Feasibility study on biogas energy production from a small-scale

farm digester in Kazakhstan

Luis Rojas-Solórzano1,a, Damira Pernebayeva2,b , Madina Bekbauova3,c,

Daniyar Seitenov4,d, Jong Kim5,e, Andrei Dobrita6,f
1a
Nazarbayev University, Kazakhstan, email:luis.rojas@nu.edu.kz ,2 b Nazarbayev University, Kazakhstan
email:damira.pernebayeva@nu.edu.kz,
3c
National Centre of Science and Technology Evaluation, Kazakhstan, email: m.bekbauova@gmail.com,4d Nazarbayev University,
Kazakhstan email: dseitenov@nu.edu.kz, 5e Nazarbayev University, Kazakhstan,email: jong.kim@nu.edu.kz , 6 f Kazakhstan, email:
adobrita@gmail.com

Keywords: Biodigester, Combined Heat and Power (CHP) system, RETScreen, Biogas, Animal Waste

Abstract

This paper assesses the technical, economic and
environmental impact for the implementation of a small-scale
anaerobic digestion system in an animal farm located in the
Republic of Kazakhstan. All data for manure availability and
local energy consumption was obtained from the model farm
“Buranbayev Company” which is located in Uralsk,
Kazakhstan. A Combined Heat and Power (CHP) system
based on a reciprocating engine and heat recovery system was
considered as the technology to operate with the biogas
generated through a mesophilic anaerobic biodigester
exporting power to the grid, which is currently the source of
power and heating in the farm. The techno-economic study
includes Feed-in-Tariff (FiT) and Entrepreneurship
Development Fund “DAMU” loan subsidy, which are current
governmental incentives in Kazakhstan. The small size farm
biodigester is fed with manure from around 600 heads of
cattle and runs a 100 kW genset unit. Results of the analysis
demonstrate that DAMU subsidy positively influences the
financial outcome of the project leading to an IRR of 38.3%
on the equity investment. The model developed here may be
easily used in the future by other local farmers in order to
assess the economic and technical advantages of own power
generation and its sales to the grid.
1 Introduction
Growing thirst for energy, environmental concerns, political
and economic instabilities, hydrocarbon prices are driving
growing interest on reliable and clean sources of energy in the
world.
Currently, about 87% Kazakhstan’ power generation comes
from combined heat and power (CHP) plants and 13% from
hydroelectric power plants located along the Irtysh River [1].
Renewable energy opportunities are extremely high, but
hardly used due to the high cost of development and the
availability of conventional energy sources. Thus, the share of
renewables in the total primary energy mix of the country is
below 0.5%: wind, solar, hydro and biogas cover only 0.02–
0.03% of energy consumption nationwide. However,
Kazakhstan government is currently developing a new
strategy to create conditions for renewable energy expansion
and smooth transition to a Green Economy aiming to produce
3% of its power generation from renewable energy sources by
2020 and 50% by 2050 [2].
In this framework, Kazakhstan aims to be known
internationally not only as fossil fuels producer-consumer, but
also as a country which is seeking a new way of development
and implementation of clean energy technologies for its own
consumption. The upcoming World Fair EXPO-2017 hosted
by Kazakhstan under “Future Energy” theme will highlight
the importance of global energy and environmental issues, the
implementation of energy efficiency measures and the
development of sustainable energy sources.
The aim of this paper is to investigate economic and technical
feasibility of a small-scale biogas project in a farm nearby
Uralsk city in Kazakhstan. The paper focuses on the
prefeasibility assessment of implementation of methophilic
anaerobic digester in this farm by using Renewable or Clean
Energy Management Software (RETScreen). Moreover, the
project aims to prove economic, social and environmental
benefits that biogas production offers to the local community
under current government policies as Feed-in-Tariffs (FiT)
and DAMU subsidy fund.
3 Biodigester Technology
3.1 Fundamentals of anaerobic digestion
Anaerobic digestion (AD) is a conversion process of volatile
acids present in livestock manure into biogas consisting of

