Subject: Project Phoenix Review Date: October 13, 2016 From: Troy Runge & Mahmoud Sharara Executive summary We provided a review of Project Phoenix feasibility study by Dynamic Concepts. Our findings conclude that although Dynamic Concepts provided an excellent study, we believe they overestimated the biogas potential of the area through an overestimation of the excreted animal manure and the availability of off-farm feedstocks. Unfortunately, the reduction identified in gas potential does not correspond to significantly lower capital and operating expenses, thus the project economic return is reduced to below the threshold of economic viability. If significant non-manure substrate can be identified (~150 - 200 kgal/day) that brings in significantly more renewable natural gas sales without significant capital and operating expenses, the project could be made viable. However it is our experience that such quantities are not typically available at zero cost, let alone with positive revenue from tipping fee. If such streams do exist, however, they typically require significant cost in aggregation and transportation. Therefore, identification of these resources will be key to make this project economically successful. Recommendations • Our more conservative estimates of manure volumes and substrates and the corresponding

financial modeling does not support a project of the current scope. • A project in Kewaunee County might be feasible but investing entities would need to have

more data collected on manure and especially non-manure feedstocks. • Our nutrient modelling indicates that Kewaunee County has excess phosphorous from the

large dairy population. Nutrient export out of the county may be necessary to reduce the impact on water quality.

• Kewaunee County has a large amount of sensitive lands for manure spreading, which in turn would yield a large environmental benefit for nutrient export if enabled by this project. Economic subsidization for the water quality improvement would make the project economics more attractive.

• Kewaunee County’s abundance of sensitive lands makes irrigation of nutrient-rich water from manure processing difficult, which necessitates advanced manure processing to create “clean” water for disposal through irrigation.

• Overall, Kewaunee County’s manure processing should be driven by environmental issues, primarily to reduce phosphorous loss from over-application. Ideally, renewable natural gas can be part of that solution.

Scope of work Four tasks were undertaken as part of this project including: 1) Peer review the feasibility study report produced by Dynamic Concepts, LLC to identify

potential errors, omissions, and other factors that should be considered. 2) Provide an independent analysis of the assumptions on gas production from the digesters,

including the use of additional substrates to make the systems work and any associated regulatory issues.

3) Provide an evaluation of environmentally sensitive lands to manure application with respect to slope, soil type, and proximity to waterways. These sensitive lands will be key to identify locations for manure processing that can provide maximum environmental impact from reduced winter spreading.

4) Perform a sensitivity analysis on the major project economics assumptions identified in the review (as time allows). Provide any system changes recommendations based on the analysis to improve the economics of the project.

Task 1 – Peer review the feasibility study

The study provided by Dynamic Concepts LLC of Waukesha WI determined that a hub and spoke manure processing system can be established in Kewaunee County integrating a network of anaerobic digester and nutrient concentration systems to produce renewable natural gas for pipeline injection, fiber product for animal bedding, and two forms of nutrients for land application. An aqueous system for land application through irrigation techniques, and a granulated solid for land application. The reduction of volume and solids/liquids separation are expected to have significant environmental benefits primarily in water quality. Whereas the renewable natural gas replacement of conventional natural gas has positive environmental impacts associated with biofuels, primarily in reduction of greenhouse gas emissions.

Overall the quality of the study was high, and it was evident to the reviewer that Dynamic Concepts spent considerable effort on the report and overall did an excellent job in the initial feasibility calculations. However, with all studies there are assumptions that should be further considered including the following:

- Manure calculation appear to be high and should be verified along with the biogas yields - The decrease of manure volume by 60% was accomplished through manure processing

including suspended solids separation, ultrafiltration, and reverse osmosis. o Ultrafiltration and reverse osmosis are fairly expensive and difficult to maintain

with a manure feedstock. Processing the manure to just remove the suspended solids without ultrafiltration is lower cost and would still allow recycling for manure flushing and irrigation application.

o Separating water from manure and using it as process water on farm does not reduce the as-excreted manure volume.

o Applying the separated liquid through fertilizer-irrigation would reduce the hauling costs. However as the original source of the water was manure, the DNR may not allow irrigation through grass waterways, making irrigation difficult on many fields. Additionally, some municipalities have local ordinances that would require exemptions for this practice.

- Off-farm feedstock of 20% was considered and may be too high of a number for the area. o Although there may be some food waste in the area it typically takes large

aggregated sources to be economically feasible for co-digestion due to logistical costs. Additionally any aggregated food waste may already have a market as animal feed (Example; whey dried for milk replacement).

o Removal of these sources from wastewater or landfill will reduce the gas volume from these sources and would need to be accounted for.

o An initial feasibility study typically is more conservative and would only include consideration of these resources after some study.

o Removal of these sources will have a significant impact on the high-side economics.

o Additional WPDES permitting and record keeping is required per NR 243. Additionally food waste stream have the potential to increase P loading for the watershed.

