15 kV line (many rural lines)– <500 kW on > 15 kV line

• New rules for payment of grid improvements1. On-farm costs paid by generators (farmer)2. Expansion to local wires split by generator and distributor

(owner of wires) – distributor pays first portion

3. Grid communications/safety systems paid by distributor

Potential and Actual Number of Biogas Systems[dairy farms and generator size]

• Small farms will have smaller biogas systems• Larger farms with larger biogas systems likely more financially viable• 3,600 less than 100 cows, 590 farms over 100 cows

Dairy farm numbers, Farm numbers with biogas systems, andBiogas system average and range of size

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Farm numbers, 2009 Farms with biogas systems kW size

Other Considerations: Space• Lots of space!

– Most livestock barns have good setbacks from neighbours

– Lots of land for land-application of digestate

Other Considerations: Cold!

• Must design for at least -30˚C– Freezing of over-under

pressure valves, pipes, gas storage areas, etc

– Note: it’s also hot: commonly +30˚C or more in summer

Other Considerations: Energy Crops?• Corn silage ~ $50/tonne to produce in Ontario• Systems using only energy crops are likely marginally

economical under FIT• Energy crops may make sense if:

– Extra revenue from co-gen heat use;– Use of existing infrastructure (bunk storage, tractors,

etc); or– Blended to increase % farm-based

material • Allows more off-farm material to

be brought in• May enable system to capture FIT

bonus for “on-farm” systems

Other Considerations: Cost

• Farmers have money and willingness to invest– e.g. dairy farmers have supply management system

• Must keep cost reasonable because FIT is not too high– < $7,000/kW: minimize bells and whistles– Must rely on existing infrastructure if possible

Making Biogas Happen in Ontario

• Environmental regulation updates– Nutrient Management Act– Renewable Energy Approval

• Sector development– Research– Training– Supporting companies– Conferences and trade shows– Technical knowledge transfer– Communications and communicating

• Biogas association: AgriEnergy Producers’ Association of Ontario– www.apao.ca

OMAFRA Ongoing Support• Communications• Tech support• Sector support• Research• Regulatory review• Training• Goals:

– Clean water– Greenhouse

gas reductions

– Farm incomes– Business

development– By-products– Food sector

Training Courses and Learning

• Multi-day training courses• Workshops• On-site technical support from OMAFRA• Conferences• Agricultural trade shows• Tours• Web sites• Videos

What’s next in Ontario?• Green Energy Act implementation

– 2 years with current FIT prices– Renewable Energy Approval development

• Potential barriers and hurdles– Availability of inputs?– Building economical systems at small and medium

livestock facilities, <100 kW– Finding use for heat from cogeneration– Electrical grid limitations

• Lots of potential!

More Information about Biogas• Ontario Ministry of Agriculture Food and Rural Affairs (OMAFRA)

– www.ontario.ca/biogas• OMAFRA Biogas contacts:

– Jake.DeBruyn@ontario.ca– Don.Hilborn@ontario.ca – Chris.Duke@ontario.ca

Ontario Renewable Energy Facilitation Office: www.mei.gov.on.ca/en/energy/renewable/ refo@ontario.ca

Agri-Energy Producers Association of Ontario:www.apao.ca

Photo courtesy CHFour Biogas

Come to London, Ontario in March 2011!

www.biogasconference.ca

Thank you

Questions?

Ontario Biogas Companies• Design - Builders1. CH4 = 82. Powerbase = 43. ValBio = 14. Stonecrest Engineering = 15. PlanET = 56. GMA = 17. Dairy Lane = 28. CCS-agriKomp Inc. = 1• Consulting

– Sprout Biogas, Yield, Ontario Biogas, Angus Power, • Equipment

– 2G, Jenbacher, Tormont, building contractors, heating, etc.• Electrical companies

– Several consulting engineering, manufacturing, control systems, etc.