Anaerobic digestion of dairy by-products

This is an example of how InSource Energy can offer a medium sized cheese producer six figure savings per year. No design fees, no capital costs, no operational costs or headaches. We only make money through saving you money. InSource is an infrastructure company, we are there for the long haul; using your waste to generate your energy needs. Our projects shelter you from ever increasing energy prices. We process your waste and by-products leaving you to focus your time, capital and resources on making great cheese!

Our example dairy produces a steady stream of the following waste and by-products over the duration of a year:

Table 1. Waste and by-products

	Whey	Waste water	Total
Flow (m3/day)	80	90	170
COD (mg/l)	72,500	19,000	44,000
Disposal Route	Farm feed	Sewer discharge
Disposal Cost (pa)	£0	£65,000	£65,000

 

Example Financial Summary: Savings come through lower waste and energy bills.

	Year 1	10 year project life (minimun)
Potential Savings:	£100,000	NPV if 10 yrs of savings reinvested in UK Gilts @4% £1.2 million Or this is cash you could be reinvesting in your cheese making.
Feasibility Cost:	£0
Capital Cost:	£0
Operating Cost:	£0
Risk Factor:	Low

 

If the company were to pursue an onsite anaerobic digestion and biogas solution for handling these materials there are a number of ways of doing this.

1.    Dairy funded Purchase options:

• Employ a consultant to undertake an independent feasibility study. A consultant will charge for this service and therefore the client is taking the risk that a project may not be feasible. A consultant should be technology neutral. This option requires committed project management of the whole process. Suitable technology providers or Engineering Procurement & Construction (EPC) contractors would be shortlisted to offer the client the design and service that best suits their needs. The client would be required to make stage payments during the construction process. The plant ownership would be transferred to client after commissioning.

• Select a technology provider to undertake a feasibility study. Most technology companies will offer an initial feasibility study zero cost. They will obviously only look at the project with their own technical solution and will try to prove the project works in order to make a sale. Some risk is diminished should you obtaining performance warrantees. The client can then negotiate the capital cost and term of the contract.

In both these cases the client will operate the plant after successful commissioning.

2.    The Dairy Partners with a developer to Build, Own, Operate (BOO)

• A developer (such as InSource Energy) will undertake a feasibility study at their own risk, and will access with different technologies in order to find the most economic solution for each client. A developer will finance the capital and operating cost of the plant and makes their return by sharing in the savings that the project generates for the client over the long term.

3.    Developer Builds, Owns, Operates, then Transfers to the Dairy (BOOT)

• As per BOO above but with the added flexibility to buy the asset outright at various stages during the operating contract. With this the plant will be designed and built using the developers capital, commissioned, optimise and running efficiently with trained and qualified staff in place, before the asset is transferred to the client. This de-risks the project in the early stages for those clients who want to own and operate the asset outright.

The key benefits to the client in cases 2 and 3 above is the ability to benefit from costs savings generated by the project without risk or financial outlay upfront.

How do the numbers stack up?

Table 2. Costs and revenues.

		Diary Funded Purchase	Developer Build, own, operate (BOO)	Developer Build, own, operate, transfer (BOOT) Figures dependent on transfer timescale
a	Development cost	£100,000	£0	£0
b	Capital Cost	£2,500,000	£0	£0 - £2,500,000
c	Total Upfront Cost (a+b)	£2,600,000	£0	£0 - £2,500,000
d	Operating Cost	£170,000	£0	£0 - £170,000
e	Savings per year (Energy and waste disposal)	*£400,000	£100,000	BOO stage - £100,000 Thereafter - £400,000
f	Net saving per year (e-d)	£230,000	£100,000	BOO stage -£100,000 Thereafter - £230,000
g	Risk	HIGH	LOW	LOW

* Excluding finance costs or opportunity cost of capital

Conclusion

InSource Energy can offer an initial feasibility study with no costs incurred and no commitment from the client. We are happy to work with you and discuss the benefits of our business model as a way to generate substantial saving without incurring any cost. In the example above the client would save £100,000 per year; or some £1m+ for the life of the contract. These cash benefits are complimented by a fixed cost and assured route for waste and by-product processing, and a fixed price for heat and power supplied back to the factory.

 

For an initial discussion please contact Tim Elsome on T: 08444 871 991 or E: tim.elsome@insource-energy.co.uk.