Assessing the Commercial Feasibility of Manure to Energy Systems

1. Assessing the Commercial Feasibility of Manure to Energy Systems Kraig Westerbeek AVP, EHS Murphy-Brown LLC

2. Current Manure Management Systems in the USA 1. 2. 3. Evaporation pond Sludge Land, Landfill

3. Manure to Energy? Manure from animal operations does have energy value Swine manure = app. 8000 BTU / pound Animals are not 100% efficient in converting feed energy into body mass Relative measure of efficiency is feed conversion (swine 3 : 1)

4. Manure to Energy? Energy not used by animal can be recycled to other forms of useful energy While gasification and or combustion are options for some dry manures, anaerobic digestion seems to have the most potential for deriving energy from animal manure

5. Potential for Anaerobic Digester Energy in the United States. Turkey: 3,100,000 tpy* Others (veal, lamb, mutton): 158,500 tpy* Swine: 11,650,000 tpy* Chicken: 18,750,000 tpy* *tpy: tons per year Source: AMI, 2011 Cattle: 13,300,000 tpy* Manure energy: 10,000 – 20,000 MW power equivalence

6. “Anaerobic digesters, commonly in the form of covered lagoons or tanks, are designed to stabilize manure and optimize the production of methane.” EPA AgStar – AD101

7. Number of Operating Anaerobic Digester Projects (US, July 2010)

8. Biogas Use for Operational Projects

9. Energy Production by Anaerobic Digester Systems: 2001-2010 (EPA AgStar)

10. Biogas Concept schematics Swine barn Electricity distribution grid Swine manure is scraped and collected in the surge tank. Generator Surge tank Develop: Dewatering system to produce dry organic fertilizer Wastewater is pumped to existing lagoon and irrigated with existing irrigation equipment Biogas Develop: Solids are further dried with waste heat and processed into organic fertilizer or used as fuel for combustion at a biomass plant Digesters Combination of above-ground and in-ground fermentation leverages the cost and engineering advantages of both design. Buffer tank

11. Manure to Energy – Commercial Feasibility Fact: The technical feasibility of creating energy from manure has been proven Question: Can energy be created at a cost that makes manure to energy commercially feasible on a large scale?

12. Commercial Feasibilty To be attractive, manure to energy projects must create value for: Investor (long term, stable return) Farmer (avoided costs / increased revenue, improved manure management system) Energy User (reasonably priced renewable energy)

13. Cost of Manure to Energy Systems High capital investment typically required (example – swine manure $5-10M per MW electricity) Various state and federal renewable energy credits help reduce initial investment Operating costs vary depending upon system used, but are significant, particularly if transportation of manure is involved

14. Revenue from Manure to Energy Systems Direct payment for energy based on current market value Renewable energy credits – vary from state to state depending upon legislative requirements Tax benefits (state, federal) Carbon credit value (destruction of methane)

15. Benefits to Manure Management Systems Significant destruction of volatile solids / reduced organic loading on existing system (increased treatment capacity) Reduction of total solids leaving a more nutrient dense solids stream Potential reduction of odor and emissions Reduction of pathogen loads

16. Commercial Feasibility Investments in manure to energy projects are risky due to the constant variability of manure characteristics Advances in technology (anaerobic digestion, etc.) have reduced the risks substantially State level renewable energy mandates have created a market for manure to energy projects by making returns more attractive Depressed carbon market has been a negative

17. Circle 4 Farms Project In the late 1990’s and early 2000’s, our company invested a significant amount of money in an anaerobic digester project at Circle 4 Farms in Utah The goal of the project was to capture methane generated from the anaerobic digestion of swine manure and convert it into biodiesel

18. Circle 4 Project The project failed due to problems associated with manure transport and lower than expected manure energy value While technically feasible, the economics of the project did not work The digesters built for this project are no longer in use This project may have worked with today’s renewable energy incentives

19. Murphy-Brown Strategy • Instead of investing internal capital in manure to energy projects, MB has sought out partnerships with project developers and investors • Current projects • Alpental Energy – Utah • Pacolet/Millikan – North Carolina • Ag Power – North Carolina • Roeslein - Missouri

20. Summary The technology is available today to support manure to energy projects – continues to improve with experience Economic drivers have been added to provide the necessary revenue to support projects The number of manure to energy projects continues to increase

21. Summary I believe manure can compete well in the renewable energy marketplace based on both its price relative to other renewable energy sources, and its reliability in delivering continuous energy I expect a continued increase in the number of manure to energy projects