Assessing the Commercial Feasibility of Manure to Energy Systems Kraig Westerbeek AVP, EHS Murphy-Brown LLC

Current Manure Management Systems in the USA 1. 2. 3. Evaporation pond Sludge Land, Landfill

Manure to Energy? Manure from animal operations does have energy value Swine manure = app. 8000 BTU / pound Animals are not 100% efficient in converting feed energy into body mass Relative measure of efficiency is feed conversion (swine 3 : 1)

Manure to Energy? Energy not used by animal can be recycled to other forms of useful energy While gasification and or combustion are options for some dry manures, anaerobic digestion seems to have the most potential for deriving energy from animal manure

Potential for Anaerobic Digester Energy in the United States. Turkey: 3,100,000 tpy* Others (veal, lamb, mutton): 158,500 tpy* Swine: 11,650,000 tpy* Chicken: 18,750,000 tpy* *tpy: tons per year Source: AMI, 2011 Cattle: 13,300,000 tpy* Manure energy: 10,000 – 20,000 MW power equivalence

“Anaerobic digesters, commonly in the form of covered lagoons or tanks, are designed to stabilize manure and optimize the production of methane.” EPA AgStar – AD101

Number of Operating Anaerobic Digester Projects (US, July 2010) Dairy 126 Swine 24 Poultry 5 Beef 2

Biogas Use for Operational Projects Cogeneration 78 Electricity 48 Boiler / Furnace Fuel 20 Flared Full Time 15 Unknown Use 7 Pipeline Gas 4 Vehicle Fuel 1 Methanol

Energy Production by Anaerobic Digester Systems: 2001-2010 (EPA AgStar)

Concept schematics Generator Digesters Buffer tank Surge tank Swine barn Develop: Dewatering system to produce dry organic fertilizer Swine manure is scraped and collected in the surge tank. Develop: Solids are further dried with waste heat and processed into organic fertilizer or used as fuel for combustion at a biomass plant Wastewater is pumped to existing lagoon and irrigated with existing irrigation equipment Biogas Electricity distribution grid Digesters Buffer tank Generator Surge tank Combination of above-ground and in-ground fermentation leverages the cost and engineering advantages of both design.

Manure to Energy – Commercial Feasibility Fact: The technical feasibility of creating energy from manure has been proven Question: Can energy be created at a cost that makes manure to energy commercially feasible on a large scale?

Commercial Feasibilty To be attractive, manure to energy projects must create value for: Investor (long term, stable return) Farmer (avoided costs / increased revenue, improved manure management system) Energy User (reasonably priced renewable energy)

Cost of Manure to Energy Systems High capital investment typically required (example – swine manure $5-10M per MW electricity) Various state and federal renewable energy credits help reduce initial investment Operating costs vary depending upon system used, but are significant, particularly if transportation of manure is involved

Revenue from Manure to Energy Systems Direct payment for energy based on current market value Renewable energy credits – vary from state to state depending upon legislative requirements Tax benefits (state, federal) Carbon credit value (destruction of methane)

Benefits to Manure Management Systems Significant destruction of volatile solids / reduced organic loading on existing system (increased treatment capacity) Reduction of total solids leaving a more nutrient dense solids stream Potential reduction of odor and emissions Reduction of pathogen loads

Commercial Feasibility Investments in manure to energy projects are risky due to the constant variability of manure characteristics Advances in technology (anaerobic digestion, etc.) have reduced the risks substantially State level renewable energy mandates have created a market for manure to energy projects by making returns more attractive Depressed carbon market has been a negative

Circle 4 Farms Project In the late 1990’s and early 2000’s, our company invested a significant amount of money in an anaerobic digester project at Circle 4 Farms in Utah The goal of the project was to capture methane generated from the anaerobic digestion of swine manure and convert it into biodiesel

Anaerobic digestion Plant at Cirle 4: Utah

Methanol Production from Biogas, Circle 4, Utah

Circle 4 Project The project failed due to problems associated with manure transport and lower than expected manure energy value While technically feasible, the economics of the project did not work The digesters built for this project are no longer in use This project may have worked with today’s renewable energy incentives

Murphy-Brown Strategy Instead of investing internal capital in manure to energy projects, MB has sought out partnerships with project developers and investors Current projects Alpental Energy – Utah Pacolet/Millikan – North Carolina Ag Power – North Carolina Roeslein - Missouri

Summary The technology is available today to support manure to energy projects – continues to improve with experience Economic drivers have been added to provide the necessary revenue to support projects The number of manure to energy projects continues to increase

Summary I believe manure can compete well in the renewable energy marketplace based on both its price relative to other renewable energy sources, and its reliability in delivering continuous energy I expect a continued increase in the number of manure to energy projects