Ontario farmers seeing revenue opportunity in biogas digesters

Renewable natural gas contracts are making new methane capture projects profitable again

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Renewable natural gas produced in biogas digesters is emerging as an opportunity for Ontario farmers to capture revenue from waste.

Natural gas utilities in British Columbia and Quebec have requested proposals to supply scrubbed methane from biogas digesters for customers willing to pay more for natural gas with a lower carbon footprint.

Why it matters: With 38 on-farm methane digesters in operation in Ontario, the province is well-placed to take advantage of this emerging opportunity

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Stanton Bros. Ltd. of Ilderton has applied to expand the biodigester on its dairy farm so that it will be able to continue to produce electricity and have the capacity to also put methane gas into the natural gas grid.

The farm currently powers three 250 kw generators from a biodigester that uses the manure from its large dairy herd along with food waste. Laurie Stanton says they have excess gas that has to be flared off and “that always bothers me to see dollars going up in smoke.”

They use the digested solids as bedding and spread some on fields.

Their current plan is to double their digester capacity with the new digester, feeding natural gas into the line that goes past their farm.

The technology and ability to produce natural gas from captured methane isn’t new, says Jennifer Green of the Canadian Biogas Association. It was there when methane digesters were built to burn the gas in generators to produce electricity in response to the province’s Feed In Tariff program. That’s where the market pull was at that point, says Green.

The cleaning system and generators for the existing biogas digester at the Stanton farm.
photo: John Greig

Now, with little new in the way of renewable electricity projects following the cancellation of the Green Energy Act in Ontario, the pull for renewable natural gas is coming from outside the province.

Similar to the 20-year-contracts created in Ontario to drive solar, wind and biogas electricity generation, natural gas utilities Fortis B.C. and Energir in Quebec are offering long-term contracts for renewable natural gas at rates attractive enough to create interest from farmers, composting facilities, landfills and municipalities.

Enbridge Gas, the largest natural gas provider in Ontario, is also in the process of applying to the Ontario regulator to offer its own contracts for renewable natural gas, says Rob Dysiewicz, Enbridge Gas’s business development manager for renewable natural gas. The provincial government has announced changes that encourage renewable natural gas, but the details aren’t yet completely known.

Carbon credit market driving growth

The opportunity to sell higher-priced renewable natural gas is being driven by carbon trading markets and carbon levies across the country and the United States. Companies and individuals looking to offset their carbon usage are being pushed by levies on carbon to look at processes that are carbon neutral.

Dairy farmers are the main users of biogas digester on farms. Composting facilities, landfill sites and municipalities also have them.
photo: John Greig

Dysiewicz says there are several reasons that make on-farm biogas efficient and cost effective.

They include:

  • There are fewer permit requirements for farmers than for industrial or municipal biogas digesters. “The least expensive way to get an anaerobic digester built is in farming,” he said.
  • The solids left over from the digestion process are an excellent fertilizer.
  • Farms with digesters can take local organic waste, which reduces the amount of waste going to the landfill and can save companies and municipalities tipping fees.
  • Capturing and burning methane through high efficiency appliances like furnaces is a better way of disposing of methane compared to burning it off at source, or having it released to the atmosphere through the decomposition of manure.
  • A system in which a farm produces its own energy through a biogas system could mean that the farm could be considered carbon neutral.

The province also announced at the recent Ontario Federation of Agriculture annual meeting that it would run consultations with the goal of making it easier for farmers to use off-farm organic matter in their biogas digesters.

Stay with electricity generation or switch?

With 38 on-farm digesters, Ontario has the largest cluster of them in Canada. All of those now produce electricity.

Would it make sense for them to switch to producing renewable natural gas?

That’s unlikely, as they already have contracts for electricity production and the system for generation of electricity is already purchased and working on the farm.

However, that doesn’t mean that farmers couldn’t increase the capacity of their biogas system to take in more external or internal waste.

A second biogas digester, like this one currently in use at the Stanton farm, would be built to create the methane used in renewable natural gas.
photo: John Greig

Green says that when the program in Ontario used to manage biogas electricity generation, known as the Feed-In Tariff program, was cancelled, there were 75 applications submitted.

Many of those could now be dusted off for the production of renewable natural gas.

Jake DeBruyn, new technology integration engineer with OMAFRA, says there is suddenly lots of activity around renewable natural gas, but for now, the costs will be higher in order to scrub the methane mix gas that comes off a digester from 50 per cent purity to 95 per cent purity.

He says an on-farm digester system generating electricity would require $2 million to $3 million in investment. A biogas digester system with a scrubbing and compression system so that the gas can go into the natural gas pipeline can cost closer to $5 million. The digestion systems need to be larger to make sense as well, he says.

Dyseiewicz says that Enbridge Gas is willing to build and manage the scrubbing facilities for farms, and charge a fee back to them for the service, taking some of the need to raise capital away from the farm.

Other costs include whether the farm already has access to a natural gas pipeline and the costs of extending it to the farm if it doesn’t.

For many areas of the province without natural gas service, there won’t be an option to put methane into the grid until the service moves closer.

The OFA has been encouraging the government and industry to increase natural gas service to the countryside as it is the least expensive energy source, but also in order to facilitate the growth of renewable natural gas on farms.

DeBruyn says natural gas is a “beautiful fuel that is reasonably priced, but there are not a lot of good ways to reduce the carbon footprint of natural gas.” Renewable natural gas would help. Transport trucks are now running on natural gas, fuelled by gas stations with natural gas filling options along the 400 highway corridor.

Burning natural gas in those trucks can reduce carbon emissions by 20 to 40 per cent over diesel fuel and the fuel cost is lower. Therefore, renewable natural gas can help reduce the emissions of the transportation sector.

Natural gas is the least-expensive fuel. The price being paid for renewable natural gas will be between $20 and $25 per gigajoule (Gj), more than twice the price for natural gas pulled from the ground. But, says Dysiewicz, the price of $21 per Gj, makes renewable natural gas the least expensive form of renewable energy — equivalent to the cost of off-peak electricity.

That’s why some farms are using natural gas generators to create electricity for the more electricity-intensive operations on farm.

Stanton says that he worries about being locked into the 20-year contract. Risk factors include the fact that their costs can escalate while what they are paid over 20 years will not and that the food waste that is so integral to efficient operation of the digester could go to another source or they could be forced to pay for it.

“If we didn’t have it, it wouldn’t make sense,” he said. There’s lots of food waste available now, but if many more digesters are built then the market would be tight.


How does the gas get from Ontario to British Columbia

It may seem strange that renewable natural gas would be sent from Ontario to British Columbia, when most of the natural gas in the country is in the area in between.

The truth is that the gas molecules produced in Ontario themselves may never get to B.C., but the concept of them being “notionally” in the natural gas grid is good enough. Ontario is well connected to the natural gas system across North America and so once the gas is in the system, and the utility from B.C. pays for “transportation” between the jurisdictions, it doesn’t matter which gas molecules are burned in B.C. as long as they are all in the same grid. After all, the methane molecule from digested manure and other organic matter, is exactly the same as the molecules in the rest of the natural gas we burn.

About the author

Editor

John Greig has spent his career in agriculture journalism and communications. He lives on a farm near Ailsa Craig, Ontario. Contact John at [email protected] or follow him on Twitter @jgreig

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