- After analysis of sensitive soils, it appears wastewater irrigation may not a suitable approach for manure slurry disposal given the predominance of critical soils to this technique. Sludge application appears a more suitable approach for manure application when compared to wastewater irrigation.

- It was unclear from the Dynamics report how hub number and location were calculated though the do appear reasonable. If the project were to continue optimization of the satellite farms and hubs might provide a slight improvement in expenses.

- Dynamics phosphorous balance could be made more robust with additional years. Additionally, the uptake appears to be high and will be verified with independent calculations.

Task 2 - Gas production from the digesters To calculate the biogas potential from the digesters we performed and independent set of calculations following American Society of Agricultural and Biological Engineers (ASABE) standards on manure production per animal unit. We used a similar farm selection criteria in the 10 digester hubs as the Dynamic report to allow direct comparison of the results. Manure production

The basis for our analysis is a livestock inventory data, provided by Department of Natural Resources (DNR) that list livestock herds in Kewaunee County by number and type of animals. We used the animal unit (AU) concept, which corresponds to 1,000 pounds of live animal

weight, to combine different livestock. Figure 1 below summarizes the herd size classification of livestock operation in Kewaunee County. Figure 2 illustrates the spatial distribution of livestock across the County.

Figure 1. Distribution of Kewaunee County livestock operations by size

Manure production rate and composition for each animal type was based U.S. Department of Agriculture guidelines summarized in Table 1. The Kewaunee herd data made no distinction between “dry” and “lactating” dairy cows. Accordingly, we assumed all animal heads under the “dairy-dry” category are lactating cows, and used the corresponding manure production and composition rates. An additional volume of water is added to milk cow manure volume to account for flush and cleaning water that is not reclaimed through separation and recycling. To account for that added volume, manure volume for milk cow was increased to 125% of as-excreted volume.

Table 1. Rates and composition of livestock manure used in this study (Source: NRCS-USDA, Agricultural Waste Management Field Handbook) Milk cow* Beef cow Heifer Calf

Animal unit (AU) equivalent 1.38 1.20 0.97 0.33 Manure volume (Gal/AU/day) 14.30 12.80 6.70 9.8

Manure solids (lb./AU/day) 15.00 13.00 8.50 9.20 Manure volatile solids (VS)

(lb./AU/day) 12.00 11.00 7.30 7.70

P excreted (lb./AU/day) 0.14 0.08 0.05 0.05 *Corresponding to a 1,375 lb. lactating cow with a milk production of 100 lb./day

We estimated daily biogas yield and energy content using estimates in the literature. Most estimates use unit mass of volatile solids (VS) in the waste (or manure) as the basis for biogas yield estimation. Dairy manure biogas potential varies according to the digester conditions (residence time, temperature, digester configuration) as well as the manure composition and age. Therefore we used a typical estimate of biogas production, 4.8 cu ft. /lb. VS, with all the biogas parameters listed in Table 2.

Table 2. Manure biogas parameters

Biogas potential for dairy manure 3.2 – 4.8 cu ft./lb. VS1 CH4 concentration in biogas 55% - 75% 1

CH4 net heating value 21,433 BTU/lb. CH4 CH4 density 0.041 lb./cu ft. (@ 20°C, 1 atm. Pressure)

1 Ileleji et al., Basics of Energy Production through Anaerobic Digestion of Livestock Manure. Purdue Extension Factsheet (ID-406-W)

Figure 1. Distribution of Kewaunee County livestock operations by size

Using this data, we estimated total manure volumes, in U.S. gallons per day, as well as phosphorus production, in pounds of P2O5 per day, and biogas yields, in cubic feet and British Thermal Units (Btu) per day. Table 3 shows this data.

Table 3. Study area manure volumes, P amounts, and biogas potential Animal Units (AU) 88,590

Manure volume (Gallons/day) 1,353,867 Manure Phosphorus (lb. P2O5/day) 23,676

Biogas production (cu ft./day) 4,645,688 Biogas energy content (Btu/day) 2,461,395,848

Using the identified hubs in the report and the satellite farms in those hub areas we allocated the total manure shown in Table 5. Next, we implemented similar criteria to that identified in the report to filter potential supplying (satellite) farms to practical manure. Namely, we excluded farms where calves made up more than 80% of animal heads as calves-only farms where manure is usually handled in dry form. Additionally, we excluded farms with less than 280 AU (comparable to 200 equivalent cow used in the study). We then allocated each of the remaining farms to the closest hub and verified that the assignment criterion did not assign a farm to a hub farther than 5 miles. The results are shown in table 6, described as practical livestock manure, with practical denoting that only farms that are close enough to the hub and large enough to be significant are being utilized. Finally, we completed a comparison in table 7 of using only the large farms at the hubs.

