Master of Engineering Thesis, Material Flow Management

1. Thesis title:
Energy cooperatives as a new model
for renewable energy development
in Croatia: investigation into biogas
production from agricultural waste
in Gundinci municipality
Mak Đukan
Student no: 954210
WS 12/13
Mentors:
Peter Heck, PhD
Michael Knaus, PhD
Program: International Master in
Material Flow Management

2. Main motivation
• Nitrates Directive
• Undeveloped manure management systems
• Small average farm size
• Developing communal, centralized biogas plants

3. Research questions
Are energy cooperatives an applicable model for
producing biogas from agricultural waste in Croatia?
Would Croatian farmers have the willingness to create
cooperatives? What benefits would this bring?

4. Research sub-questions
1) What is the economic biogas potential in Gundinci?
2) Is biogas in Gundinci economically feasible?
3) What is the local cooperation potential?

5. Research methodology

6. Research scope

7. Field research
• 43 structured interviews – family farm
owners and households
• 5 semi-structured interviews – mayor
and local community members
Structured interviews
question flow

8. Biogas partner selection tool based on three
indicators
DYNAMIC DEVELOPMENT
Land under cultivation and livestock unit now, compared to past five
years & future ambitions + manure management system + own land (ha)
BIOGAS POTENTIAL
Volume of biogas from manure and
land availability for energy crop growth
BIOGAS COOPERATION
Willingness to provide manure, grow energy
crops and invest jointly into AD plant
Weight
30%
30%
40%
Total 100%

9. Material Flow Analysis

10. Gundinci location

11. 1500 ha of land covered in forests and 3500 ha of
agricultural land

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Number of animals per municipality in Brodsko-posavska county (2001)!
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Municiplaity with greatest number of animals in Brodsko-
posavska County

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Main crops under cultivation in 2010 - 2012 "
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Corn, wheat and barly the most cultivated crops
Source: Gundinci municiplaity

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Number of livestock units in 2010 - 2012"
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Source: Croatian agricultural agency
Decrease in milking cows and other cattle indicates to declining
milk production

15. *Manure production rates (t/LU/yr)
Cattle – adopted from Brdarić et al. (2009), who calculate liquid manure production. Here
data is enlarged for 15% to account for straw additions
Pigs – adopted from Brdarić et al. (2009) and Croatian Cleaner Production Center (2011)
Chicken – average rate for chicken farms in field research
Main findings
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Waste flow analysis

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(kWh) !
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Energy flow analysis

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Energy flow analysis

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Energy flow analysis

19. Strenghts Weakness
ThreatsOpportunities
! Technology well suited for high-moisture content biowaste
! Compliance with EU manue management regulations
! New revenue stream for local community – contract with
HEP to sell electricity at FIT for 14 years
! Fertiliser as end product
! Reduction of odour from current manure management
! GHG emiission reductions
! Decrease in nutrient run off to ground water
! Local ownership of biogas plants reduces the Not in My
Back Yard (NIMBY) problem
! Creation of local jobs
! Strenghening of social cohesion of the village
! Biogas and fertilizer production very sensitive to
feedstock quality
! Small changes lead to proces instability
! Lack of existing demand for thermal energy
! Relatively expensive technology
! Harder access to finanicng from business banks – more
owners means more risk
! Energy cooperatives have many members with equal
votes – decision making made harder
! Local skills set very low – biogass technology completely
unknown
! Economic recession could lead to decrease in number of
animals in municiplaity due to smaller demand for agri
products
! Monopolistic milk price setting
! Change in political leadership of municiplaity
! “Not in My Back Yard” problem
! Bad internal relations among farmers could break up the
energy cooperative
! Low levels of dry matter content in local manure, due
water permeable storage facilities
! Decrease in Feed in Tariff for biogas production
! Sales of electricity diversifies local revenue streams –
farmers less dependent on price changes of main
products (milk, meat etc.)
! Possibility to charge gate fees for processing of organic
waste from households and industry
! Thermal energy utilization for greenhouse
! Fertilizer savings due to better AD digestate nutrient
quality than raw manure
! Carbon credits earning within ETS system
AD SWOT analysis

20. !"#$%& '()%&*+%,&*-%
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OPGs make the largest share of respondents: a) high manure
production rates and b) wealthiest community members
Best potential energy
cooperative members
Field research

21. !"#$
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Share of respondents by farm type!
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Most responses from cattle farmers

22. Biogas partner selection tool
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Biogas
cooperation
Dynamic
development
Biogas
potential
Final grade -
50% cutoff

23. !"###"$%&'
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Energy potential from manure before
and after partner selection (kWh/yr) !
AB87'=8?8;C>6'
D8E>78'=8?8;C>6'
After selection 28000t of manure would be available for biogas
production or app. 8700 MWh ≈ 435 kWel

