An economic analysis of the electricity generation potential from biogas resources in the state of Indiana

Juan S Giraldo, Purdue University

Abstract

Anaerobic digestion is a process that is a common part of organic waste management systems and is used in concentrated animal feeding operations (CAFOs), wastewater treatment plants (WWTPs), and municipal solid waste (MSW) landfills. The process produces biogas, which contains methane, and it can be burned to generate electricity. Previous reports have indicated that based on the availability of feedstocks there is a large potential for biogas production and use for electricity generation in the state of Indiana. However, these reports varied in their consideration of important factors that affect the technical and economic feasibility of being able to develop the resources available. The goal of this thesis is to make a more targeted assessment of the electricity generation potential from biogas resources at CAFOs, WWTPs, and MSW landfills in Indiana. A capital budgeting model is used to estimate the net present value (NPV) of biogas electricity projects at facilities that are identified as technically suitable. A statewide estimate of the potential generation capacity is made by estimating the number of facilities that could profitably undertake a biogas electricity project. In addition this thesis explored the impact that different incentive policies would have on the economic viability of these projects. The results indicated that the electricity generation potential is much smaller when technical and economic factors are taken into account in addition to feedstock availability. In particular it was found that projects at hog farms are unlikely to be economically feasible in the present even when financial incentives are considered. In total, 47.94 MW of potential generating capacity is estimated from biogas production at CAFOs, WWTPs, and MSW landfills. Though results indicated that 37.10 MW of capacity are economically feasible under current operating conditions, sensitivity analysis reveals that these projects are very sensitive to capital cost assumptions and incentives are likely needed to encourage investment.

Degree

M.S.

Advisors

Preckel, Purdue University.

Subject Area

Alternative Energy|Agricultural economics|Energy

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