The cost of hauling manure from satellite farms to the hub was calculated and shown along with the manure volumes in tables 5 and 6, using the manure transportation equation detailed in the project report (Equation 1). All hauling is assumed to be carried out through trucking, though pipelines should be studied if the project proceeds. The transportation cost model appears consistent with costs reported by other producers in Wisconsin. Hauling cost ($) = Hauled volume (gallon) * [A + B * (Hauled distance (mile) – 1)] (Eq. 1)

Where:

A: base hauling cost ($0.01/gallon) B: incremental hauling cost ($0.0005/gallon/additional miles

Table 4. Livestock in Kewaunee County by municipality

Township Total area

(ha)

Herds (AU)

CAFO Digesters Phosphorus

(lbP2O5/d)

Manure (Gal/d)

Biogas

(cu ft./d)

Energy

(Btu/d)

Farms

Town of Lincoln 9,262.6 18,396.4 3.0 1.0 5,017.8 284,522.1 968,981.6 513,389,464.3 16.0 Town of Casco 9,225.0 14,638.9 2.0 1.0 4,071.1 230,862.3 780,004.6 413,264,978.9 19.0 Town of Luxemburg 8,806.3 11,823.0 3.0 1.0 3,255.3 185,073.0 627,209.6 332,310,553.1 28.0 Town of Montpelier 9,347.8 9,709.9 2.0 - 2,214.7 131,911.7 469,847.3 248,936,280.1 34.0 Town of Red River 8,994.3 7,032.7 1.0 - 1,981.6 112,645.2 379,872.8 201,265,614.6 21.0 Town of Franklin 9,376.3 7,337.1 2.0 1.0 1,817.8 107,031.1 384,408.6 203,668,789.8 22.0 Town of Pierce 4,833.4 7,311.0 1.0 - 1,792.1 101,825.3 362,483.7 192,052,480.5 5.0 Town of Carlton 9,229.9 6,849.5 2.0 1.0 1,971.0 111,313.7 373,788.5 198,042,036.5 23.0 Town of West Kewaunee 9,577.1 4,326.4 - - 1,252.4 71,083.4 237,383.2 125,771,263.1 18.0 Town of Ahnapee 8,031.0 848.7 - - 216.8 12,541.1 44,191.8 23,413,841.7 5.0 City of Kewaunee 962.8 316.2 - - 85.5 5,058.3 17,516.3 9,280,545.8 2.0 Village of Luxemburg 596.6 - - - - - - - - Village of Casco 173.5 - - - - - - - - City of Algoma 645.9 - - - - - - - - Sum 89,062.4 88,589.8 16.0 5.0 23,676.0 1,353,867.2 4,645,687.9 2,461,395,848.2 193.0

Table 5. Assessment of All Livestock in Kewaunee County Category Hub #1 Hub #2 Hub #3 Hub #4 Hub #5 Hub #6 Hub #7 Hub #8 Hub #9 Hub

#10 Total

Total Animal Units 7,288 10,260 4,553 8,379 6,134 10,694 9,046 7,852 8,647 15,736 88,590 Total Manure (gal/day) 113,232 160,502 66,180 117,581 94,232 175,076 122,813 112,372 143,843 248,037 1,353,867 Total P2O5 (lb./day) 1,990 2,830 1,157 2,065 1,642 3,108 2,054 1,904 2,550 4,376 23,676 Total Biogas (cu ft./day) 384,130 547,068

230,989 417,877

320,959 584,497 437,582 406,957 477,782 837,847 4,645,688

Total Energy Value (MMBtu/day)

203.52 289.85 122.38 221.40 170.05 309.68 231.84 215.62 253.14 443.91 2,461.40

farms per hub 5 21 9 11 17 27 30 27 26 20 193 Daily hauling (Gallon. Mile) 47,565 96,920 28,598 63,678 169,517 296,207 225,566 268,295 219,770 237,059 1,653,175 Max. one-way distance to hub (Mile)

2.92 4.60 3.53 6.71 5.26 4.21 4.08 5.57 3.68 4.65 N/A

Haul cost to hub ($/day, one-way) 362.6 498.7 403.5 221.4 689.7 1,473.7 975.7 922.9 972.6 971.8 7,493

Table 6. Assessment of Practical Livestock in Kewaunee County

Category Hub #1 Hub #2 Hub #3 Hub #4 Hub #5 Hub #6 Hub #7 Hub #8 Hub #9 Hub #10 Total

Total Animal Units 7,016 7,936 3,937 7,447 4,167 8,037 4,619 5,374 7,159 13,686 69,378

Total Manure (gal/day) 109,258 127,238

57,505 104,680

68,908 135,472

65,510 76,066 120,927

221,791 1,087,355

Total P2O5 (lb./day) 1,919 2,264 1,008 1,845 1,224 2,414 1,153 1,282 2,153 3,926 19,189

