HomeMy WebLinkAbout[2020-12] Report - Biogas Utilization Feasibility5815 Council Street NE Suite B Cedar Rapids, IA 52402-5893
(319) 373-2536
hdrinc.com
Biogas Utilization
Feasibility Report
CAAP – Methane Recovery Feasibility Study
Completed by HDR Engineering, Inc. on behalf of
the City of Iowa City, to support the Climate Action
and Adaptation Plan (CAAP) and the associated
Action Items 3.7 and 3.8.
Iowa City, Iowa
December 30, 2020
VERSION: 2
ii
Contents
Executive Summary .............................................................................................................. ES-1
1 Introduction ..................................................................................................................... 1
2 Project Background ........................................................................................................ 1
2.1 Climate Action and Adaptation Plan ...................................................................... 1
2.2 Feasibility Study .................................................................................................... 2
3 Renewable Natural Gas as a Resource ......................................................................... 4
3.1 Renewable Natural Gas - Environmental Attributes as Vehicle Fuel .................... 4
4 Description of Project Alternatives ............................................................................... 9
4.1 Alternative 1: Natural Gas Pipeline Injection ......................................................... 9
4.2 Alternative 2: Electricity Generation ...................................................................... 9
4.3 Alternative 3: WWTP Natural Gas Replacement ................................................... 9
4.4 Alternative 4: Composting ................................................................................... 10
4.5 Organics Diversion Scenarios ............................................................................. 10
4.6 Estimated Costs .................................................................................................. 12
4.7 Description of Impact Categories ........................................................................ 13
5 Summary Economic, and Environmental Impacts of Alternatives ........................... 24
5.1 Findings and Insights .......................................................................................... 27
6 References: .................................................................................................................... 30
Figures
Figure 1: SROI Triple Bottom Line Accounting ............................................................................. 3
Figure 2: EPA RFS Nested RIN Categories and Volumes ........................................................... 5
Figure 3: Historical RIN values From the EPA from 2015 Through August 2020 ......................... 6
Figure 4: California LCFS Market History ..................................................................................... 7
Figure 5: PhysRNG Value Considerations .................................................................................... 8
Figure 6: Organics Diversion ...................................................................................................... 11
Figure 7: Lifecycle Cost Structure and Logic Diagram. ............................................................... 14
Figure 8: RIN Credit Value Structure and Logic Diagram. .......................................................... 15
Figure 9: Renewable Electricity Production Value Structure and Logic Diagram ....................... 16
Figure 10: Renewable Natural Gas Value Structure and Logic Diagram .................................... 17
Figure 11: GHG Emissions Structure and Logic Diagram. ......................................................... 23
ii
Tables
Table ES-1: Summary and Ranking of Monetary and Non-Monetary Results .............................. 3
Table ES-2: Indexed and Weighted Scores for each Alternative .................................................. 4
Table ES-3: Potential Biogas Utilization Alternatives Combinations ............................................. 5
Table 1: Summary of the Alternatives and Diversion Scenarios evaluated for Feasibility .......... 11
Table 2: Biogas Utilization Alternatives Summary ...................................................................... 13
Table 3: Value of RIN Credits ..................................................................................................... 15
Table 4: Value of Renewable Electricity Production ................................................................... 16
Table 5: Estimated Energy Inputs for Each Alternative .............................................................. 19
Table 6: Estimated GHG Emissions ........................................................................................... 22
Table 7: Social Costs of GHG Emissions ................................................................................... 23
Table 8: Summary of Monetary Benefits and Costs ($ Millions, 2019) ....................................... 24
Table 9: Summary of Non-Monetary Impacts ............................................................................. 25
Table 10: Summary and Ranking of Monetary and Non-Monetary Results ................................ 26
Table 11: Indexed and Weighted Scores for each Alternative .................................................... 27
Table 12: Potential Biogas Utilization Alternatives Combinations ............................................... 28
Appendices
Appendix A - Low Diversion Scenario Digester Costs
Appendix B – Financial Proforma – Breakeven Analysis
City of Iowa City | CAAP Methane Recovery Feasibility Study
Executive Summary
ES-1
Executive Summary
In December 2019, the City of Iowa City (City) selected HDR Engineering, Inc. (HDR) to perform
a Methane Recovery Feasibility Study to address two specific Action Items included in the Iowa
City Climate Action and Adaptation Plan (CAAP):
Action Number 3.7: Take Action on a Study to Efficiently Capture and Use Methane
from Wastewater Operations
“After water is used by residents, it flows into the wastewater system and then goes to the
City’s Wastewater Treatment Facility. While the City currently captures methane gas from
the digesters used in the wastewater treatment process, only a portion of the methane is
used to offset natural gas usage for the plant. To explore other options for further
management of wastewater greenhouse gas (GHG) emissions, the City should conduct a
study to determine the feasibility of using all captured methane to create renewable fuel
or electricity that can be used to operate the facility, and take specific actions based on
the results of this study.”
Action Number 3.8: Take Action on a Feasibility Study on Energy Generation from
Landfill Methane
“The methane produced by decomposition of organic waste in the Iowa City Landfill is
currently being flared to transform it into carbon dioxide, which is a less potent GHG. The
City has been considering methods to use the methane as a renewable energy source,
and to further explore this opportunity, the City will conduct a Feasibility Study in FY2019
and take specific actions based on the results of this study.”
This Feasibility Report incorporates a number of recently completed Technical Memorandums
(TMs) that evaluated current and future biogas generation potential and identified alternatives for
utilizing biogas at the Iowa City Wastewater Treatment Plant (WWTP) and/or the Landfill and
Recycling Center (Landfill). HDR used its Sustainable Return on Investment (SROI) process to
measure the feasibility of the objectives.
The Study objectives are to evaluate current and future methane generation, collection,
processing, and reuses at the two facilities based on the following three categories for feasibility:
• Net GHG emissions, considering both incremental emission sources and direct and
indirect reductions;
• Net Energy impacting, applying an Energy Return on Energy Invested (EROEI)
methodology;
• Economics, using HDR’s SROI framework to monetize the benefits associated with
beneficial reuse of methane sourced from the Landfill and WWTP.
HDR analyzed three alternatives to beneficially reuse biogas generated at the WWTP and Landfill,
as well as GHG emissions and financial impact of expanding composting operations to handle
City of Iowa City | CAAP Methane Recovery Feasibility Study
Executive Summary
ES-2
incremental food waste diverted from the Landfill. The following is a description of each
alternative:
• Alternative 1: Natural Gas Pipeline Injection. This alternative is divided into two sub-
alternatives:
o Alternative 1a – WWTP NG Pipeline Injection.
o Alternative 1b – Landfill NG Pipeline Injection.
• Alternative 2: Electricity Generation. This alternative is divided into two sub-
alternatives:
o Alternative 2a – WWTP Electricity Generation.
o Alternative 2b – Landfill Electricity Generation.
• Alternative 3: WWTP Natural Gas Replacement
• Alternative 4: Composting
Recognizing the synergy with another Action in the City’s CAAP, Item 3.2 Increase Composting
of Organics, the alternatives consider impacts of diverting incremental volumes of food waste
from the Landfill to the existing WWTP, a new, dedicated anaerobic digester (AD) located at the
WWTP, and expanded composting operations. Each of the alternatives listed except Alternative
No. 4 consider three organics diversion scenarios:
1) No incremental organics diversion (No-Diversion)
2) Additional 1,500 tons organics diverted from Landfill, which represents the available
capacity at the existing WWTP AD (1,500 tons)
3) 20% of food waste diverted from landfill to a future “new” AD (Low-Diversion)
HDR developed an opinion of probable construction costs (OPCC) and opinion of operations and
maintenance (O&M) costs for the No-Diversion scenario for each alternative. The No-Diversion
scenario costs were then extrapolated to estimate costs for the two diversion scenarios for each
alternative.
The SROI analysis considers the triple bottom line (i.e., economic, environmental, and social)
benefits of methane reuse. This study focuses on the economic and environmental impacts.
The analysis took into account:
• Estimated reductions in GHG emissions and the associated social cost of carbon;
• Value of Renewable Identification Number (RIN) credits under the Renewable Fuel
Standard Program;
• Value of electricity exported to the grid under net metering and buyback agreements with
MidAmerican Energy Company and the Eastern Iowa Light and Power Cooperative;
• Value of avoided natural gas purchases;
• Capital investment and O&M costs of biogas reuse alternatives; and
• Energy Return on Investment (EROEI).
The results of this study are intended to help the City assess the viability of, and prioritize,
alternatives with the greatest potential to reduce GHG emissions under CAAP Action Items 3.7
City of Iowa City | CAAP Methane Recovery Feasibility Study
Executive Summary
ES-3
and 3.8. This Report details technical information on the feasibility analysis and summarizes the
previous Technical Memorandums (TMs) that were completed by HDR leading up to the SROI
analysis:
1. Evaluation of Existing Facilities TM
2. Wasteshed Analysis TM
3. Biogas Utilization Alternatives TM
The monetary and non-monetary results and rankings by metric are presented in Table ES-1. The
evaluation of economic and environmental impacts considered a time horizon or study period,
which includes project development (construction and implementation) and 30 years of operation
and benefit. This extends to 2050 and aligns with the planning horizon of the City’s CAAP. All
monetary Costs and benefits have been converted to present value using a 3% discount factor
and are compared using a benefit to cost ratio (BCR), benefits divided by costs. BCR’s exceeding
1.0 indicate that the benefits from the alternative exceed the costs of the investment over a 30
year period. The non-monetary metrics include EROEI and lifecycle change in CO2e emissions.
Table ES-1: Summary and Ranking of Monetary and Non-Monetary Results
Alternative
Description
Location Alternative GHG
Reduction
GHG
Rank
EROEI EROEI
Rank
BCR BCR
Rank
Pipeline
Injection
WWTP Alt. 1a - ND 40,500 15 6.9 9 0.20 11
Alt. 1a - 1500 77,800 12 7.9 6 0.22 9
Alt. 1a - LD 436,200 6 7.9 4 0.39 8
Landfill Alt. 1b - ND 820,500 3 7.5 8 1.62 3
Alt. 1b - 1500 844,500 2 7.6 7 1.63 2
Alt. 1b - LD 931,800 1 7.9 5 1.69 1
Electricity
Generation
WWTP Alt. 2a - ND 19,000 16 2.0 13 0.05 16
Alt. 2a - 1500 60,000 13 12.4 3 0.10 15
Alt. 2a - LD 395,600 7 13.3 1 0.18 12
Landfill Alt. 2b - ND 459,200 5 1.5 15 0.76 6
Alt. 2b - 1500 386,500 8 2.1 12 0.69 7
Alt. 2b - LD 585,200 4 12.6 2 0.89 5
Natural Gas
Replacement
WWTP Alt. 3 - ND 40,900 14 4.6 10 0.11 14
Alt. 3 - 1500 78,300 11 3.4 11 0.13 13
Alt. 3 - LD 252,200 10 1.8 14 0.20 10
Expanded
Composting
Compost Alt. 4 365,100 9 0.0 16 0.96 4
The results show that:
• Only Alternative 1b (landfill natural gas) has benefits that exceed the costs;
• The highest BCR (1.69) is Alternative 1b – Low-Diversion. This alternative ranks highest
on total lifecycle CO2e emission reductions, and when combined with the value of RIN
credits results in the greatest economic benefits;
• All of the alternatives result in a net reduction in CO2e over the next 30 years;
City of Iowa City | CAAP Methane Recovery Feasibility Study
Executive Summary
ES-4
• All alternatives except for composting result in an EROEI of 1.0 or greater (incremental
composting of food waste does not generate energy);
• Alternative 2a (WWTP Electricity Generation) – Low-Diversion ranks highest on EROEI;
• Alternative 1b – Low-Diversion is ranked 5th on EROEI; and
• Changing the value of the SCC was found to have no effect in ranking as the value
influences all of the alternatives equally.
