On-site anaerobic digesters are helping feedstock operators throughout the U.S. become more sustainable and more profitable. Learn about the investment that’s helping operators introduce green initiatives without compromising their bottom line.
The Problem: A Need for Profitable Sustainability Initiatives
The business world is responding to the climate crisis by adopting new levels of social and environmental responsibility. An increasing amount of evidence points to human activity as the root cause of increased greenhouse gas concentrations that continue to harm our planet. In turn, institutions are more motivated than ever to improve their sustainability record.
From major corporations like Dell implementing safe disposal programs to local small businesses using renewable energy to run their dry cleaning services, sustainable business practices are becoming the new norm. And in some cases, these activities are imperative. At least 17 states have mandated a 100% renewables or zero-emission electricity supplies policy by a certain date. In addition, California requires “obligated parties”, such as oil refiners and diesel providers, to purchase Low Carbon Fuel Standard (LCFS) credit offsets or be forced to pay fines.
However, “going green” can be difficult to navigate with various forms of renewable energy sources available (wind, hydropower, solar, biomass, and geothermal), all of which require new, complex, and expensive technologies to harness. That’s where anaerobic digestion comes into play
The Solution: On-Site Anaerobic Digesters
Anaerobic digesters turn bio-waste into clean, efficient energy that can be used to power an operation, offset a carbon footprint or generate additional profit.
Anaerobic digestion is a sequence of processes by which microorganisms break down biodegradable material (also known as biomass) in the absence of oxygen to produce fuel. On-site digesters facilitate this process. Waste, namely livestock manure, becomes a clean form of alternative energy that can be used as fuel, heat, or electricity.
With environmentally conscious activities on the rise, it’s no surprise that the number of Renewable Natural Gas (RNG) facilities with an anaerobic digestor has increased by 184% in just three short years, up from 87 operational facilities in 2018 to 247 in 2021. The installation of these systems involves a wide variety of stakeholders, including but not limited to, site owners of dairy, swine and poultry feedstock operations, as well as suppliers, manufacturers, project developers, financing specialists and engineers. While all of these stakeholders benefit from their participation in RNG projects, it’s particularly important for feedstock operators to be aware of the potential upside should they choose to use an anaerobic digester to manage waste.
5 Reasons To Install An Anaerobic Digester
1. Diversify Farm Revenue Streams
RNG is a valuable source of energy which can be sold to energy utility companies and used to power the local grid. “Tipping fees” can also be earned for the management of additional waste that can be accepted from other local sources. In addition, organic nutrients from the by-products of digested manure can be sold to local or regional agriculture sources.
2. Leverage Recycled Products to Reduce Costs
Producing a valuable resource that can be sold means money can also be saved. RNG produced can be used to generate onsite electricity for lighting barns, heat for warming green houses, energy for cooling milk, and fuel for running on-site vehicles. Products created from manure also lessen a feedstock operator’s dependence on fertilizers and other expenses, such as phosphorus, petroleum and peat moss
3. Conservation of Agricultural Land
Family-owned farms strive to achieve active conservation practices to ensure their legacy is in good condition when it’s time for the next generation to take over. Anaerobic digesters can help improve soil health by converting the nutrients in manure to a more accessible form for plants to use, while also protecting local water resources by reducing nutrient run-off and destroying pathogens.
4. Favorable Demand Trends for RNG Supply
Assuming Independent Energy Association (IEA) net zero emission goals are met by 2050, worldwide RNG production growth is projected to be 27x the production levels of 2020. Corporations and universities face pressure from shareholders and regulators to contribute to decarbonization efforts and are starting to make commitments. The demand for RNG supply will only continue to grow as more and more organizations are being forced to set clearer long-term agendas that address “going green”.
5. Support Local Economic Growth
Installing an anaerobic digester requires a high degree of sophistication and resources. Engineer, contractor and construction worker roles needed for each project contribute to the creation of local (often times rural) jobs. Not only are these jobs created during the construction phase, but many of them are maintained for long-term maintenance of the facility. Constructing and operating anaerobic digesters offers new local job opportunities and increases local tax revenue
What Makes Installing An Anaerobic Digester Difficult?
Unfortunately, as the saying goes, nothing in life is free. Installing an anaerobic digester requires significant start-up costs. Furthermore, finding a lending partner that understands the challenges of being an innovator in RNG, as well as how to structure affordable financing options for leading-edge technologies, can be very difficult. The vast majority of financial institutions shy away from the complexities of uncertainty. Whether it’s uncertainty surrounding the technologies, science, overall RNG industry, or a combination of these factors, the hesitation is real.
Luckily, through our national United States Department of Agricultural (USDA) lending platform, the Renewable Energy Lending team at West Town Bank & Trust provides expertise in waste-to-energy verticals through several government guaranteed lending programs. When getting started, you’ll need to prepare a proposal that illustrates a deep understanding of the market, your financial situation and a path to repayment
Maximizing the value of manure increases a feedstock owner’s flexibility to the uncertainty of commodity product markets.
Conclusion
The opportunity for feedstock operators to procure RNG is diverse and growing as a result of institutions seeking sustainable energy solutions and Federal and State programs gaining traction. The benefits for feedstock operators that use anaerobic digesters should not be overlooked and can be realized when working with an experienced financial institution on your project.
Contact us today to learn more about what your feedstock operation can achieve on strong financial terms with a partner like West Town Bank & Trust.
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About West Town Bank & Trust | As a top rural USDA lender, our mission is to help American businesses access the capital they need to grow. During each of the previous five fiscal years, West Town Bank & Trust has ranked as a top 10 USDA B&I and REAP lender in the country by total dollar volume, authorizing nearly $400 million in financing.
