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Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - GASFARM (SMALL-SCALE ANAEROBIC DIGESTION FOR AFFORDABLE, EFFICIENT AND SUSTAINABLE MANAGEMENT OF FARMS WASTE)

Teaser

Summary

Sereco Biotest, founded in 1976, has become a leader in the field of advanced environmental services in Italy. We are natural pioneers specialised providers of fore-front R&D solutions in the environmental technology field. Since 2012 we have been working on our GASFARM project, having tested the technology at a small scale (3kWh) achieving great results (e.g. >30% biogas yield compared to traditional AD techniques). GASFARM extends anaerobic digestion (AD) technology to small and medium agro and zoo-technical farms, based on ABR (Anaerobic Baffled reactor) technology. GASFARM is a multi-chamber reactor that allows a longitudinal separation and distribution of the different reactions (hydrolysis, acidogenesis and methanogenesis) that occur during biogasification. Our small-scale baffled reactor reduces the reactor volume 4x times, improve the hydrolysis, acidogenic, acetogenic and methanogenic yield, protects against toxic materials and provide higher resistance to changes in operational parameters, making AD technology ideally suitable for small and medium farms. Some attempts have been made to down-scale AD, however their efficiency is quite limited and their landscape impact significant. As a result, SMFs currently store and use their wastes for fertirrigation in their own lands or others (when they do not have sufficient land), in order to comply with regulations. This situation is forcing many farms to either reduce the number of animals, or even shut-down as they are unable to manage their wastes affordably. GASFARM presents a payback between 1-4 years, low operational costs and high rentability (income from electricity sale an internal savings). Sereco prepares its launch for 2019, just after validating the technology at a commercial scale (63kWh) in a real environment (end-userâ€™s pig farm). We will first target pig farms in Italy, Spain and France, countries with a strong pig farming industry. We have estimated a cumulative benefit of around â‚¬6 million after 5 years into commercialization, presenting a ROI of approximately 3.5 years. During the feasibility study, we have been searching for the best partner/s able to join us in this venture, complementing on skills, financial capabilities and strategic position, ensuring the success of our Phase 2 project.

Work performed

Between September and December 2016, we have completed a feasibility study, assessing the technical, commercial and financial viability of our project, funded through SME Instrument H2020 Phase 1:
- Technical viability: we completed a Failure Modes and Effect Analysis (FMEA) in order to identify failure risks prior reaching commercialization stage, by identifying potential areas of concern in the system lifecycle. We have also prepared a detailed list of materials and components, identified potential suppliers and determined costs (final selling price around â‚¬450k, operational costs around â‚¬15k, for a 63kWh unit). In addition, we have performed a Technology Watch analysis in order to expand our knowledge of potential competing technologies, and develop a list with technical regulations and standards to be met. We have also engaged and reached an agreement with Checcarini Agricoltura to host GASFARM pilot plant.
- Commercial potential: we have deepened our knowledge of our market, segmented it and quantified it, projected our growth and determined our pricing and commercialization strategy (pig farms in Italy, Spain and France as our primary market). We have also carried out a Freedom to Operate analysis that has confirmed the novel advantages of GASFARM and helped us shape our Intellectual Property (IP) strategy. We have also spent considerable time identifying and engaging with numerous companies, specially within the â€˜energy from waste/valorizationâ€™ sector, in order to find the best potential partner to complement us and bring value into the project. Some of the companies that have been selected and reached in order to discuss partnership opportunities (some others are cited within the following section):
- Zuccato energia: CHP/energy valorization specialized company, located in Italy.
- Stanzani: Italian engineering company working, among other sectors, renewable energy technology.
- NBI: Italian company operating in the areas of plant engineering, renewable energy, production and maintenance.
- Fiper: association of renewable energy producers in Italy.
- Key Global Italia: Italian main engineering contractor & management company.
- We have also used the support of our H2020 coach and used their access to Europartner partner search services. MTM Energia and OCREM were also reached to discuss about the possibility to become partners for GASFARM PH2 project. We also reached Karla Energize, a Czech company provider of cogeneration units with whom we had engaged in the past.
- Financial viability: We have projected GASFARMâ€™s revenues, costs, pricing, margins and payback. We have assessed several economic scenarios with different participating entities (materials suppliers, manufacturing profiles, subcontracting possibilities and partners. Out of this analysis we have also been able to determine the best strategy to go along with the project for Phase 2 i.e. partnership with a CHP technology provider, in order to leverage financial burden whilst bringing complementary skills and resources into the project.

Final results

The key value of our commercial strategy is that we turn the AD plant industry process from civil engineering into an industrial production i.e. turnkey plant delivered onsite ready for functioning. Our market analysis has identified that based on the current size of the farming sector in Europe, and more specifically for pig farms, our primary sector, in the regions of Italy, Spain and France, with a total of 11,250 pig farms. GASFARM will be launched in 2019. Particularly in Italy, where we develop our activities, we have an easy access to the market (Sereco have already been approached by numerous farms interested in our technology). We have defined our total annual production and estimated production cost and selling prices for GASFARM. We have projected revenues, margins and Return of Investment (ROI) for the first five years of commercialisation, based on a â€œconservativeâ€ approach. With this strategy we foresee a cumulative net profit of â‚¬6M (after tax) for the project after 5 yearsâ€™ post project (5 units sold on 1st year, and 9, 15, 25 and 40 in consecutive years â€“ benefit margin starting at 15% reaching up to 19% after 5 years of commercialization)). We have estimated a total budget of â‚¬1.7M (previous investment 200,000â‚¬ and 1.5Mâ‚¬ foreseen in the next 2 years), the estimated Return on investment (ROI) is 3.5 for the first 5 years. Payback of the project will be achieved by 2022, the third year of commercialization of GASFARM. Selling price for our reference farm (3,000 pig heads, 9,500 tonnes of slurry produced, with a 63kWh CHP unit) is â‚¬450k, this price exclusive of 3% royalty fee and annual operational management of approximately 30,000â‚¬.
We will use the support for distribution activities such as vendors and value added resellers.
We will also look for a strong engagement with industry related parties such as associations (farming and waste to energy sectors). We will then look to approach other countries such as Germany, Denmark, the Netherlands and Poland. Our next market segment will be cattle farms, and later other types of feedstocks farms (livestock and agro farms).