Total Biogas (cu ft./day) 370,269 428,060

199,885

370,888

228,515

446,992

231,213

277,901

398,453

740,462 3,692,639

Total Energy Value (MMBtu/day)

196.18 226.80 105.90 196.51 121.07 236.83 122.50 147.24 211.11 392.31 1,956.45

Farms per hub 3 3 3 2 5 8 5 5 8 5 47

Daily hauling (Gallon. Mile) 42,098 24,474 10,593 17,884 89,869 203,952

97,415 137,772

172,576 162,732 959,365

Max. one-way distance to hub (Mile)

2.92 2.70 1.46 3.01 4.29 4.21 3.82 4.40 3.66 3.05 N/A

Haul cost to hub ($/day, one-way) 320.9 196.8 310.0 136.6 445.1 1,102.2 506.5 518.8 891.7 846.7 5,275

Table 7. Assessment of Hub-only Livestock in Kewaunee County

Category Hub #1 Hub #2 Hub #3 Hub #4 Hub #5 Hub #6 Hub #7 Hub #8 Hub #9 Hub #10

Total

Total Animal Units 5,958 7,119 2,709 7,090 2,057 2,312 2,622 1,884 3,105 9,955 44,811 Total Manure (gal/day) 91,646 115,343 39,788 98,740 34,601 40,279 36,617 33,671 55,502 161,870 708,055 Total P2O5 (lb./day) 1,609 2,057 695 1,740 620 720 645 604 996 2,858 12,543 Total Biogas (cu ft./day) 311,687 386,238 137,746 351,235 114,344 131,174 130,079 108,727 179,221 539,127 2,389,579 Total Energy Value (MMBtu/day) 165.14 204.64 72.98 186.09 60.58 69.50 68.92 57.61 94.95 285.64 1,266.06

The results from our calculations including total manure volume, biogas produced, and energy value from the biogas from the three different scenarios (total, practical, and hub-only) were summarized in Table 8. Additionally the values from the Dynamic Concepts report were put in for comparison. A percent difference was calculated following Equation 2.

% Difference = [(DC value – UW value)/UW value] * 100% (Eq. 2)

Table 8. Results comparison with Dynamic Concepts assessment Item UW

Assessment Dynamic Concepts

Percent Difference

Total manure volume (Gal./day) 1,353,867 1,840,979 36.0% Biogas from total manure (cu ft./day) 4,645,688 6,299,595 35.6% Energy value from total manure (Btu/day)

2,461,395,848 3,401,782,110 38.2%

Practical manure volume (Gal./day) 1,087,355 1,584,335 45.7% Biogas from Practical manure (cu ft./day)

3,692,639 5,418,463 46.7%

Energy value from Practical manure (Btu/day)

1,956,447,633 2,925,969,674 49.6%

Hub-only manure volume (Gal./day) 708,055 1,078,965 52.4% Biogas from Hub-only manure (cu ft./day)

2,389,579 3,690,080 54.4%

Energy value from Hub-only manure (Btu/day)

1,266,055,723 1,992,643,055 57.4%

Task 3 - Evaluation of environmentally sensitive lands

Task 3. Part I: Agricultural phosphorus budget in Kewaunee County In this section, we first assessed agricultural P budget by quantifying phosphorus uptake in growing crops and phosphorus production in generated manure within Kewaunee County. We utilized relevant U.S. Department of Agriculture (USDA) records and data layers to evaluate that balance. Specifically, we utilized tabulated annual records collected in National Agricultural Statistics Service (NASS) database, as well as spatial crop data layers that represent Kewaunee County. We selected six consecutive years (2010 – 2015) to provide a robust estimate of agricultural P budget in Kewaunee County. We did not account for or include external P fertilizer sources in this analysis. The following table (Table 8) presents a summary of acreages of different crops grown in Kewaunee County during this period. Given that many of these growing crops are fruits and vegetables which do not typically receive manure applications. We limited our assessment to the key crops grown in Kewaunee County, i.e., Corn, alfalfa, soybeans,

