The potential contribution of anaerobic digestion to UK energy goals and the resulting market value 1|Page Contents Contents EXECUTIVE SUMMARY ............................................................................................................................................................ 3 1. Introduction ....................................................................................................................................................................... 4 2. Food waste ....................................................................................................................................................................... 5 3. Farm animal wastes ........................................................................................................................................................... 4 4. Crops................................................................................................................................................................................ 8 5. Sewage sludge ................................................................................................................................................................ 10 6. Other feedstocks.............................................................................................................................................................. 11 7. Total feedstocks............................................................................................................................................................... 12 8. Current feedstock use ...................................................................................................................................................... 16 9. Potential market value ...................................................................................................................................................... 17 2|Page EXECUTIVE SUMMARY Based on analysis undertaken for this project, anaerobic digestion technically has the potential to deliver 16-34 TWh of delivered energy per year in 2020 (equating to 0.7-1.6 GW of electrical capacity). This is 7-15% of our 2020 renewable energy target. Food waste AD has the potential to generate up to 9 TWh per year, recycling up to 9 million tonnes of food waste in the process. Agricultural AD plants have the potential to generate up to 19 TWh. This equates to [x] tonnes CO2e savings based solely reducing emissions from fossil energy generation (i.e. not accounting for the other greenhouse gas benefits of AD). Based on market trends and support schemes, the breakdown of plants we could expect to see if AD achieved its full potential is 100-200 waste-based plants operating in the period 2020-2030 and 700-1,800 agricultural-based plants. This is a potential figure, not an estimate. The UK market value from these could be £600m - £1.4 bn per year in 10 years. 3|Page 1. INTRODUCTION Data has been collected on the amount of feedstocks suitable for AD that are currently produced annually. This has been from a range of sources. We have used these to establish a ‘technical’ potential for the amount of energy that could be generated from AD in the UK. This ‘technical’ potential would therefore be met if all policy, financial and logistical issues were overcome. We have also applied several limiting factors to this ‘technical’ potential to produce a ‘realistic’ potential. This ‘realistic’ potential still assumes that policy and financial barriers are overcome. However, under this scenario we assume a higher avoidance of avoidable food waste (reducing the potential for AD), and we assume that other factors such as competition from energy-from-waste plants and lack of uptake by residents of food waste collections limits the feedstock that could be available. A further range of factors then alter the potentially available feedstock to AD up to 2020 and to 2030. For example, population growth is likely to increase the amount of food waste generated by households between 2014 and 2020. So a percentage increase is added to account for this. The sections on each feedstock list all the assumptions which are included in the calculation to estimate the “technical” and “realistic” potential scenarios for 2020 and 2030. We then compare the two scenarios to the feedstocks currently being used by the industry to estimate the percentage of the potential that is currently being realised. We the potential energy generation and cost data to estimate how the AD market might grow and how this may be converted into an annual market value for the sector. It should be noted that these are only estimates of the potential market, not an estimate of the amount that will actually be built (which will be lower than the potential). 