The humble “cow pie,” and its porcine equivalent, are getting more respect these days.
While the value of manure for fertilizer has been known since time immemorial, animal waste from both cattle and hogs is now being tapped as a source of electrical power for the farms where it is produced and for regional electrical grids.
A small but growing number of farms--perhaps 100 to date nationwide--have installed anaerobic manure digesters that separate and capture methane gas that is naturally produced by animal waste and burn it to generate electricity.
Manure digesters are being hailed as an economically effective and environmentally friendly response to several contemporary problems: dependence on foreign oil, strained power grids, greenhouse gas emissions, and offensive odors from livestock operations.
That’s why federal agencies are collaborating with state agricultural departments on an “AgSTAR” program to promote the use of anaerobic digesters through technical assistance and financial incentives.
“The number of anaerobic digesters used on livestock farms has increased over the past 5-6 years as U.S. Dept. of Agriculture grants to assist in their construction have become available, and the technology has improved,” says Bill Johnson, agricultural compliance manager for Alliant Energy, Madison, Wis., a utility serving areas of Illinois, Iowa, Minnesota, and Wisconsin.
In Wisconsin, there are currently 11 digesters in use, each of which generates 600-700 megawatts of electricity, enough to supply about 500 homes, according to David Jenkins, manager of the Wisconsin Electric Cooperative Association (WECA), also based in Madison.
“They are being used more now than in the past because of a Wisconsin law that requires utilities to use 10% renewable energy by 2015,” says Jenkins. He adds that 22 other states have similar laws, with varying percentage requirements.
“Utilities tend to like manure digesters because they are base load power sources that operate 24/7,” he says. In contrast, “solar and wind sources are intermittent.”
According to the U.S. Environmental Protection Agency (EPA), anaerobic digesters are responsible for reducing U.S. agricultural emissions of methane, a greenhouse gas, by 124,000 metric tons of carbon equivalent each year.
The EPA also reports that digesters generate 30 gigawatts (GW) of electricity annually, an amount roughly equivalent to that generated in a day by a major metropolitan utility company.
Most manure digesters work by having animal waste flushed into an enclosed pool, where it is heated to separate the methane, which is captured and piped away or burned onsite to drive electrical generators. (The methane is often also burned to heat the manure and create more methane, thus establishing a self-sustaining cycle after the initial warming.)
“Revenue from the generation of electricity is not a significant source of income for farms,” says Johnson of Alliant Energy, “but the sale of electricity allows a farm’s manure management system to become a source of revenue rather than a cost center.”
“A manure digester can repay its costs in about six years and contribute savings in the form of free electric power and heat on the farm,” says Jenkins at WECA. However, he adds, “only larger farms seem to be able to support a digester, as no one has yet figured out a way that farms with fewer than 500 cows can use them efficiently.”
Digesters produce other byproducts that contribute to farm income, however.
For example, the solid material left behind after the methane has been separated out can be used sold as fertilizer and/or bedding for animals.
Both of those byproducts may be of higher quality than their counterparts which have not gone through the digester process, says James Bessler, AAIS’s manager of farm and agricultural programs.
According to Bessler, “recovered digested solids are generally free of pathogens, as those pathogens are killed by the digestion process.”
Similarly, he says, the process kills undigested seeds that might pass through an animal, thus reducing the possibility that weeds will germinate in manure and thus reducing the amount of herbicide that needs to be applied to fields.
Even for farm insurers accustomed to underwriting unique combinations of personal, commercial, and farm exposures, manure digesters pose new challenges.
“Insurance companies are increasingly faced with questions on how to handle exposures generated from these systems,” says Eric Hubicki, assistant vice president for agriculture in the Chicago office of Munich Reinsurance America.
“Generally,” Hubicki says,” a well-designed and managed digester will have few safety concerns.
“However, the biogas can pose health risks for workers and be explosive in confined spaces. Electrical equipment and connections in biogas exposed areas requires special adaptations to avoid spark ignition.”
“If the methane is piped to a tank for storage, the operation is essentially a flammable gas compressor station like that found in the natural gas industry,” says Michael Fusselbaugh, senior vice president for business development at The Hartford Steam Boiler Inspection & Insurance Company (HSB), Hartford, Conn.
“For underwriting purposes, this operation should be treated similarly to that of a hazardous petrochemical manufacturing plant,” Fusselbaugh adds.
Hubicki and Fusselbaugh are not alone in citing the risk of combustion posed by digesters, but others say that risk is less than it is for other types of energy producers, because the methane is kept at low pressure.
“Digesters have safety devices that guard against excessive pressure,” says David Ritzinger, senior engineering exposure analyst for Mutual Boiler Re, Malvern, PA.
“The first of these are flares, which will ignite to burn excess methane if the pressure exceeds a certain limit,” he says. “If the flares fail, a device similar to a boiler safety valve will open to release the gas into the atmosphere.”
Manure digesters also have a substantial equipment breakdown exposure for units that can cost up to $1.5 million to install.
“Loss of the engine generator set is the largest equipment hazard exposure associated with this system,” says Ritzinger at Mutual Boiler Re. “It is possible that a chemical reaction can cause the process to produce sulfuric acid [which] can lead to corrosion of engine components.
“Significant corrosion of components such as the engine crankshaft can lead to catastrophic failure of the engine.”
“Severe and rapid corrosion and deterioration is common in almost all equipment in a raw methane operation,” says Fusselbaugh at HSB. “Equipment that is not professionally designed, manufactured, installed, and maintained could have a high failure rate.”
As costly as digesters can be, perhaps the most daunting exposure for farm insurers, because it is an unfamiliar one, is the business income exposure for power generation.
“A loss exposure could arise if the farmer fails to live up to the terms of his purchase power agreement with the utility,” says Jenkins at WECA. “Farmers should be careful to get good legal advice before and while entering into such agreements.”
“We recommend [that] insurance carriers review the
contract [or] agreement between electric company and the farmer,” says Hubicki at Munich Re America. “One item to look for includes making sure interruptions of electrical current from either side can be handled smoothly and safely by the farmer’s systems.
“It is important to find out who would ultimately be responsible for any interruptions or surges, especially [since] power outages and/or surges caused by a farmer’s electric generating equipment could be dangerous to electric company line workers.”
While manure digesters present farm insurers with several new property exposures, they appear to reduce general liability exposure, says Bessler at AAIS.
“Digesters can reduce the pollution risk of a livestock enterprise,” he says. “The waste is more contained than when it is stored in a pit or lagoon.
“With that,” Bessler adds, “there is much less odor associated with the digester process” and, thus, less of a chance that a farm will be the target of a nuisance suit by its neighbors.
While manure digesters have spread rapidly enough to catch the attention of farm insurers and reinsurers, Bessler says there haven’t been enough of them for a long enough time to develop loss costs and a specialized coverage form to address the risks they pose.
For the time being, at least, insurers are largely on their own to value and schedule the unique property and income exposures presented by the digesters they encounter, and to insure it as scheduled farm property or through a commercial property endorsement.
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