To aid in the comparison of the monetary and non-monetary metrics and provide insight from this
Feasibility Study towards actions under 3.7 and 3.8, the results have been combined into a
weighted score as shown below in Table ES-2. Each result was converted to an index (1 to 0)
and were then weighted equally into a total score with a maximum value of 1.
Table ES-2: Indexed and Weighted Scores for each Alternative
Alternative
Description
Location Alternative GHG
Reduction
EROEI BCR Total
Score
Rank
Pipeline
Injection
WWTP Alt. 1a - ND 0.01 0.17 0.04 0.23 13
Alt. 1a - 1500 0.03 0.20 0.04 0.27 11
Alt. 1a - LD 0.16 0.20 0.08 0.43 6
Landfill Alt. 1b - ND 0.29 0.19 0.32 0.80 3
Alt. 1b - 1500 0.30 0.19 0.32 0.81 2
Alt. 1b - LD 0.33 0.20 0.33 0.86 1
Electricity
Generation
WWTP Alt. 2a - ND 0.01 0.05 0.01 0.07 16
Alt. 2a - 1500 0.02 0.31 0.02 0.35 7
Alt. 2a - LD 0.14 0.33 0.04 0.51 5
Landfill Alt. 2b - ND 0.16 0.04 0.15 0.35 8
Alt. 2b - 1500 0.14 0.05 0.14 0.33 9
Alt. 2b - LD 0.21 0.32 0.18 0.70 4
Natural Gas
Replacement
WWTP Alt. 3 - ND 0.01 0.12 0.02 0.15 14
Alt. 3 - 1500 0.03 0.08 0.02 0.14 15
Alt. 3 - LD 0.14 0.05 0.04 0.23 12
Expanded
Composting
Compost Alt. 4
0.13 0.00 0.19 0.32 10
Based on the indexing and weighting exercise:
• Alternative 1b (landfill natural gas) – Low-Diversion has the highest score (0.86).
• Alternative 1b (landfill natural gas) – 1500 ton diversion is ranked second.
• Alternative 1b (landfill natural gas) – No-Diversion is ranked third.
If the City is instead focused on reductions that will be reflected in its municipal and community-
scale GHG emission inventory, then evaluation should be narrowed to focus on Alternative 2,
Electricity Generation, and Alternative 3, Natural Gas Replacement. While electricity generated
at the WWTP or Landfill (2a and 2b, respectively) could very well be pushed to the power grid,
contractual agreements with local utilities could allow the City to retain and retire RECs for GHG
accounting purposes. Specifically, RECs could be applied to the City’s Scope 2 market-based
GHG inventory. Using RNG to displace natural gas use at the WWTP would result in lower
City of Iowa City | CAAP Methane Recovery Feasibility Study
Executive Summary
ES-5
Scope 1 GHG emissions. Focused on these two alternatives, Alternative 2b – Low-Diversion is
ranked highest (fourth overall), followed by Alternatives 2a – Low-Diversion and 2a – 1500. These
alternatives are ranked 4, 5 and 7 overall.
Finally, biogas utilization alternatives can be combined together with others, and some can be
incorporated as standalone projects (as shown in Table ES-3).
Table ES-3: Potential Biogas Utilization Alternatives Combinations
There are 18 unique possible combinations of alternatives, boxes in Table ES-3 with blue
numbering indicate the individual alternative scenarios at either the Landfill or at the WWTP. The
individual alternatives can be combined together, but must be done so following the same waste
diversion scenario from the Landfill. Specifically, an alternative from No-Diversion scenario cannot
be combined with an alternative from the Low-Diversion scenario. When combining the
alternatives the scores from the Landfill and WWTP alternatives can be added together to identify
the optimal combination of actions under each of the waste diversion scenarios. The highest
scored individual alternatives are consistently Alternative 1b – NG Pipeline Injection (landfill
alternatives for each of the No-Diversion, 1500 ton diversion, and Low-Diversion scenarios).
Identifying the optimal combination of actions may be approached as follows: select the highest
scored alternative from the desired waste diversion scenario (shown to be from the Alternative 1b
– NG Pipeline Injection landfill alternatives) then work down the column to the corresponding
green shaded boxes. Select the highest scored, or desired, combination. Corresponding capital
costs for each individual alternative are also additive when combined. For example, if choosing
NG Pipeline
Injection
Electricity
Generation
NG Pipeline
Injection
Electricity
Generation
NG Pipeline
Injection
Electricity
Generation
Alt 1b-ND Alt 2b-ND Alt 1b-1500 Alt 2b-1500 Alt 1b-LD Alt 2b-LD
0 0.80 0.35 0.81 0.33 0.86 0.70
NG Pipeline
Injection Alt 1a-ND 0.23 1.02 0.58
Electricity
Generation Alt 2a-ND 0.07 0.87 0.42
NG
Replacement Alt 3-ND 0.15 0.95 0.50
NG Pipeline
Injection Alt 1a-1500 0.27 1.08 0.60
Electricity
Generation Alt 2a-1500 0.35 1.16 0.68
NG
Replacement Alt 3-1500 0.14 0.95 0.47
NG Pipeline
Injection Alt 1a-LD 0.43 1.30 1.13
Electricity
Generation Alt 2a-LD 0.51 1.37 1.21
NG
Replacement Alt 3-LD 0.23 1.09 0.93WWTP LocationLandfill Location
Low Diversion1500 ton/yr DiversionNo Diversion 1500 ton/yr Diversion Low Diversion
Do Nothing
Weighted and Indexed Performance
Indicators
Total Score, inclusive of:
GHG Reduction, EROI, and BCR
Do Nothing
No Diversion
City of Iowa City | CAAP Methane Recovery Feasibility Study
Executive Summary
ES-6
from Alternative 1b – NG Pipeline Injection (at the Landfill, Total Score of 0.81), with 1500 ton
diversion to the WWTP, work down the column (or “diversion lane”) to the desired combination
scenario. In this case, combining with Alternative 2a – Electricity Generation at the WWTP, results
in a combined score of 1.16. As capital costs are also additive, consideration should be given to
the seemingly minor weighted score differential. In the example of combined Alt 1b-1500 with Alt
2a-1500, there is an estimated $6.2M savings to select Alt 1b-1500 with Alt 1a-1500.
Path Forward
HDR recognizes that incremental food waste diversion is not an instantaneous process, but the
SROI analysis provides an assessment of the resulting impact when achieved. This Report
provides decision tools to support the City’s further consideration and decision making.
Consequently, the City might consider the following path forward to further evaluate and
implement the preferred alternative(s):
i. City decision on desired diversion scenario and methane utilization at the WWTP to
narrow the field of alternatives. (0-6 months)
ii. Further technical analysis to develop organics management strategies to achieve a
targeted diversion scenario and further evaluate life cycle costs of co-digestion (if desired)
and biogas utilization to generate electricity or RNG. Consideration of impacts to planned
digester rehab project. (3-6 months)
iii. Conceptual Design Development of the selected alternative(s), providing basis of design
parameters and implementation planning. (3-6 months)
iv. Detailed Design Development. (TBD)
v. Bidding and Construction. (TBD)
It may be prudent for the City to complete items i) and ii) within the next 6-months for capital
planning purposes.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Introduction
1
1 Introduction
In December 2019, the City of Iowa City (City) selected HDR Engineering, Inc. (HDR) to perform
a Methane Recovery Feasibility Study to address Action Items 3.7 and 3.8 included in the Iowa
City Climate Action and Adaptation Plan (CAAP). The CAAP contains objectives for conducting a
study that would determine the feasibility of methane generation, collection, processing, and
potential re-use at the Iowa City Wastewater Treatment Plant (WWTP) and/or the Landfill and
Recycling Center (Landfill). HDR used its Sustainable Return on Investment (SROI) process to
measure the feasibility of the objectives.
This Feasibility Report evaluates alternatives for methane gas recovery and beneficial reuse of
biogas at the City WWTP and/or Landfill as part of the City’s CAAP objectives. This evaluation
focuses on monetizing the benefits associated with the reuse of methane sourced from either the
WWTP and/or the Landfill. The SROI analysis considers the triple bottom line (i.e., economic,
environmental, and social) benefits of methane reuse. This study focuses on the economic and
environmental impacts.
The analysis took into account:
• Estimated reductions in Greenhouse Gas (GHG) emissions and the associated social cost
of carbon;
• Value of Renewable Identification Number (RIN) credits under the Renewable Fuel
Standard Program (RFS);
• Value of electricity exported to the grid under net metering and buyback agreements with
MidAmerican Energy Company and the Eastern Iowa Light and Power Cooperative;
• Value of avoided natural gas purchases;
• Capital investment and O&M costs of biogas reuse alternatives; and
• Energy Return on Investment (EROEI).
The results of this Study are intended to help the City assess the viability of alternatives with the
greatest potential to reduce GHG emissions under CAAP Action Items 3.7 and 3.8. This Report
details technical information on the feasibility analysis and summarizes the previous Technical
Memorandums (TMs) that were completed by HDR leading up to the SROI analysis:
1. Evaluation of Existing Facilities TM
2. Wasteshed Analysis TM
3. Biogas Utilization Alternatives TM
2 Project Background
2.1 Climate Action and Adaptation Plan
In September of 2018, the City Council approved its Climate Action and Adaptation Plan. CAAP
included specific actions to achieve GHG emissions targets. The plan’s targets are in accordance
with the Paris Agreement and include city-wide carbon emissions reductions of 25-28% over 2005
City of Iowa City | CAAP Methane Recovery Feasibility Study
Project Background
2
levels. On August 6th, 2019, the City passed Resolution 19-218 declaring a climate crisis and
requesting accelerated action toward carbon emissions reductions in an effort to meet the
Intergovernmental Panel on Climate Change (IPCC) target of limiting global warming to 1.5
Celsius.
CAAP identified 35 actions related to buildings, transportation, waste, adaptation, and sustainable
lifestyle to help the City achieve its goals for reducing carbon emissions. Furthermore, these 35
actions were broken into 3 phases with phase 1 actions to be initiated by the end of 2020. Under
waste actions 3.7 and 3.8 the City is looking to explore ways to recover and beneficially reuse
methane from landfill and WWTP. The importance of these actions were reiterated in the
Accelerating Iowa City’s Climate Action Plan, published in April 2020. As noted in the CAAP:
Action Number 3.7: Take action on a feasibility study to efficiently capture and use
methane from wastewater operations:
“After water is used by residents, it flows into the wastewater system and then goes to the
City’s Wastewater Treatment Facility. While the City currently captures methane gas from
the digesters used in the wastewater treatment process, only a portion of the methane is
used to offset natural gas usage for the plant. To explore other options for further
management of wastewater greenhouse gas (GHG) emissions, the City should conduct a
study to determine the feasibility of using all captured methane to create renewable fuel
or electricity that can be used to operate the facility, and take specific actions based on
the results of this study.”
Action Number 3.8: Take action on a feasibility study on energy generation from
landfill methane.
“The methane produced by decomposition of organic waste in the Iowa City Landfill is
currently being flared to transform it into carbon dioxide, which is a less potent GHG. The
City has been considering methods to use the methane as a renewable energy source,
and to further explore this opportunity, the City will conduct a feasibility study in FY2019
and take specific actions based on the results of this study.”
2.2 Feasibility Study
The objective of this Feasibility Study is to evaluate alternatives developed to support actions 3.7
and 3.8. To conduct this study, HDR applied its SROI framework to evaluate alternatives. The
following sections of this report detail:
• The approach used.
• The alternatives considered.
• The economic analysis methods used to evaluate alternatives.
• A summary of the economic analysis results.
