Are Utilities Missing Out on the Decarbonization Potential of Renewable Natural Gas?

Renewable natural gas (RNG) is emerging as an increasingly viable solution for moving toward clean energy. RNG is one potential beneficial use of biogas, the largely methane-based byproduct of decomposing organic matter that is captured by onsite anaerobic digesters. By converting this biogas to meet pipeline quality standards it becomes fully interchangeable with conventional natural gas.

From a renewable portfolio standpoint, RNG presents a largely untapped opportunity for gas utilities and many of their customers. There are few options for gas companies seeking to reduce greenhouse gas emissions (GHG), and converting biogas to RNG gives gas utilities a significant boost in meeting renewable energy targets. RNG solutions may also prove critical going forward for oil and gas companies in the wake of the landmark ruling by a Dutch court that oil and gas company Shell must reduce the carbon emissions of both its operations and energy products by 45% by 2030 compared to 2019 levels. Achieving these emissions reductions, however, will depend upon buy-in from those organizations that are able to capture biogas.

An underutilized resource

To date, much of this advanced biofuel comes from municipal solid waste landfills. In 2019, landfills accounted for 15% of all methane emissions in the U.S., according to the EPA, and those outfitted with correct equipment can easily capture the biogas that can then be converted to RNG, among other potential uses.

However, not all of the facilities required to capture biogas have the infrastructure in place to benefit from this resource. For example, of the 1,300 wastewater treatment plants (WWTPs) or water resource recovery facilities (WRRFs) with anaerobic digesters installed onsite, only about 860 are using the biogas captured by these systems to their advantage, estimates the Water Environment Federation. The vast remainder of these WWTPs tend to flare their biogas, wasting a potential revenue source.

Part of the reason for this biogas’ underutilization may stem from a lack of awareness around strategies for maximizing yield to make the conversion of biogas to RNG cost-effective. Research indicates that WWTPs processing sewage flows in the greater than 20 million gallons per day may already see cost advantages in converting biogas to renewable natural gas, but there are also many strategies that can make this conversion process beneficial for smaller facilities as well. Utilities seeking to meet ambitious GHG reduction goals may depend upon support from small- and mid-sized WWTPs.

While organizations such as the American Biogas Council are making a strong case for biogas’ benefits, gas utilities can do much to support clients in converting biogas to RNG. By educating and incentivizing smaller facilities to make the leap to cleaning and converting biogas to RNG, gas utilities can support state, federal, and organizational energy-efficiency goals.

Identifying cost advantages of renewable natural gas

The slow adoption of processes for converting biogas to RNG can be attributed to a number of factors, ranging from a simple lack of awareness of the many beneficial uses of biogas to the potentially high cost of the process changes necessary to convert captured biogas to RNG. Some facility operators are hampered by the belief that the cost savings of utilizing biogas produced onsite can’t compete with low local electricity rates—a belief that is increasingly being contested.

In fact, many facilities may be surprised to find that with little effort they can easily fall into the “sweet spot” where RNG becomes an affordable option for offsetting energy costs. This becomes even more cost-effective when factoring in the potential of new revenue streams through the sale of RNG to local utilities, as well as the tipping fees that come from the necessary collection of organic waste diverted from landfills, agricultural operations, restaurants and commercial kitchens, and other sources. There’s also the option of using the biogas yield to generate electricity to become self-reliant or sell excess energy back to the local electricity grid or ensure energy resiliency during frequent climate event-related power outages.

For WWTPs to determine if they can gain advantages from renewable natural gas, they must consider:

  • Trends in natural gas retail rates.
  • How much electricity could be produced using biogas.
  • Trends in local rate of electricity (dollar per kWh).

Depending on how aggressive the WWTP is with its biogas-generating strategy, it’s possible for the cost of power production to vary between $0.04/kwh to $0.12/kWh. When the local rate for electricity is $0.20/kWh, that can quickly make a cost-case for investing in infrastructure to convert biogas to RNG.

If the plant is very aggressive and able to design a biogas program such that they divert other organic waste into their digesters, and perform process improvements to increase biogas yield, they can create more power using available equipment. This, too, drives down the cost of power produced.

By working with an energy consultant that can help strategize the process from an end-to-end sustainability perspective, even small- to mid-size water treatment facilities can identify solutions to boost their biogas yield and make the conversion of biogas to RNG a worthwhile investment. Gas utilities can also consider adapting rate structures or otherwise incentivizing beneficial use of biogas to help WWTPs make this leap.

Factors impacting cost savings

While natural gas and electricity rates may be beyond WWTPs’ control, there is one variable that they can address: the amount of biogas generated. By making changes to technology, process efficiency, and feedstock, facilities can increase the biogas yield that their anaerobic digestors emit and see greater advantages.

Lincus has found that most WWTPs considering biogas capture focus solely on municipal sanitary waste. However, co-digestion—the process of adding more energy-rich waste such as fats, oils, and grease (FOG) and food scraps to wastewater digesters—can significantly increase biogas yield. In general, higher fat contents can drive higher gas yields. Our research indicates that co-digestion programs can yield an average increase in biogas production of between 50% to 140%.

Making this switch isn’t exactly as simple as coordinating with your local restaurants to pick up this added material. Accepting FOG requires that facilities set up a receiving station that separates FOG waste from the rest of the material being processed. Receiving FOG with other plant influent can create secondary processing issues, affecting treatment objectives.

The carbon-to-nitrogen ratio is another critical factor to consider. Optimizing the feedstock flowing into digesters, and the feedstock’s carbon-to-nitrogen ratio, can help maximize biogas yield. For anaerobic digesters, an ideal carbon-to-nitrogen ratio may vary anywhere from 20:1 to 30:1. WWTPs will have to factor in the local availability of optimal feedstock, as the cost of hauling or delivering this material could potentially offset the cost and emissions benefits of capturing biogas.

Maximizing advantages of renewable natural gas

Given how few options are available for gas companies seeking to reduce GHG emissions, driving the conversion of biogas to RNG can help gas utilities meet state and national requirements for switching to renewable energy. In California, utilities are already onboard with this switch. SoCalGas, for example, has set the ambitious goal of achieving a 20% RNG mix for its portfolio by 2030. Utilities in Virginia are following suit and legislation in a handful of states may soon allow utilities to invest in RNG solutions.

While large facilities with biogas capture infrastructure already in place may help drive the use of RNG forward, it will take buy-in from a large number of facilities to meet ambitious RNG goals. Utilities will have to take the lead in educating their customers on the need for this shift, but they don’t have to do it alone. To help identify the next step in your RNG plan, contact Lincus today.