Hybrid Biorefinery Biodiesel and Biogas Production Synergies

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Hybrid Biorefinery and Biogas Production Synergies Joe Tesar, Quantalux, LLC Dana Kirk, MSU Department of Biosystems and Agricultural Engineering Dennis Pennington, Michigan State Extension Charles Gould, Michigan State Extension October 22, 2013

Agenda Introduction Quantalux, MSU / MSU Extension Background USDA, ADREC, Mobile Overview, Oilseed and 1000 Cow Dairy Hybrid System and Balance Key lessons learned 2

Quantalux, MSU & MSU Extension Quantalux, LLC: Quantalux is focused on developing renewable biofuel technology. Current projects include the development of small scale digester systems for agricultural users. Located in Ann Arbor, Michigan. Digester Research and Education Center Based at Michigan State University, ADREC is a public-private partnership that offers staff and facilities to support the development of nextgeneration biofuel systems. Located in East Lansing, Michigan. Michigan State University - Extension Michigan State University Extension has experience with on-farm biodiesel production and agricultural practices. Located in W. Michigan. 3

Hybrid Biorefinery Improve biofuel production efficiency through synergies Problem: Costs of biofuel production are high and uncompetitive with petroleum based fuels High cost of feedstock material Less mature technology High capital investment and operation costs Approach: Identify production synergies from biodiesel and biogas production to improve system efficiency Use byproducts from production as co-feedstocks Evaluate energy and economic comparisons between a hybrid biorefinery design and baseline production 4

Resources and Facilities Resources - Awarded Conservation Innovation Grant (CIG) in 2012 from the USDA to demonstrate the process to farmers and other agricultural operations. Facilities - Research and Education Center (ADREC - MSU) - Mobile 50 Gallon Batch Production Unit -Michigan State Extension 5

Background: Production in the U.S. 967 million gallons of biodiesel produced (2011) Primary feedstock = soybean, canola, used vegetable oil The Renewable Fuel Standard (RFS) requires one billion gallons of biodiesel to be consumed in the US in 2013 ~1/200 th of U.S. petroleum consumption million lbs 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Largest Feedstock Inputs 2011 2012 Source: U.S. Information Administration, Monthly Production Report: July 30 th, 2013 - Soybean Oil Canola Oil Recycled Feeds 6

Overview: Hybrid Biorefinery Production Bio- Crop Farm Oilseed Crop Fertilizer Bedding Seed Crusher Manure O. Waste Oilseed Meal Bio Oil Mix with Catalyst Electricity Transesterification Heat Digester Heat Electricity Biomethane Glycerin 7

Hybrid Biorefinery Production Bio- Crop Farm Oilseed Crop Fertilizer Bedding Seed Crusher Manure O. Waste Oilseed Meal Bio Oil Mix with Catalyst Electricity Transesterification Heat Digester Heat Electricity Biomethane Glycerin 8

A primer Transesterification: Bio Oil + alcohol + catalyst biodiesel + glycerin About 1 gallon of bio-oil produces about 0.95 gallons of biodiesel. Glycerin The reaction produces a 1:5 ratio of glycerin to biodiesel volume and is a readily digestible product. Oilseed Meal High in protein and is primarily used for animal feed Alcohol = Methanol catalyst = NaHO, KOH or Sodium Methylate 9

Hybrid Biorefinery Production Bio- Crop Farm Oilseed Crop Fertilizer Bedding Seed Crusher Manure O. Waste Oilseed Meal Bio Oil Mix with Catalyst Electricity Transesterification Heat Digester Heat Electricity Biomethane Glycerin 10

Products Biogas 60-65% Methane Digestate Fertilizer product or alternative fibrous bedding for dairy cows. 11

Shared By-products ByProducts BioDiesel ByProducts Bio- Crop Farm Oilseed Crop Fertilizer Bedding Seed Crusher Manure O. Waste Oilseed Meal Bio Oil Mix with Catalyst Electricity Transesterification Digester Heat Electricity Biomethane Glycerin 12

: 1000 Cow Dairy Baseline: 1000 Cow Dairy Farm with Digester Manure Production = 68 kg/day *1000 cows *365 = 25,000 tons/yr Potential = 24 mmbtu/cow/yr *1000 = 24,000 mmbtu (assume 80% utilization of methane) or 2.3 million kwh - 300kW Generator How many acres of canola or soybean crop are needed to produce biodiesel? 13

: 1000 Cow Dairy Baseline: 1000 Cow Dairy Farm with Digester Manure Production = 68 kg/day *1000 cows *365 = 25,000 tons/yr Potential = 24 mmbtu/cow/yr *1000 = 24,000 mmbtu (assume 80% utilization of methane) or 2.3 million kwh - 300kW Generator How many acres of canola or soybean crop are needed to produce biodiesel? Product Yields per Acre Canola Soybean Seed (kg) 725 900 Bio Oil (kg) 260 150 (gal) 74 41 Glycerin (kg) 24 14 Meal (kg) 460 760 14

