Economic Feasibility Study of Colorado Anaerobic Digester Projects ...

Examples of revenue generation and cost offset are presented in the agricultural
operation interviews, and are further reviewed in the enterprise budget and
sensitivity analysis.
B. Use of AD to leverage future operational expansion: Installation of an AD system can
open the door to grow the operation, because controls are already in place to
accommodate environmental quality concerns, including odor control. Mike Casper
of Microgy noted a case in Wisconsin where a 4,000 head dairy producer with an
existing digester was able to more easily double the size of his operation to 8,000
because the technology was in place. Doug Derouchey of Wyoming Premium Farms
and Adam Barka of Christensen Farms LLC both acknowledged that part of the intent
behind installation of two AD systems was to accommodate expansion. While AD
units may accommodate operational expansion, it is important to consider that
inappropriately low feedstock availability may make the digester malfunction. When
installing a digester, it is important to maintain a balance between expansion goals
and current and short-term availability of feedstock.
C. Markets for effluents and environmental goods: Compost, fertilizer, and carbon
markets all provide opportunities for revenue generation. Use of an AD system may
also help the products become branded as a renewable energy systems, or carbon
neutral systems—a title that may provide increasing benefit as eco-labeling becomes
more prominent in the food labeling industry.
3.2.5 Capital Financing: All technology providers noted that recent disruptions to the
financial markets have affected their ability to secure capital financing for large projects.
Economic recession, the collapse of national financial institutions, and the closing of regional
banks (such as Greeley’s New Frontier Bank), have yielded complex macroeconomic
results. Among the macroeconomic effects are high interest rates and difficulty for
technology providers and agricultural operations to secure financial capital. Furthermore,
the effects of proposed reforms to the financial system are unknown, making it difficult to
predict when and to what extent the capital market will rebound. Technology providers
report that the most relevant financial impacts on the industry are:
A. Rapid changes in interest rates. For example, two technology providers reported
that in mid-2008, tax exempt municipal bonds for $50-$60 million projects were at 7%
in Texas and at 9% in California. In November 2008, the interest rate rose to 14%,
where it has essentially remained since that time.
B. High interest rates by historical standards.
Economic Feasibility Study of Colorado Anaerobic Digester Projects
Prepared by Dr. Catherine Keske, Colorado State University
August 2009
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