2.1. Selection of Full-Scale BGPs in Germany and China
Three Chinese (CN) BGPs were selected in Beijing to conduct a one-year monitoring, within 100 km of the China Agricultural University (Beijing), where the laboratory for the chemical analysis is located. The key selection criteria included (1) willingness of the BGP operators to cooperate; (2) sampling possibilities; and (3) availability of operation data records. Three German (DE) full-scale BGPs under the current BMP III were selected to make general comparisons with CN BGPs in all aspects. They are all located in Baden-Württemberg.
DE1 was built in 2011, commenced operation in 2012, and holds a FiT contract under the EEG 2009 for 20 years. It consists of a 1500 m3 heated continuous stirred-tank reactor (CSTR) with a mesophilic average working temperature of 42.3 ± 1.9 °C. Cow manure from the packed bedding stalls (CM) and liquid manure from cow (LM) and grass silage (GS) are fed directly to the digester, while the digestate flows into a gas-tight storage tank of 1500 m3, for subsequent application as fertilizer on-site. The biogas drives a 250 kW combined heat and power (CHP) generator (Motortyp Scania–Schnell, ES 2507; 2G Bio-Energietechnik AG, Heek, Germany). Power is sold to the power grid and heat is partially used for warming up the digesters, and the rest is sold to local residential houses in the surrounding area. Under its EEG-2009 contract, the annual revenue is derived from the basic power tariff, EEG bonus for energy crops, CHP unit and manure, and heating supply. One-year monitoring was conducted in September 2017 to August 2018.
DE2 was built in 2009 and commenced operation in 2011. It holds an FiT contract under EEG 2009 for 20 years. It consists of one 1880 m3 heated CSTR (average thermophilic working temperature at 49.3 ± 1.0 °C) and one 1880 m3 complete mixed secondary digester (heated). CM, LM, maize silage (MS), and cereal leftovers (CL) are fed directly to the digester, while the digestate flows into three gas-tight storage tanks of 13,539 m3 in total, for subsequent fertilizer application on-site. The biogas drives four CHP generators, including three 400 kW generators and one 350 kW generator (E2842 LE322, E3268 LE232, Elektro Hagl KG, Geisenfeld, Germany). Power is sold to the power grid and heat is partially used for heating digesters, and the rest is sold to local residential houses. Under its EEG-2009 contract, the annual revenue is derived from the basic power tariff, EEG bonus for energy crops, CHP unit, manure and power flexibility scheme, and heating supply. One-year monitoring was conducted from September 2016 to August 2017.
DE3 was built in 2013 and commenced operation in the same year. It holds an FiT contract under the EEG 2012 for 20 years. It consists of an 847 m3 CSTR digester (heated) (mesophilic average working temperature at 41.9 ± 0.2 °C). Chicken solid manure (CSM), CM, LM, MS, and GS are fed directly to the digester, while the digestate flows into a storage tank of 1742 m3, for subsequent application on-site. The biogas drives one 75 kW CHP generator. Power is sold to the power grid, and heat is completely used for heating the digesters. Given the capacity of this plant (75 kWh CHP unit), the annual revenue only comes from the basic power tariff. One-year monitoring was conducted from September 2017 to August 2018.
In DE BGPs, all initial investments were made by the farmers (in this case, also the BGP operators). Loans obtained from commercial bank(s) to cover the payment had differing loan terms and conditions based on the assessment by each of the banks. During the operation, income was generated from the sale of electricity and heat to repay the principal loan and interest to the bank(s).
CN1 was built in 2007 and commenced operation in the same year. It consists of two 700 m3 upflow solid reactors (USR) with an average working temperature of 31.3 ± 5.1 °C, a low mesophilic range. Biogas was supplied to seven villages with a total of 1700 households for cooking. CSM was mixed with digestate and/or water for ease of pumping and fed to the digesters (heated by electricity or solar energy), while the digestate flowed into a storage tank of 1500 m3 for subsequent application on farmland or circulation for feeding. After removing H2O and H2S, biogas was compressed through two 22 kW biogas compressors, stored in four 8 bar storage tanks (40 m3 each), and was then supplied to households. One-year monitoring was conducted from October 2017 to September 2018.
