What Investors Should Review Before Funding a Biogas Project

 

Key Technical and Commercial Factors That Determine Project Success

Biogas projects are increasingly attractive to investors seeking opportunities aligned with renewable energy, sustainability, and circular economy principles. The concept of converting organic waste into energy appears promising, offering multiple benefits such as waste reduction, carbon emission mitigation, and long-term energy generation.

However, despite these advantages, many biogas projects fail to meet performance and financial expectations. From an investor’s perspective, the challenge is not whether biogas technology works—it does—but whether a specific project is technically sound, commercially viable, and operationally sustainable.

This article outlines what investors should carefully review before funding a biogas project, based on common findings from project reviews and early-stage engineering assessments.

---

1. Feedstock Availability and Reliability

The foundation of any biogas project is its feedstock. Investors should not rely solely on nominal quantities presented in proposals.

Key questions include:

• Is the feedstock supply contractually secured?
• How consistent is the feedstock in terms of quantity and quality?
• Are there seasonal variations or competing uses?
• What level of contamination or pre-treatment is required?

Projects often assume continuous, high-quality feedstock supply, while reality is more complex. A conservative feedstock assessment is essential, as biogas yield directly affects revenue and plant utilization.

---

2. Technology Selection and Process Simplicity

Biogas technologies vary significantly depending on feedstock type, scale, and operating conditions. Investors should examine whether technology selection is based on:

• Proven operational performance
• Compatibility with feedstock characteristics
• Simplicity and reliability
• Local operator capability and maintenance resources

Overly complex systems may appear efficient on paper but can create operational instability and higher operating costs. From an investment perspective, robust and operable systems often outperform theoretically optimized designs over the project lifecycle.

---

3. Energy Utilization Strategy

Biogas projects typically generate value through:

• Electricity and heat (CHP)
• Upgrading biogas to biomethane
• Direct gas utilization for industrial processes

Investors should assess whether the selected utilization route aligns with:

• Market demand
• Grid access and tariffs
• Regulatory requirements
• Operational readiness

In many cases, phased development—starting with CHP and later expanding to biomethane upgrading—reduces risk and improves project bankability.

---

4. Capital Expenditure (CAPEX) Realism

CAPEX estimates for biogas projects are frequently underestimated. Common gaps include:

• Incomplete scope definition
• Underestimated civil works and infrastructure
• Imported equipment costs and logistics
• Insufficient contingency for project risk

Investors should review the basis of estimate, not just the total number. Benchmarking against similar projects and reviewing cost breakdowns are critical steps before committing capital.

---

5. Operating Expenditure (OPEX) and Lifecycle Costs

Operational costs often determine whether a biogas project remains profitable over time. Investors should scrutinize assumptions related to:

• Skilled labor requirements
• Maintenance of biological and mechanical systems
• Consumables, chemicals, and spare parts
• Digestate handling and disposal

Underestimating OPEX may make a project appear attractive initially but can significantly erode returns during operation.

---

6. Revenue Assumptions and Market Sensitivity

Revenue projections should be tested against realistic scenarios:

• Energy price fluctuations
• Changes in policy or incentives
• Variability in plant availability and output

Investors should understand how sensitive project economics are to changes in key assumptions. A bankable project remains viable under conservative scenarios, not only under optimistic forecasts.

---

7. Regulatory and Environmental Compliance

Biogas projects operate within complex regulatory environments. Investors should verify:

• Permitting requirements
• Environmental approvals
• Emission and waste management compliance
• Grid or gas network interconnection rules

Delays or non-compliance can significantly affect project timelines and costs.

---

8. Execution Readiness and EPC Strategy

Even well-designed projects can fail during execution. Investors should review:

• Project maturity level (FS, FEED, DED)
• EPC strategy and contracting approach
• Long-lead equipment identification
• Construction and commissioning plans

Projects that proceed to EPC with insufficient engineering definition face higher risks of cost overruns and delays.

---

9. Operational Capability and Management Structure

Long-term success depends on operational discipline. Investors should consider:

• Who will operate the plant?
• Is there experience with biological processes?
• What training and support are planned?

Biogas plants are not “set-and-forget” facilities. Operational capability is a critical investment risk factor.

---

10. The Role of Independent Project Review

An independent project review provides investors with:

• Objective assessment of assumptions
• Identification of hidden risks
• Alignment between technical and commercial realities
• Improved decision confidence

Independent reviews are most valuable when conducted before final investment decisions, when risks can still be mitigated at relatively low cost.

---

Final Thoughts

Biogas projects can deliver strong financial and environmental returns—but only when developed with discipline, realism, and independent oversight. For investors, the key is not to avoid biogas projects, but to ensure that decisions are based on sound engineering judgment and conservative commercial assumptions.

Early-stage reviews, feasibility assessments, and independent evaluations play a vital role in protecting investment value and supporting long-term project success.

---

How This Applies to Investors and Project Owners

This type of analysis is typically performed during:

• Biogas feasibility studies (FS)
• Bioenergy project reviews
• Independent assessments for investors and lenders

If you are considering funding or developing a biogas project, an independent review can significantly reduce technical and commercial risk.