: 1000 Cow Dairy Baseline: 1000 Cow Dairy Farm with Digester Product Yields per Acre Canola Soybean Seed (kg) 725 900 Bio Oil (kg) 260 150 (gal) 74 41 Glycerin (kg) 24 14 Meal (kg) 460 760 Manure Production = 68 kg/day *1000 cows *365 = 25,000 tons/yr Potential = 24 mmbtu/cow/yr *1000 = 24,000 mmbtu (assume 80% utilization of methane) or 2.3 million kwh - 300kW Generator How many acres of canola or soybean crop are needed to produce biodiesel? Glycerin Acres + Meal : Ratio Canola Soybean 0.25% 127 80 0.50% 254 161 1.0% 510 324 2.0% 1030 655 5.0% 2657 1690 10% 5610 3568 20% 12623 8029 Only small co-feedstock ratios are realistic. 15

BMP of Byproducts Biogas production increases with biodiesel byproducts Byproduct Influence on Biogas Production (l/kg VS) Biogas (l/kg of VS) 700 650 600 550 500 450 The greatest rate of increase occurs at < %5 co-feed ratio Baseline: 100% Manure 400 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Byproduct Co-Feed Ratio Lower ratios of biodiesel byproduct is more effective on a per unit basis. 16

BMP of Byproducts Biogas production increases with biodiesel byproducts Byproduct Influence on Biogas Production (l/kg VS) Biogas (l/kg of VS) 700 650 600 550 500 450 The greatest rate of increase occurs at < %5 co-feed ratio Baseline: 100% Manure 400 0% 3% 5% 8% 10% 13% 15% 18% 20% Byproduct Co-Feed Ratio Lower ratios of biodiesel byproduct is more effective on a per unit basis. 17

Balance- 1000 Cow Dairy Baseline 0.5% Hybrid Farm - Canola 250 Acres Bio- Crop 24,000 mmbtu Biogas 30,000 mmbtu Biogas 19,000 gal. 18

s : 1000 Cow Dairy and Modeling 2 Processes 7 Products - Oil Seed - Meal - Bio Oil - - Glycerin - Biogas - Digestate Baseline Biogas VS. Prod. Costs Opp. Costs (Meal + Glycerin) Revenue Biogas Revenue 19

Cost of Production From Canola $0.13 $0.69 Electricity, Labor, Treatment Equipment $1.25 Chemicals $1.49 $3.56/gallon* Oil (Harvesting) + 14 lbs of Canola Meal *Source: Expanding Bioenergy Crops to Non-traditional Lands in Michigan, Task 7 Table 17. 2012 20

Market Value of Feedstocks/Byproducts Seed Meal Oil Crude Glycerin $23/CWT $360 /ton $4.33/gal $6-8/CWT Production Source: USDA Agricultural Marketing Service, Research Service (ERS) 21

Product Revenue Values = $4.00 - $4.20 / gallon 1 Biogas = $4.00 - $12.00 / mmbtu 2, 3 Digestate = $0 - $10 / ton Source: (1) EIA: Clean Cities Alternative Fuel Price Report, (2) Based on $4.00/mmbtu Natural Gas Cost, (3) @ $0.08/kWh biogas value would be around $9.00/mmbtu 22

s : 1000 Cow Dairy Baseline 0.5% Hybrid Farm 250 Acres Bio- Crop $217,250 Biogas $271,200 Biogas $75,500 $113,000 Prod. & Opp. Costs @ $9/mmbtu @ $9/mmbtu @ $4.00/gal 23

Balance: Lower co-feed ratios provide more value per unit land and offer synergies for improved energy production. s Balance: There are multiple economic flows to account for but, preliminary modeling suggests that the hybrid biorefinery is economically viable. Baseline - 1000 Cow Dairy Hybrid 254 Acres (0.5)% Hybrid Biorefinery Nets $16,000 2,531 Total VS (Tons) 2,633 Total VS (Tons) 450 Biogas Prod. l/kg VS 540 Biogas Prod. l/kg VS 24,138 Total mmbtu 30,134 Total mmbtu $217,248 Biogas $271,210 Biogas $0 Digestate $75,559 ($67,153) Production Costs ($46,190) Feedstock Opp. Costs $0 Digestate $217,248 Total $233,427 Total Net = $16,179 24

Key Take-aways Small co-feed fractions will increase biogas production The cost of biodiesel production is somewhat static. Market prices for inputs/outputs are STRONG drivers for economic viability. Market availability and price drivers A Balancing Act: What works best for you? demand, costs, and subsidies 25

Next Steps These results are preliminary, and our followon work will: Run additional BMP testing at larger scale to validate initial results Clarify how RINS and other incentives can be factored into the model Work with farmers to assess how to implement on-farm. 26

Acknowledgements Thanks to: Conservation Innovation Grant (CIG) from the USDA (Awarded to Michigan State University and Quantalux) USDA/NIFA for SBIR Phase II to Quantalux Mr. John Willard of Quantalux for detailed modeling and energy analysis. 27

Q and A 28