Farmers could be sitting on a £24-million goldmine, according to new research into biomethane production that shows medium to large farms could stand to make millions from producing renewable methane for the gas industry.
Biomethane for Gas Grid Injection details how the UK’s farmers are currently missing out on the opportunity to produce gas from suitable organic products and inject it into the country’s natural gas grid for large returns.
“An entry-level anaerobic digestion (AD) plant would be looking to earn in the region of £24 million over 20 years, and farms that developed larger plants could earn exponentially more than that,” Rob Heap, of Rob Heap Consulting, who carried out the research, said. “Given the right conditions, it wouldn’t be difficult to double or even triple that amount.”
Dairy and poultry farmers, pig farms and producers of energy crops such as maize, grass, rye and energy beet all have the potential to tap into this new money-making resource.
“It depends on the style and type of farming, but all farms have one or more of the necessary products needed for biogas production,” he added. “For example, a dairy, pig or poultry farmer might have slurry and manure, but no energy crops. If a group of farmers got together, they would have a good chance of developing a very attractive business.
“The more farmers that get involved, the more feedstock available to feed the AD plant and the more diversified it will be, which is quite important for receiving greater returns on your investment.
“A lot of farmers are potentially sitting on a goldmine and “gas farming” could be a valuable diversification opportunity that still has to be exploited by UK farmers.”
Biogas is produced for commercial exploitation by processing organic feedstock at certain temperatures in controlled, airless environments. This process is called anaerobic digestion and has traditionally been exploited by the water industry, which has used “sewage gas” to produce its own renewable energy for decades. Biomethane is biogas that has been cleaned and dried and closely resembles the properties of natural gas.
In more recent years, AD plants have been used to produce energy for the electricity supply industry, with 110 AD plants currently operational in the UK and more in construction. But with the introduction of tariff incentives for renewable methane and a number of enticements stemming from the government’s environmental commitments, producing biogas for the gas industry has become a very attractive financial prospect.
“Until about 18 months ago there wasn’t a tariff available for farms to create biogas for the gas grid and everyone looked to embrace electricity production,” Mr heap said. “But things have changed and there’s now an attractive tariff in place for biomethane. There has also been a relaxation in some of the regulations surrounding production and injection of biomethane into the gas networks.
“More funding people are getting interested as biomethane has the potential to be more profitable than generating electricity.”
This new study, commissioned by Northern Gas Networks, has shown that hundreds of sites in Yorkshire, Cumbria and the North East alone are currently producing the appropriate feedstock necessary for biogas production. However, many of these sites are very low volume producers and are situated in remote rural locations or are using alternative methods of waste recycling.
Nevertheless, the study has shown these farms could still contribute to the gas grid and stand to make huge returns by partnering up with neighbouring farms and forming regional alliances.
Virtual gas networks, where biomethane is moved in a private pipeline or pressurised and transported by road (just like compressed natural gas) to centralised upgrading plants prior to being injected into the grid, could present small producers with further opportunities to develop feasible projects.
“A great deal depends on an individual farmer’s appetite to embrace these kinds of farming initiatives; it has a lot to do with attitude, knowledge and skills,” Mr Heap said. “Anaerobic digestion is something that a lot of farmers will not be familiar with and some may be put off by its apparent complexities, which is a shame.”
“The typical capital outlay for an entry-level AD plant would be in the region of £3-4 million, but it’s difficult to be specific because it’s a technology that is usually designed in a bespoke manner to suit each individual farm’s requirements. However, there are specialised funding companies and indeed quite a number of individual entrepreneurs willing to put up funding for projects such as these.
“More and more farms across the UK are exploring the possibilities of AD and as it takes off it’s hoped that more farmers will become open to the idea and cooperate with other interested farmers in their area.”
The findings come ahead of a free conference on commercial opportunities in biomethane, to be held in York in September. Gas to Cash will explore how farmers can make money from their existing operations by producing biomethane for injection into the natural gas network.
Organised and sponsored by Northern Gas Networks, in partnership with the Institution of Gas Engineers and Managers (IGEM), the chartered body representing the gas industry, the event promises to assist farmers in the steps necessary to realising the business opportunities available to them.
For more information about the invite-only Gas to Cash event, visit: www.igem.org.uk/gastocash