NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

A Technoeconomic Analysis of Biomethane

Production from Biogas and Pipeline Delivery

Ali Jalalzadeh-Azar

Hydrogen Technologies 

and Systems Center

NREL/PR-5600-49629

Renewable Resources 

for Fuel Cells Workshop

San Antonio, TX 

October 18, 2010
2 Innovation for Our Energy Future

Objectives

 Develop a cost-analysis model, H2A Biomethane, focusing on biogas 

upgrading process and pipeline delivery with post compression. 

 Collect, qualify, and analyze data:

 GIS data for California—geo-spatial biogas potential from landfills, dairy 

farms, and sewage treatment plants; distances of biogas sites from the 

natural gas pipelines and load centers; and energy consumption.

 Cost data—biogas purification/upgrading systems and pipeline 

transport of biomethane.

 Perform techno-economic analyses focusing on:

 Biomethane production from biogas.

 Export of the product gas to the natural gas grid.

 Cost structure of biomethane production and pipeline delivery. 

The project objectives have been achieved. 
Innovation for Our Energy Future

Drivers and Benefits

 Fuel cells operating on biomethane or on hydrogen derived from 

biomethane can mitigate energy and environmental issues and 

provide an opportunity for their commercialization.

 The availability of incentives and requirements for renewables

such as:

 California RPS requirements: 20% by 2010 and 33% by 

2020

 SB1505 renewable content requirement for hydrogen 

production.

 Self-generation incentive program (SGIP)

 The project can provide valuable insights and information to the 

stakeholders—utilities, municipalities, and policy makers (macrolevel) and producers of biogas (micro-level).

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4 Innovation for Our Energy Future

Approach

 Developed the new analysis tool based on the vetted H2A Production 

and H2A Delivery models. 

 Interacted with the industry and experts for input:

 Held an introductory panel discussion with the stakeholders in 

November 2009 to facilitate information/data gathering.

 Obtained cost data on biogas upgrading system from vendors 

and publications.

 Completed the first round of the external review process for the 

H2A Biomethane via a webinar in August 2010.

 Applied the H2A Biomethane Model to scenario analyses for dairy 

farms.
Innovation for Our Energy Future

Approach: Project Concept

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Water Treat. Plant

Landfills

Dairy Waste

Anaerobic Digester

Clean-Up System Injection in NG 

Pipelines

Power Grid

Vehicle Fueling Station

Hydrogen

Electricity

Heat Stationary 

End-Use 

Biomethane

Biogas

Source Production / Cleanup Distribution / Utilization

Reformation / Fuel 

Cell Systems

Shaded areas represent the boundaries of the current project.
6 Innovation for Our Energy Future

Approach: Qualification of Cost Data

0

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3

4

5

6

0

2

4

6

8

10

12

0 500 1,000 1,500 2,000

Relative Cost of Biomethane Production

Relative Capital Cost

Feed Biogas Capacity, Nm3/h

Vender A, Total Capital

Project I, Total Capital

Vender A, Biomethane Cost (calc.)

Project I, Biomethane Cost (calc.)

Bio-Methane Cost,

“Biomethane from Dairy Waste,”

Krich et al, July 2005

The differences are reflective of the uncertainties in the estimates.
7 Innovation for Our Energy Future

Model: Key Input Data / Assumptions

Upgrading Techniques

Pressure swing adsorption

High-pressure water scrubbing

Cryogenic separation

Chemical absorption

Membrane separation

Upgrading Process

Waste Stream(s)

50 – 65% CH4 90 – 98% CH4

System Characterization Biogas Biomethane

 Feed biogas chemical composition.

 Product Biomethane chemical composition.

 Process electricity usage: kW/ Nm3 biogas.

 Reference capital cost and scaling factor.

 Operating capacity factor and life span.

Economic Assumptions

 Internal rate of return, inflation rate, and tax 

rates.

 Analysis period, depreciation type, etc.

Default values are provided for upgrading biogas from dairy farms.
8 Innovation for Our Energy Future

Model: Output Metrics

Key Results

Costs

Cost components and relative 

values

Total unit cost of bio-methane

Energy

Process energy usage

Upstream energy usage

Process energy efficiency

Emissions

Process emissions

Upstream emissions

Sensitivity

Tornado chart depicting 

sensitivity of bio-methane cost 

to key variables.

