Discussion

In terms of gross energy conversion, burning biogas in a boiler with efficiency of around 80% would be preferable to generation of electricity at around 30% efficiency. Co-generation could approach 80% efficiency if a low grade heat demand is available, however if only the parasitic heat load of the AD plant need be supplied, then co-generation may only achieve around 60% efficiency (30% electricity, 30% heat), as co-generation would supply more heat than the AD plant requires. Alternative use of the heat available, either in a district heating system, space heating for agriculture such as for greenhouse heating, or for absorption chilling may be worth investigation. Evaluation based on gross energy conversion efficiency however does not take account of the difference in value between different grades of energy (i.e. electricity, steam or hot water). From the results it may be determined which grade of energy is most useful for Balmenach Distillery.

Due to the low biogas yield in comparison to demand for heating fuel, biogas burned in a steam boiler can at best be expected to offset around 23% of the distillery’s fuel oil use. The high price of fuel oil in comparison with mains gas may however make a reduction in fuel oil use worthwhile. At 2010 prices for fuel oil and grid electricity, steam raised in a biogas boiler may be the more economically valuable option, however the government incentives skew this result in favour of electricity generation due to the higher tariffs available for FITs from AD (See Chart 2). Chart 5 shows that co-generation with steam (Option F) provides the shortest payback period for all except the lowest SMP. At low biogas production rates, the lower capital cost of a 200kW boiler combined with RHI (Option B) presents the shortest payback period.

It is clear that without the FIT subsidy, the generation of electricity would be significantly less attractive. Were it not for FIT, the payback period across the range of biogas production rates examined would be greater than 20 years. Chart 4 shows the relative values in a ‘no tariffs’ scenario.

The effect of tariffs on the payback period of Option F means that waste heat boilers could become viable at a much smaller scale than has previously been the case. Raising steam in this way uses approximately 47% of the energy available in the biogas (35% for electricity generation plus 12.5% for waste heat boiler). The demand profile of steam use in a batch run distillery, which requires constant modulation, does not lend itself to a co-generation plant, however as with the biogas boiler scenario, the low volume of steam produced in comparison with peak demand means that the co-generation plant can offset baseload steam during production cycles whilst the oil fired boiler is modulated to meet peak demand as per normal operation. p>

In terms of reduction of CO2 emissions, a 538kW biogas boiler would be the most cost effective option provided the AD plant can achieve a SMP of 15m3/tonne. This is also the best overall reduction in CO2 of 971 tonnes of CO2 per year. The effect of the RHI, shown in boiler results table, is however to give a 200kW boiler equivalent economic benefit at 2010 oil prices, despite having lower net benefit and lower CO2 emissions reduction; if the purpose of the RHI is to reduce CO2 emissions then this may be termed a ‘perverse incentive’ due to the 200kW sizing limitation. IF RHI is extended to above the 200kW limit in 2012 as has been suggested, this may change.

Overall, the tariffs contribute to Option F, with lowest CO2 reduction potential and highest capital cost per CO2 reduction, having the shortest payback period.