• Return on investment in smaller anaerobic digestion plants has diminished with changes to the Feed-in Tariff and Renewable Heat Incentive
• Farmers are advised to weigh up the costs as these projects can still produce gains including direct income from energy sales and/or incentives, energy savings, and an increased amount of available fertiliser
• A lower-cost small-scale solution is to burn the biogas in a boiler for on-site use

Justifying the initial capital investment for the on-farm anaerobic digestion (AD) of cattle slurry is a challenge for many farmers, despite its advantages. It captures a direct source of greenhouse gas emissions – methane – using it as a renewable energy source and displacing the use (and purchase) of fossil fuels for fertiliser, heating and/or electricity.

It also produces a much more environmentally friendly bio-fertiliser than the original slurry, reduces the nitrate pollution of watercourses, and virtually eliminates odours, pathogens and weed seeds from the bio-fertiliser.

Over the past seven years, 48 small-scale on-farm AD plants (up to 250 kilowatts capacity) relying on animal slurry have been deployed in the UK. Installations peaked in 2014 and have tailed off since as support has reduced. They supply enough energy to power the equivalent of over 11,400 homes.

The National Farmers’ Union (NFU) says AD is particularly well suited to medium-sized dairy and livestock enterprises (up to 500 cows), meeting mostly the energy needs of the farm itself. However, the economic return for smaller plants has diminished with the tapering-off of the government Feed-in Tariff or FiT (due to end in 2019) and changes to the Renewable Heat Incentive (RHI).

Oli Coe of the NFU Energy Service says the business case for investing “is borderline now” but it’s still possible to make it work. “The RHI is still there. If you’re using the heat in a farm building you can adapt it for a limited cost to take the heat from your boiler.”

An International Energy Agency survey puts the cost for small farmers in the range of £3,000 – £6,915 per kWe (kilowatt of electric capacity). Angela Bywater, the report’s co-author, offers a ‘rule of thumb’ that slurry from 200 dairy cows requires 200 cubic metres of digester space and produces about 20kWe continuous power. To this must be added the costs of feasibility studies, planning permission and any assessment and licences – typically 10% to 15%. This gives a minimum of £66,000.

Bywater’s advice to farmers? “Do look at your own situation. You might be able to make it work.”

The digester chosen can significantly affect the cost, so farmers should look carefully at the options. Costs can also be saved by using existing farm machinery and labour for civil works.

Another way to cut expenditure is to use a flexible tank or slurry lagoon cover instead of a metal one. Several companies supply different versions of these. Jamie Williams from rural business consultancy Gasson Associates says: “Novel systems like the lagoonQUBE and other covers (often subsidised by grants) can offer very affordable solutions for generating vehicle gas or gas for water-heating boilers. As the electrical grid and gas grid options become less viable [because of the lower tariffs], smaller AD operations that utilise locally produced waste for local uses with low capex may well become more viable.”

A combined heat and power plant (CHP) uses the biogas to generate heat and power. But all sources we spoke to advise that costs can be saved by not using CHP. Some advisers advocate upgrading the gas to the quality needed for use in a vehicle or to pump into the National Grid. But, again, this will incur extra costs.

A simpler, cheaper small-scale solution is to burn the gas in a boiler for on-site use, including for the small proportion of generated heat that is required to kick-start the digester to process the slurry. The typical cost of a 25kW boiler for a 100-cow farm is £3,200, plus £300 for a heat exchanger. “Normal boilers can be converted to run on biogas with a change of burner to make use of the RHI,” Coe says.

Operating costs might be in the range of £300 – £1,000 for a twice-yearly clean. The operational time should be less than the farm’s current system. Financial viability depends on whether it can offer a long-term improvement in farm efficiency at no greater cost per cow than the current system of slurry storage.

Andy Bull, the AD specialist for Severn Wye Energy Agency and Biogas Action, says almost all current AD plants are bespoke. “We are actively seeking an off-the-peg solution that fits a dairy farm of (multiples of) 120 – 150 cows. This will significantly reduce the current cost of installation, with low maintenance costs, and can be easily adapted to fit any of the possibilities.”

On the positive side of the balance sheet sit the direct income from energy sales and/or incentives, the costs avoided by using the biogas, and an approximately 20% increase in the amount of available fertiliser. ADBA (Anaerobic Digestion and Bioresources Association) chief executive Charlotte Morton says: “AD plants producing biogas or biomethane used for heating are eligible to receive payment through the RHI, and plants producing biomethane for use in vehicles can sell Renewable Transport Fuel Certificates to fuel companies looking to invest in low-carbon fuels.”

She adds that farmers can also “market and sell the bio-fertiliser.” For example, “on-farm operator SS Agri now sells its bio-fertiliser in Homebase, Blue Diamond and other stores across the UK.”

In a report Bywater wrote for the Royal Agricultural Society of England, she lists among the challenges for small farmers that “the primary feedstock (cattle slurry) is generally only available for the six to seven months when cows are housed indoors over the winter months, that sufficient year-round on-farm organic feedstocks may be limited, and that there are significant regulatory financial penalties imposed for digesting off-farm feedstocks”.

She concludes that slurries can, however, with the appropriate technology, be digested in “smaller-scale AD plants on farms with other feedstocks available locally that can be included without excessive additional regulation”, adding: “Small-scale modular plants will help reduce costs.”

Farmers’ finances are not helped by the ongoing low price of milk, but the green credentials that come from installing AD can help mitigate that, Bywater explains: “Some supermarkets are looking to reduce the carbon in their supply chains and will consider paying the farmer an extra couple of pence per litre of milk to cover the cost of AD.”

Morton says smaller farms find it easier to gain planning permission and “may benefit from the income diversification that AD offers and from reduced carbon emissions”.

Bywater says the business case becomes more attractive when farmers have to satisfy the regulations on Nitrate Vulnerable Zones (NVZs) to protect watercourses, where “you may as well install some kind of AD”. Some farmers face the cost of meeting ‘end of waste’ regulations. In this case, using digested slurry on their farms can cut costs.

The challenge of diffuse pollution is driving change, says Bull. “The current regulations do not differentiate between slurry and digestate [the matter that remains after anaerobic digestion] but NVZs will encourage/require slurry storage, which will indirectly provide opportunities for AD. Since raw slurry has a higher oxygen demand than does digested slurry then (relatively inexpensive) options exist for converting a slurry store into a digester.”

Morton hopes government support doesn’t fall away. “It would kill this growing industry. A policy that supports AD would encourage the fastest shift to sustainability and innovation in the AD sector.” Bywater says other countries have got the support level right for small farms, “in Belgium, in Italy with their Biogasdoneright campaign, and in France. In terms of numbers, China and India are way ahead.” Does Morton think that small-scale AD is really paying off anywhere? “Yes – some farmers in the UK have greatly benefited.”

Bywater adds that whether the overall climate for AD will improve “will largely depend upon background fossil fuel prices, cost of regulation/permitting/compliance, policy, climate change initiatives and how serious the food industry is about decarbonising their supply chain”.