CN2 was built in 2008 and commenced operation in the same year. It was equally financed by the government and the village committee. It consists of four 450 m3 CSTR digesters (heated by air source heating pumps or electricity or biogas burning) with a mesophilic average working temperature of 38.0 ± 2.2 °C. After mixing with freshwater in the mixing tank (about 60 m3/d), the substrates, including CSM and CM, were fed directly to the digesters, while the digestate flowed into a storage tank of 1742 m3, for sequent application on the village-owned farmland and orchards. The biogas was compressed by two 11 kW compressors (42F, AL-160M/4 TF, Nord Drivesystems Nord Co., Ltd., Suzhou, China) and stored in six 8 bar storage tanks with a total capacity of 280 m3. Biogas was supplied to approximately 2000 households in one village for cooking. Monitoring was conducted from October 2017 to July 2018 as this BGP was closed down afterward due to the natural gas supply to local households.
CN3 was built in 2007 and commenced operation in 2008. It was equally financed by the government and the village committee. It consists of two 160 m3 USR digesters (heated) with an average working temperature of 32.0 ± 2.2 °C in the low mesophilic range. Pig manure (PM) was fed directly to the digester, while the digestate flowed into the underground storage tank with 450 m3 (not fully covered, no biogas collection), for sequent application in the vineyard and other agricultural fields (free of charge and delivered to the field for farmers). The biogas was compressed by an 11 kW compressor and stored in one 8 bar storage tank of 30 m3. Biogas was supplied to 184 households in one village for cooking. One-year monitoring was conducted from October 2017 to September 2018.
In all CN BGPs, the village committee is responsible for the daily operation, as well as managing the income and the assumption of operation costs (including labor and all maintenance cost). Investment from the central government is a type of grant, requiring no repayment. Income is sourced from biogas sold to the local households.
Table 1 presents the details of these BGPs.
Figure 1 presents the general BGP schemes of DE BGPs and CN BGPs.
2.6. Financial Analysis
Financial analysis has been undertaken individually for all BGPs by applying the discounted cash flow method. The financial analyses focus on the financial viability of the biogas produced for CN BGPs and the electricity and heat for the DE BGPs. The assumptions that were used for the financial analysis include:
Project costs are expressed in Euro (€), and the average exchange rate in 2017 (€ 1.00 = CNY 7.6293) was used for CN BGPs wherever needed.
All BGPs were expected to be fully implemented (civil works and equipment supply and installation) in one year following the completion of construction, and the residual value of the investment is zero.
DE BGPs are assumed to operate for 20 years due to the existing EEG contracts while CN BGPs were operated for 10 years based on the actual operation situation.
Based on the consultation with operators of DE BGPs, replacement of the CHP unit is required after seven years of operation.
Operation and maintenance costs have been estimated to cover the costs of fuel and power for the BGPs, salaries and welfare, routine maintenance (including CHP units), and other operating expenses.
For DE BGPs, the income tax rate is calculated individually for each BGP according to the German Income Tax Act, assuming that the income from the BGP is the total taxable joint income per calendar year 2017 of the operators, and BGPs are sole proprietorships [
34].
The weighted average cost of capital (WACC) used for the financial analysis is estimated based on the actual interest rate that operators paid for loans from commercial bank(s) and the investments that are financed by the operators in DE BGPs, or in CN BGPs, by the village committees and government.
Revenues are based on prevailing prices in 2017 and are expressed in constant 2017 terms.
In the present work, the future scenario using an average market price cap for biomass (2018 auction price, 14.37 €ct/kWh) [
6] is used to explore the financial viability when German renewable energy will face the end of guaranteed pricing. This scenario also applies to newly built BGPs in the future, which are operated similarly as these selected BGPs.
The financial net present value (NPV) is defined as the sum of the present values of the individual (yearly) cash flows. A project is financially feasible when the NPV is positive, and the financial internal rate of return (IRR) must be greater than WACC, which is used as the discount rate to estimate the NPV of the BGP cash flows [
35,
36]. The higher the NPV, the more profitable the BGP [
37]. The IRR of a net cash flow is calculated after tax. Equations for calculating the NPV, IRR, and WACC are expressed as [
38]:
where
at is the financial discount factor chosen for discounting at time t,
St is the balance of cash flow at time t (€),
rdebt is the cost of debt (%) (actual cost collected from the operators), and
requity is the cost of equity (8.1% was used in the calculation for DE BGPs) [
39].