$6.00 $7.00 $8.00 $9.00 $10.00 $11.00 $12.00 $13.00 $14.00 $15.00

Electricity Usage (-/+ 5%)

Electricity Price (-/+ 10%)

Operating Capacity Factor (95%,90%,85%)

Total Direct Capital Cost (-/+ 10%)

Biogas Usage (-/+ 5%)

Biogas Price ($2.9/GJ,$7.6/GJ,$11/GJ)

Biomethane Cost ($/GJ)

Biomethane Cost Sensitivity

 The results are normalized (e.g., $/kg and $/GJ)

 Key variables for sensitivity analysis: biogas cost, biogas usage, capital cost, 

capacity factor, electricity price, and electricity usage. 
9 Innovation for Our Energy Future

Model: Exploratory Analyses

 Energy efficiency takes on greater 

importance at larger capacities.

 Clustering sources of biogas may 

be imperative to achieving 

economy of scale. 

 Impact of system life on the 

economics.

 Significant uncertainty in life span is 

reflected in vendors’ data and 

literature.

The model can lend itself to exploratory or “what-if” analyses for 

valuable insights. 

0%

20%

40%

60%

80%

100%

250 500 1000 2000 3000

Relative Costs

Feed Biogas Capacity, Nm3 / h

Variable Cost (Utility) O&M Cost Capital Cost

0

1

2

3

4

5

6

0 2,000 4,000 6,000 8,000 10,000 12,000

Relative Cost of Biomethane Production

Feed Biogas Capacity, Nm3/h

20 years

15 years

10 years

Assumptions:

Effective CF = 90%

Inflation rate = 1.9%

ROR = 10%

Life span = varies

Salvage value = 0.

Feed CH4 = 60%

Input pressure: ~ 1 atm (abs.) 

Output pressure = 7 - 8 atm (abs.)

Life Span

Vender A
10 Innovation for Our Energy Future

GIS Analysis

 Select biogas resources: Landfills, 

sewage treatment plants, and dairy 

farms.

 Landfills offer greater biogas 

potential.

 Transmission lines are reasonably 

accessible to most of biogas 

sources.

 Majority of GIS data are for the 

central valley due to systematic 

tracking. 

 Data were unavailable for a 

number of dairy farms in California.
11 Innovation for Our Energy Future

GIS Analysis (cont.)

0

20,000

40,000

60,000

80,000

100,000

Dairy 

Farms

Landfills Sewage 

Treatment 

Plants

Biomethane, MMcf / yr.

Utilized

Stranded

 Landfills have the dominant share at 75%, followed by dairy farms at 22%.

 Total biomethane potential is about 5% of NG consumption. 

California
12 Innovation for Our Energy Future

GIS Analysis: Clustering Dairy Farms for Economy of Scale

 Bio-methane potentials: 

C1: 2,020,000 Nm3/yr (~ 80,200 GJ/yr.)

C2: 1,316,000 Nm3/yr (~ 52,200 GJ/yr.)

C3: 1,860,000 Nm3/yr (~ 73,800 GJ/yr.)

 Achieving economy of scale for biogas 

upgrading can be challenging for dairy 

farms.

C3

C1

C2

NG Transmission Line
13 Innovation for Our Energy Future

 Facility: Bio-methane production from dairy farm biogas.

 Feed biogas capacity: Varies

 Overall capacity factor = 90%.

 Length of pipeline from production site to NG transmission line = 10 miles.

 Bio-methane pressure at the output of purification system = ~ 8 bar (abs.)

 NG transmission line pressure = ~ 40 bar.

 Rate of return = 10%

 Inflation rate = 1.9%

 System Life = 20yrs.

Scenario Analysis—Key Assumptions
14 Innovation for Our Energy Future

Cost Estimates—Biogas Cost

AD Type

Reported 

elec. gen. 

costs*

Estimated 

biogas*cost

Biomethane

Cost = AD + 

Upgrade Cost

Remarks / Assumptions

Estimates are in 2010 USD. 