4|Page 2. FOOD WASTE 2.1. Food waste assumptions The assumptions relevant to food waste are the following, based on data interpreted from various sources1. Population assumptions Total population growth 2014-2020 "Technical" scenarios and 4.1% household "realistic" scenario Total population growth 2020-2030 "Technical" scenarios and 5.3% household "realistic" scenario Economy assumptions Annual GDP/ industrial per capita growth 2014-2020 Cumulative GDP/ industrial per capita growth 2014-2020 Annual GDP/ industrial growth 2020-2030 Cumulative GDP/ industrial growth 2020-2030 1% 6.2% 1% 10.5% "Technical" scenarios "Technical" scenarios "Technical" scenarios "Technical" scenarios Percentage reduction in avoidable food waste by 2020 Percentage reduction in avoidable food waste by 2020 Further percentage reduction in avoidable food waste 2020-2030 Further percentage reduction in avoidable food waste 2020-2030 50% 10% 50% 10% "Realistic" scenario "Technical" scenarios "Realistic" scenario "Technical" scenarios Percentage of commercial/ industrial food waste that is avoidable "Technical" and "realistic" 75% scenarios Avoidable food waste assumptions Food waste collection assumptions Percentage of food waste that can be collected (i.e. cannot collect all food waste): e.g. due to households not participating. 75% "Realistic" scenario Competition assumptions Decrease in food waste availability (in 2014, and from 2014-2020 and from 2020-2030) due to energy-from-waste and/ or composting/ land spreading contracts/ competition 15% "Realistic" scenario 1 Including http://www.wrap.org.uk/content/household-food-and-drink-waste-uk-2012 , http://www.wrap.org.uk/sites/files/wrap/Estimates%20of%20waste%20in%20the%20food%20and%20drink%20supply%20chain_0. pdf , http://www.wrap.org.uk/content/food-waste-hospitality-and-food-service-sector , http://www.ons.gov.uk/ons/rel/npp/national-population-projections/2012-based-reference-volume--series-pp2/results.html#tabFuture-Size-of-the-Population 5|Page 2.2. Household waste For household food waste, the following wet tonne outputs per year may be available: Year 2012 2020 2030 Total amount of food and drink waste generated by households in the UK (million wet tonnes) avoidable unavoidable Discharged to sewer (not available to AD) Food waste collections (should be available for AD) - illustrative only Composted at home (not available for AD)* Fed to animals (not available to AD) Potentially available to AD (million wet tonnes) 7.0 4.2 2.8 1.6 0.54 0.5 0.3 4.6 6.8 5.1 6.8 4.2 4.0 2.3 4.0 1.4 2.8 2.8 2.8 2.8 1.6 1.2 1.6 1.0 0.5 0.4 0.5 0.3 0.5 0.4 0.5 0.3 0.3 0.2 0.3 0.2 4.5 3.4 4.5 2.7 Competi tion Percentage collection N/A N/A 4.6 15% 75% 15% 75% 2.9 4.5 2.1 4.5 1.7 15% 75% Total potentially remaining for AD in 2012 "technical" Total potentially remaining for AD in 2012 (see assumptions list for explanation) "realistic" "technical" "realistic" scenario "technical" "realistic" scenario * 2012 composting, sewer and animal feed proportion assumed to continue in future years 1|Page 2.3. C&I waste The assumptions for commercial and industrial waste are the following, based on data2 on surveys on the grocery (including food manufacturing) and hospitality sectors. These numbers do not include industrial liquid effluents, so are an underestimate. Grocery sector Sector Sub-sector Million tonnes pa Grocery sector Food wholesale and retail Food manufacturing factories 0.4 3.9 Sector total Of which landfill (potentially available to AD under both "high" and "low" scenarios) 4.345 0.045 Of which land spreading (potentially