oats, winter wheat, and other hay (non-alfalfa). These six crops represent around 50% of the entire county area, and more than 90% of all agricultural lands. Straw and residue P uptake was not taken into consideration since most of straw used as animal bedding is returned to crop fields as organic fertilizers. Cropland acreage in the Dynamic Systems report was 130,228 acres of harvested crops. Our analysis showed significantly lower harvested acres (approximately 40,000 less acres) as we did not include the grass/pasture land as identified in the USDA Cropscape Data Layer, as this typically includes permanent grass, abandoned pastures, and farm buildings, none of which would typically receive manure land applications. Yield estimates for each year (Table 10) as well as phosphorus uptake for each crop (Table 11) were used to assess total phosphorus removal in Kewaunee County each year. We used the same extension publication, referenced in Dynamic Concepts assessment, to evaluate P uptake in each crop. Furthermore, we utilized spatial data, i.e., cropland data layers, which shows where crops are grown, in combination with property boundary data for the county to estimate a 6-year average of crop P uptake for each field in the County (Figure 2). This assessment should assist in determining key areas where organic P fertilizer is needed for crop production. Assessment results in Table 12 shows that annual P-uptake in growing crops for Kewaunee County is around 5.14 million pounds of P2O5 (+/- 0.36 million pounds of P2O5). Manure P production in Kewaunee County in reported in Table 3 to be 23,676 lb. P2O5on a daily basis, which corresponds to annual P production rate of 8.64 million pounds of P2O5. This indicates that, unlike the results stated in the report, Kewaunee County is actually in surplus (160%) when comparing phosphorus contained in generated manure and phosphorus uptake by harvested crops.

Task 3. Part II: Assessment of field sensitivity

In this section, we utilized available soil data to identify sensitivity to manure application and storage. We divide this task into two categories: (1) assessment of fields sensitive to wastewater irrigation (which applies here to low-solids manure slurry), and (2) assessment of fields sensitive to manure and food processing sludge waster. To evaluate these attributes, we utilized soil survey geographic (SSURGO) database for Kewaunee County. This data represents spatially-referenced soil survey data collected over a century which describes key soil characteristics such as texture, water holding capacity, pH, and hydraulic conductivity. Furthermore, this dataset can be utilized to determine suitability of soils to different purposes, i.e., recreational, agricultural, and waste disposal. In addition to the SSURGO database, we also utilized Soil Data Viewer v 6.2, which is a software add-in developed by the Natural Resources Conservation Services (NRCS) to classify and rate soils in a given study area based on intended use. For this analysis we utilized the SSURGO database in conjunction with the Soil Data Viewer tool to assess Kewaunee County soils for (1) Disposal of Wastewater by Irrigation, and (2) Manure and Food-

Processing Waste application. The following section is compiled from the Soil Data Viewer documentation to detail soil characteristics associated with rating soils according to these uses. 1) Disposal of Wastewater by Irrigation a. Design and management b. Construction c. Performance • Sodium adsorption ratio • Depth to a water table • Ponding • Available water capacity • Saturated hydraulic

conductivity (Ksat) • Slope • Flooding

• Stones • Cobbles • Depth to bedrock or a

cemented pan • Depth to a water table • Ponding

• Depth to bedrock or a cemented pan

• Bulk density • The sodium adsorption ratio • Salinity • Cation-exchange capacity

(used to estimate the capacity of a soil to adsorb heavy metals).

• Permanently frozen soils are not suitable for disposal of wastewater by irrigation.

2) Soil-based classification for manure and food-processing waste application

a. Absorption b. Plant growth and microbial activity • Saturated hydraulic conductivity (Ksat) • Reaction • Depth to a water table • Sodium adsorption ratio • Ponding • Salinity • Sodium adsorption ratio • Bulk density • Depth to bedrock or a cemented pan • Available water capacity

The maps generated using the specified criteria are qualitative, i.e., they rank soils in terms of their suitability for intended use from restricted (or critical) to unrestricted (not limited). Figure 4 and Figure 5 show the mapped results of this assessment. It is clear wastewater irrigation is not a suitable approach for manure slurry disposal given the predominance of critical soils to this technique. Sludge application appears a more suitable approach for manure application when compared to wastewater irrigation.

Table 9. Kewaunee County Land Use (in acres) between 2010 and 2015 (Source: USDA Cropscape data layers)

CODE DESCRIPTION 2015 2014 2013 2012 2011 2010 1 CORN 53,617.2 47,644.7 47,543.7 52,319.5 47,947.2 47,321.6

176 GRASS/PASTURE 41,221.8 53,949.9 56,350.0 56,001.9 56,401.5 51,819.8 36 ALFALFA 33,714.3 34,625.8 34,111.4 32,811.7 36,057.9 36,547.2 5 SOYBEANS 11,633.4 12,236.7 8,706.6 8,962.5 8,457.6 8,913.8

28 OATS 8,117.1 3,602.3 3,180.9 3,204.3 4,422.5 5,115.7 24 WINTER WHEAT 5,528.1 8,931.6 10,984.0 10,967.6 10,496.1 9,864.0 37 OTHER HAY/NON_ALFA 3,052.6 1,449.4 2,715.4 638.8 - 1,829.4 42 DRY BEANS 1,299.1 1,568.3 1,031.2 846.2 984.1 881.3 205 TRITICALE 311.8 886.4 1,210.7 392.9 524.4 1,065.6 41 SUGAR BEETS 147.9 167.9 203.2 77.3 161.0 189.0 4 SORGHUM 144.4 10.4 34.4 5.8 2.0 1.1

