When it comes down to it, farmers have had two choices if they’re interested in developing a biogas plant on their land: 1) Pay for it themselves using their own equity and borrowing power, or 2) Let a developer build it and receive lease payments. A third option is available, and it adds economic value to the local community.
Option 1 – Own
Farmers know and understand that a biogas plant on the farm is a beneficial thing. They also have a lot of information coming at them about renewable power these days.
These business savvy farmers understand opportunities, but they have a constant eye on risk as well. That’s why there continues to be more Ontario farmers expressing interest in biogas everyday. At a recent plant tour, over 50% of those in attendance said they would be interested in investigating the biogas potential of their farm.
The challenge with Option 1 is that not everyone can get the money together to build a biogas plant at the scale that’s required to make good money (250 kW+). And the ones that can, aren’t so enthusiastic about bearing all the risk themselves.
Option 2 – Lease
The most obvious benefit is that the farmer doesn’t have to bear any of the financial risk, and receives regular fixed payments.
The lack of control over the plant’s operations, however, is a big strike against Option 2. A common response from farmers has been, “This is my farm, these are my animals, this is going to be my biogas plant”.
There is also the fact that although leasing reduces the financial risk, it doesn’t reduce the environmental risk the farm is taking. Off-farm feedstocks will be arriving on trucks on a somewhat regular basis, dropping off waste from food processing plants, restaurants, slaughterhouses, and grocery stores. As a result of this intake, the out-take if you will, isn’t always so pure and ready for the field. Proper treatment is essential.
There is also the chance that the feedstock causes unexpected problems in the digester, resulting in gas production slowing down considerably or stopping altogether. When this happens, the off-farm waste doesn’t stop arriving. It piles up. Proper storage facilities are essential.
The point is that biogas plants are complicated operations handling somewhat sensitive waste streams – and sometimes, things go wrong. Sure would be nice to be in control when something goes wrong on the farm.
Option 3
What if the farmer and the local community take the risk together? Say a 60/40 split?
When I say the community I’m talking about Ontario’s municipalities and the increasing number of renewable energy co-ops sprouting up. This group is able to raise a combination of debt and equity from the community and its lenders (credit unions), and can help manage the development and operation of a biogas plant. Everyone who is going to benefit from its operation, has a vested interest in it working properly.
Option 3 allows for control, and the sharing of risk and returns with friends and neighbours. Sounds good to me.
Talk to the people in your community, see if they’re interested in growing local value – and creating jobs, with biogas. ReGenerate can make it happen for you, talk to me to find out more.
photo credit: _cheryl
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