• Recommendations for waste actions 3.7 and 3.8.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Project Background
3
2.2.1 SROI Background
SROI evaluates whether the public value of a project is sufficient to justify the money required to
develop the project and which alternative provides the greatest financial and societal return
relative to the project cost. SROI process is an enhanced form of benefit cost analysis (BCA) that
involves a systematic comparison of the benefits and costs of projects in ways that communicate
a project’s triple-bottom line outcomes, (i.e. its full range of environmental, social and economic
impacts). SROI originated from a commitment by HDR to develop a new generation of public
decision support metrics for the Clinton Global Initiative (CGI) in 2007. SROI was developed with
input from Columbia University’s Graduate School of International Public Affairs and launched at
the 2009 CGI annual meeting. Since then, the SROI process has been used by HDR to evaluate
the monetary value of numerous sustainability programs and projects for water and wastewater
infrastructure utilities around the country.
2.2.2 Methodology of SROI Process
The SROI process draws from standard economic BCA methods and the best available data to
systematically calculate and compare the benefits and costs of project alternatives. The process
addresses sustainability goals and outcomes from a triple bottom-line perspective, meaning the
range of potential environmental, social, and economic impacts (see Figure 1). In this Feasibility
Study, impacts are associated with the economic and environmental benefits related to the value
of RIN credits to the City as well as the social cost of carbon associated with changes in GHG
emissions. In addition, the EROEI and tons of GHG emissions are estimated as non-monetary
metrics.
Figure 1: SROI Triple Bottom Line Accounting
The SROI process builds on best practices in benefit-cost and financial analysis methodologies,
complemented by advanced risk analysis and stakeholder elicitation. Typically, the SROI process
is implemented in four steps, which include:
1. Develop the structure and logic diagrams (S&L’s): Structure and logic diagrams are
useful to display the understanding of how key variables within an analysis interact to
influence the intermediate or final outputs being measured. These diagrams provide a
City of Iowa City | CAAP Methane Recovery Feasibility Study
Renewable Natural Gas as a Resource
4
transparent view of the calculations being made in the analyses for key stakeholders and
subject matter experts to review and understand the process better.
2. Assign values to inputs: Values are assigned to inputs based on logic established in the
S&L’s. In some instances, ranges for inputs are established to enable the analysis to
capture how an input will impact the project with the potential variability of its value
essentially simulating real world conditions.
3. Develop consensus among stakeholders to validate inputs: The S&L’s and inputs are
then presented to stakeholders for validation. This is a key step in the SROI process.
Stakeholders and subject matter experts are consulted regarding the values used to
understand their view on these inputs. This step is critical for getting stakeholder buy-in
on the process and seeking out additional knowledge that may not have been captured
previously.
4. Evaluate impact on agency goals (e.g. cost, environmental impact, public
perception, etc.), including simulation if applicable: These inputs will then be added
into the model structure detailed with the structure and logic diagrams to evaluate the
agency goals, specifically the costs or environmental impact. The alternative that best
meets these criteria will be the one that is the most desirable alternative.
3 Renewable Natural Gas as a Resource
Renewable Natural Gas (RNG) is biogas or landfill gas that has been treated or refined to natural
gas (NG) quality. The resulting RNG can be used interchangeably with NG, but is considered
renewable as it doesn’t rely on petroleum and can therefore provide additional environmental
attributes through federal and state programs.
3.1 Renewable Natural Gas - Environmental Attributes as Vehicle
Fuel
3.1.1 EPA - Renewable Fuel Standard
The United States Congress created the Renewable Fuels Standard (RFS) through the Energy
Policy Act of 2005 and revised the program with the Energy Independence and Security Act in
2007. The RFS is a renewable fuels program within the Clean Air Act which mandates that large
fuel producers and blenders (Obligated Parties) must include within their fuel mix a growing
portion of renewable fuels. The quotas required of the Obligated Parties are referred to as
Renewable Volume Obligations (RVOs) and are established and tracked by the United States
Environmental Protection Agency (EPA) through the use of renewable credits, also known as,
Renewable Identification Numbers (RINs). The original program was designed to increase the
RVOs until 2022 and then level off beyond that point unless Congress issued another
amendment. The EPA can lower or raise the RVOs up to the maximum RVO quota set for 2022,
but Congressional action would be required to eliminate the RFS program. The RFS program has
pressure against it from the Oil and Gas Industry, but also has a strong support from the Corn
Ethanol Industry, who represent half of the RIN market.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Renewable Natural Gas as a Resource
5
As the EPA’s RFS, RVOs are developed by categorized RIN types based on their environmental
benefit and the production pathway. These categories, D3 through D7, encompass lower value
biofuels like corn-based ethanol (D6) up to high value biofuels like cellulosic biodiesel or ethanol
(D3) (see Figure 2).
RNG produced from landfill gas is considered D3 cellulosic biofuel in the RFS. RNG produced
from wastewater biogas production from anaerobic digestion or co-digestion is considered D3
cellulosic or D5 advanced biofuel depending on the feedstocks used to production. The biogas
produced from the digestion of municipal biosolids will be considered D3 cellulosic and have the
highest value. However, any biogas produced by the co-digestion of municipal solids with hauled
in or high strength wastes will be considered D5 advanced, unless each individual feedstock has
a 75% or higher cellulosic content.
Figure 2: EPA RFS Nested RIN Categories and Volumes
Figure 3 presents the historical RIN values as reported by the EPA from 2015 through August
2020.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Renewable Natural Gas as a Resource
6
Figure 3: Historical RIN values From the EPA from 2015 Through August 2020
Source: https://www.epa.gov/fuels-registration-reporting-and-compliance-help/rin-trades-and-price-information
3.1.2 California Low Carbon Fuel Standard
In addition to RINs, carbon offset credits are also available through California’s Low Carbon Fuel
Standard (LCFS) program. The LCFS market has become a healthy market with more
transactions and higher values throughout the last seven years (see Figure 4) and is not
anticipated to end until 2032. LCFS credits can be obtained in addition to RIN credits as long as
the renewable fuel is contracted for sale to an Obligated Party with end use in California.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Renewable Natural Gas as a Resource
7
Figure 4: California LCFS Market History
3.1.3 Requirements and Pathways
A requirement to be aware of for both of these programs (RFS and LCFS) is that they are
specifically renewable fuels for transportation programs. As such, the fuel must ultimately be used
as a transportation fuel in order for the renewable attribute to be recognized. A renewable fuel
producer is not required to explicitly find a transportation end user of the fuel it produces, however,
at some point along the fuel supply pathway, it must be used as transportation fuel so that an
Obligated Party can claim the RIN and/or the LCFS credit and meet its obligation with the EPA or
with California.
The production and sale of RNG and environmental attributes like RINs and/or LCFS occurs in
two pathways; the physical pathway and the contractual pathway for the attributes. The physical
pathway is the sale of the RNG by the producer to end user of the gas via the natural gas grid.
The contractual pathway for the attributes is separate and handled by third party which verifies
that the RNG is truly renewable and markets the attributes to Obligated Parties. Figure 5 illustrates
the two pathways of RNG and RIN/LCFS sales. It is important to note that the molecules of natural
gas don’t actually have to be used as vehicle fuel, but the physical pathway needs to be verified
through the grid system.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Renewable Natural Gas as a Resource
8
Figure 5: PhysRNG Value Considerations
The value of RNG should take into account following:
1. The value of the RNG as natural gas based on the natural gas commodity market.
2. The value of environmental attributes obtained through the RFS (D3 or D5)
3. The value environmental attributes obtained through the LCFS.
4. The cost of compliance with the RFS and LCFS.
5. The cost of marketing the environmental attributes to Obligated Parties.
Items 1-3 should be considered as ranges (low, median, high) to account for the variability in
future market values. The biogas revenues at the WWTP need to be divided into D3 and D5
categories. The biogas produced in the anaerobic digesters handling municipal biosolids will
produce D3, but biogas produced at the co-digestion facility will be D5, but may be eligible for
LCFS depending on the carbon intensity score. Items 4 and 5 are included to reflect the cost of
bringing the gas to market within the environmental attribute programs. The RFS is highly
regulated, so market RIN values are typically reduced by 15% and the LCFS values by 15-30%
to account for the third part cost of compliance and marketing the environmental attributes to
Obligated Parties. The third parties are either gas marketing companies or the Obligated Parties
themselves, and are typically selected by a Request for Proposal (RFP) process. The resulting
contractual arrangement specifies the City’s share be based on either a fixed price or percentage
of total revenue and the term of the agreement. The third party will qualify the RINs with EPA,
qualify with California for LCFS credits, develop QA programs for certification, and administer the
program. The City is then paid by the third party for both the natural gas commodity value and the
associated renewable attributes based on a monthly or quarterly invoice.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
9
4 Description of Project Alternatives
Three beneficial reuse alternatives were analyzed for current and future biogas generated at the
WWTP and Landfill. For a complete and detailed assessment, please refer to the Biogas
Utilization Alternatives Analysis Technical Memorandum previously provided by HDR, dated July
17, 2020. Recognizing synergy with another action in the City’s CAAP, Action Item 3.2 Increase
Composting of Organics, HDR also considered impacts of diverting incremental volumes of food
waste from the Landfill to the existing WWTP, a new, dedicated anaerobic digester, and expanded
composting operations. The following is a description of each alternative.
4.1 Alternative 1: Natural Gas Pipeline Injection
Biogas Utilization Alternative 1 assumes that the City purchases and operates equipment to
condition the biogas to natural gas quality (RNG) for injection into the natural gas pipeline. To
provide an interconnection point, the natural gas utility (MidAmerican Energy Company) would
route a new pipeline from the existing natural gas distribution system to the City’s property. The
City would be required to reimburse the utility for the cost of the connecting pipe, and also pay an
annual pipeline usage fee. This pipeline usage fee is dependent on the amount of RNG injected
into the natural gas pipeline by the City. Assuming natural gas quality meets the RFS Program,
the City would sell RIN credits and surrender any downstream GHG emissions reductions that
would be realized by the Obligated Party purchasing the credits. Alternative 1 is applicable to both
the WWTP and Landfill, presented as alternatives 1a and 1b, respectively.
4.2 Alternative 2: Electricity Generation
Biogas Utilization Alternative 2 assumes that biogas is conditioned and utilized in engine
generators owned and operated by the City to produce renewable electricity. The electric power
utility (MidAmerican Energy or Eastern Iowa Light & Power) would establish a connection to the
grid, enabling the City to sell the renewable power. The City would be required to reimburse the
electric utility for all system upgrades required to accommodate the connection. Under this
alternative, HDR assumes that the City’s contract with the electric power utility would allow the
City to retain Renewable Energy Credits (RECs) to offset GHG emission associated with
electricity use in their buildings and facilities. Alternative 2 is applicable to both the WWTP and
Landfill, presented as alternatives 2a and 2b, respectively.
4.3 Alternative 3: WWTP Natural Gas Replacement
Biogas Utilization Alternative 3 involves conditioning biogas to natural gas quality with the intent
of using the RNG in place of the natural gas at the WWTP. Biogas would be conditioned to natural
gas quality by equipment owned and operated by the City to be installed at the WWTP. The
WWTP RNG produced will exceed the amount of natural gas used at the plant. As such, the City
would need to either: find a use for the excess RNG produced, flare the excess gas, or the City
would only condition the amount of biogas needed and the excess biogas would be flared. For
this analysis, it was assumed that RNG production would be capped at 62,848 standard cubic
feet per day. Alternative 3 is only applicable to the WWTP as natural gas is not consumed at the
landfill.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
10
4.4 Alternative 4: Composting
Alternative 4 consists of diverting organic waste that would typically be placed in the landfill to a
new or expanded composting facility. Because the existing composting operation is at capacity,
this alternative assumes the City would utilize existing owned-land and purchase equipment to
expand composting capacity. This alternative is only relevant for the Low-Diversion scenario,
further described in the section below.
4.5 Organics Diversion Scenarios
Recognizing the synergy with the City’s goal to increase composting of organics, HDR evaluated
the relative cost and GHG emissions impact for each of the four alternatives under three food
waste diversion scenarios. HDR’s previous technical analysis determined the impact on future
biogas generation quantity when some of the City’s organic matter is diverted from the Landfill for
co-digestion or composting.
