What Are You Really Being Paid to Optimize?
Better digester performance doesn’t mean the same thing at every facility. We look at how tipping fees, biomethane production, feedstock, solids destruction and other factors shape what operators are really trying to optimize.
TL;DR
- Better digester performance depends on how the facility creates value.
- More biomethane is not always the primary objective. Throughput, tipping fees, solids destruction and avoided costs can also drive operating decisions.
- The best operating point connects biological performance with the economics of the facility.
Field Notes
We spend a lot of time in anaerobic digestion talking about performance: more gas, better yield, higher volatile solids destruction, more stable biology.
But better technical performance doesn't always translate directly into better economics.
We were talking with an operator recently about opportunities to improve digester performance. During the conversation, he explained that roughly 75% of their revenue comes from tipping fees.
For that business, the ability to accept more material can be more valuable than getting another few percentage points of gas yield from the material already being processed. The digester still needs to be stable and perform well, but maximizing biomethane yield isn't necessarily the primary objective.
We've heard similar considerations in other conversations. Some facilities contract for more feedstock than they expect to need. Others have contractual obligations to accept material regardless of how the digester is performing. At other facilities, the economics are much more directly tied to maximizing RNG production.
It depends on how the facility makes money
For an RNG facility, more biomethane may seem like the obvious measure of success. But feedstock cost or tipping revenue can have just as much influence on the economics. Carbon intensity and environmental credits can matter too, as can the amount of material the facility can process reliably.
At a wastewater treatment plant, there may be a completely different set of priorities. Greater volatile solids destruction can mean less material to dewater, haul and dispose of. Improvements in digestion may also reduce chemical use or downstream treatment costs. More gas may be valuable, but it may not be where most of the economic benefit comes from.
We've found it increasingly useful to understand the business model alongside the biology. If we don't know where the facility actually makes or saves money, it's difficult to know what better performance should look like.
The best operating point isn't necessarily maximum production
We touched on this in an earlier Signals when we wrote about economic capacity.
A digester may be capable of accepting more material or operating at a higher organic loading rate, but whether it should depends on what happens to the economics as loading increases.
For a facility that earns significant tipping revenue, accepting more tonnage may be worth some reduction in yield per ton. Somewhere else, protecting yield and RNG production may be worth more than the revenue from additional feedstock. A wastewater treatment plant may be looking for the point that gives it the best solids destruction without creating problems elsewhere in the treatment process.
The biology establishes what the digester can handle. Where the facility chooses to operate within that range is also a business decision.
What is another ton worth?
The economics of additional feedstock varies widely from one facility to another.
At one plant, another ton through the gate brings additional tipping revenue. At another, the value depends on how much additional biomethane it produces. That same ton can also bring costs with it, particularly if it contributes to instability or ultimately creates more digestate that has to be dewatered, transported or disposed of.
For RNG facilities, feedstock can also affect carbon intensity and the value of the gas being produced.
Looking only at gas production, yield or throughput can therefore miss part of the economics. The operating decision needs to connect back to how the facility actually makes or saves money.
Signals Takeaway
There isn't one definition of an optimized digester.
Depending on the facility, better performance could mean producing more gas from the same feedstock, processing more material, increasing volatile solids destruction, reducing disposal costs or maintaining stable production while changing the feed mix.
What are you really being paid to optimize?
If you're looking at how improved digester performance could create more value for your facility, we'd be glad to talk.
“The biology establishes what the digester can handle. Where the facility chooses to operate within that range is also a business decision.”
