Griffith Case Study Report - Viability Assessment: Assessment framework for bio-methane injection in gas networks

Abstract

The production of bio-methane and its injection into existing gas networks is currently almost non-existent in Australia, despite the opportunity and the significant commercial success of biogas in other countries (Scarlat et al., 2018). This is, at least in part, due to a lack of a transparent and consistent framework for assessing the viability of bio-methane production and injection. In order to address this shortcoming, this project aims to (i) assess the viability of injecting bio-methane into existing gas networks for two case studies, by considering a range of factors related to feedstock, processing, transmission and others, and (ii) develop a conceptual framework outlining the requirements for performing assessments of the commercial viability of injecting bio-methane into existing gas networks at locations of interest in an Australian context. This report presents the techno-economic viability assessment for Griffith, NSW. Given its location, a key focus of the Griffith case study is the management of different feedstocks, and what factors influence the viability of bio-methane production from agricultural residues in Australia. A challenge for rural settings is the availability of feedstock throughout the year, given the reliance on agricultural harvests. The methodology for the viability assessment follows that outlined in Culley et al. (2020), and presents the framing for the viability assessments, details the co-development of a techno-economic model and the structure of the viability analysis using this model. To ensure a robust and holistic modelling approach, a combination of sources of knowledge has been drawn upon, including stakeholder insight, expert opinion, a range of data sources and literature, as well as integrated modelling from FFCRC project RP1.2-02. The Griffith assessment shows that the most viable configuration is a single, centralised hub where both biogas production and bio-methane upgrading take place. This is primarily due to this configuration being able to more readily accept any available feedstock, even if it is only available for a month. With a distributed set of plants, specifically assigned to a type of feedstock, 60% are only in operation for half of the year. This suggests the availability of feedstock throughout the year is a key challenge for rural sites considering bio-methane grid injection. While even the single centralised plant does not operate at full capacity throughout the year, results suggest it is capable of meeting Griffith’s annual gas demand at a LCOE of $15/GJ (Figure i). However, over large distances, transporting the biogas is more cost effective than transporting the feedstock, and so if the distributed plants could be operated at full capacity through the year (e.g. through the use of energy crops) there is the potential to lower the LCOE further. Using methanation to increase overall bio-methane outputs of the plants considered for Griffith is potentially economically viable, provided there is enough demand for the increased bio-methane, and the price of hydrogen is below $2/kg. A consideration of how different options and scenarios change the LCOE relative to the price of gas is shown in Figure ii. In the left panel, the two revenue streams are considered together (a gate fee for feedstock delivery and a profit from the produced digestate), and these show that the LCOE can approach $6/GJ. This suggests that if biogas plants can offset their operation costs with the other product streams the injection of bio-methane can approach the price of natural gas under current policy settings. The panel on the right shows the combined effects of the UK renewable heat incentive tariffs and a $30/tonne carbon credit, which significantly lowers the LCOE to $2.4/GJ. This suggests that policy support for the development of the biogas industry in Australia would be a significant factor in making bio-methane injection projects viable.