1
55-70% methane along with carbon dioxide, water, and other  Modeling scenario in RETScreen life cycle cost
compounds [3], with most stages of the process taking place analysis tool.
without oxygen or anaerobically.
A significant amount of manure from dairy cattle, beef cattle,
The biogas process consists of three main steps, namely: horses and camels is available on the farm. Table 1 presents
hydrolysis, acidogenesis and met-hanogenesis, where the quantity of animals and their average animal weight.
different groups of bacteria are responsible for each specific
step. There are two main types of digesters: mesophilic and Livestock Average weight Quantity
thermophilic. The mesophilic digester due to the presence of per unit [kg]
mesophilic bacteria, operates in a temperature range of 25- Dairy cattle 300 10
45ºC, with an optimum temperature for biological growth of Beef cattle 300 340
35ºC. On the other hand, thermophilic digestion is caused by Horse 500 250
thermophilic bacteria and operates at 55ºC or higher Camel 800 25
temperatures. Various feedstocks can be used for biogas
production, as for example, animal manure, crop residues and Table 1: Livestock on the farm
in general, other organic materials.
Biogas potential was evaluated considering the average
The biological activity of anaerobic digestion takes a finite animal weight, its quantity, dry matter and biogas production
time to proceed towards completion. Biological breakdown factor.
can occur at different rates, which depend on the fiber and
cellulose content of biomass. The residence time to fully Dry Biogas
producing methane is usually two or three weeks. In practice, matter production
fresh biomass is continually supplied to the digester, while factor
digestate is tapped off, and the digester operates on a basis of Unit % m³/kg
continuous mixing biomass. Dairy cattle 8.0% 0.33
Beef cattle 9.3% 0.86
3.2 Technology for biogas conversion to CHP
Horse 14.3% 0.70
Biogas systems are widely employed in Europe, North Camel 10.0% 0.60
America, India, China and other areas. Owing to the high
levels of methane, biogas can be used as a heating fuel as well Table 2: Biogas potential
as for power generation. In addition, farm-based AD systems
have other benefits for the farm and the community, such as The primary component of biogas is methane, which is the
the reduction of greenhouse gas emissions, odours and main contributor to its heating value. The methane content
pathogens, while also serving to the production of enhanced can vary (52-72%) due to several factors, namely: breed of
fertilizer. Generally, a traditional on-farm digester consists of livestock and its diet. In this analysis, according to the nature
a simple vessel, embedded into the ground for strength, with of the livestock considered, average methane content is taken
either fixed or floating sealed cap. The produced gas can be 59% (RETScreen biogas tool manual) [5].
directly recovered and converted into heat and power by a
complementary CHP unit. Generally, electricity and heat can It was also assumed 80% accessibility to actual number of
be extracted from the energy content of the biogas with an dairy cattle, 25% for beef cattle, and 50% for horse and
approximately efficiency of 35-40% and 45-50%, camel, because animals spend a large amount of time grazing
respectively [4]. in field, reducing the availability of them for manure
collection in specific places [6]. Therefore, the model
4 Case Study: Buranbayev farm, animal manure considered an equivalent reduced number of animals in the
estimation of their production of biogas.
availability and biogas potential
Basically, the manure derived from the animals is assumed to
The case study here presented was carried out in a small be collected by tractors and local labor helps to prepare and
village nearby Uralsk (Oral) city in the northwestern part of mix it before dumped to the main digester where the
the country. The Buranbayev farm is a small family-run farm, fermentation process takes place at 35 ºC. The produced
whose owners volunteered to participate in this research and biogas is collected in special pipeline on top of the biodigester
provided information about livestock in the farm. and is transported to feed the CHP generation unit where
biogas is burned and converted to electric power and heat.
The following steps were taken to conduct the objectives of The biogas plant with capacity of 100kW is estimated to

 Assessing local biogas potential

this work: produce 801 MWh of electricity per year. The generated

 Assessing current heating demand of the farm and

electricity will be fed into the central grid at Feed-in-Tariff
paid price of 32.23 KZT/kWh (0.08$/kWh, at the currency
consumption of power for that purpose rate by the National Bank of Kazakhstan 10.02.2016 [7]).