21 BARLEY 83.1 22.2 119.9 78.4 31.5 235.9 6 SUNFLOWER 72.4 100.8 70.9 131.0 - 207.4

61 FALLOW/IDLE CROPLAND 55.3 38.2 165.5 47.3 77.7 180.6 226 DBL CRP OATS/CORN 16.0 9.8 - - - - 27 RYE 14.7 27.8 0.7 - 0.4 124.8 142 EVERGREEN FOREST 14.4 8.2 65.1 20.7 11.1 515.1 53 PEAS 11.3 0.9 22.9 113.7 194.3 781.6 66 CHERRIES 5.6 - 2.2 0.7 10.7 17.3 206 CARROTS 3.8 8.0 0.2 - 2.4 - 68 APPLES 0.9 0.4 0.7 - 0.7 2.2 12 SWEET CORN 0.2 6.4 0.4 2.2 3.6 22.9 229 PUMPKIN 0.2 - - - - - 243 CABBAGE 0.2 2.7 1.8 1.6 11.8 1.3 13 POP OR ORN CORN - - - - - 0.2 23 SPRING WHEAT - - - 0.4 - 2.4 26 DBL W. WHEAT/SOYBEANS - 1.8 0.9 - - - 31 CANOLA - - 9.1 2.9 - 0.9 32 FLAXSEED - - - - - 4.4 33 SAFFLOWER - - - - - 2.7 39 BUCKWHEAT - 0.4 - 1.8 - - 43 POTATOS - - - 1.8 0.2 - 47 MISC VEG FRUIT - - - - 0.7 - 49 ONIONS - 0.2 - - - 0.4 54 TOMATOS - 0.2 - - - 2.0 57 HERBS - 0.7 - 0.2 - - 58 CLOVER/WILDFLOWERS - 21.8 0.2 - - 8.2 59 SOD/GRASS SEED - 0.4 - - - 1.1 60 SWITCHGRASS - - - - 3.1 4.0 70 CHRISTMAS TREES - 0.2 - 0.2 0.2 - 71 OTHER TREE CROPS - - - 0.2 0.7 - 77 PEARS - 0.9 - 0.9 - - 219 GREENS - - - - - 0.9 221 STRAWBERRIES - 8.7 - - 7.6 1.6 222 SQUASH - - - 0.4 - - 225 DBL WITNER WHEAT/CORN - 6.0 216.1 34.9 6.9 2.2 236 DBL WITNER

WHEAT/SORGHUM - 7.3 0.2 161.9 - -

237 DBL BARLEY/CORN - - 7.3 - - - 241 DBL CORN/SOYBEANS - - - - 0.2 - 246 RADISHES - 24.7 - - - -

TOTAL ACRES 219,920 219,920 219,920 219,920 219,920 219,920

Table 10. Acreages, yields and production of key agricultural crops in Kewaunee County between 2010 and 2015 (Source: NASS-USDA, Quick Stats 2.0 database)