available to AD under both "high" and "low" scenarios) Of which unknown destination (potentially available to AD under both "high" and "low" scenarios) Of which recycling (including composting) (potentially available to AD under "high" scenario) Of which thermal (not likely to be available to AD) 2014 "high" 2014 "low" 2 0.6 1.3 0.4 3.9 2.6 Hospitality sector Sector Hospitality sector Sub-sector Hotels Restaurants Fast food Pubs Million tonnes pa 0.08 0.20 0.08 0.17 2 http://www.wrap.org.uk/sites/files/wrap/Estimates%20of%20waste%20in%20the%20food%20and%20drink%20supply%20chain_0.pdf, http://www.wrap.org.uk/content/food-wastehospitality-and-food-service-sector and https://www.fdf.org.uk/corporate_pubs/waste_survey_2010.pdf 2|Page Leisure outlets Staff canteens Schools Hospitals Services 0.06 0.02 0.12 0.12 0.07 0.92 Sector total 2014 Using the assumptions listed above in [section 2.1], including on avoiding food waste, the below tonnages could be attained: 2014 m wet tonnes 2020 m wet tonnes "high" "low" Percentage reduction due to food waste avoidance 4.9 3.6 "high" 8% 5.0 "low" 38% 2.3 2030 m wet tonnes "high" "low" 8% 38% 5.1 1.5 3|Page 3. FARM ANIMAL WASTES 3.1. Animal waste assumptions The following assumptions are relevant to the animal waste estimates: Economy assumptions Annual GDP/ industrial per capita growth 2014-2020 Cumulative GDP/ industrial per capita growth 2014-2020 Annual GDP/ industrial growth 2020-2030 Cumulative GDP/ industrial growth 2020-2030 1% 6.2% 1% 10.5% "Technical" scenarios "Technical" scenarios "Technical" scenarios "Technical" scenarios Agriculture assumptions To estimate the crop tonnages for the "high" scenario, we assume that crop use will be a fraction of the total wet tonnes of manures (i.e. one tonne of crops will be used for every 4 or 5 tonnes of manure). The actual range of availability of crops will clearly be greater, but linking the crops used to manures demonstrates the role that crops can play in improving waste management of manures. Annual yield growth 2014-2030 Cumulative yield growth 2014-2020 Cumulative yield growth 2020-2030 15% 0.8% 4.9% 8.3% "Technical" scenarios "Technical" scenarios "Technical" scenarios "Technical" scenarios 4|Page Maize yield 2014 42 wet tonnes per hectare The following table gives the assumptions for animal waste availability based on data from the UK greenhouse gas inventory and DEFRA’s livestock excreta volumes3: Animal type Number of animals (2010) Volume of Excreta per month (M3)* Average manure per animal per year (tonnes) Total Manure Production per annum (tonnes) Liquid System Daily Spread Solid Storage and Dry Lot Pasture Range and Paddock Poultry without bedding Poultry with bedding Incineration Potential manure capture (% indoors) Wet tonnes manure per year Cattle: Dairy cows 1,846,634 1.4 16.8 31,023,451 38% 13% 4% 45% 55% Beef cows 1,656,702 1.35 16.2 26,838,572 5% 14% 16% 65% 35% Dairy heifers 407,708 1.2 14.4 6,604,869 9% 9% 13% 69% 31% Beef heifers 377,530 0.78 9.36 3,533,680 5% 14% 16% 65% 35% Dairy replacements >1 year 500,809 0.6 7.2 3,605,825 9% 9% 13% 69% 31% Beef all others >1 year 2,458,422 0.6 7.2 17,700,638 5% 14% 16% 65% 35% Dairy calves <1 year 519,447 0.6 7.2 3,740,018 0% 14% 31% 55% 45% Beef calves <1 year 2,341,838 0.6 7.2 16,861,233 0% 14% 31% 55% 45% Sows 360,268 0.33 3.96 1,426,661 17% 17% 24% 42% 58% Gilts 141,152 0.13 1.56 220,197 17% 17% 24% 42% 58% Boars 16,809 0.26 3.12 52,444 17% 17% 24% 42% 58% Fattening & other pigs 80 - >110 kg 673,425 0.26 3.12 2,101,086 25% 29% 44% 2% 98% Fattening & other pigs 50-80 kg 968,938 0.18 2.16 2,092,906 25% 29% 44% 2% 98% 1,133,631 0.1 1.2 1,360,357 25% 29% 44% 2% 98% 17,062,898 9,393,500 2,047,509 1,236,788 1,117,806 6,195,223 1,683,008 7,587,555 Pigs: Other pigs 20-50 kg 3 827,464 127,714 30,418 2,059,064 2,051,048 1,333,150 http://naei.defra.gov.uk/ and https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/261371/pb14050-nvz-guidance.pdf 5|Page Pigs < 20 kg 26% 23% 30% 79% 556,558 0% 99% 0% 0% 91% 0% 50% 0% 100% 1% 0% 32% 36% 99% 114,005 1,098,866 391,965 1,876,612 4% 0% 48% 0% 96% 161,829 1,174,174 0.05 0.6 704,504 21% Growing pullets 8,724,012 1.1 0.0132 115,157 49% 1% 0% 