2
Whereas, part of the associated heat from the CHP unit is in the FIT contract. Table 3 represents the fixed tariffs in local
used to heat the digester in order to maintain the mesophilic currency Kazakh Tenge and USD.
anaerobic process, the remaining recovered heat is used to
partially cover the heating demand of the farm, displacing Power plants Price KZT/kWh, 10-2 U.S$ /kWh
part of the original electrical consumption of the farm used by (excluding VAT) 1USD=360
the farmer’s home for that purpose. KZT
Wind 22.68 6.3
The audit of the farm led to a grid power consumption of 11.7 PV 34.67 9.6
MWh/year. Since the climate of the region is continental with Small hydro 16.71 4.6
long cold winter, it is understandable that the highest Biogas 32.23 8.9
consumption of power stands for heating. In this project, it is
assumed that electricity demand of the farm is covered from Table 3: FiT in the Republic of Kazakhstan as of 2015
the central grid and electricity from biogas plant is going to
be wholly sold to the grid to maximize the profit.
6 Biodigester Project Economics
Nevertheless, as previously indicated, the proposed biogas
plant will provide part of the heating demand of the farm,
The proposed biogas plant can generate revenue from FiT and
reducing the consumption of power for that purpose and
savings in heating power, as well as benefits from other
generating and additional source of income to the project.
aspects such as: reduced manure spreading cost, reduced
fertilizer cost and environmental impact. However, the
current study focuses only on power sales revenue under
current FiT and heating electricity savings at regular KEGOC
tariffs.

6.1 Capital and Operation & Maintenance Costs

The Anaerobic Digester is a complex system that requires

considerable capital investment and operational cost. Capital
cost of the installation used in this analysis was provided by a
local company “TechnoAgroService LLP” [11] and
accounted for 98 743 621 KZT (274 287 USD), presented by
items in Table 4. The Operation and Maintenance cost is
considered 0.018$ per kWh on a yearly basis, this includes
labor, maintenance, insurance and financing cost [12].
Figure 1: shows the conceptual schematic of the proposed
technology in this study. KZT 1USD=360
KZT [13]
5 Energy Market in Kazakhstan Feasibility study 4 838 000 13 439
Engineering work 28 600 000 79 444
5.1 Electricity Power system 63 840 356 177 334
Balance of system 1 372 175 3 812
The grid in Kazakhstan is state-owned and operated by the and miscellaneous
Kazakhstan Electricity Grid Operating Company (KEGOC). Total Capital Cost 98 743 621 274 287
There is a three-level tariff for consumers per month: up to Annual costs
70kWh electricity consumption is charged at 7.74 KZT/kWh. O&M (0.018$/ 5 190 480 14 418
From 70 to 120 kWh - 9.65 KZT and over 120kWh kWh)
consumption it is charged at 12.06 KZT [8]. Electricity (Engine 1 000 000 2 778
escalation rate in the country for the last 5 years is 8.9% in refurbishment
average [9]. Note: every 7.5
years)
5.2 Feed-in-tariff (FiT) Feasibility study 4 838 000 13 439

Feed-in-Tariff (FiT) for electricity produced from renewable Table 4: Itemized Capital and O&M Cost
energy sources has been recently approved by the
Government of the Republic of Kazakhstan [10]. According
to the adopted decision, the generated electricity will be 6.2 Depreciation rule
purchased by KEGOC at a fixed tariff which rule for 15
years. Tariff indexation according to the inflation rate is also One of the important parameters that should be taken into
consideration is equipment depreciation for taxes