The three organics diversion scenarios include:
1) No Organics Diversion. The No Organics Diversion scenario assumes that all organics
material is disposed of in the Landfill (i.e. current operation).
2) 1,500 tons. The 1,500 tons scenario assumes that an additional 1,500 tons of food waste
material will be diverted from the Landfill to the existing WWTP anaerobic digester each
year. This quantity represents the current available capacity in the WWTP anaerobic
digester; therefore, no additional digester capacity is required for this diversion scenario.
This scenario is not applicable to composting, as the existing facility is operating at
capacity.
3) Low-Diversion. The Low-Diversion scenario assumes that 20% of organic material (7,960
tons/year) currently disposed of at the Landfill is diverted to new anaerobic digesters or
an expanded composting facility. For GHG emissions modeling purposes, HDR assumed
that the additional diverted organic material is entirely comprised of food waste. The
required anaerobic digester volume required for the Low-Diversion scenario is 1.4 million
gallons (MG).
For purposes of this study, HDR assumed that the new waste receiving station and standalone
anaerobic digesters required to accept the additional diverted food waste would be located at the
WWTP. A standalone digester facility for the diverted organic waste was assumed because the
RIN credits for RNG produced in a municipal WWTP digester will have a higher value than those
for RNG produced by a diverted waste digester. Additionally, the WWTP digester gas contains
high levels of siloxanes. It is beneficial to keep the two sources of biogas separated until the
siloxanes are removed from the WWTP biogas. Over the course of the Study development,
discussion with City staff supported retaining digester capacity within the existing complex to
support municipal biosolids. Therefore, for a planning level, Feasibility Study, an independent
system to support new low-diversion digesters is proposed. Implementation would include
independent operation, and not an expansion of the existing digester facility. However, as the
plan is refined, a more detailed evaluation and conceptual design should be conducted to further
determine the best approach for the City.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
11
Figure 6: Organics Diversion
A summary of the alternatives and diversion scenarios selected for the SROI analysis are listed
in Table 1.
Table 1: Summary of the Alternatives and Diversion Scenarios evaluated for Feasibility
Alternative Description Facility
Location
Scenario Name
Pipeline Injection
(Alt. 1)
Sell RIN credits, & no additional organics
diversion
WWTP Alt. 1a - ND
Landfill Alt. 1b - ND
Sell RIN credits, & 1,500 TPY organics
diverted from landfill
WWTP Alt. 1a - 1500 Div
Landfill Alt. 1b - 1500 Div
New AD facility, sell RIN credits, & 7,960
TPY organics diverted from landfill
WWTP Alt. 1a - LD
Landfill Alt. 1b - LD
Electricity
Generation
(Alt. 2)
No additional organics diversion WWTP Alt. 2a - ND
Landfill Alt. 2b - ND
1,500 TPY organics diverted from landfill WWTP Alt. 2a - 1500 Div
Landfill Alt. 2b - 1500 Div
7,960 TPY organics diverted from landfill WWTP Alt. 2a - LD
Landfill Alt. 2b - LD
Natural Gas
Replacement
(Alt. 3)
No additional organics diversion WWTP Alt. 3 - ND
1,500 TPY organics diverted from landfill WWTP Alt. 3 - 1500 Div
New AD facility, & 7,960 TPY organics
diverted from landfill
WWTP Alt. 3 - LD
Expanded Composting
(Alt. 4)
7,960 TPY organics diverted from landfill Compost Alt. 4
Some of the alternatives listed in Table 1 can be constructed as standalone alternatives.
Additionally the alternatives can be constructed together in various combinations provided the
same waste diversion scenario is followed. For example, Alternative 1b – NG Pipeline Injection
at the Landfill may be constructed at the Landfill with no improvements at the WWTP.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
12
Alternatively, Alternative 1b could be selected for utilization of the biogas at the Landfill, with
Alternative 2a (Electricity Generation) selected for biogas utilization at the WWTP.
A more detailed explanation and associated matrix table of possible combination scenarios is
included later under Section 5.1.
4.5.1 Impacts to Existing Wastewater Treatment Plant
Implementation of anaerobic digestion for organics diversion can result in impacts to the existing
WWTP. The diverted organics need to be incorporated into a mixture with a target feed total solids
(TS) content of 6 percent. This requires the use of makeup water to create the mixture in a
receiving station. Typically, the makeup water is a combination of digester recycle and WWTP
effluent. The total water feed rate into the digester is estimated near 90,000 gallons per day, and
the makeup water stream would be small.
A more important impact to the existing WWTP is the return stream from the diversion digester.
After dewatering of the digested solids, some of the excess water must be returned to the plant
as recycle. Digestion of organics results in the release of nutrients, nitrogen and phosphorus in
the forms of ammonium and phosphate, respectively. After dewatering, the nutrients are divided
between the solids and liquids residuals. A fraction of the nutrients would remain with the solids
to their ultimate disposal (e.g. land application or landfilling). The remaining fraction is recycled
with the liquid residuals to the WWTP. Recycled nutrients then consume part of the nitrification
and nutrient removal capacities of the treatment facility. In addition, the carbon to nutrient ratio is
skewed and biological nutrient removal becomes less favorable. This means that carbon addition
may be needed to support biological nutrient removal. Further, liquid treatment capacity and cost
must be reevaluated with potential increases to nutrient loading.
Organic waste nutrient content varies considerably. The nitrogen content can vary between 5 and
50 percent of the TS, and the phosphorus content can vary between 1 and 10 percent of the TS.
This analysis used typical food waste values of roughly 10 percent for nitrogen content and 5
percent for phosphorus for the analysis. The result is an additional 150 to 200 lb-N/d nitrogen load
and an additional 30 to 50 lb-P/d phosphorus load estimated for the WWTP for every ton/d of
organics diversion. In all, every 1 ton/d of diverted wastes results in a recycle containing between
2 and 3 percent of the WWTP’s nitrogen capacity. The Low-Diversion scenario is based on about
4 ton/d of organics diversion, which could use between 8 and 12 percent of the WWTP’s TKN
capacity1.
4.6 Estimated Costs
A detailed opinion of probable costs and opinion of O&M costs was developed for the No-
Diversion scenario for each alternative. The No-Diversion scenario costs (gas conditioning system
and electricity generation equipment) were then extrapolated to estimate costs for the two
diversion scenarios for each alternative. For the Low-Diversion scenario, costs were added for a
new anaerobic digester and waste receiving station. The estimated biogas quantities for each
1 Design TKN capacity of WWTP identified as 6,311 lb-N/d based on NPDES permit issued 05/01/2020
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
13
scenario as a basis for the extrapolation. Equipment proposals were also obtained for the
No-Diversion scenario for each alternative.
Table 2 contains a summary of the capital and O&M costs for each alternative selected for the
detailed SROI analysis.
Table 2: Biogas Utilization Alternatives Summary
Alternative Scenario Alternative
Designation
Opinion of
Probable
Construction
Costs
Opinion of
Probable Annual
O&M Costs
1a: WWTP NG
Pipeline Injection
No Diversion 1A - ND $8,600,000 $1,353,000
1,500 Ton/Year 1A - 1500 $10,800,000 $1,815,000
Low Diversion 1A - LD $41,400,000 $3,112,000
1b: Landfill NG
Pipeline Injection
No Diversion 1B - ND $29,200,000 $2,292,000
1,500 Ton/Year 1B - 1500 $29,000,000 $2,282,000
Low Diversion 1B - LD $28,000,000 $2,200,000
2a-2: WWTP
Electricity
Generation
No Diversion 2A - ND $13,500,000 $1,067,000
1,500 Ton/Year 2A - 1500 $17,000,000 $1,432,000
Low Diversion 2A - LD $50,000,000 $2,538,000
2b-2: Landfill
Electricity
Generation
No Diversion 2B - ND $20,500,000 $1,288,000
1,500 Ton/Year 2B - 1500 $20,300,000 $1,282,000
Low Diversion 2B - LD $19,600,000 $1,236,000
3: WWTP NG
Replacement
No Diversion 3 - ND $7,700,000 $867,000
1,500 Ton/Year 3 - 1500 $9,700,000 $1,163,000
Low Diversion 3 - LD $39,800,000 $2,136,000
4: Composting Low Diversion 4 $5,700,000 $495,000
4.7 Description of Impact Categories
The effect of an alternative differs across the individual impact categories (individual economic
and environmental benefits and/or costs) and depends on the design of the project alternative,
site conditions where the project is implemented, and characteristics in the community. Estimation
of benefits and costs from a project depends on the degree to which linkages can be quantified
between alternatives and a benefit or cost, and then available economic literature to value this
change.
This section develops the general assumptions and inputs used in the SROI analysis framework
and describes the impacts.
4.7.1 General Assumptions and Inputs
The SROI analysis measures benefits and costs throughout a 30-year period of analysis from
2021 to through the year 2050 representing the GHG emissions reduction goal year in the City’s
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
14
CAAP. The methodology makes several important assumptions and seeks to avoid
overestimation of benefits and underestimation of costs. Specifically:
• Input prices are inflated to 2019 dollars;
• The analysis period begins in 2021 and ends in 2050. It includes twenty-nine years of
operations (2022-2050); and
• A constant 3 percent real discount rate is assumed throughout the period of analysis.
4.7.2 Impact Categories
Each of the evaluated impacts is discussed in detail in the following sections. The impacts are
organized by their respective triple bottom line categorization (economic and environmental).
4.7.2.1 ECONOMIC IMPACTS
Economic benefits include impacts that are created by the project after deducting the cost of all
inputs, including the cost of the capital expenditures (CAPEX) and annual operations and
maintenance (O&M) costs (lifecycle costs of the project alternatives). Economic benefits include
value of RIN credits to the City. Additionally a non-monetary measure of economic efficiency
includes energy return on investment.
4.7.2.1.1 Lifecycle Costs
Lifecycle costs include CAPEX and annual O&M for each alternative. The costs are estimated as
a 30 year life-cycle costs as shown below in the S&L diagram.
Figure 7: Lifecycle Cost Structure and Logic Diagram.
Capital Costs
($ / yr)
O&M Costs
($ / yr)
Discount Rate
(%)
Total Costs
($ / yr)
Present Value of Total Costs
($)
4.7.2.1.2 RIN Credit Benefits
RIN credits provide a potential unique revenue source to Alternative 1. RINs are the credits that
the US Environmental Protection Agency (EPA) uses to track and enforce compliance with
the renewable fuels mandates set by the federal RFS Program. The City may be able to generate
and sell RIN credits to Obligated Parties by producing RNG from biogas and injecting it into the
pipeline for blending with conventional, non-renewable natural gas. Figure 8 illustrates the value
of RIN credits.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
15
Figure 8: RIN Credit Value Structure and Logic Diagram.
RIN Credit Value ($/MMBTU)RNG Production (MMBTU/
Year)
Discount Rate
(%)Value of RIN Credits ($/Year)
Present Value of RIN Credits
($)
The potential value of RIN credits beyond 2020 is shown below in Table 3. Based on this
information and discussions between the City and HDR, the median D3 value ($16.18) was used
in the SROI analysis for alternatives involving gas produced from the landfill. For alternatives
located at the WWTP and food waste diversion scenarios the D5 value ($7.70) was used
presuming the mix of a lesser quality gas.
Table 3: Value of RIN Credits
RIN and Carbon Market2
Units
Value
Most
likely Low Median High
Total for D3 + Commodity $/MMBTU $16.18 $8.20 $11.69 $25.15
Total for D5 + Commodity $/MMBTU $12.37 $5.71 $6.71 $9.70
Total for D5 + Commodity + LCFS $/MMBTU $7.70 $5.71 $11.69 $19.70
4.7.2.1.3 Renewable Electricity Production
Revenue from electricity sales are assumed to be captured from both net metering and negotiated
buyback agreements with MidAmerican Energy Company and Eastern Iowa Light and Power
Cooperative.
