When Fennville, MI-based Scenic View Dairy decided to expand its anaerobic digesters, it faced a decision on how to maximize the value of the additional biogas produced. One option called for converting the excess biogas into electricity for sale to the grid. But a second option, upgrading the biogas to pipeline-quality renewable natural gas (RNG), produced a higher rate of return on invested capital. State definitions frequently omitted relevant costs such as overhead or capital-carrying expenses, resulting in prices paid to producers that were well below market rates. The cost of upgrading biogas to pipeline quality specifications is significantly higher than the cost of cleaning biogas for use in a generator. Revenues for RNG production increase by 88% versus 82% for electricity generation. New regulations can also impact project returns. It is no longer an option to just send the biogas directly to the generator.
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