📩 Email: afakar@gmail.com

📱 WhatsApp: +62 813-6864-3249

---

Published by

Project, Industry & Engineering Review Hub

Independent project reviews, engineering consulting, and industry analysis for energy, industrial, and bioenergy projects worldwide.

Biogas Project Review: Technical and Commercial Pitfalls

Why Many Biogas Projects Underperform and How Early Reviews Can Prevent Failure?

Biogas projects are often promoted as an ideal solution for renewable energy, waste management, and sustainability goals. In theory, converting organic waste into energy sounds straightforward and environmentally attractive. In practice, however, many biogas projects underperform, struggle financially, or fail to reach stable operation.

Based on experience reviewing energy and industrial projects, biogas developments frequently suffer not from a lack of technology, but from weak early-stage engineering, unrealistic assumptions, and insufficient independent review.

This article discusses the most common technical and commercial pitfalls in biogas projects and explains how structured project reviews can significantly improve project outcomes.

---

The Nature of Biogas Projects

Unlike conventional power or gas projects, biogas facilities are feedstock-driven systems. Their performance depends not only on equipment and technology, but also on:

• Feedstock quantity and consistency
• Biological process stability
• Operational discipline
• Long-term waste supply arrangements

This inherent complexity makes biogas projects particularly vulnerable to early-stage misjudgments.

---

Common Technical Pitfalls in Biogas Projects

1. Over-Optimistic Feedstock Assumptions

One of the most frequent issues identified during biogas project reviews is overestimation of feedstock availability and quality.

Typical problems include:

• Assuming full availability of organic waste year-round
• Ignoring seasonal variations
• Underestimating contamination and pre-treatment requirements

In reality, feedstock supply is often inconsistent. Without conservative assumptions, digesters may operate below capacity, directly reducing biogas yield and revenue.

An effective project review challenges feedstock assumptions using realistic operational scenarios, not best-case projections.

---

2. Inappropriate Digestion Technology Selection

Biogas technologies are not one-size-fits-all. Common mistakes include:

• Selecting digesters based on vendor marketing rather than feedstock characteristics
• Overly complex process configurations
• Insufficient consideration of operational simplicity

Projects that prioritize theoretical efficiency over operability and maintainability often face unstable digestion, higher downtime, and increased operating costs.

Independent reviews help align technology selection with feedstock variability, operator capability, and local conditions.

---

3. Underestimating Utilities and Supporting Systems

Biogas plants require more than digesters and gas engines. Reviews frequently identify missing or underestimated systems such as:

• Feedstock handling and storage
• Digestate dewatering and disposal
• Gas cleaning and conditioning
• Utilities (power, water, heat, control systems)

When these systems are inadequately defined during feasibility or FEED stages, projects encounter scope creep, cost overruns, and operational constraints during execution.

---

4. Insufficient Redundancy and Reliability Planning

Many biogas projects are designed with minimal redundancy to reduce CAPEX. While this may improve paper economics, it often compromises:

• Plant availability
• Maintenance flexibility
• Long-term reliability

A project review evaluates whether redundancy levels are appropriate for the intended operational philosophy and revenue model.

---

Commercial and Financial Pitfalls

5. CAPEX Underestimation

Biogas project CAPEX is often underestimated due to:

• Incomplete scope definition
• Ignoring civil works and infrastructure
• Underestimating imported equipment and logistics

Independent reviews benchmark cost estimates against similar projects and assess whether contingencies are adequate for project risk.

---

6. Unrealistic OPEX Assumptions

Operational costs are frequently underestimated, especially for:

• Skilled labor and supervision
• Maintenance of biological and mechanical systems
• Consumables and chemicals
• Digestate handling

Underestimated OPEX erodes project margins and can quickly turn a “bankable” project into a financial burden.

---

7. Weak Revenue and Market Assumptions

Revenue projections in biogas projects often rely on:

• Optimistic energy prices
• Assumed incentives or subsidies
• Uncertain offtake agreements

A robust project review examines the sensitivity of project economics to changes in energy pricing, policy, and operational performance.

---

Biogas vs. Biomethane: Strategic Misalignment

Many projects attempt to jump directly into biomethane upgrading without first stabilizing biogas production. While biomethane offers higher potential value, it also introduces:

• Higher CAPEX
• Stricter gas quality requirements
• Increased operational complexity

Project reviews often recommend a phased development approach, starting with CHP and progressing to upgrading only after operational stability is proven.

---

The Importance of Early-Stage Project Reviews

The most valuable biogas project reviews occur during:

• Concept development
• Feasibility Study (FS)
• Pre-FEED or FEED

At these stages:

• Design flexibility is high
• Capital exposure is limited
• Risk mitigation is cost-effective

Late-stage corrections, after EPC commitment or commissioning, are significantly more expensive and disruptive.

