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Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - Biofrigas (Turning manure into fuel: a container based LBG plant for small to medium scale farms)

Teaser

The ContextLivestock farming generates more global warming greenhouse gases than transportation, and is only second to energy generation. The livestock sector accounts for 9% of the CO2, 65% of the nitrous oxide and 37% of the methane that is produced by human activity...

Summary

The Context
Livestock farming generates more global warming greenhouse gases than transportation, and is only second to energy generation. The livestock sector accounts for 9% of the CO2, 65% of the nitrous oxide and 37% of the methane that is produced by human activity, predominantly from manure . It is for this reason that cows are seen as one of the greatest threats to global warming.
Driven by increasing environmental concern, coupled with stringent government regulations pertaining to air pollution and waste management, the demand for renewable fuels is growing. Liquefied natural gas (LNG) and liquefied biogas (LBG) are beginning to replace traditional oil-based fuels in marine and heavy vehicle engines, power generation and process industries.

The problem
Livestock manure is also an excellent source of LBG, turning waste product into energy. However, currently, it is only possible to generate LBG through large scale plants. This means that it is not economically viable to utilize manure from small and medium sized farms, which make up 40% of the total biogas production potential , as small, decentralized plants are currently not economically efficient. The major reason for this due to the lack of a commercially viable technology that can generate liquid biogas at a small scale, while collecting and transporting the bulky manure to a centralized plant is also resource intensive, and inefficient. This means that less than 1% of the potential biogas production is being produced2.

The solution
We, at BFG, have developed and piloted an effective, small-scale and affordable, containerized energy plant that converts manure into 97% pure liquefied biogas (LBG) and separates the CO2 it contains.
This has several advantages:
- No need to transport sludge to LBG plant – the plant is onsite
- Biogas produced is in liquefied form that meets vehicle use requirements
- This allows easy storage and transportation, reducing transport costs by 84%
- Economically viable to produce biogas at decentralized small scale farms
- Turns pollutant into fuel source; turns a cost into income
- Decreased amount of unprocessed manure leads to lower emissions.

Based on our preliminary R&D results, we have identified a business opportunity to offer the CryoSep plant - a container based LBG producing plant for the disposal and valorisation of farm sludge via a 100% environmentally clean process. By creating decentralised LBG plants, we unlock a huge potential market for this sustainable technology.
Crucially, our business plan is not to sell LBG production plants to farmers, but rather to install container based LBG production plants on agricultural sites and then sell the produced fuel to LBG distributors. This business model means that we do not rely on the farmer to invest in the infrastructure. As the plant is transportable, it allows us to own and manage the plant. The farmer is reimbursed for supplying the manure as a % of the gas produced, estimated at approximately 30,000€/ year.
The objective of this feasibility study is to confirm the technical feasibility and business opportunity presented to us at Biofrigas by the Biofrigas CryoSep plant. In particular, we aim to discern the needs and demands of farmers and other stakeholders, and to identify the best business model to exploit the technology. We also consider whether the viability of including any additional functionalities that farmers are looking for.

Work performed

In order to reach the objectives, we have analysed the market of different European countries and held detailed conversations with farmers from Sweden, France, Netherlands and Belguim and with a Swedish utility company that currently distributes gas for transport vehicles.

Technical Structure
Our method consisted in conducting desktop research, which helped us identify which countries would be more suitable beachhead markets, and subsequent qualitative client research among farmers and the utility company.
The goal of our customer research was to assess: 1) how willing farmers would be to have our plant installed on their facility, 2) what could incentivise them to install one, 3) what kind of business model would be more successful.
Our research on the utility company aimed at finding out: 1) whether they can handle the quantities from one farm, 2) the requirements they have on the gas, 3) whether they require any certifications.

For this feasibility study, we also performed a series of analyses:
- Gap analysis: Is the prototype conforming with the feedback from farmers/utility company? In case it isn’t, what do we have to change? How important is this change? Is it possible to make it? What will it cost? How long will it take? Will customers be willing to pay for the increased price of the improved solution?
- Cost analysis on the current business case: considering capex, operational (electric and labour) costs and distribution.
- Lifetime maintenance costs analysis: What is the lifetime of the different parts? Can some parts be replaced by better ones and at what cost? Are there any parts that are difficult to replace and that we need to monitor to reduce risk of failure?
- Scale up analysis: To identify the industrial partners that will produce the parts what will it take to bring the new improved prototype to the market? What parts are special, how can they be made standard? How can manual work in production be replaced by standard parts?
- Business Model Analysis: we carried out a SWOT analysis for different potential business models.

Based on the fact that our investigations demonstrated the potential for creating a successful product and business, we developed a five year business plan.

Final results

The Biofrigas project offers to go beyond the commercial state-of-the-art and have a considerable impact on farmers, the environment and society. This has two components. The first relates to the technology and the second relates to the business model that the characteristics of the technology allows, in particular the size of the CryoSep plant.

During this phase 1 project, the state of the art has not been advanced in terms of the technology. Discussions have focused on additional functionality that farmers would like to see included in the technology that would increase their interest in the CryoSep plant. The functionalities that have been identified as adding value are:
- Remote monitoring
- Control alerts and instructions
- Liquefaction and storage of CO2
- Maintenance

We have then carried out a detailed analysis of how we will be able to scale up the existing prototype to include these additional features and developed a detailed road map that will form the basis of the SME instrument phase 2.
In terms of the business model, due to the CryoSep plant’s size and the fact that it fits within a 40 foot container, means that it is possible to move the plant. This means that the installation is not permanent and therefore that it is easier to obtain financing for the plant and to consider innovative ownership models. Our conversations with farmers demonstrate that they consider the investment costs and risks as high and that this significantly reduces their interest in using a CryoSep plant. When this investment is taken away, and farmers are paid simply for supplying the manure used to run the plant, the interest is understandably higher.

During the phase 2 of the SME instrument we therefore aim to certify the bank ability of the CryoSep plants, and to demonstrate to distributors the quality and reliability of supply. When we commercialise the plant, in Sweden we plan to own the plants and secure bank loans on them, with BFG receiving the revenue generated from the sales of the LBG. This will serve as a model to be followed by the rest of Europe. Outside of Sweden we will sell the plants to interested parties. We are currently receiving interest from LBG distributors who recognise that there is growing demand and that this demand is set to grown further in the coming years.

Potential Impact
The potential benefits are significant, even more so if we consider the potential for all small and medium sized farms to turn their animal waste into Biogas. However, our calculations of the environmental impact only takes into account the projected level of penetration estimated in our business plan. With that in mind, the successful completion of a phase 2 project would have the following benefits.

Economic benefits:
- Generate revenues of over 50M€ by 2024, five years after the project ends.
- Create direct employment for 119 and indirect employment of 1383 (KADA, 2013), boosting the rural economy
- Diversifies farmers income and supports the rural economy with an additional 11€M annual revenue going into farmers pockets by 2024.

Environmental benefits achieved by 2024:
- 51,500 tonnes of LBG produced, the equivalent of 1M tonnes of CO2
- LBG produced is enough for 117,600 cars running on LBG for a year
- reduced emissions of these cars equivalent to 165,000 tonnes of CO2

Website & more info

More info: http://horizon2020.biofrigas.se/.