MidAmerican Energy Company (which supplies the electricity to the Iowa City Landfill) allows for
net metering agreements for a facility nameplate generation capacity of up to 1 megawatt (MW)
or 110% of its annual load. Credits from net metering agreements are paid out at the average
locational marginal price (LMP) from the Midcontinent Independent System Operator (MISO)
based on the generation profile of the resource. For energy produced beyond a nameplate
capacity of 1 MW or 110% of its annual load, energy can be sold to MidAmerican Energy at a
negotiated buyback rate. The Eastern Iowa Light and Power Cooperative allows for buyback
agreements for facilities with a nameplate generation capacity exceeding 20 kilowatts (kW).
Figure 9 illustrates the value of renewable electricity production.
2 HDR is NOT providing a revenue projection or analysis of financial feasibility of alternatives. Such
projections are highly dependent on open market commodity pricing, political volatility, and local, state, and
federal programs and policies.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
16
Figure 9: Renewable Electricity Production Value Structure and Logic Diagram
Electricity Sales Rate ($/kWh)
Renewable Electricity
Production
(kWh/Year)
Discount Rate
(%)
Value of Renewable Electricity
Production
($/Year)
Present Value of Renewable
Electricity Production
($)
Electricity production was monetized under the assumptions shown in Table 4. The landfill is
assumed to export 110% of its 2019 electricity usage at the net metered rate offered by
MidAmerican Energy Company, and any excess generation is monetized at the negotiated
buyback rate. The wastewater treatment plant receives the Eastern Iowa Light and Power
Cooperative avoided cost rate for all of its electricity generation.
Table 4: Value of Renewable Electricity Production
Electricity Sales Assumptions Units Value
MidAmerican Energy Net Metering Rate ¢/kWh 2.6¢3
MidAmerican Energy Negotiated Buyback Rate ¢/kWh 2.6¢4
Eastern Iowa Light and Power Cooperative Avoided Cost Rate ¢/kWh 4.2¢5
2019 Iowa City Landfill Electricity Usage kWh 278,882
4.7.2.1.4 Value of Avoided Natural Gas Purchases
The WWTP RNG produced will exceed the amount of natural gas used at the plant. As such, the
City would need to either: find a use for the excess RNG produced, flare the excess gas, or the
City would only condition the amount of biogas needed and the excess biogas would be flared.
Production of RNG would prevent the facility from needing to purchase natural gas. For this
analysis, it was assumed that RNG production would be capped at 62,848 standard cubic feet
3 The net metered rate is assumed to be a weighted average LMP based on 2019 hourly real-time LMP
prices for the Illinois hub and the MISO load. Calculated based on data from Midcontinent Independent
System Operator’s market reports.
***********.misoenergy.org/markets-and-operations/real-time--market-data/market-reports/#nt=.
MISO historical load data was gathered from EnergyOnline from January 1, 2019 to December 31, 2019.
**********.energyonline.com/Data/GenericData.aspx?DataId=17.
4 Negotiated buyback rate is assumed to be equivalent to the average LMP price calculated for the net
metering rate.
5 Weighted average calculation based on Eastern Iowa Light and Power Cooperative’s posted avoided cost
of generation during peak and off-peak hours.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
17
per day and valued at the delivered cost of natural gas at the facility assumed to be $3.166 per
MMBtu. The value stream is shown in Figure 10.
Figure 10: Renewable Natural Gas Value Structure and Logic Diagram
Natural Gas Price ($/MMBtu)
Renewable Natural Gas
Produced
(MMBtu/Year)
Discount Rate
(%)
Value of Renewable Natural
Gas Produced
($/Year)
Present Value of Renewable
Natural Gas Produced
($)
4.7.2.1.5 Energy return on energy investment
Energy return on energy investment is the ratio of the amount of usable energy delivered from a
particular energy resource to the amount of energy used to obtain that energy resource as
illustrated below.
퐸푅푂퐸퐼 = 퐸표
퐸푖
Where:
Eo = Energy output
Ei = Energy input
The resulting ratio demonstrates the relative energy inputs necessary to produce the energy
output for each alternative. The higher the EROEI, the greater the amount of energy that is yielded
for the amount of energy produced. EROEI was estimated for each alternative except for
Alternative 4, because composting does not generate energy.
Energy output was based on the quantity of RNG produced or electricity generated. In addition to
energy generated, HDR also factored in lifecycle energy use reduction using the USEPA Waste
Reduction Model (WARM), which compares GHG emissions reductions and lifecycle energy
savings from baseline and alternative waste management scenarios. HDR estimated change in
lifecycle embodied energy by utilizing WARM to compare the baseline conditions to both 1,500
tons and Low-Diversion scenarios. Specifically, the output of the WARM model estimated the
lifecycle energy use reduction by co-digesting or composting additional diverted food waste as
compared to the baseline of landfilling this material. Because WARM is a lifecycle assessment
tool, meaning impacts are estimated from cradle-to-grave, the estimated energy use reduction
6 Calculated based on natural gas delivered and delivery charges from the wastewater treatment plant’s bill
for the month of October 2020.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
18
occurs outside of the City’s reporting boundary and would not be evident in annual GHG
emissions inventories.
Direct energy input is based on the parasitic load of new equipment installed for the purposes of
generating RNG or electricity, and does not include base load energy use required to operate the
WWTP and Landfill Facilities based on current conditions. Specifically, direct energy input
includes the parasitic load of the biogas conditioning equipment and electric generators. All
energy output and input measures were converted into million British thermal units (MMBtu) to
allow a relative comparison of alternatives. Table 5 provides details on each energy output and
input value. The resulting EROEI’s are presented in the results section of this report.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
19
Table 5: Estimated Energy Inputs for Each Alternative
Alternative
Description
Location Alternative Energy Input Energy Output
(Lifecycle Output + Lifecycle Energy Reduction)
EROEI
kW/hr1 lifecycle
(MMBTU)
RNG
(scfm)2
kW-
hr/day1
Lifecycle
Output
(MMBTU)
Lifecycle
Energy
Reduction
(MMBTU)
Total
Lifecycle
Energy
Output
(MMBTU)
Pipeline
Injection
WWTP Alt. 1a - ND 158 141,680 71 0 1,056,062 0 1,056,062 7.5
Alt. 1a - 1500 Div 243 217,901 95 0 1,417,070 0 1,497,046 6.9
Alt. 1a - LD 375 336,266 142 0 2,121,111 79,976 2,545,515 7.6
Landfill Alt. 1b - ND 1,145 1,026,733 541 0 8,096,474 424,404 8,096,474 7.9
Alt. 1b - 1500 Div 1,145 1,026,733 536 0 8,026,070 0 8,106,045 7.9
Alt. 1b - LD 1,145 1,026,733 515 0 7,710,000 79,976 8,134,404 7.9
Electricity
Generation
WWTP Alt. 2a - ND 305 273,497 0 10,915 407,816 424,404 407,816 1.5
Alt. 2a - 1500 Div 353 316,539 0 14,644 547,143 0 627,118 2.0
Alt. 2a - LD 650 582,862 0 21,921 819,033 79,976 1,243,437 2.1
Landfill Alt. 2b - ND 317 284,257 0 94,517 3,531,432 424,404 3,531,432 12.4
Alt. 2b - 1500 Div 317 284,257 0 93,695 3,500,720 0 3,580,696 12.6
Alt. 2b - LD 317 284,257 0 89,997 3,362,552 79,976 3,786,956 13.3
Natural Gas
Replacement
WWTP Alt. 3 - ND 158 141,680 71 0 653,776 424,404 653,776 4.6
Alt. 3 - 1500 Div 243 217,901 95 0 653,776 0 733,752 3.4
Alt. 3 - LD 650 582,862 142 0 653,776 79,976 1,078,180 1.8
Expanded
Composting
Compost Alt. 4 0 0 0 0 0 424,404 0 0.0
Notes:
1) The conversion from kw/hr to MMBTU is: kw/hr * 24 hours * 3,412.14 BTU per kW/hr * 365 days * 30 years divided by 1,000,000.
2) The conversion from scfm to MMBTU is: scfm * 1440 mins/day * 950 BTU per scfm natural gas * 365 days * 30 years divided by 1,000,000.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
20
4.7.2.2 ENVIRONMENTAL IMPACTS
Environmental benefits include impacts that are valued based on the project’s change in natural
resource quality or quantity. The environmental included in this analysis include the social cost of
carbon measured by changes in the emissions of carbon dioxide equivalents (CO2e).
4.7.2.2.1 Social Cost of Carbon
GHG Emissions Impact Assessment: HDR understands that a key driver for decision-making
is understanding the relative GHG emissions impact associated with each alternative and making
progress towards the City’s climate action goals. GHG emissions were estimated for each
alternative included in the SROI analysis, and considered both direct and lifecycle impacts, as
well as avoided emissions resulting from the beneficial reuse of biogas. Calculation
methodologies align with best practices described in the Global Protocol for Community-Scale
Greenhouse Gas Emission Inventories (GPC) and Local Government Operations Protocol
(LGOP) for GHG assessment. These considerations are described below and cumulative GHG
emissions impacts for each alternative are presented in Table 6.
• Direct GHG emissions were based on the incremental emissions resulting from processes
required to beneficially reuse biogas. Specifically, direct GHG emissions are based on the
parasitic load of new equipment installed for the purposes of generating RNG or electricity,
such as energy consumed by the biogas conditioning equipment and electric generators.
It is important to note that direct emissions do not include base load energy use required
to operate the WWTP and Landfill Facilities based on current conditions, rather, the
Feasibility Study analyzes the incremental change from current operations. At the City’s
direction, HDR assumed that there would not be a material change in transportation-
related GHG emissions associated with diverting food waste for the 1,500 tons and Low-
Diversion scenarios. Lastly, it should be noted that GHG emissions associated with
combustion of biogas/RNG is considered biogenic (CO2(b)), and per the GPC, is to be
reported separately outside of Scope 1, 2, and 3 GHG emission categories. Biogenic
emissions are those related to the natural carbon cycle, as well as those resulting from
the combustion, harvest, digestion, fermentation, decomposition or processing of
biologically based materials.
• Lifecycle GHG emissions were estimated using the EPA WARM, which compares GHG
emissions reductions and lifecycle energy savings from baseline and alternative waste
management scenarios. HDR estimated change in lifecycle embodied carbon by utilizing
WARM to compare the baseline conditions to both 1,500 tons and Low-Diversion
scenarios. Specifically, the output of the WARM model estimated the lifecycle energy use
reduction by co-digesting or composting additional diverted food waste as compared to
the baseline of landfilling this material. Because WARM is a lifecycle assessment tool,
meaning impacts are estimated from cradle-to-grave, the estimated GHG emissions
reduction occurs outside of the City’s reporting boundary and would not be evident in
annual GHG emissions inventories.
• Avoided GHG emissions were estimated based on the beneficial reuse of biogas,
including pipeline injection, electricity generation, and natural gas displacement,
assuming:
o Biogas injected into the natural gas pipeline would be utilized to generate and sell
RIN credits, ultimately being used as a renewable fuel for mobile source
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
21
combustion. RNG is a market driver for commercial fleets to transition away from
conventional diesel trucks to compressed natural gas (CNG)/RNG alternate
fueled-vehicles. GHG emission reductions were estimated using a diesel fuel
emissions factor published by the EPA.
o Biogas used to generate electricity would ultimately offset electricity generated by
local electric power utilities (MidAmerican Energy or Eastern Iowa Light & Power).
