Economic Methods Matter – Appropriate Analysis Can Overcome the Biggest Barrier to Biogas Use

Abstract

The Water Environment Research Foundation (WERF) and New York State Energy Research and Development Authority (NYSERDA) have conducted a project with Brown and Caldwell, Black & Veatch, Hemenway Inc., and the Northeast Biosolids and Residuals Association (NEBRA) to determine the barriers that wastewater utilities face when implementing anaerobic digestion and combined heat and power (CHP) projects. A number of barriers were identified, but the foremost involved the combination of: Economics. The largest, most widespread barriers to biogas use are economic, stemming from either higher priority demands on limited capital resources or perceptions that the economics do not justify the investment.  Decision making. Public agencies' decision-making practices can also hinder biogas use.Discretionary projects can be easily derailed by numerous factors, specific uncertainties, or requirements to exceed somewhat arbitrary thresholds.This paper uses a simplified case study to evaluate the economics using five methodologies and discusses the benefits and context of each methodology. These methodologies include: 1. Simple Payback; 2. Net Present Value (NPV);