Economic feasibility of converting cow manure to electricity: A case study of the CVPS Cow Power program in Vermont

Abstract

A case study of the Central Vermont Public Service Corporation (CVPS) Cow Power program examines the economic feasibility for dairy farms to convert cow manure into electricity via anaerobic methane digestion. The study reviews the mechanism for CVPS, dairy farms, electricity customers, and government agencies to develop and operate the program since 2004, examines the costs and returns for the participating dairy farms, and assesses their cash flow over a period of 7 yr under different scenarios. With 6 dairy farms generating about 12 million kilowatt-hours of electricity per year and more than 4,600 CVPS electricity customers voluntarily paying premiums of $0.04 per kilowatt-hour, or a total of about $470,000 per year, the CVPS Cow Power program represents a successful and locally sourced renewable energy project with many environmental and economic benefits. Factors for the successful development and operation of the program include significant grants from government agencies and other organizations, strong consumer support, timely adjustments to the basic electricity price paid to the farms, and close collaboration among the participating parties. This study confirms that it is technically feasible to convert cow manure to electricity on farms, but the economic returns depend highly on the base electricity price, premium rate, financial supports from government agencies and other organizations, and sales of the byproducts of methane generation.

Energy Outputs and Financial Returns of On-Farm Biodigester Systems in the United States: A Case Study in Vermont

“…This study has expanded previous research by Wang et al by analyzing financial returns from a larger number of farms and focusing on the impacts of farm size on the financial returns of ADS [3]. The major characteristics of the eight dairy farms with operational ADS are summarized in Table 1.…”

“…This methodology varies from that employed in the study by Wang et al in which a 7-year depreciation schedule was used for all components and structures, and is a more accurate reflection of observed investment lifespan [3].…”

“…The number of operating ADS on Vermont farms has increased rapidly in the past 10 years, reaching a total of 16 by December 2014 [8]. The development of ADS in Vermont has been closely associated with the Cow Power program (see Wang et al for a review of the Cow Power program's development and contributions to the expansion of ADS in Vermont [3]). …”

“…Although many factors have contributed to the problems faced by dairy farms, rising production costs and fluctuating farm gate milk prices are the major causes [2]. While there may not be any simple solution to the challenges faced by dairy farms, converting cow manure and other agricultural wastes into biogas, electricity, and other marketable products via anaerobic digester systems (ADS) is one avenue for some dairy farmers to diversify their production practices and increase farm income [3]. For example, Wang et al reported that the ADS on four Vermont dairy farms generated an average of $474,239 revenue per farm per year from the sales of electricity and solid materials used as animal bedding or compost [3].…”

“…While there may not be any simple solution to the challenges faced by dairy farms, converting cow manure and other agricultural wastes into biogas, electricity, and other marketable products via anaerobic digester systems (ADS) is one avenue for some dairy farmers to diversify their production practices and increase farm income [3]. For example, Wang et al reported that the ADS on four Vermont dairy farms generated an average of $474,239 revenue per farm per year from the sales of electricity and solid materials used as animal bedding or compost [3]. In addition to the marketable products and farm income, the on-farm ADS have also shown many environmental benefits such as reduction of greenhouse gas (GHG) emissions and manure odors.…”