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Total land under cultivation vs. land that could be devoted for
energy crops (ha)"
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433 ha of land available for
energy crops
Total land the farmers cultivate vs. land that they could devote
(based on interviews) for energy crops

25. Co-digestion of manure with maize sillage and sorghum sillage,
grown on 40 ha each
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26. Potential installed capacity of 640 kWel (8000h/yr working time)
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Source for feedstock parameters: KTBL biogas rechner

27. Main plant data . . .
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28. Using AD digestate instead of raw manure for soil conditioning
would lead to savings of 11t/yr N fertilizer
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12+"3,5,*":(#)*,/4)6.%0, <<=>?>

29. Potential project location . . .

30. Social Fabrics Landscape (SFL) . . . or something like
stakeholder analysis

31. Economic
pre-feasability

32. Examined scenarios
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from outside the village
builds this

33. Scenario revenue streams . . .
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cogeneration
>300 kW ≤ 2 MW
Standard market price
in Croatia

34. Discounted cash flow analysis: Net Present Value, Internal Rate
of Return and Payback Period
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Each scenario analyzed
based on these assumptions

35. Scenario analysis results
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36. Sensitivity for changes in energy crops prices by 15% and 30%
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37. Sensitivity for changes in energy crops prices by 15% and 30%
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38. Main findings
• Worst case scenario (No. 4) achieves IRR of 11.34%
and payback of 10.13 years
• Compared to IRR of 15.17% and payback of 8 years
for best case (No. 1)
• Increase in energy crop price for 15% changes IRR
by – 0.61% on average and payback + 0.35 years on
average
• Increase by 30% has slightly worse effects
Based on Base A (most realistic)
Above the hurdle rate
of 8.6% = projects are
acceptable

39. Analysis of local
cooperation potential

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90% of farmers would willingly provide manure for AD, 46%
would grow energy crops and 70% invest jointly into biogas

41. 70% of the farmers do not sell any products within the
municiplaity and 40% do not purchase anything
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42. Semi structured interviews on the Gundinci
Agricultural Cooperative (GAC)
Mr. Marijan Lučić, Chicken husbandry, former member of GAC,
15th November 2012, Gundinci
• Cooperative founded in 1968 and broke apart in 1995
• Had one director who managed trade deals
• Financing of production materials through a collective loan – the
farmers did not have to invest money themselves
Mr. Marijan Lučić, Pig husbandry, director of GAC for 25 years, 16th
November 2012, Gundinci
• Jelaousy and individual rows between locals problem for cooperative
• Difficult to get the people to invest jointly into the plant

43. What was done . . .
• Using the biogas partner selection tool – developed by this
research – enables investors to map local cooperation and
biogas potentials
• Gundinci biogas plant with installed capacity of 640 kWel,
from 28000t of animal manure and 5000t of energy crops –
larger capacity possible if more energy crops used
• Investment acceptable even under te scenario where only
electricity is sold (IRR=11.34%)
• Farmers show willingness to create a energy cooperative:
Majority is willing to provide manure (90%) and invest
jointly (70%)

44. Are energy cooperatives an applicable model for
producing biogas from agricultural waste in Croatia?
• Most Croatian farms are small in size, meaning that
developing biogas economically is possible only
through aggregating manure into centralized plants
• Energy cooperatives create a model for investing into
biogas plants by the community. These investments
would be economically viable provided there is enough
biomass

45. What benefits would this bring?
• Sharing of investment risk among the farmers
• Ability to take advantage of more manure produced on
Croatian farms
• Compliance with the Nitrates directive
• Greater added value chain in the local economy – job
creation, introduction of new skills to the locals, marketing
of the municiplaity
• Reduction of water pollution from nutrient runoff and
methane emissions
• Health benefits due to cleaner local drinking water

46. Would Croatian farmers have the willingness to create
biogas energy cooperatives?
• Farmers are willing to cooperate with the biogas plant
(provide manure) because this would help them get into
accordance with the Nitates directive (efficient manure
management and 170 kg N/ha)
• Growing of energy crops depends on price negotiations
with the farmers
• But in real life the majority would most likey not be willing
to invest into the plant. In general they do not want to take
any more financial risk.
• Local financing could be the greatest obstacle for
cooperatives development

47. What are the obstacles for developing energy
cooperatives in Croatia?
MACRO LEVEL
• Top down structure of Croatian cooperatives
governance and lack of institutional support
• Lack of governmet leadership in promoting
cooperatives as form of social entreprenuership
MICRO LEVEL
• Misunderstanding of the cooperatives by the general
pubic – seen as relics of socialism
• Lack of education and skills at the local level
• Weak sense of group and tollerance among people

48. Policy recommendations
• Create pilot project, which would serve as an example
for farmers that IT CAN BE DONE
• Involvement of international development organizations
that have a brand name and financial power to finance
this
• Local shared interest crucial in bringing the farmers
together. They have to see the benefits and this means
EDUCATING them
• Create easier access to finance – business banks
perceive communal projects as risky