Upgrading cost of $3.2/GJ of 

biomethane was used for 

aggregate feed biogas 

capacity of about 2,000 

Nm3/h.

Ancillary (e.g., storage) costs 

are not included. 

Covered

lagoon

$12.59/GJ

($0.045 /kWh) $2.9 / GJ ~ $6 / GJ

Plug-flow $34.82

($0.13/kWh) $7.6 / GJ ~ $11 / GJ

Mixed $52.39

($0.19/kWh) $11.0 / GJ ~ $14 / GJ

* Source: “An Analysis of Energy Production Costs from Anaerobic Digestion Systems on U.S. 

Livestock Production Facilities,” Technical Note No. 1, Natural Resources Conservation Service, 

USDA, October 2007.

Upgrading biogas from dairy-farm anaerobic digesters (AD)
15 Innovation for Our Energy Future

Cost Estimates—Impact of Biogas Capacity

 Export of biomethane from 

individual dairy farms or 

limited aggregates is not 

economical without 

incentives.

 Clustering sources of 

biogas (e.g., dairy farms) 

may be imperative for 

economic competition.

 If permissible, injection of 

biomethane into a 

distribution pipeline can 

reduce the transport cost 

(due to shorter distance 

and lower pressure). 

Price of natural gas (residential) is approx. $9.5/GJ for CA and $11.7 for U.S. based on EIA data: 

http://tonto.eia.doe.gov/state/state_energy_profiles.cfm?sid=CA

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Cost, $ / GJ of Biomethane

Feed Biogas Capacity, Nm3 / h

Total Cost

Biogas Upgrading

Pipeline / Compression Station

Feed Biogas

Landfills

Sewage T. Plants

DF

Aggregated Dairy Farms 

NG

(Without Incentives) 
16 Innovation for Our Energy Future

Cost Estimates: Relative Contributions

 Depending on the source, 

feed biogas cost can take 

on greater significance at 

high capacities.

 Pipeline delivery cost is 

dominant at low feed 

capacities (e.g., < 2,000 

Nm3/h).

 The relative contribution of 

the cleanup-system cost 

does not significantly 

change with the feed biogas 

capacity.

0%

20%

40%

60%

80%

100%

250 500 1000 2000 3000

Relative Cost

Feed Biogas Capacity, Nm3 / h

Biogas Upgrad. Pipeline / Comp. Feed Biogas

Note: Costs of ancillary components (e.g., storage) are not included.
Innovation for Our Energy Future

 Through the economy of scale, biomethane production via purification of biogas 

from dairy farms can be economically competitive for on- or near-site utilization 

even without incentives. 

 The economics of pipeline delivery of biomethane to the natural gas grid or 

another end-use site are influenced by the distance and the operating pressure 

at the point of delivery—incentives may be necessary for economic justification.

 Clustering farms to facilitate use of a semi-central upgrading system is 

imperative for achieving the economy of scale. 

 Landfills can provide low-cost biogas, favorable economy of scale for 

biomethane production, and an opportunity for emissions control. However, 

sustainability of biogas supply, biomethane quality requirements for end-use 

applications, and restrictive guidelines for grid interconnection are among the 

prevailing challenges. 

 The H2A Biomethane Model can lend itself to analyses of biomethane

production and delivery scenarios and assist the stakeholders in their decision 

making process. 

Conclusions 

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18 Innovation for Our Energy Future

Potential Future Work

 Include the waste-stream oxidization and sequestration aspects of the 

biogas upgrading process in the model from the economic, energy, and 

environmental standpoints. 

 Explore the possibility of formulating a correlation between the cost of the 

biogas upgrading system and the purification requirements.

 Investigate the effect of combining biogas products from multiple 

sites/sources on temporal variation of the feed chemical composition for the 

clean-up process. 

Implication: 

 Possible mitigation of variation in the impurity level of feed biogas for 

upgrading process—in addition to achieving the economy of scale.
19 Innovation for Our Energy Future

Acknowledgement

The efforts of Genevieve Saur in development of the 

H2A Biomethane Model and Anthony Lopez in the GIS 

data collection and analysis are greatly appreciated. 
20 Innovation for Our Energy Future

Questions / Comments?

Thank You!

Ali.Jalalzadeh@nrel.gov