Taking slurry sample for biogas production

I've been quoted £275k for the 52kW biolectric with rhi payments roc payments and fuel savings coming to about £75k minus maintance and interest on the finace I have been offered means i've paid it off in 5 years.

MidlandFarmer said:

I've been quoted £275k for the 52kW biolectric with rhi payments roc payments and fuel savings coming to about £75k minus maintance and interest on the finace I have been offered means i've paid it off in 5 years.

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I can run the calculation for you, however I need to know:

Cap-x

1) cost of planning
2) cost of civils and construction
3) cost of the technology/biogas plant complete ( I assume this is the £275k) ?
4) Cost of the grid connection
5) Amount for miscellaneous
6) Amount of equity and the amount to borrow and the interest rate

Operational

1) Service cost for the plant (average per year)
2) Service costs CHP including gas filtration/cleaning (average per year)
3) Digestate disposal costs per year (if applied)
4) feed-stock costs per year
5) Staff/labour costs per year
6) Insurance costs per year
7) Business rate costs per year
8) Additive / inoculate costs per year.

I know the ROC values, however I need to know your annual electrical usage (kwhr) and what you are are currently paying for electricity.

In addition, what is the heat usage per year (kwhr) and what heat is available.

So it is a fair comparison, what depreciation % is used and is it linear (same per year) ?

For safety, I will only add income for the first year @ 50%.

It will be interesting to see how my figures compare with what you have seen/been quoted.

I can dig out all those exact figures but I answered rough figures in my previous post.
I don't doubt what I've been told but you seem sceptical ?
I'm just waiting to get confirmation from my bank on Loan rates

MidlandFarmer said:

I can dig out all those exact figures but I answered rough figures in my previous post.
I don't doubt what I've been told but you seem sceptical ?
I'm just waiting to get confirmation from my bank on Loan rates

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Not sceptical, very interested, however the cost of the plant is not the full cost of the project. However we will soon see exactly once you produce the figures above. If as you say they show 20% IRR, then crack on as quickly as possible, you will have no problem borrowing if the ROI is as you say.
The rates of return are dependent on ROC's which unlike the FiT are not guaranteed for 20 years and are not index linked. the appeal at the moment is the return is higher than FiT after the September FiT degression.

However, most importantly for your project, ROC's are finished next spring, so make hay while the sun shines...

I assume you know what the <250kw FiT rates are ? BUT !!!! they maybe guaranteed for 20 years and indexed (they may soon change the indexing to the lower scale system) - If not visit Ofgem and search.

See here for the most recent ROC values and some history.........http://www.epowerauctions.co.uk/erocrecord.htm

I assume your paying without borrowing ? if you are borrowing, the lender will lead you...

Today's ROC price will be 7.41 p/kwhr however keep an eye on what ' headroom ' is set by Ofgem, this will drive the ROC auction prices in future.

In addition, as of 1-10-16, the Combustion RHI is likely to be degressed by 25%

Can someone put some costs against my headings above ?

thesilentone said:

Today's ROC price will be 7.41 p/kwhr however keep an eye on what ' headroom ' is set by Ofgem, this will drive the ROC auction prices in future.

In addition, as of 1-10-16, the Combustion RHI is likely to be degressed by 25%

Can someone put some costs against my headings above ?

Click to expand...

I suspect that you will never see the costing lines above fully fleshed out......

re the tariffs - roc's or fit's or rhi...... I think that where you are heading is.....
regardless of what route you choose and what rates are paid the bottom line is that the base financials must stack up- and this means all the corners need swept out prior to doing anything....
too many ad plants being build on the back of ad tech companies projections and not costed out properly by the developer / farmer

If there is an opportunity to build a small scale AD System and get a 20% return EVERY dairy/stock farmer that has the feed-stock and utilisation should crack on asap as this would be a chance to good to miss.

Those who do not have sufficient waste or feel they cannot justify a system, then get together with your neighbour and build.

For those who are big enough, why not build multiple systems ?