CATEGORY 2015 2014 2013 2012 2011 2010

CORN - ACRES PLANTED 56,100 50,800 53,300 54,000 52,000 48,000

CORN, GRAIN - ACRES HARVESTED 26,100 15,000 17,400 28,500 30,600 23,800

CORN, GRAIN - TOTAL PRODUCTION, MEASURED IN BU 4,105,000 2,109,000 2,912,000 4,060,000 3,810,000 3,560,000

CORN, GRAIN - YIELD, MEASURED IN BU / ACRE 157 141 167 143 125 150

CORN, SILAGE - ACRES HARVESTED 29,700 35,600 35,600 25,000 21,200 23,000

CORN, SILAGE - PRODUCTION, MEASURED IN TONS 592,000 591,000 682,000 435,000 375,000 446,000

CORN, SILAGE - YIELD, MEASURED IN TONS / ACRE 20 17 19 18 18 20

HAY, ALFALFA - ACRES HARVESTED 14,600 15,700 15,300 16,900 14,800 18,000

HAY, ALFALFA - PRODUCTION, MEASURED IN TONS 36,600 48,800 46,600 49,600 42,300 54,000

HAY, ALFALFA - YIELD, MEASURED IN TONS / ACRE 3 3 3 2.95 2.85 3

OATS - ACRES HARVESTED 6,150 4,640 2,550 5,500 5,100 3,600

OATS - ACRES PLANTED 9,900 5,700 5,500 6,500 5,900 7,300

OATS - PRODUCTION, MEASURED IN BU 502,000 309,000 169,000 346,000 367,000 210,000

OATS - YIELD, MEASURED IN BU / ACRE 82 67 66 62.9 72 58.3

SOYBEANS - ACRES HARVESTED 11,200 13,400 10,100 10,400 10,300 8,700

SOYBEANS - ACRES PLANTED 11,300 13,500 10,200 10,500 10,400 8,800

SOYBEANS - PRODUCTION, MEASURED IN BU 536,000 480,000 465,000 531,000 458,000 424,000

SOYBEANS - YIELD, MEASURED IN BU / ACRE 48 36 46 51 45 49

WHEAT, WINTER - ACRES HARVESTED 6,000 8,800 11,500 11,600 11,200 10,100

WHEAT, WINTER - ACRES PLANTED 6,600 10,300 12,100 11,900 11,300 10,900

WHEAT, WINTER - PRODUCTION, MEASURED IN BU 469,000 648,000 655,000 887,000 543,000 666,000

WHEAT, WINTER - YIELD, MEASURED IN BU / ACRE 78 74 57 77 49 66

Table 11. Phosphorus removal, in pounds of P2O5 per acre, by key agricultural crops* in Kewaunee County using annual yield estimates between 2010 and 2015.

2015 2014 2013 2012 2011 2010 CORN** 66.3 57.6 66.8 58.3 53.7 63.4 ALFALFA 32.5 40.3 39.7 38.4 37.1 39 NON-ALFALFA HAY 37.5 37.5 37.5 37.5 37.5 33.8 SOYBEANS 38.3 28.6 36.8 40.9 35.6 39 WINTER WHEAT 39.1 36.8 28.5 38.3 24.3 33 OATS 23.7 19.3 19.2 18.2 20.9 16.9

* Stover and straw removal was not considered in this assessment ** Corn uptake here represents combined silage and grain uptakes using the ratio of their acreages, and their yields, in each year

Figure 2. 6-year average phosphorus uptake, in pounds of P2O5 per acre, for key agricultural crops in Kewaunee County using annual yield estimates between 2010 and 2015.

Figure 3. Frequency distribution of Phosphorus removal by agricultural land parcels in Kewaunee County

Table 12. Kewaunee County annual phosphorus uptake, as pounds of P2O5, in harvested crops*

Year Total County Phosphorus uptake (Lb. P2O5/year)

2015 5,611,189.5 2014 4,955,209.5 2013 5,315,755.5 2012 5,164,504.0 2011 4,547,854.0 2010 5,258,467.0

Average 5,142,163 STD 361,193

* Crops considered in this analysis are: corn (silage, grain), soybean, alfalfa, hay, oats, and winter wheat

Figure 4. Concentrated Animal Feeing Operations (CAFO) in Kewaunee County and soil classification in terms of suitability for wastewater disposal by irrigation (stars indicate hub

locations)

Figure 5. Concentrated Animal Feeing Operations (CAFO) in Kewaunee County and soil classification in terms of suitability for manure and food-processing waste application (stars indicate hub locations)

Task 4 - Sensitivity analysis on the major project economics assumptions The Dynamic study did an excellent job of determining capital expenses and operating expenses for the multitude of project scenarios and should be commended on this aspect of their work. Unfortunately, from the initial analysis the quantity of biogas produced was found to be in question and creates the largest uncertainty in the project, with the biogas production estimates by the UW team suggesting the Dynamic Concepts to be high by approximately 50%. Additionally the team questions the validity of including a 20% volume of food waste substrates when those sources have not been identified. Therefore to provide what we feel is a more realistic (and conservative) economic analysis, the UW team re-created the Dynamic financial model for the Mega and Mega no Effluent scenarios and included 6 feedstock analysis options from high to low estimates. The feedstock options included Dynamic’s Manure with Substrate, Dynamics Manure Only, and UW Manure Only. Each of these feedstock sourcing calculations then included Hub and Spoke farms or just Hub farms. The UW analysis used the Dynamic Capital and Operating Expenses for the Manure only scenario as is, with the idea that equipment would be similarly sized even though less as-excreted manure was being digested. This is a conservative estimate that considers the hauled volume to be similar as the dilution water and bedding do not contribute to biogas. If the economics suggest a potential feasible project additional financial modeling should be done on manure hauling including manure removal system (scrape or flush) and bedding practices. The analysis calculated revenues for the avoided tipping fees from the substrate, RNG sales, and fiber bedding where appropriate. Revenues were proportioned to Dynamic’s model which both seemed reasonable and allowed for only the impact of manure and substrate volumes to be observed. The cash flows for the expenses and revenues were put into a 20 year project life with no salvage value and used to calculate the Internal Rate of Return (IRR). Additionally an 8% discount rate was used to calculate a Net Present Value (NPV) for the project. The results for the financial modeling are summarized in Table 13 (Mega Plant with Effluent Treatment) and Table 14 (Mega Plant without Effluent Treatment). Starting with Table 13, inspection of the UW revision of the financial model suggests the removal of substrate addition to the digesters and the reduction in excreted manure has a significant reduction on the economic feasibility of the project. In both the hub only and hub and spoke scenarios the reduced gas sales leads to a negative return on the project signifying negative cash flows making the project unfeasible. Significant reduction in expenses would be required in AD system which suggest the Mega Plant without Effluent Treatment scenario, in Table 14. Inspection of this data, also concludes the project to have a negative return even with the reduced expenses.

