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

Abstract

This study assesses the investments, energy outputs, and financial returns of on-farm anaerobic digester systems (ADS) by farm size through a case study in Vermont and discusses the potential policy implications. Detailed data on the initial investments, production of electricity and other marketable products, operational expenses, and income, collected through surveys of eight operating ADS on dairy farms in Vermont, are used to estimate the return on equity (ROE), return on assets (ROA), and other financial indicators for small, medium, and large farms. The primary survey data indicate that the average investment was $1.35 million for small and medium farms (75-500 cows) and $2.44 million for large farms (>500 cows). Financial analysis indicates that the ROE and ROA were 12.54% and 13.50% for large farms but only 0.73% and 1.07% for small and medium dairy farms, respectively. Whereas the technology of ADS developed in the United States seems to favor large farms in terms of both energy production and financial returns, the centralized ADS developed in Europe and low-cost mini digesters developed in China may have potentials for small and medium farms to develop more economically viable ADS in the United States.

Determinants of Return-on-Equity (ROE) of Biogas Plants Operating in Poland

“…This will result in profitability increase [75,76,104]. Wang et al [62] research about the financial-economic situation of biogas plants that use anaerobic digester systems indicated the necessity of implementing new technological and operational solutions. Our research also indicates the necessity to pay attention to the actions that stimulate development and implement new technological and organizational solutions.…”

“…In further research, the relationship between profitability and the scale of production should be sought. Wang et al [62] focused on that in their research, indicating that anaerobic digester systems technologies developed in the USA favor large farms.…”

“…ROE in biogas plants at cattle farms in the USA was higher for larger installations by about 12%. Financial analysis indicates that the ROE was 12.54% for large farms, but only 0.73% for small and medium dairy farms [62]. This means that the profitability of an individual biogas plant depends on the country, including the obtained support in the form of feed-in tariffs and subsidies for investments, the use of waste from their own production as a raw material, and also factors within the enterprise, including energy use for internal needs of the company, investment outlays related to installed capacity, capital structure, and inventory management.…”

“…The level of profitability observed for the group of biogas plants in Poland (about 14%) was lower than what was established in similar research for biogas plants in Italy, where it was 20% [61], but higher than what was obtained in countries where the level of subsidisation is lower. In the USA, biogas plants achieved a level of profitability up to 12% [62].…”