49% Laying fowls 28,751,081 3.5 0.042 1,207,545 46% 9% 46% Breeding flock 9,606,990 3.4 0.0408 391,965 50% 0% Table chicken 105,309,326 1.5 0.018 1,895,568 32% 3,902,122 3.6 0.0432 168,572 48% Poultry: Turkeys (averaged male/female figures) *1 m3 assumed to = 1 tonne Animal bedding additional tonnage (tonnes as percent of animal excreta) Total 20% 68,343,578 15% 10,251,537 58,092,042 121,645,250 Percent unavailable in "realistic" scenario due to logistics, size of farm, losses etc. Unavailable due to logistics, size of farm, losses etc. Total potentially available ("realistic") This produces the following tonnages: Feedstock type Low/ High scenario Low/ high scenario assumptions Million wet tonnes 2014 2020 2030 58.1 52.3 47.1 Farm animal wastes and bedding Low - Decreasing livestock numbers 6|Page High - GDP/ industrial growth - Stable livestock numbers 68.3 72.5 80.1 7|Page 4. CROPS 4.1. Crops assumptions The following assumptions relate to crop tonnages: Agriculture assumptions To estimate the crop tonnages for the "technical" potential scenario, we have linked the amount of crops that could be used for AD to the amount of animal wastes that could be treated alongside those crops through AD. This reflects the industry trend for using crops to support the treatment of animal wastes. Here we assume that for each tonne of crop used, 4-5 tonnes of manure will be used. The following percentage gives the additional percentage of crops we assume for each tonne of animal waste: Annual yield growth 2014-2030 Cumulative yield growth 2014-2020 Cumulative yield growth 2020-2030 Maize yield 2014 Decreasing livestock numbers 2014-2020 and 2020-2030 15% 0.8% 4.9% 8.3% 42 10% "Technical" scenarios "Technical" scenarios "Technical" scenarios "Technical" scenarios wet tonnes per hectare "Realistic" scenario Percent unavailable in "realistic" scenario due to logistics, size of farm, losses etc. 15% "Realistic" scenario The “technical” scenario wet tonnes equates to approximately 1% of UK agricultural land. The tonnages increase with yield improvements in future4. For the “realistic” scenario we use the amount of land used in 2012 for bioenergy in the UK and the land used for crops for AD and solely adjust for yield growth. Bioenergy agricultural land use data (for "realistic" scenario) 2012 area used for bioenergy crops (excluding AD) 2012 AD Total bioenergy + AD 42,000 hectares 15,500 hectares 57,500 hectares These assumptions give the following tonnages: Feedstock type Low/ High scenario Crops Low 4 Low/ high scenario assumptions - Only current bioenergy land use is available for AD - No yield increases Million wet tonnes 2014 2020 2030 2.4 2.4 2.4 Taking account of estimates used in http://www.fao.org/docrep/016/ap106e/ap106e.pdf 8|Page High - Proportion of crops in 2014 is related to 2014 manures use - Yield increases 10.3 10.8 11.3 9|Page 5. SEWAGE SLUDGE For sewage sludge we have used existing data on sewage sludge tonnages5, converting them to wet tonnes (30-35 million wet tonnes). We have adjusted for population growth. Sewage assumptions percent of current "realistic" scenario Current sewage sludge percentage used for AD 70% Population assumptions Total population growth 2014-2020 4.1% "Technical" scenarios and household "realistic" scenario Total population growth 2020-2030 5.3% "Technical" scenarios and household "realistic" scenario This gives: Feedstock type Low/ High scenario Sewage sludge Low High Low/ high scenario assumptions - Accounts for population growth - Lower end of the estimates of sewage sludge production assumed - Accounts for population growth - Higher end of sewage sludge production assumed Million wet tonnes 2014 2020 2030 30 31 33 35 36 38 5 Page 12, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/69400/anaerobic-digestion-strataction-plan.pdf , http://www.oft.gov.uk/shared_oft/market-studies/oft1372.pdf 10 | P a g e 6. OTHER FEEDSTOCKS For other potential sources of feedstock that may be available in future with further market, infrastructure and research and development we have made some assumptions on the amount of other material that may become available over time. There are a large number of these potential