Emission factors were provided by the City. While MidAmerican Energy does have
a public goal related to 100% of retail sales being served by renewable energy,
this is not equivalent to a net zero carbon production goal. Absent of either electric
utility having a publicly stated carbon emissions reduction goal, GHG emission
reductions were estimated using the emission factor provided by the City, held
constant for the study period.
o Biogas used as onsite fuel at the WWTP would displace natural gas on a 1:1 unit
basis. GHG emission reductions were estimated using a natural gas emissions
factor published by the EPA.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
22
Table 6: Estimated GHG Emissions
Alternative
Description
Location Alternative Change in
Landfill
GHG
Inventory
Parasitic
energy
load
Change in
biological
treatment
inventory
Beneficial
reuse GHG
benefit
Change in
Net
Embodied
Carbon (EPA
WARM)
Total
Annual
Change in
CO2e Metric
Tons
Pipeline
Injection
WWTP Alt. 1a - ND 0 666 0 -2,017 0 -1,351
Alt. 1a - 1500 Div 1,027 0 27 -2,707 -941 -2,594
Alt. 1a - LD 1,585 0 144 -4,052 -4,996 -7,318
Landfill Alt. 1b - ND 0 4,840 0 -32,190 0 -27,350
Alt. 1b - 1500 Div 0 4,840 0 -32,047 -941 -28,148
Alt. 1b - LD 0 4,840 0 -30,903 -4,996 -31,059
Electricity
Generation
WWTP Alt. 2a - ND 0 1,289 0 -1,922 0 -633
Alt. 2a - 1500 Div 1,492 0 27 -2,579 -941 -2,001
Alt. 2a - LD 2,748 0 144 -3,861 -4,996 -5,965
Landfill Alt. 2b - ND 0 1,340 0 -16,647 0 -15,307
Alt. 2b - 1500 Div 0 1,340 0 -13,282 -941 -12,884
Alt. 2b - LD 0 1,340 0 -15,851 -4,996 -19,507
Natural Gas
Replacement
WWTP Alt. 3 - ND 0 666 0 -2,030 0 -1,363
Alt. 3 - 1500 Div 0 1,027 27 -4,076 -941 -3,963
Alt. 3 - LD -7,221 144 2,748 -4,076 -4,996 -13,401
Expanded
Composting
Compost Alt. 4
-7,221 0 0 722 -5,670 -12,169
City of Iowa City | CAAP Methane Recovery Feasibility Study
Description of Project Alternatives
23
Value of GHG Emissions: Scientific studies in the United States and internationally have widely
concluded that GHG emissions are closely linked with climate change, a condition that has been
determined to lead to future economic impacts from more extreme weather events and damaging
conditions on coasts. The impact is estimated from the change in energy production and net
embodied carbon in each of the waste diversion scenarios. In alternatives of 1A and 1B (pipeline
injection), RIN credits are counted as an economic benefit and the environmental attributes would
therefore be sold to Obligated party who purchases the RIN credits. As such, the value of the
social cost of carbon (SCC) is not counted for the associated changes in GHG emissions to avoid
double counting.
GHG impacts were estimated using:
• EPA WARM model for the change in metric tons of CO2e from embodied carbon in the
waste stream;
• an electricity conversion factor (converts megawatt hours to tons of pollution for each
emission type); and
• a cost of emission (monetizes the impact).
The logic for the estimating impacts of changes in GHG emissions is illustrated in Figure 11.
Figure 11: GHG Emissions Structure and Logic Diagram.
Parasitic Energy Consumption
(kWh / yr)
GHG Emissions Rate
(tons / kWh)
Discount Rate
(%)
Net Change in GHG
(tons / yr)
Present Value of Total Costs
($)
Net Embodied GHG Emissions -
EPA WARM Model
(tons / yr)
Emissions Reduction Biogas
Reuse
(tons / yr)
Economic Value of GHG –
Social Cost of Carbon
($ / ton)
Net GHG SCC ($ / yr)
For CO2e; the value from the Interagency Working Group on the Social Cost of Carbon (IWGSCC)
was used in the analysis. This value is then escalated annually at 2% using rates derived from
the Federal Interagency Working Group on Social Cost of Carbon. All values are in 2019 US
dollars per ton.
Table 7: Social Costs of GHG Emissions
GHG Emissions Unit Value Source
CO2e $/Ton $46 IWGSCC (2013)
City of Iowa City | CAAP Methane Recovery Feasibility Study
Summary Economic, and Environmental Impacts of Alternatives
24
5 Summary Economic, and Environmental
Impacts of Alternatives
The evaluation of economic and environmental impacts considered a time horizon or study period,
which includes project development (construction and implementation) and 29 years of operation
and benefit. This extends to 2050 and aligns with the planning horizon of the City’s CAAP. Costs
and benefits have been converted to present value using a 3% discount factor. Total benefits and
costs are compared using a benefit to cost ratio (BCR), benefits divided by costs. BCR’s
exceeding 1.0 indicate that the benefits from the alternative exceed the costs of the investment
over a 30 year period. Results are shown below in Table 8.
Consideration should be given to the implementation schedule of alternatives and potential for a
phased approach. Revising the economic framework to account for a phasing of projects over
5-10 years would affect all of the alternatives equally and would not change the overall ranking or
comparison of the alternatives. Furthermore, there is limited impact to the capital and O&M cost
considerations as long as the period of study remains over 30-years. The more significant cost
impacts are observed with a minimum delay of 8-10 years out of the study period. A number of
implementation scenarios are possible, but the CIP planning impact is often similar from a
planning perspective.
Table 8: Summary of Monetary Benefits and Costs ($ Millions, 2019)
Alternative
Description
Location Alternative Total
Cost
Total
Social
Cost of
Carbon
Total Value
for RIN Credit
and Energy
Revenues
Total
Benefit
Benefit
-Cost
Ratio
Pipeline
Injection
WWTP Alt. 1a - ND $35.92 $1.67 $5.48 $7.15 0.20
Alt. 1a - 1500 $47.44 $3.21 $7.35 $10.56 0.22
Alt. 1a - LD $104.23 $18.01 $23.09 $41.10 0.39
Landfill Alt. 1b - ND $75.47 $33.87 $88.14 $122.01 1.62
Alt. 1b - 1500 $75.07 $34.86 $87.37 $122.23 1.63
Alt. 1b - LD $72.42 $38.46 $83.93 $122.39 1.69
Electricity
Generation
WWTP Alt. 2a - ND $35.04 $0.78 $1.58 $1.91 0.05
Alt. 2a - 1500 $45.91 $2.48 $2.71 $4.41 0.10
Alt. 2a - LD $101.24 $16.33 $2.77 $18.31 0.18
Landfill Alt. 2b - ND $46.50 $18.96 $27.16 $35.23 0.76
Alt. 2b - 1500 $46.18 $15.95 $26.91 $32.08 0.69
Alt. 2b - LD $44.55 $24.16 $25.75 $39.58 0.89
Natural Gas
Replacement
WWTP Alt. 3 - ND $25.20 $1.69 $1.09 $2.78 0.11
Alt. 3 - 1500 $33.18 $3.23 $0.93 $4.16 0.13
Alt. 3 - LD $82.92 $16.60 $0.15 $16.75 0.20
Expanded
Composting
Compost Alt. 4 $15.69 $15.07 $0.00 $15.07 0.96
City of Iowa City | CAAP Methane Recovery Feasibility Study
Summary Economic, and Environmental Impacts of Alternatives
25
The results show that only Alternative 1b (landfill natural gas) has benefits that exceed the costs.
The highest BCR is Alternative 1b – Low-Diversion. This alternative ranks highest on total lifecycle
CO2e emission reductions, and when combined with the value of RIN credits results in the
greatest economic benefits. However, the City should be aware that the CO2e emission reduction
when RINs are sold to an Obligated Party will occur outside of the City’s municipal and
community-scale GHG inventories. This alternative has the sixth highest cost of the 15
alternatives presented. The net result, of Alternative 1b, is a BCR of 1.69 dollars of benefit per
dollar of cost invested.
A sensitivity test was conducted to test the impact of key monetary values (RIN credits and SCC
values) on the ranking of the alternatives. Changing the value of the SCC was found to have no
effect in ranking as the value influences all of the alternatives equally. Conversely, the RIN credit
value only affects the BCR of pipeline injection alternative (Alternative 1) and would have an
impact on alternative ranking. The sensitivity analysis showed that the realized RIN credit value
would need to be below $6.00 per MMBTU, or 5% greater than the low value of D5 RIN credits
shown Table 3 for the BCR ranking of alternatives to change.
Perhaps as important for consideration in CAAP are non-monetary considerations. The non-
monetary metrics (EROEI and lifecycle change in CO2e emissions) are shown in Table 9. Perhaps
the most important measure related to CAAP action objectives is CO2e reductions. All of the
alternatives result in a net reduction in CO2e over the next 30 years. Alternative 1b – Low-
Diversion results in the greatest net reduction.
Table 9: Summary of Non-Monetary Impacts
Alternative
Description
Location Alternative Lifecycle Change in
CO2e Emissions
Lifecycle
EROEI
Pipeline Injection WWTP Alt. 1a - ND 40,500 6.9
Alt. 1a - 1500 77,800 7.9
Alt. 1a – LD 436,200 7.9
Landfill Alt. 1b - ND 820,500 7.5
Alt. 1b - 1500 844,500 7.6
Alt. 1b - LD 931,800 7.9
Electricity
Generation
WWTP Alt. 2a - ND 19,000 2.0
Alt. 2a - 1500 60,000 12.4
Alt. 2a - LD 395,600 13.3
Landfill Alt. 2b - ND 459,200 1.5
Alt. 2b - 1500 386,500 2.1
Alt. 2b - LD 585,200 12.6
Natural Gas
Replacement
WWTP Alt. 3 - ND 40,900 4.6
Alt. 3 - 1500 78,300 3.4
Alt. 3 - LD 252,200 1.8
Expanded
Composting
Compost Alt. 4 365,100 0.0
City of Iowa City | CAAP Methane Recovery Feasibility Study
Summary Economic, and Environmental Impacts of Alternatives
26
Finally, all alternatives, except for composting, result in an EROEI of 1.0 or greater. Incremental
composting of food waste does not generate energy. Opposite of the economic and GHG
measures, Alternative 2a (WWTP Electricity Generation) – Low-Diversion ranks highest on
EROEI. Meanwhile Alt 1b – Low-Diversion is ranked 5th on EROEI.
The overall ranking of the alternatives for the monetary (BCR) and the two non-monetary results
are shown below in Table 10.
Table 10: Summary and Ranking of Monetary and Non-Monetary Results
Alternative
Description
Location Alternative GHG
Reduction
GHG
Rank
EROEI EROEI
Rank
BCR BCR
Rank
Pipeline
Injection
WWTP Alt. 1a - ND 40500 15 6.9 9 0.20 11
Alt. 1a - 1500 77800 12 7.9 6 0.22 9
Alt. 1a - LD 436200 6 7.9 4 0.39 8
Landfill Alt. 1b - ND 820500 3 7.5 8 1.62 3
Alt. 1b - 1500 844500 2 7.6 7 1.63 2
Alt. 1b - LD 931800 1 7.9 5 1.69 1
Electricity
Generation
WWTP Alt. 2a - ND 19000 16 2.0 13 0.05 16
Alt. 2a - 1500 60000 13 12.4 3 0.10 15
Alt. 2a - LD 395600 8 13.3 1 0.18 12
Landfill Alt. 2b - ND 459200 5 1.5 15 0.76 6
Alt. 2b - 1500 386500 9 2.1 12 0.69 7
Alt. 2b - LD 585200 4 12.6 2 0.89 5
Natural Gas
Replacement
WWTP Alt. 3 - ND 40900 14 4.6 10 0.11 14
Alt. 3 - 1500 78300 11 3.4 11 0.13 13
Alt. 3 - LD 402000 7 1.8 14 0.20 10
Expanded
Composting
Compost Alt. 4 365100 10 0.0 16 0.96 4
City of Iowa City | CAAP Methane Recovery Feasibility Study
Summary Economic, and Environmental Impacts of Alternatives
27
5.1 Findings and Insights
To make recommendations for actions under 3.7 and 3.8, the monetary and non-monetary results
are combined into a weighted score as shown below in Table 11. Each result was converted to
an index (1 to 0). The indexed results were then weighted equally into a total score with a
maximum value of 1.