But, caution is needed, do your sums first ! The absence of any figures speaks volumes

Ok i've dug out the figures i've been given

Cap-x

1) cost of planning
2) cost of civils and construction
3) cost of the technology/biogas plant complete ( I assume this is the £275k) ?
4) Cost of the grid connection
5) Amount for miscellaneous
6) Amount of equity and the amount to borrow and the interest rate

This is £275,000 all in, export is limited to 11kW so no grid cost. 90% loan waiting for confirmation on the rate from the bank but been told to expect 3-4%
The only extra on this is me doing a couple of days trench work for the connections

Operational

1) Service cost for the plant (average per year)
2) Service costs CHP including gas filtration/cleaning (average per year)
3) Digestate disposal costs per year (if applied)
4) feed-stock costs per year
5) Staff/labour costs per year
6) Insurance costs per year
7) Business rate costs per year
8) Additive / inoculate costs per year.

set aside £5k per year plus my time for an hour or two every fortnight
no disposal costs, no feed stock costs, just my time mentioned above
not had quote on insurance yet, don't know on business rates and no additive or inoculate costs

Rocs are 1.8 rhi is 5.9p and maybe drop 10-20% by the time i get round to doing it?

Thanks for that, what does 'all-in ' include ? make a simple price number alongside by my list, as each will have a separate cost associated.

The RHI is 4.43 after 1-10-16

Looking at the case examples, I estimate your rates could be as high as £9000.00 per year.

You may be able to add the plant to your farmers combined insurance policy at extra cost, however if not this could be between £1500-£5000

Inoculate /additives should not be to high but no less than the late hundreds £.

The cost to drill into is gas cleaning, this could be done in several different ways:

1) Adding salt
2) Injecting air (oxygen)
3) Carbon filtration

Around 350 ppm H2S is max for the CH4, don't be convinced of any other, as above this figure will cost you w&t at the CHP, this will ultimately lead to loss of efficiency and high maintenance bills.

Each of the above has a cost..............

MidlandFarmer said:

Ok i've dug out the figures i've been given

Cap-x

1) cost of planning
2) cost of civils and construction
3) cost of the technology/biogas plant complete ( I assume this is the £275k) ?
4) Cost of the grid connection
5) Amount for miscellaneous
6) Amount of equity and the amount to borrow and the interest rate

This is £275,000 all in, export is limited to 11kW so no grid cost. 90% loan waiting for confirmation on the rate from the bank but been told to expect 3-4%
The only extra on this is me doing a couple of days trench work for the connections

Operational

1) Service cost for the plant (average per year)
2) Service costs CHP including gas filtration/cleaning (average per year)
3) Digestate disposal costs per year (if applied)
4) feed-stock costs per year
5) Staff/labour costs per year
6) Insurance costs per year
7) Business rate costs per year
8) Additive / inoculate costs per year.

set aside £5k per year plus my time for an hour or two every fortnight
no disposal costs, no feed stock costs, just my time mentioned above
not had quote on insurance yet, don't know on business rates and no additive or inoculate costs

Rocs are 1.8 rhi is 5.9p and maybe drop 10-20% by the time i get round to doing it?

Click to expand...

Ok, here go's...............

I have calculated you project based on:

1) Planning / consultants / etc £3,000
2) ' All-in' plant and civils £275,000
3) Your work - trenching, condensate taps - insulation etc
internet connection - water - drainage - data cables -
HV to transformer (no transformer allowed for) £10,000
4) Start up boiler hire- heat - fuel £1,500
5) pc sum (all the things you forgot) £5,000
6) Financing costs (based on 80% two stage loan @ 5%) £14,700
Total: £308,700

Income

Electricity 1.8 ROC's + 4.5p (11.0p kwhr brown or savings) £44,300 slightly reduced to allow for parasitic
Heat based on 4.5p/kwhr £6045
Total income £50,477

Operational costs

plant service and maintenance £3000
CHP £1850
Rates £6000
Insurance £5000
Labour and admin £0.000

total £15850

Result £34,627

IRR 10%

Payback including interest 15 years


The above figures are food for thought and for illustration only (that's the legal disclaimer done)

Different technology suppliers can / do boast higher efficiency levels with the chp unit these figures are based on 39% electrical and around 45% heat. Smaller CHP units are less efficient so please check this out......

Everyone feel free to challenge / change these figures, it is in everyone's interest....

Chippy said:

My 33kw quote was a 28% return and my 52kw was a 35% return on my investment!

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Interesting Chippy, however without some ' meat on the bone ' on how that IRR was arrived at, I'm afraid it is difficult to comment.

You can see the numbers I have used, how do these compare ?

Ok second attempt at answering your list again...