feedstocks, so we have judged the overall figures rather than trying to break them down individually: Feedstock type Other potential sources: - Nature conservation managed (e.g. wetland reed beds - see case studies and DECC funding) - Algae/ sea kelp etc. (see Norfolk CC studies, VTT, academic research) - Municipal street and park waste (e.g. leaves and grass cuttings) - Other farm and horticultural wastes (e.g. greenhouse industry wastes, on-site farm residues, straw, orchard waste) - Aquaculture wastes - Household garden green wastes (e.g. lawn cuttings, leaves) Low/ High scenario Low/ high scenario assumptions Low High - Potential for new sources of feedstock to emerge following technological progress/ R&D/ demonstration and commercialisation programmes etc. Million wet tonnes 2014 2020 2030 0.2 0.2 0.2 1 2 4 11 | P a g e 7. TOTAL FEEDSTOCKS We calculate the energy value of the feedstocks by using the following assumptions: Feedstock and gas yields Feedstock and gas yields Dry matter Household food waste 25% C&I food waste 25% Crops 33% Animal wastes and bedding 10% Sewage sludge 5% Average (figure to use for "potential new feedstock") 20% MWh per m3 Biogas yield (m3 Biogas yield raw biogas per CH4 per wet dry tonne) percentage tonne 700 62% 175 700 62% 175 600 62% 200 200 55% 20 400 60% 20 520 60% 118 0.0101 Please note that these are all estimates of the average numbers across a large number of individual feedstocks so should not be used for other purposes. The following is a summary of the assumptions for each feedstock: Feedstock type Low/ High scenario Household food waste Low High C&I food waste Low High Low/ high scenario assumptions - Accounts for population growth - High household food waste reductions - High competition from composting/ EfW - Of remaining 'potential', a proportion is not collected (e.g. due to lack of food waste collections) - Accounts for population growth - Low household food waste reductions - High food waste collections - Accounts for population growth - High business food waste reductions - High competition from composting/ EfW - Of remaining 'potential', a proportion is not collected (e.g. due to lack of food waste collections) - Accounts for population growth - Low business food waste reductions - GDP/ industrial growth - High food waste collections 12 | P a g e Farm animal wastes and bedding Low Low - GDP/ industrial growth - Stable livestock numbers - Only current bioenergy land use is available for AD - No yield increases High - Proportion of crops in 2014 is related to 2014 manures use - Yield increases High Crops Other potential sources: - Nature conservation managed (e.g. wetland reed beds - see case studies and DECC funding) - Algae/ sea kelp etc. (see Norfolk CC studies, VTT, academic research) - Municipal street and park waste (e.g. leaves and grass cuttings) - Other farm and horticultural wastes (e.g. greenhouse industry wastes, on-site farm residues, straw, orchard waste) - Aquaculture wastes - Household garden green wastes (e.g. lawn cuttings, leaves) Sewage sludge - Decreasing livestock numbers - Percentage which could not be available due to logistics etc. Low High Low High - Potential for new sources of feedstock to emerge following technological progress/ R&D/ demonstration and commercialisation programmes etc. - Accounts for population growth - Lower end of the estimates of sewage sludge production assumed - Accounts for population growth - Higher end of sewage sludge production assumed 13 | P a g e The results of the overall analysis are the following: Feedstock type Household food waste C&I food waste Farm animal wastes and bedding Crops Other potential sources Low/ High scenario Million wet tonnes Million dry tonnes TWh useable energy (accounts for parasitic load) MW biogas capacity (80% load factor) TWhe-equivalent MW electricalcapacity-equivalent (80% load factor) 2014 2020 2030 2014 2020 2030 2014 2020 2030 2014 2020 2030 2014 2020 2030 2014 2020 2030 Low 2.9 2.1 1.7 0.7 0.5 0.4 2.9 2.1 1.7 331 241 197 1.2 0.8 0.7 132 96 79 High 4.6 4.5 4.5 1.2 1.1 1.1 4.5 4.4 4.4 519 508 503 1.8 1.8 1.8 208 203 201 Low 3.6 2.3 1.5 0.9 0.6 0.4 3.5 2.3 1.5 401 261 172 1.4 0.9 0.6 161 