Table 13. Mega Plant including Effluent Treatment Dynamic

(Manure + Substrate) Dynamic

(Manure only) UW

(Manure only) Hub & Spoke Hub Only Hub & Spoke Hub Only Hub & Spoke Hub Only

Input Substrate vol.(gal/day) 316,867

215,793

- - - -

Manure vol. (gal/day) 1,584,335 1,078,965

1,584,335

1,078,965 1,087,355 708,055

Output Biogas (SCFM) 7,219

4,956

3,891 2,691 2,564 1,659

Bedding (tons/day) 346

236

289

197 198 129

Fine cake (tons/day) 1,289

877

1,074

731 737 480

Expenses Cap Ex, $ $188,770,919 $140,827,654 $158,522,166 $115,757,825 $ 158,522,166 $ 115,757,825 Equipment Op Ex, $/yr $ 25,181,703 $ 17,766,590 $ 22,181,176 $ 15,192,329 $ 22,181,176 $ 15,192,329 Land appl. Credit, $/yr $ (5,504,537) $ (3,748,704) $ (4,587,114) $ (3,123,920) $(3,148,211.41) $(2,050,026.74) Revenue Tipping fees $ 6,708,074 $ 4,568,338 $

- $ -

$ - $ -

Bedding sales $ 4,613,600 $ 3,146,849 $ 3,853,556 $ 2,626,818 $ 2,644,759 $ 1,723,811 RNG sales $45,952,236.0 $ 31,547,206 $ 24,767,994 $ 17,129,446 $ 16,323,150 $ 10,563,030 Metrics IRR 19.3% 17.2% 3.4% 2.9% negative negative NPV (w/ 8% Discount) $166,999,496 $99,098,731 $(46,530,240) $(37,293,826) $(147,371,202) $(114,960,064)

Table 14. Mega Plant without Effluent Treatment Dynamic Dynamic UW

(Manure + Substrate) (Manure only) (Manure only) Hub & Spoke Hub Only Hub & Spoke Hub Only Hub & Spoke Hub Only Input Substrate vol.(gal/day) 316,867 215,793 0 0 0 0 Manure vol. (gal/day) 1,584,335 1,078,965 1,584,335 1,078,965 1,087,355 708,055 Output Biogas (SCFM) 7,219 4,956 3,891 2,691 2,564 1,659 Bedding (tons/day) 0 0 0 0 0 0 Fine cake (tons/day) 0 0 0 0 0 0 Expenses Cap Ex, $ $139,328,835 $104,555,203 $115,692,713 $83,968,282 $115,692,713 $83,968,282 Equipment Op Ex, $/yr $16,545,835 $11,752,448 $14,813,384 $10,178,451 $14,813,384 $10,178,451 Land appl. Credit, $/yr ($5,504,537) ($3,748,704) ($4,587,114) ($3,123,920) ($3,148,211.41) ($2,050,026.74) Revenue Tipping fees $6,708,074 $4,568,338 0 0 0 0 Bedding sales $0 $0 $0 $0 $0 $0 RNG sales $45,952,236.0 $31,547,206 $24,767,994 $17,129,446 $16,323,150 $10,563,030 Metrics IRR 30% 27% 11% 10% negative negative NPV (w/ 8% Discount) $249,345,148 $158,750,546 $25,074,149 $13,841,401 $(64,777,783) $(55,615,709)

The obvious variable that is most impactful on this project is the amount of non-manure substrate available. This high gas production material is assumed to be available not just for free but also would provide fees for the avoided landfill disposal. To understand how much would be required a simple sensitivity analysis was performed for the two scenarios (Mega Plant and Mega No Effluent Plant) with increasing amounts of substrate. The financial modeling was completed, graphed, and shown Figures 6 and 7. Assuming IRR of at least 6-8% are required it appears substrate volumes in 150 – 200 kgal/day are required. Although this may be possible, any larger producers with these types of volumes would be able to likely have an AD and produce heat and power or command a price for the energy in their “waste” stream. Overall, we do not recommend include these material in initial feasibility studies until sources have been identified.

Figure 6. Impact on IRR of adding non-manure substrate using Mega plant concept with UW manure and biogas base.

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

50,000 100,000 150,000 200,000 250,000

IRR

Substrate volume (gal/day)

Hub & Spoke Hub Only

Figure 7. Impact on IRR of adding non-manure substrate using Mega plant with No Effluent concept with UW manure and biogas base.

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

50,000 100,000 150,000 200,000 250,000

IRR

Substrate volume (gal/day)

Hub & Spoke Hub Only