3
considerations. It is assumed that equipment (tanks, pipelines,
valves, accessories and concrete work) are depreciated on a 6.3.3 Electricity
15 year schedule. However, biogas engine and accessories
need refurbishment in 5-10 year schedule. In the current case, As mentioned earlier in the study, the focus of this analysis is
7.5 year schedule is taken as shown in Table 4. Additionally, to prove the economic benefits of the farm based on the FiT
it is also assumed that there is an available space on the farm and DAMU subsidy programs, which allow the generator to
to store manure before handling manure to an anaerobic sell produced electricity for incentivized rates (see Table 3).
digester.
For this analysis, it is assumed that the efficiency of the
6.3 Economic input parameters genset is 35%, and the generator runs 8000 hours per year,
allowing 760 hours for maintenance stops. With these
The economic analysis was carried out for the 15 year project assumptions, the gross revenue from electricity generation is
lifetime. The following financial assumptions were made calculated and presented in Table 7.
based on the literatures for economic analysis:
Grid electricity rate KZT/MWh 1 3041
Project lifetime 15 yr (as FiT Annual electricity KZT 152 575
program rate) saving from heating
Inflation rate 14.4 % [17] Electricity exported to MWh 801
Debt ratio 70% [15] the grid
Interest rate 4% [15] Electricity exported rate KZT/MWh 32 230
Debt term 3 yr [15] (FiT)
Effective net income tax in 12% [18] Electricity exported KZT 25 830
Kazakhstan annual income 953

Table 5: Economic parameters

6.3.1 Private funding (equity)
It is assumed that 30% of total initial investment (Capital
Cost) comes from the farm-owner; i.e., corresponds to the
Equity and therefore, the Debt Ratio amounts to 70% (see
Table 5). According to private conversation with owner of the
farm, current debt ratio corresponded to the amount they were
reasonably willing to invest.
6.3.2 Additional incentives (via government funding)
The Government of Kazakhstan has created the program
“DAMU Entrepreneurship Development Fund” [14] that
subsidizes the Debt Interest Rate on loans to projects in
priority sectors of the economy (such as Electricity
production), providing guarantees to banks on loans of
entrepreneurs. In this project, it is assumed the application of
such a subsidy that covers during a 3-year period a fraction of
10% of interest rate of the bank loan, reducing the cost of the
money from 14% (current market rate) to 4% during the
duration of the project as indicated in Table 6. Thus, the debt
term is fixed in 3 years; consider the full payback of the loan
in the same period of duration of DAMU subsidy.
Table7: Project annual income via FiT
6.3.4 Heat Supply
Heat as a side product of the combustion process is used to
maintain the plant process and cover part of the heat demand
of the family house in the farm. Currently, there is no market
for heat in Kazakhstan. Nevertheless, it is considered that
50% of the heat recovered by the CHP genset unit is used to
maintain the AD at mesophilic conditions and the remaining
goes directly to the farmer’s home, displacing part of the
electricity otherwise used for heating purposes.
6.4 Economic viability (IRR, NPV, and B-C)
The profitability of the installed system is assessed by
determining the life cycle cost, Internal Rate of Return (IRR),
Net Present Value (NPV), Benefit-Cost ratio (B-C), Simple
and Equity Payback periods, as decision making indicators.
Table 8 presents a summary of these indicators. Figure 6
presents the cumulative cash flow of the project with a year-
to-zero value (Equity Payback) at 4th year and a positive
development of cash inflows for the investor.

Amount of subsidy 10% off the interest rate of

the loan
Subsidizing period 3 years, with possible
extension of subsidization for
up to 6 years
Interest rate of loan No more than 14% per annum

Table 6: DAMU Subsidization Terms

4
 Electricity
O&M
Initial costs
Dept term
Dept interest
rate
Fuel cost-
proposed case
Fuel cost-base
case

Figure 4: IRR sensitivity analysis (as obtained by

RETScreen)

Pre-tax IRR - equity % 38,3%

Figure 2: Cumulated Cash Flow graph (as obtained from
RETScreen) Pre-tax IRR - assets % 18,4%
After-tax IRR - equity % 36,2%
6.5 Sensitivity and Risk Analysis After-tax IRR - assets % 16,8%
Simple payback yr 4,8
A sensitivity and risk analysis was performed to assess the Equity payback yr 4,2
robustness of the financial outcomes. Essentially, it was 112 614
relevant to determine how the NPV and IRR of the project Net Present Value (NPV) KZT 901
vary with uncertainties in critical input parameters, i.e., FiT, Annual life cycle savings KZT/yr 16 534 597
Capital Cost, Debt Term, Debt Ratio and Debt Interest Rate. Benefit-Cost (B-C) ratio 4,80
The range of change of input parameters was set to +/- 20% KZT/tCO
and Montecarlo sampling of 500 scenarios were drawn with GHG reduction cost 2 53 382
resulting normalized impact shown in Fig. 5.

