Anaerobic digestion of organic wastes and by‐products from agriculture and the food industry is a process known for many years and is widely used for waste stabilization, pollution control, improvement of manure quality and biogas production (Weiland, 2006). Biogas production from manure contributes to climate protection by reducing emissions of CO2 via substitution of fossil fuels and by reducing CH4 emissions from the manure during storage (Moller et al., 2007). It is expected that biogas production will be instrumental in reaching European goals in the field of renewable energy. Due to the simultaneous advantages of avoiding greenhouse gas emissions and producing energy (Sommer et al., 2004) as well as reducing odor emissions (Hansen et al., 2006), there has been a rapid development in the use of biogas in recent years (Weiland, 2006). In the EU, where only about 5% of the gross consumption is made up of renewables, which is lower than observed in other parts of the world, the share of renewables is expected to double by 2010, and the share of biogas, as part of it, is expected to rise to 12% (Nielsen, Al Seadi, 2006). The Dutch government, in its white paper on energy calls for a simultaneous approach of continuous energy savings, a 30% improvement of efficiency by 2020 and a 20% share of renewable energy in 2020 (Kwant, 2003). In the Netherlands, the potential of energy production from biogas has been estimated to be 49 PJ in 2020 (Nielsen, Al Seadi, 2006). As part of the “clean and efficient” program, the Dutch dairy chain is aiming to achieve an energy‐neutral production. This new initiative, hereafter called as the energy‐neutral milk initiative, aims at bringing the whole chain, i.e. from the dairy farm to the factory, ultimately to be self sufficient in energy in 2020. This is envisaged to be achieved by building fermentation units to convert manure and food waste into biogas, which can then be used (directly or indirectly) by local dairy factories. The energy consumption in the dairy chain for milk production and processing is estimated to be 25 PJ per annum excluding energy consumed for feed and artificial fertilizers. Our analyses aim to estimate the aggregated costs of producing this amount of energy at farm level. We herewith consider various business models varying in size and output. In analyzing the feasibility of biogas plants, a mix of variables is relevant as economic efficiency of anaerobic digestion depends on among others investment costs, the costs of operating the biogas plant and the optimum methane production (Chynoweth, 2004; Walla, Schneeberger, 2005). A maximum methane yield is especially important with the digestion of energy crops as these (in contrast to animal manures or organic wastes) have production costs that have to be covered by the methane production (Walla, Schneeberger, 2009). So far, feasibility studies of biogas plants generally use only a limited amount of practical data, see for instance Georgakakis et al. (2003), Singh and Sooch (2003), Svensson et al. (2005) and Svensson et al. (2006). In our study we use cross‐sectional data of 23 farm level biogas plants located in the Netherlands.
2 Review of literature
Biogas produced in anaerobic digestion (AD) plants is primarily composed of methane (CH4) and carbon dioxide (C02) with smaller amounts of hydrogen sulphide (H2S), ammonia (NH3) and other particles (Persson et al., 2006). A lot of fermentation plants have been built, particularly in Denmark, Germany and Sweden, with capacities varying from 10,000 tons of biomass/year to around 150,000 tons/year. In the Netherlands these plants tend to be capable of processing 2000‐4000 tons/year (for a single farm) up to around 36,000 tons/year (Wempe, Dumont, 2008)1. Existing plants vary greatly in size and design. The large‐scale processing of residual products, for example from the food industry and...