A Technoeconomic Analysis of Biomethane Production from Biogas and Pipeline Delivery



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A Technoeconomic Analysis of Biomethane Production from Biogas and Pipeline Delivery Ali Jalalzadeh-Azar Hydrogen Technologies and Systems Center NREL/PR-5600-49629 Renewable Resources for Fuel Cells Workshop San Antonio, TX October 18, 2010 NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

Objectives Develop a cost-analysis model, H2A Biomethane, focusing on biogas upgrading process and pipeline delivery with post compression. Collect, qualify, and analyze data: GIS data for California geo-spatial biogas potential from landfills, dairy farms, and sewage treatment plants; distances of biogas sites from the natural gas pipelines and load centers; and energy consumption. Cost data biogas purification/upgrading systems and pipeline transport of biomethane. Perform techno-economic analyses focusing on: Biomethane production from biogas. Export of the product gas to the natural gas grid. Cost structure of biomethane production and pipeline delivery. The project objectives have been achieved. 2

Drivers and Benefits Fuel cells operating on biomethane or on hydrogen derived from biomethane can mitigate energy and environmental issues and provide an opportunity for their commercialization. The availability of incentives and requirements for renewables such as: California RPS requirements: 20% by 2010 and 33% by 2020 SB1505 renewable content requirement for hydrogen production. Self-generation incentive program (SGIP) The project can provide valuable insights and information to the stakeholders utilities, municipalities, and policy makers (macrolevel) and producers of biogas (micro-level). 3

Approach Developed the new analysis tool based on the vetted H2A Production and H2A Delivery models. Interacted with the industry and experts for input: Held an introductory panel discussion with the stakeholders in November 2009 to facilitate information/data gathering. Obtained cost data on biogas upgrading system from vendors and publications. Completed the first round of the external review process for the H2A Biomethane via a webinar in August 2010. Applied the H2A Biomethane Model to scenario analyses for dairy farms. 4

Approach: Project Concept Source Production / Cleanup Distribution / Utilization Anaerobic Digester Reformation / Fuel Cell Systems Power Grid Landfills Electricity Biogas Dairy Waste Biomethane Heat Stationary End-Use Hydrogen Water Treat. Plant Clean-Up System Injection in NG Pipelines Vehicle Fueling Station Shaded areas represent the boundaries of the current project. 5

Approach: Qualification of Cost Data 12 10 Relative Capital Cost 8 6 4 2 Bio-Methane Cost, Biomethane from Dairy Waste, Krich et al, July 2005 Vender A, Total Capital Project I, Total Capital Vender A, Biomethane Cost (calc.) Project I, Biomethane Cost (calc.) 6 5 Relative Cost of Biomethane Production 4 3 2 1 0 0 0 500 1,000 1,500 2,000 Feed Biogas Capacity, Nm3/h The differences are reflective of the uncertainties in the estimates. 6

Model: Key Input Data / Assumptions System Characterization Feed biogas chemical composition. Biogas 50 65% CH 4 Biomethane 90 98% CH 4 Product Biomethane chemical composition. Upgrading Process Process electricity usage: kw/ Nm 3 biogas. Reference capital cost and scaling factor. Operating capacity factor and life span. Economic Assumptions Internal rate of return, inflation rate, and tax rates. Analysis period, depreciation type, etc. Waste Stream(s) Upgrading Techniques Pressure swing adsorption High-pressure water scrubbing Cryogenic separation Chemical absorption Membrane separation Default values are provided for upgrading biogas from dairy farms. 7

Model: Output Metrics Key Results Costs Energy Emissions Sensitivity Cost components and relative values Total unit cost of bio-methane Process energy usage Upstream energy usage Process energy efficiency Process emissions Upstream emissions Tornado chart depicting sensitivity of bio-methane cost to key variables. Biomethane Cost Sensitivity Biogas Price ($2.9/GJ,$7.6/GJ,$11/GJ) Biogas Usage (-/+ 5%) Total Direct Capital Cost (-/+ 10%) Operating Capacity Factor (95%,90%,85%) Electricity Price (-/+ 10%) Electricity Usage (-/+ 5%) $6.00 $7.00 $8.00 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 Biomethane Cost ($/GJ) The results are normalized (e.g., $/kg and $/GJ) Key variables for sensitivity analysis: biogas cost, biogas usage, capital cost, capacity factor, electricity price, and electricity usage. 8

Model: Exploratory Analyses 6 Variable Cost (Utility) O&M Cost Capital Cost Vender A Relative Costs 100% 80% 60% 40% 20% Relative Cost of Biomethane Production 5 4 3 2 1 Life Span 20 years 15 years 10 years Assumptions: Effective CF = 90% Inflation rate = 1.9% ROR = 10% Life span = varies Salvage value = 0. Feed CH4 = 60% Input pressure: ~ 1 atm (abs.) Output pressure = 7-8 atm (abs.) 0% 250 500 1000 2000 3000 Feed Biogas Capacity, Nm 3 / h Energy efficiency takes on greater importance at larger capacities. Clustering sources of biogas may be imperative to achieving economy of scale. 0 0 2,000 4,000 6,000 8,000 10,000 12,000 Feed Biogas Capacity, Nm3/h Impact of system life on the economics. Significant uncertainty in life span is reflected in vendors data and literature. The model can lend itself to exploratory or what-if analyses for valuable insights. 9