The analysis shows that NPV and IRR sharply respond to
changes in electricity export rate (FiT), operation and
maintenance cost, initial costs and debt term/ratio. Therefore,
these parameters have crucial importance in further
development and implementation of this technology and need
to be carefully assessed when developing the feasibility of the
biogas projects in Kazakhstan. As for the other parameters,
their impact is relatively minor or negligible.
Table 8: Financial viability of the proposed case
6.6 Environmental impact
The environmental impact assessment of on-farm anaerobic
digestion can provide a number of direct environmental
benefits such as odour control, pathogen reduction, reduced
Greenhouse Gas (GHG) emissions and improved water
quality.

The carbon dioxide released during biogas combustion

Electricity
O&M
originally was organic plant material and hence, it is just
Initial costs completing a cycle from atmosphere to plant to animal and
Dept term back to the atmosphere. Methane is a more severe greenhouse
Dept interest gas than carbon dioxide and the capture of biogas as a fuel
rate
Fuel cost-
prevents the release of methane into the atmosphere. Land
proposed application of solids and anaerobic lagoon treatment of liquid
case wastes releases a substantial amount of methane to the
Fuel cost- atmosphere. Capture of the methane for use as a fuel would
base case
significantly reduce the net greenhouse gas production [15].

In order to evaluate the net GHG reduction for the project, an

Figure 3: NPV sensitivity analysis (as obtained by electricity generation GHG emission factor for Kazakhstan of
RETScreen) 0.434 tCO2/MWh was used (RETScreen tool). As a results,
the net GHG reduction is 310 tCO2/yr or equivalent to 57
cars not used, and for whole duration of the project (15 yrs) is
4 646 tCO2.

5
7 Concluding Remarks
A pre-feasibility assessment has been conducted for the
implementation of a small-scale anaerobic digestion biogas
plant located at the Buranbayev farm in Uralsk city,
Kazakhstan. The model farm consists of 300 heads of cows
and dairy cattle, 500 and 800 heads of horses and camels,
respectively, and the following findings can be listed from
this study:
It is predicted to produce at maximum capacity of 100kW and
will be able to produce 801 MWh per year of electricity and
11 MW/h of heating.
The project economics takes advantages of FiT and DAMU
subsidy of loans, currently offered by the government of
Kazakhstan, to have an IRR 38.3% on the equity investment.
The sensitivity analysis showed that the FiT, initial costs and
debt ratio have the major role in the outcome of the project
and therefore, special attention has to be paid in its estimation
to minimize the risk of failure.
[9]. http://forbes.kz/process/expertise/begom_za_tarifami
_chast_3, accessed May 2016
[10]. www.samrukenergy.kz/index.php?option=com_con
tent , accessed May 2016
[11]. http://tass.kz/, accessed May 2016
[12]. http://www.epa.gov/sites/production/files/2015-
07/documents/biomass_combined_heat_and_power_
catalog_of_technologies_v.1.1.pdf, accessed May
2016
[13]. http://www.tradingeconomics.com/kazakhstan/corp
orate-tax-rate, accessed May 2016
[14]. http://www.damu.kz/275, accessed May 2016
[15]. Parker et al. “Agricultural energy consumption,
biomass generation, and livestock manure value in
the southern high plains, Livestock Waste
Streams” Energy and Environment, Texas Biomass
Energy Opportunities Workshop Series, Amarillo,
TX. (1997)

The project also provides environmental and socio-economic

benefits for the farmer, by reducing 310 tCO2/yr of GHG
emissions and permitting the preparation of fertilizers.
In overall, the project has positive financial results and
demonstrates that this technology is ready to be developed
and mass-produced in the country with the direct participation
of the national private sector with strategic support from the
government.

Finally, it was demonstrated that biogas technology can make

a significant contribution in meeting the national targets to
produce 3% of Kazakhstan energy generation from renewable
energy sources by 2020.

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