Table 11: Indexed and Weighted Scores for each Alternative
Alternative
Description
Location Alternative GHG
Reducti
on
EROEI BCR Total
Score
Rank
Pipeline
Injection
WWTP Alt. 1a - ND 0.01 0.17 0.04 0.23 13
Alt. 1a - 1500 0.03 0.20 0.04 0.27 11
Alt. 1a - LD 0.16 0.20 0.08 0.43 6
Landfill Alt. 1b - ND 0.29 0.19 0.32 0.80 3
Alt. 1b - 1500 0.30 0.19 0.32 0.81 2
Alt. 1b - LD 0.33 0.20 0.33 0.86 1
Electricity
Generation
WWTP Alt. 2a - ND 0.01 0.05 0.01 0.07 16
Alt. 2a - 1500 0.02 0.31 0.02 0.35 7
Alt. 2a - LD 0.14 0.33 0.04 0.51 5
Landfill Alt. 2b - ND 0.16 0.04 0.15 0.35 8
Alt. 2b - 1500 0.14 0.05 0.14 0.33 9
Alt. 2b - LD 0.21 0.32 0.18 0.70 4
Natural Gas
Replacement
WWTP Alt. 3 - ND 0.01 0.12 0.02 0.15 14
Alt. 3 - 1500 0.03 0.08 0.02 0.14 15
Alt. 3 - LD 0.14 0.05 0.04 0.23 12
Expanded
Composting
Compost Alt. 4 0.13 0.00 0.19 0.32 10
As noted previously, the Alternative 1b-LD (Landfill RNG Pipeline Injection) – Low-Diversion has
the highest BCR. It also has the highest GHG reduction over 30 years. This is driven by the
assumption that biogas injected into the natural gas pipeline would be utilized to generate and
sell RIN credits, ultimately being used as a renewable fuel for mobile source combustion. Further,
RNG is a market driver for commercial fleets to transition away from conventional diesel trucks to
compressed natural gas (CNG)/RNG alternate fueled-vehicles. However, the City should be
aware that when RINs are sold to an Obligated Party, the CO2e emission reduction will occur
outside of the City’s municipal and community-scale GHG inventories. Opposite of the economic
and GHG impacts, Alternative 2a (WWTP Electricity Generation) – Low-Diversion ranks highest
on EROEI. Meanwhile Alternative 1b – Low-Diversion is ranked 5th on EROEI.
Based on the indexing and weighting exercise, Alternative 1b (Landfill Natural Gas) – Low-
Diversion has the highest score (0.86). Alternative 1b (landfill natural gas) – 1500 ton diversion is
ranked second. Alternative 1b (landfill natural gas) – No-Diversion is ranked third. Again, CO2e
emission reduction associated with pipeline injection and used as a renewable fuel will occur
outside of the City’s municipal and community-scale GHG inventories.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Summary Economic, and Environmental Impacts of Alternatives
28
If the City is instead focused on reductions that will be reflected in its municipal and community-
scale GHG emission inventory, then evaluation should be narrowed to focus on Alternatives 2
(Electricity Generation) and 3 (Natural Gas Replacement). While electricity generated at the
WWTP or Landfill (2a and 2b, respectively) could very well be pushed to the power grid,
contractual agreements with local utilities could allow the City to retain and retire RECs for GHG
accounting purposes. Specifically, RECs could be applied to the City’s Scope 2 market-based
GHG inventory. Using RNG to displace natural gas use at the WWTP would result in lower Scope
1 GHG emissions. Focused on these two alternatives, Alternative 2b – Low-Diversion is ranked
highest (fourth overall), followed by Alternatives 2a – Low-Diversion and 2a – 1500. These
alternatives are ranked 4, 5 and 7 overall.
If total GHG emissions reduction is the ultimately priority, Alternatives 1b (Landfill Pipeline
Injection) offers the greatest potential, simply due to the volume of biogas generation and
associated potential for renewable electricity generation.
Finally, biogas utilization alternatives can be combined together with others, and some can be
incorporated as standalone projects (as shown in Table 12).
Table 12: Potential Biogas Utilization Alternatives Combinations
There are 18 unique possible combinations of alternatives, Table 12 has been developed to more
appropriately showcase combinations and the “diversion lanes” in which decisions would need to
be maintained with a decision. Boxes with blue numbering indicate individual alternative scenarios
NG Pipeline
Injection
Electricity
Generation
NG Pipeline
Injection
Electricity
Generation
NG Pipeline
Injection
Electricity
Generation
Alt 1b-ND Alt 2b-ND Alt 1b-1500 Alt 2b-1500 Alt 1b-LD Alt 2b-LD
0 0.80 0.35 0.81 0.33 0.86 0.70
NG Pipeline
Injection Alt 1a-ND 0.23 1.02 0.58
Electricity
Generation Alt 2a-ND 0.07 0.87 0.42
NG
Replacement Alt 3-ND 0.15 0.95 0.50
NG Pipeline
Injection Alt 1a-1500 0.27 1.08 0.60
Electricity
Generation Alt 2a-1500 0.35 1.16 0.68
NG
Replacement Alt 3-1500 0.14 0.95 0.47
NG Pipeline
Injection Alt 1a-LD 0.43 1.30 1.13
Electricity
Generation Alt 2a-LD 0.51 1.37 1.21
NG
Replacement Alt 3-LD 0.23 1.09 0.93
Landfill Location
No Diversion 1500 ton/yr Diversion Low Diversion
Do Nothing
Weighted and Indexed Performance
Indicators
Total Score, inclusive of:
GHG Reduction, EROI, and BCR
Do Nothing
City of Iowa City | CAAP Methane Recovery Feasibility Study
Summary Economic, and Environmental Impacts of Alternatives
29
at either the Landfill or at the WWTP. The boxes are also color coded in a “heat map” format, to
show the overall ranking of the individual scenarios.
The individual alternatives can be combined together, but must be done so following the same
waste diversion scenario from the Landfill. When combining the alternatives the scores from the
Landfill and WWTP alternatives can be added together to identify the best combination of actions
under each of the waste diversion scenarios. From Table 11 above, the higher the score the better
the alternative. The highest scored alternatives are: Alternative 1b – NG Pipeline Injection landfill
alternatives for each of the No-Diversion, 1500 ton diversion, and Low-Diversion scenarios.
Identifying the best combination of actions works as follows: select the highest scored alternative
from the desired waste diversion scenario (shown to be from the Alternative 1b – NG Pipeline
Injection landfill alternatives) then work down the column (or “diversion lane”) to the desired
combination scenario. In the case of combining with Alternative 2a – Electricity Generation at the
WWTP, a resulting combined score of 1.16. As capital costs are also additive, consideration
should be given to the seemingly minor weighted score differential. In the example of combined
Alt 1b-1500 with Alt 2a-1500, there is an estimated $6.2M savings to select Alt 1b-1500 with Alt
1a-1500.
5.1.1 Path Forward
HDR recognizes that incremental food waste diversion is not an instantaneous process, but the
SROI analysis provides an assessment of the resulting impact when achieved. This Report
provides decision tools to support the City’s further consideration and decision making.
Consequently, the City might consider the following path forward to further evaluate and
implement the preferred alternative(s):
i. City decision on desired diversion scenario and methane utilization at the WWTP to
narrow the field of alternatives. (0-6 months)
ii. Further technical analysis to develop organics management strategies to achieve a
targeted diversion scenario and further evaluate life cycle costs of co-digestion (if desired)
and biogas utilization to generate electricity or RNG. Consideration of impacts to planned
digester rehab project. (3-6 months)
iii. Conceptual Design Development of the selected alternative(s), providing basis of design
parameters and implementation planning. (3-6 months)
iv. Detailed Design Development. (TBD)
v. Bidding and Construction. (TBD)
It may be prudent for the City to complete items i) and ii) within the next 6-months for capital
planning purposes.
City of Iowa City | CAAP Methane Recovery Feasibility Study
References:
30
6 References:
City of Iowa City (2018), Climate Action and Adaptation Plan,
https://www.icgov.org/project/climate-action.
City of Iowa City (2019), City Resolution 19-218, https://www.icgov.org/project/climate-action.
City of Iowa City, (2020), Accelerating Iowa City’s Climate Action Plan,
https://www.icgov.org/project/climate-action.
Clinton Global Initiative, (2007), https://www.clintonfoundation.org/clinton-global-
initiative/commitments/creating-sustainable-return-investment-sroi-tool.
Interagency Working Group on Social Cost of Carbon (IWGSCC), United States Government.
(2010). Technical Support Document: Social Cost of Carbon for Regulatory Impact
Analysis Under Executive Order 12866.
U.S. Environmental Protection Agency (2019). Environmental Protection Agency Waste
Reduction Model (WARM) version 15. https://www.epa.gov/warm/versions-waste-
reduction-model-warm#15.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Appendix A
A
Appendix A
Low-Diversion Scenario
Digester Costs
Costs
Hauled Waste Receiving Station $2,960,000
Anaerobic Digester (1.4 MG)$18,325,000
Sludge Dewatering and Storage $4,990,000
$26,300,000
General O&M - Parts, Labor, Electricity 1.5% of capital subtotal $394,500
$394,500
Low Diversion Scenario (20% Diversion) - New Anaerobic Digester Complex
Capital Cost
Total Adjusted Base Bid with Installation
Annual O&M Cost Annual O&M Costs
OPINION OF PROBABLE CONSTRUCTION COSTS
City of Iowa City | CAAP Methane Recovery Feasibility Study
Appendix B
B
Appendix B
Financial Proforma –
Breakeven Analysis
City of Iowa City | CAAP Methane Recovery Feasibility Study
Appendix B - Memo | Financial Proforma - Breakeven Analysis
1
Appendix B - Memo
Date: Wednesday, December 23, 2020
Project: CAAP Methane Recovery Feasibility Study (HDR #10203725)
To: City of Iowa City (PM – Joseph Welter)
From: HDR (PM – Morgan Mays; Marcella Thompson; Serguei Kouznetsov; Jeremy Cook)
Subject: Financial Proforma - Breakeven Analysis
Building on the Sustainable Return on Investment (SROI) and the Energy Return on Energy
Invested (EROEI) analysis performed by HDR, a high-level breakeven financial analysis was
performed for each of the options identified in the Final Feasibility Report. The financial analysis
examines the impact of cash flows to Iowa City (the City) to compare the revenues (inflows) and
costs (outflows). The purpose of the analysis was to identify the length of time for each
alternative to break-even. This memorandum outlines the cash flows evaluated, key
assumptions, and the results of the analysis.
Key Assumptions
The financial analysis examined revenue streams for the various alternatives. For the pipeline
injection alternatives, the revenue is derived from the Renewable Identification Number (RIN)
credits under the Renewable Fuel Standard Program. For the electricity generation alternatives,
the revenue is derived from electricity sales through an agreement with the utilities and
Renewable Energy Credits (RECs). For natural gas replacement alternatives, revenue or rather
savings are derived from avoided natural gas purchases.
Revenue from electricity sales are assumed to be captured from both net metering and
negotiated buyback agreements with MidAmerican Energy Company and Eastern Iowa Light
and Power Cooperative.
MidAmerican Energy Company (which supplies the electricity to the Iowa City Landfill) allows for
net metering agreements for a facility nameplate generation capacity of up to 1 megawatt (MW).
Credits from net metering agreements are paid out at the average locational marginal price
(LMP) from the Midcontinent Independent System Operator (MISO) based on the generation
profile of the resource. For energy produced beyond a nameplate capacity of 1 MW, energy can
be sold to MidAmerican Energy at a negotiated buyback rate. The Eastern Iowa Light and
Power Cooperative allows for buyback agreements for facilities with a nameplate generation
capacity exceeding 20 kilowatts (kW). RECs are earned for each megawatt-hour (MWh) of
electricity generated. For the purposes of this analysis, an average LMP of 2.6¢1 per kilowatt-
hour (kWh) was calculated based on the 2019 LMP prices for the Illinois hub and the 2019
1 Real time LMP prices gathered from Midcontinent Independent System Operator (MISO)’s historical
LMPs for real-time markets from January 1, 2019 to December 31, 2019.