GIS Analysis Select biogas resources: Landfills, sewage treatment plants, and dairy farms. Landfills offer greater biogas potential. Transmission lines are reasonably accessible to most of biogas sources. Majority of GIS data are for the central valley due to systematic tracking. Data were unavailable for a number of dairy farms in California. 10

GIS Analysis (cont.) 100,000 California Biomethane, MMcf / yr. 80,000 60,000 40,000 20,000 Utilized Stranded 0 Dairy Farms Landfills Sewage Treatment Plants Landfills have the dominant share at 75%, followed by dairy farms at 22%. Total biomethane potential is about 5% of NG consumption. 11

GIS Analysis: Clustering Dairy Farms for Economy of Scale C2 NG Transmission Line Bio-methane potentials: C1: 2,020,000 Nm 3 /yr (~ 80,200 GJ/yr.) C2: 1,316,000 Nm 3 /yr (~ 52,200 GJ/yr.) C3: 1,860,000 Nm 3 /yr (~ 73,800 GJ/yr.) Achieving economy of scale for biogas upgrading can be challenging for dairy farms. C1 C3 12

Scenario Analysis Key Assumptions Facility: Bio-methane production from dairy farm biogas. Feed biogas capacity: Varies Overall capacity factor = 90%. Length of pipeline from production site to NG transmission line = 10 miles. Bio-methane pressure at the output of purification system = ~ 8 bar (abs.) NG transmission line pressure = ~ 40 bar. Rate of return = 10% Inflation rate = 1.9% System Life = 20yrs. 13

Cost Estimates Biogas Cost Upgrading biogas from dairy-farm anaerobic digesters (AD) AD Type Reported elec. gen. costs* Estimated biogas*cost Biomethane Cost = AD + Upgrade Cost Remarks / Assumptions Estimates are in 2010 USD. Covered lagoon Plug-flow $12.59/GJ ($0.045 /kwh) $2.9 / GJ ~ $6 / GJ $34.82 ($0.13/kWh) $7.6 / GJ ~ $11 / GJ Upgrading cost of $3.2/GJ of biomethane was used for aggregate feed biogas capacity of about 2,000 Nm 3 /h. Mixed $52.39 ($0.19/kWh) $11.0 / GJ ~ $14 / GJ Ancillary (e.g., storage) costs are not included. * Source: An Analysis of Energy Production Costs from Anaerobic Digestion Systems on U.S. Livestock Production Facilities, Technical Note No. 1, Natural Resources Conservation Service, USDA, October 2007. 14

Cost Estimates Impact of Biogas Capacity Export of biomethane from individual dairy farms or limited aggregates is not economical without incentives. Clustering sources of biogas (e.g., dairy farms) may be imperative for economic competition. If permissible, injection of biomethane into a distribution pipeline can reduce the transport cost (due to shorter distance and lower pressure). Cost, $ / GJ of Biomethane 40 30 20 10 0 Sewage T. Plants DF Landfills Aggregated Dairy Farms Total Cost Biogas Upgrading Pipeline / Compression Station Feed Biogas (Without Incentives) NG 0 500 1,000 1,500 2,000 2,500 3,000 Feed Biogas Capacity, Nm 3 / h Price of natural gas (residential) is approx. $9.5/GJ for CA and $11.7 for U.S. based on EIA data: http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=ca 15

Cost Estimates: Relative Contributions Depending on the source, feed biogas cost can take on greater significance at high capacities. 100% 80% Biogas Upgrad. Pipeline / Comp. Feed Biogas Pipeline delivery cost is dominant at low feed capacities (e.g., < 2,000 Nm 3 /h). The relative contribution of the cleanup-system cost does not significantly change with the feed biogas capacity. Relative Cost 60% 40% 20% 0% 250 500 1000 2000 3000 Feed Biogas Capacity, Nm 3 / h Note: Costs of ancillary components (e.g., storage) are not included. 16

Conclusions Through the economy of scale, biomethane production via purification of biogas from dairy farms can be economically competitive for on- or near-site utilization even without incentives. The economics of pipeline delivery of biomethane to the natural gas grid or another end-use site are influenced by the distance and the operating pressure at the point of delivery incentives may be necessary for economic justification. Clustering farms to facilitate use of a semi-central upgrading system is imperative for achieving the economy of scale. Landfills can provide low-cost biogas, favorable economy of scale for biomethane production, and an opportunity for emissions control. However, sustainability of biogas supply, biomethane quality requirements for end-use applications, and restrictive guidelines for grid interconnection are among the prevailing challenges. The H2A Biomethane Model can lend itself to analyses of biomethane production and delivery scenarios and assist the stakeholders in their decision making process. 17

Potential Future Work Include the waste-stream oxidization and sequestration aspects of the biogas upgrading process in the model from the economic, energy, and environmental standpoints. Explore the possibility of formulating a correlation between the cost of the biogas upgrading system and the purification requirements. Investigate the effect of combining biogas products from multiple sites/sources on temporal variation of the feed chemical composition for the clean-up process. Implication: Possible mitigation of variation in the impurity level of feed biogas for upgrading process in addition to achieving the economy of scale. 18

Acknowledgement The efforts of Genevieve Saur in development of the H2A Biomethane Model and Anthony Lopez in the GIS data collection and analysis are greatly appreciated. 19

Questions / Comments? Thank You! Ali.Jalalzadeh@nrel.gov 20