Costs of Producing Biogas at Dairy Farms in The Netherlands

Abstract

By 2020, Dutch dairy chains envisage to be self-sufficient with regard to energy used by dairy farms and dairy processors. This would require dairy farms to produce 25 PJ per year, possibly by a combination of wind, solar and biogas. This paper focuses on biogas. To evaluate the project’s viability we estimated the expected technical and financial performance of 4 types of business models, i.e. “CHP-farm”, “CHP-large”, “green gas” and “central upgrading of green gas”. Data stem from among others 23 biogas plants in the Netherlands. Anticipating that CHP-models and green gas models occur with a likelihood of 40% and 60% respectively, the total number of biogas plants would amount to 232 (1% of dairy farms), including a total of 5 million tons of manure per year (14% of all cattle manure in the Netherlands) and annual government subsidies of Euro 295 million. Aggregated annual profits are expected to be positive, but over the project’s total life time there is an expected deficit of Euro 262. For this to change costs of feedstocks or digestate disposal costs would for instance have to go down. Also fully switching to green gas models dampens the deficit. Results are used in current stakeholders debates on the organization of an “energy neutral dairy chain” in the Netherlands. Further analyses incorporating uncertainty around key technical and economic parameters including financial impacts of CO₂-reductions are underway.