Cap-x

1) cost of planning (included in £275,000)
2) cost of civils and construction (included in £275,000 + me on a digger for 2-3 days)
3) cost of the technology/biogas plant complete ( I assume this is the £275k) ? (included in £275,000)
4) Cost of the grid connection (included in £275,000)
5) Amount for miscellaneous (included in £275,000)
6) Amount of equity and the amount to borrow and the interest rate (90% and awaiting confirmation on rate but been told to expect 3-4%, also this is out of cashflow not capex...?)

Operational

1) Service cost for the plant (average per year) (included in the £5k + my time for an hour or two every fortnight)
2) Service costs CHP including gas filtration/cleaning (average per year) (included in the £5k + my time for an hour or two every fortnight)
3) Digestate disposal costs per year (if applied) (n/a)
4) feed-stock costs per year (n/a)
5) Staff/labour costs per year (my time for an hour or two every fortnight)
6) Insurance costs per year (don't know)
7) Business rate costs per year (don't know)
8) Additive / inoculate costs per year. (n/a)

Using your 275k as everything and no financing cost or the other items you excluded, I have increased the maintenance cost to 5k and left the insurance and rates the same.

Result £34,477

IRR 11.6%

Payback excluding interest 7 years 9 months

Interesting result, your actual result is less, however your payback period is also less, this is due to the first result including interest as a cost (you do not do this for some reason)

The above figures are food for thought and for illustration only (that's the legal disclaimer done)

Different technology suppliers can / do boast higher efficiency levels with the chp unit these figures are based on 39% electrical and around 45% heat. Smaller CHP units are less efficient so please check this out......

Everyone feel free to challenge / change these figures, it is in everyone's interest....

See the P&L results below based on a 20 year balance sheet.

52kw represents my first calculation, 275k is midlandfarmers



52kw 275k
1,082 4,594
2,308 5,743
3,547 6,904
4,799 8,077
6,065 9,263
7,344 10,462
8,636 11,673
9,943 12,897
11,263 14,135
12,598 9,647
10,884 8,871
6,920 9,338
7,492 9,857
8,086 10,426
8,723 11,033
29,974 30,004
30,300 30,336
30,645 30,684
31,005 31,046
31,377 31,419
262,992 296,407

If your wondering why the 52kw is more profitable in years 10 and 11, this is due to depreciation and tax, that's the best I can do for an answer as I am not an accountant

thesilentone said:

Using your 275k as everything and no financing cost or the other items you excluded, I have increased the maintenance cost to 5k and left the insurance and rates the same.

Result £34,477

IRR 11.6%

Payback excluding interest 7 years 9 months

Interesting result, your actual result is less, however your payback period is also less, this is due to the first result including interest as a cost (you do not do this for some reason)

The above figures are food for thought and for illustration only (that's the legal disclaimer done)

Different technology suppliers can / do boast higher efficiency levels with the chp unit these figures are based on 39% electrical and around 45% heat. Smaller CHP units are less efficient so please check this out......

Everyone feel free to challenge / change these figures, it is in everyone's interest....

See the P&L results below based on a 20 year balance sheet.

52kw represents my first calculation, 275k is midlandfarmers



52kw 275k
1,082 4,594
2,308 5,743
3,547 6,904
4,799 8,077
6,065 9,263
7,344 10,462
8,636 11,673
9,943 12,897
11,263 14,135
12,598 9,647
10,884 8,871
6,920 9,338
7,492 9,857
8,086 10,426
8,723 11,033
29,974 30,004
30,300 30,336
30,645 30,684
31,005 31,046
31,377 31,419
262,992 296,407

If your wondering why the 52kw is more profitable in years 10 and 11, this is due to depreciation and tax, that's the best I can do for an answer as I am not an accountant

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My total benefits come to around £78k p/a for incentive income export and savings

(this is £26k roc, 20k rhi, 14k electric saving, 7k oil saving, 11k export)

This minus £5k maintenance and your costs of £6k rates and £5k insurance which sound very high give me £16k a year costs

So i'm £62k a year better off. - loan payments whic comes to 4k a month over 7 years.

So the first 7 years i'm £14k a year better of in years 1-7 then when i've paid the loan of £62k a year better of from then on....

The figures you have quoted would put you round 20% IRR, however my calculations are based on ROC's + Export.

Yours are based on ROC's, Export and Home usage, my ROC and Export come close to 44k, your total come to 51k.

Mine are based on an electrical generation of 404 MWhr/yr - gross, and heat of 485 MWhr/yr -gross what are yours based on ?

I have also made deduction for parasitic loading and heat loss, have you done the same ?