***********.misoenergy.org/markets-and-operations/real-time--market-data/market-reports/#nt=.
MISO historical load data was gathered from EnergyOnline from January 1, 2019 to December 31, 2019.
**********.energyonline.com/Data/GenericData.aspx?DataId=17.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Appendix B - Memo | Financial Proforma - Breakeven Analysis
2
MISO load. This was assumed to be the price paid per kWh for MidAmerican Energy’s net
metering agreements. It was also assumed that the negotiated buyback rate for electricity
generation in excess of 1 MW was equivalent to the average LMP price of 2.6¢ per kWh.
Eastern Iowa Light and Power Cooperative posts its avoided cost of generation during peak and
off-peak hours online from which a weighted average rate of 4.2¢ per kWh was calculated for
energy sales from the wastewater treatment plant.
Renewable energy credits were monetized at an average rate of $17 per MWh based on the
latest auction prices of $16.93 per MWh in and the approximate band of prices over the past
couple of years (see figure below). The analysis assumed that prices would remain at that price
for the full 30 years of the analysis.
Figure 1: Historical Auction Prices for Renewable Energy Credits2
As mentioned in the main report, the WWTP RNG produced will exceed the amount of natural
gas used at the plant. As such, the City would need to either: find a use for the excess RNG
produced, flare the excess gas, or the City would only condition the amount of biogas needed
2 California Air Resources Board. California and Quebec Carbon Allowance Prices, December 4, 2020.
********ww2.arb.ca.gov/sites/default/files/2020-09/carbonallowanceprices_0.pdf.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Appendix B - Memo | Financial Proforma - Breakeven Analysis
3
and the excess biogas would be flared. For this analysis, it was assumed that RNG production
would be capped at 62,848 standard cubic feet per day and valued at the delivered cost of
natural gas at the facility assumed to be $3.16 per MMBtu.
Results
High level results of the financial analysis are presented in the tables below. Projects were
assumed to be bonded at a 3% interest rate and the breakeven term represents the minimum
financing term that would be needed for the project to break even financially. Many alternatives
have a payback term that is longer than 30 years, making them infeasible without grant funding
support.
Table 1: Lifecycle Financial Breakeven Analysis Results, Millions of 2019$
Alternative
Description
Location Alternative Total
Cost
Total
Financial
Benefit
Project
NPV (3%
bond rate)
Financial
Breakeven
Term
Pipeline
Injection
WWTP Alt. 1a - ND $35.92 $5.48 -$30.44 N/A
Alt. 1a - 1500 Div $47.44 $7.35 -$40.10 N/A
Alt. 1a - LD $104.23 $23.09 -$81.14 N/A
Landfill Alt. 1b - ND $75.47 $88.14 $12.67 17.9 years
Alt. 1b - 1500 Div $75.07 $87.37 $12.30 18.0 years
Alt. 1b - LD $72.42 $83.93 $11.52 18.2 years
Electricity
Generation
WWTP Alt. 2a - ND $35.04 $1.58 -$33.47 N/A
Alt. 2a - 1500 Div $45.91 $2.71 -$43.21 N/A
Alt. 2a - LD $101.24 $2.77 -$98.47 N/A
Landfill Alt. 2b - ND $46.50 $27.16 -$19.34 N/A
Alt. 2b - 1500 Div $46.18 $26.91 -$19.28 N/A
Alt. 2b - LD $44.55 $25.75 -$18.81 N/A
Natural Gas
Replacement
WWTP Alt. 3 - ND $25.20 $1.09 -$24.11 N/A
Alt. 3 - 1500 Div $33.18 $0.93 -$32.25 N/A
Alt. 3 - LD $82.92 $0.15 -$82.77 N/A
Expanded
Composting
Compost Alt. 4 $15.69 $0.00 -$15.69 N/A
Table 2: Annual Financial Breakeven Analysis Results
Alternative
Description Location Alternative
Annual Debt
Service on
Capital Costs
Annual
Operating
Costs
Annual
Revenues/
Savings
Net
Annual
Financial
Impact
Pipeline
Injection
WWTP Alt. 1a - ND $0.44 $1.35 $0.27 -$1.52
Alt. 1a - 1500 Div $0.55 $1.82 $0.36 -$2.00
Alt. 1a - LD $2.11 $3.11 $1.14 -$4.08
Landfill Alt. 1b - ND $1.49 $2.29 $4.37 $0.58
Alt. 1b - 1500 Div $1.48 $2.28 $4.33 $0.57
Alt. 1b - LD $1.43 $2.20 $4.16 $0.53
WWTP Alt. 2a - ND $0.69 $1.07 $0.08 -$1.68
City of Iowa City | CAAP Methane Recovery Feasibility Study
Appendix B - Memo | Financial Proforma - Breakeven Analysis
4
Alternative
Description Location Alternative
Annual Debt
Service on
Capital Costs
Annual
Operating
Costs
Annual
Revenues/
Savings
Net
Annual
Financial
Impact
Electricity
Generation
Alt. 2a - 1500 Div $0.87 $1.43 $0.13 -$2.17
Alt. 2a - LD $2.55 $2.54 $0.14 -$4.95
Landfill Alt. 2b - ND $1.05 $1.29 $1.35 -$0.99
Alt. 2b - 1500 Div $1.04 $1.04 $1.33 -$0.74
Alt. 2b - LD $1.00 $1.24 $1.28 -$0.96
Natural Gas
Replacement
WWTP Alt. 3 - ND $0.39 $0.87 $0.05 -$1.21
Alt. 3 - 1500 Div $0.49 $1.16 $0.05 -$1.61
Alt. 3 - LD $2.03 $2.14 $0.01 -$4.16
Expanded
Composting
Compost Alt. 4 $0.29 $0.50 $0.00 -$0.79
Given that many of the alternatives do not generate enough financial benefits to break even in a
reasonable time frame, the HDR team considered whether grant funding support could make
the project feasible. The table below presents the minimum amount of grant funding required for
each project to break even within specific time frames. Since grant funding is used to support
up-front project capital costs, amounts above the initial capital costs are highlighted in red as not
feasible. Amounts in green are feasible with the specified amount of grant funding.
Table 3: Grant Funding Support Necessary for Projects to Break Even
Alternative
Description Location Alternative
Initial
Project
Capital
Cost
Baseline
Financial
Breakeven
Term
Grant Funding
Support to
Break Even
within 30 Years
Pipeline
Injection
WWTP Alt. 1a - ND $8.60 N/A $30.44
Alt. 1a - 1500 Div $10.80 N/A $40.10
Alt. 1a - LD $41.40 N/A $81.14
Landfill Alt. 1b - ND $29.20 17.9 years $0
Alt. 1b - 1500 Div $29.00 18.0 years $0
Alt. 1b - LD $28.00 18.2 years $0
Electricity
Generation
WWTP Alt. 2a - ND $13.50 N/A $33.47
Alt. 2a - 1500 Div $17.00 N/A $43.21
Alt. 2a - LD $50.00 N/A $98.47
Landfill Alt. 2b - ND $20.50 N/A $19.34
Alt. 2b - 1500 Div $20.30 N/A $19.28
Alt. 2b - LD $19.60 N/A $18.81
Natural Gas
Replacement
WWTP Alt. 3 - ND $7.70 N/A $24.11
Alt. 3 - 1500 Div $9.70 N/A $32.25
Alt. 3 - LD $39.80 N/A $82.77
Expanded
Composting
Compost Alt. 4 $5.70 N/A $15.69
City of Iowa City | CAAP Methane Recovery Feasibility Study
Appendix B - Memo | Financial Proforma - Breakeven Analysis
5
In general, pipeline injection and electricity generation at the landfill are the only options that
generate enough revenues to pay for the operating costs on an ongoing basis. Pipeline injection
is feasible with bonding terms of about 18 years, while electricity generation would require
around $19 million in grant funding support to be financially viable within 30 years. That said,
the electricity generation revenues are currently limited by the net metering and buyback
agreements in place. This analysis has assumed that MidAmerican Energy Company (which
provides electricity to the Iowa City Landfill) will negotiate a buyback agreement similar to the
LMP-based rates they offer under their net metering agreement. However, if the City were able
to negotiate a higher rate, it could make the alternatives financially viable. Specifically, an
electricity sales rate of 5.7¢ per kWh would make all three of the alternatives financially viable
within the 30-year time frame.
Grant Funding
A few federal and state grant programs could potentially be leveraged to reduce the City’s
financial contribution and make the alternatives financially viable. The table below summarizes a
few options based on literature review of the biggest programs which have had funding cycles
within the past year.
Table 4: Grant Funding Opportunities
Program
Administrator
Funding
Program
Eligible
Applicants Eligibility Requirements Funding
Federal Programs
US Department
of Energy
Office of Energy
Efficiency and
Renewable
Energy
Bioenergy
Technologies
Multi-Topic
FOA
Individuals,
entities, state
or local
governments,
corporations,
etc.
Varies based on year. FY2020
included area of Waste to Energy
Strategies for the Bioeconomy,
focusing on projects addressing
topics such as advanced
preprocessing of feedstocks,
conversion of wet wastes to energy
and products, and synergistic
integration of algal biomass
technologies with municipal
wastewater treatment for greater
energy efficiencies and lower costs.
20% cost share required.
Varies based on
topic. Based on the
FY20 grant
application
documentation,
minimum award was
$1,000,000 and
maximum award for
most topics was
between $2,000,000
and $4,000,000.
US Department
of Agriculture
Biorefinery,
Renewable
Chemical,
and Biobased
Product
Manufacturing
Assistance
Program
Individuals,
entities, state
or local
governments,
corporations,
institutions,
public power
entities, etc.
Must be for development and
construction or retrofitting of a
commercial scale biorefinery using an
eligible technology for the production
of advanced biofuels and biobased
products. Majority of production must
be an advanced biofuel.
Maximum loan
guarantee of 80% of
project costs or $250
million. Term length
of the lesser of 20
years or the useful life
of the project.
State Programs
Iowa Energy
Center
Iowa Energy
Center Grant
Iowa
businesses,
colleges and
universities,
and private
nonprofit
agencies and
foundations
Projects must provide benefit to Iowa
ratepayers and aid in one of the key
focus areas of the Iowa Energy Plan:
1) technology-based research and
development, 2) energy workforce
development, 3) support for rural and
underserved areas, 4) biomass
conversion, 5) natural gas expansion
in underserved areas, 6) electric grid
Minimum award of
$10,000, maximum
award of $1,000,000.
City of Iowa City | CAAP Methane Recovery Feasibility Study
Appendix B - Memo | Financial Proforma - Breakeven Analysis
6
Program
Administrator
Funding
Program
Eligible
Applicants Eligibility Requirements Funding
modernization, 7) alternative fuel
vehicles.
Iowa Energy
Center
Alternate
Energy
Revolving
Loan Program
Businesses,
individuals,
water and
wastewater
utilities, rural
water districts
and sanitary
districts
Eligible technologies and resources
include solar, wind, waste
management, resource recovery,
refuse-derived fuel, agricultural crops
and residue, and wood burning,
hydroelectric facility at a dam, energy
storage, anerobic digestion, biogas,
combined heat and power, wind
repower. Facility must be in Iowa and
be wholly owned by the borrower.
Minimum loan of
$25,000, up to 50%
of eligible project
costs. Maximum loan
of $1,000,000 per
project. Loans offered
at 0% interest.
Iowa
Department of
Natural
Resources
Solid Waste
Alternatives
Program
Any unit of
local
government,
public or
private group,
or individual
Projects to reduce the amount of solid
waste generated and landfilled in
Iowa. Funds can be used for waste
reduction equipment and installation,
recycling, collection, processing or
hauling equipment, purchase and
installation of recycled content
products. 25% cash match required.
First $10,000 is
eligible as a
forgivable loan, next
$50,000 is eligible as
a zero-interest loan,
and 3% loan on the
remainder.