104 69 High 4.9 5.0 5.1 1.2 1.2 1.3 4.8 4.9 5.0 548 559 576 1.9 2.0 2.0 219 223 230 Low 58.1 52.3 47.1 5.8 5.2 4.7 5.8 5.2 4.7 663 597 537 2.3 2.1 1.9 265 239 215 High 68.3 72.5 80.1 6.8 7.3 8.0 6.8 7.3 8.0 780 828 915 2.7 2.9 3.2 312 331 366 Low 2.4 2.4 2.4 0.8 0.8 0.8 2.7 2.7 2.7 308 308 308 1.1 1.1 1.1 123 123 123 High 10.3 10.8 11.3 3.4 3.5 3.7 11.4 12.0 12.6 1,306 1,370 1,437 4.6 4.8 5.0 523 548 575 Low 0.2 0.2 0.2 0.04 0.04 0.04 0.1 0.1 0.1 15 15 15 0.1 0.1 0.1 6 6 6 High 1 2 4 0.2 0.4 0.8 0.6 1.2 2.5 71 142 283 0.2 0.5 1.0 28 57 113 14 | P a g e Sewage sludge Low 30 31 33 1.5 1.6 1.6 3.6 3.8 4.0 415 432 455 1.5 1.5 1.6 166 173 182 High 35 36 38 1.75 1.8 1.9 4.2 4.4 4.6 484 504 531 1.7 1.8 1.9 194 202 212 Low 97 91 86 10 9 8 19 16 15 2,134 1,854 1,684 7 6 6 854 742 673 High 124 131 143 15 15 17 32 34 37 3,709 3,910 4,245 13 14 15 1,484 1,564 1,698 Total Percentage of 225 TWh 2020 renewable energy target Low 7% High 15% As well as renewable energy targets, this will make a significant contribution to greenhouse gas reduction, landfill diversion and recycling targets. 15 | P a g e 8. CURRENT FEEDSTOCK USE Using our information on current feedstock use for AD we calculate the following progress for each feedstock towards its potential: Feedstock type Current use mtpa (wet) Food waste: household, municipal and industrial Farm animal wastes and bedding Crops Current use as percentage of 2020 potential Low 36% High 17% Low 1% High 1% Low 39% High 9% Low 50% High 5% Low 67% High 58% Low 33% High 16% 1.6 0.6 0.9 Other potential sources: - Nature conservation managed (e.g. wetland reed beds - see case studies and DECC funding) - Algae/ sea kelp etc. (see Norfolk CC studies, VTT, academic research) - Municipal street and park waste (e.g. leaves and grass cuttings) - Other farm and horticultural wastes (e.g. greenhouse industry wastes, on-site farm residues, straw, orchard waste) - Aquaculture wastes - Household garden green wastes (e.g. lawn cuttings, leaves) 0.1 Sewage sludge 21.0 Total (as percentage of potential energy generation) High/ low 2020 scenario We are therefore currently fulfilling 16-33% of AD’s potential. Therefore, there could be room for an industry five times the current size. 16 | P a g e 9. POTENTIAL MARKET VALUE The majority of agricultural plants in operation are approximately 0.5 MWe in size on average. Food waste plants are often 2 MWe. The UK could therefore potentially support the following number of farm-based and waste-based plants: 2020 Typical plant capacity MWe (equivalent) Agriculturalbased plants Food wastebased plants Other' feedstock type plants Total (excluding sewage) "technical" potential capacity "realistic" potential capacity 2030 "technical" potential number of plants "realistic" potential number of plants "technical " potential capacity "realistic" potential capacity "technical" potential number of plants "realistic" potential number of plants 0.5 879 362 1,759 724 941 338 1,882 676 2 427 201 213 100 432 147 216 74 1 57 6 57 6 113 6 113 6 2,029 830 2,211 756 Based on our analysis, the capital and operating cost of plants of these sizes are typically the following, which result in the following potential annual market value: Typical plant capacity MWe (equivalent) Agriculturalbased plants Food wastebased plants Other' feedstock type plants Total (excluding sewage) Cost assumptions Annual operating cost per plant (includes Capital cost feedstock per plant differentials) "technical" potential scenario If constructed over a 10 year period, average annual capex Annual opex after 10 years "realistic" potential scenario If constructed over a 10 year period, average annual capex Annual opex after 10 years 0.5 £2,200,000 £500,000 £193,466,614 £439,696,850 £79,611,718 £180,935,723 2 £6,000,000 £1,100,000 £255,921,908 £469,190,164 £120,523,219 £220,959,235 1 £4,400,000 £1,000,000 £24,908,342 £56,609,868 £2,663,977 £6,054,493 £474,296,864 £965,496,882 £202,798,914 £407,949,450 £1,439,793,746 £610,748,364 The potential market value for AD is therefore £700m - £1.4bn in an individual year (if 10% of these were built in a year) and assuming the maximum number of plants incur operating costs. 17 | P a g e