---

How Independent Reviews Improve Biogas Project Outcomes

Independent biogas project reviews help stakeholders:

• Identify unrealistic assumptions
• Align technology with feedstock reality
• Improve cost and schedule confidence
• Reduce operational and execution risk
• Support informed investment decisions

For investors, lenders, and project owners, this independent perspective often provides greater value than optimistic projections.

---

Who Should Consider a Biogas Project Review?

Biogas project reviews are particularly relevant for:

• Project developers and owners
• Investors and financial institutions
• EPC contractors entering bioenergy projects
• Industrial operators exploring waste-to-energy solutions

Any organization investing in bioenergy should recognize that biological systems require engineering discipline and conservative planning.

---

Final Thoughts

Biogas projects can deliver strong environmental and economic benefits—but only when developed with realistic assumptions, disciplined engineering, and independent oversight.

Most biogas project failures are not technological failures. They are project development failures that could have been identified and mitigated early.

Independent project reviews bridge the gap between sustainability ambition and operational reality, helping biogas projects move from concept to reliable performance.

---

How This Applies to Your Biogas Project

This type of analysis is typically performed during:

• Biogas feasibility studies (FS)
• Bioenergy FEED reviews
• Independent project assessments for investors and owners

If you are planning or evaluating a biogas or bioenergy project, an early-stage independent review can significantly improve technical robustness and commercial confidence.

📩 Email: afakar@gmail.com

📱 WhatsApp: +62 813-6864-3249

---

🔍 About the Author

Published by Project, Industry & Engineering Review Hub, providing independent project reviews, engineering consulting, and industry analysis for energy, industrial, and bioenergy projects worldwide.

Hydropower: Theoretical Foundations and Practical Applications

1. Introduction

Hydropower, or hydroelectric power, is one of the oldest and most widely used renewable energy sources. It involves converting the potential and kinetic energy of flowing water into mechanical energy and then into electricity. Due to its low greenhouse gas emissions and ability to provide reliable baseload and peak-load power, hydropower plays a vital role in modern energy systems.

This article explores the theoretical basis of hydropower generation, associated formulas, and real-world applications.

---

2. Theoretical Basis of Hydropower

Hydropower is fundamentally based on the conversion of gravitational potential energy of water stored at height into mechanical energy using turbines, and then into electrical energy using generators. The process adheres to the law of conservation of energy, and its efficiency is governed by fluid dynamics and mechanical engineering principles.

2.1 Potential and Kinetic Energy

The two primary forms of energy utilized in hydropower are:

• Potential Energy (PE):
  Stored in water due to its height above a reference point.
  PE = m · g · h
  Where:
         m = mass of water (kg)
          g = acceleration due to gravity (9.81 m/s²)
          h = height of water (head) in meters

• Kinetic Energy (KE):
  Due to the velocity of flowing water (especially in run-of-river systems).
  KE = ½ · m · v²
  Where:
         v = velocity of water (m/s)
        m = mass of water (kg)

However, most conventional hydropower systems primarily harness potential energy.

---

3. Hydropower Output Calculation

The theoretical power output from a hydropower system can be estimated using the following formula:

P = η · ρ · g · Q · H

Where:

           P  = electrical power output (Watts)

           η  = efficiency of the system (turbine + generator, typically 0.8–0.95)

           ρ  = density of water (~1000 kg/m³)

           g  = acceleration due to gravity (9.81 m/s²)

          Q  = volumetric flow rate (m³/s)

          H  = effective head (height difference, in meters)

This equation assumes a steady-state flow and neglects losses due to friction, turbulence, and cavitation.

---

4. Types of Hydropower Systems

There are three primary types of hydropower systems:

4.1 Impoundment (Reservoir-Based) Hydropower

• Structure: Uses a dam to store water in a reservoir.

• Mechanism: Water released from the reservoir flows through a turbine, spinning it to generate electricity.

• Key Feature: Capable of supplying base and peak loads.

4.2 Run-of-River Hydropower

• Structure: Diverts a portion of a river’s flow through a channel or penstock.

• Mechanism: Utilizes the river’s natural flow and elevation drop.

• Key Feature: Minimal environmental impact, but highly flow-dependent.

4.3 Pumped Storage Hydropower

• Structure: Uses two reservoirs at different elevations.

• Mechanism: Pumps water to the upper reservoir during low demand; releases it during peak demand to generate electricity.

• Key Feature: Acts as a grid-scale battery.

---

5. Turbine Types and Their Operation

The choice of turbine depends on the head and flow conditions. Common types include:

5.1 Pelton Turbine (High Head, Low Flow)

• Impulse turbine: Converts water’s kinetic energy into mechanical energy.

• Equation for torque:

  τ = r · F = r · ṁ · (v₁ − v₂)
  Where:
         τ = torque  
         r = radius  
        ṁ = mass flow rate  
        v₁ = inlet velocity of the water jet  
        v₂ = outlet velocity of the water jet

5.2 Francis Turbine (Medium Head, Medium Flow)

• Reaction turbine: Works with both kinetic and pressure energy.

• Power equation: Similar to general hydropower formula.

• Involves complex fluid mechanics and blade angle design.

5.3 Kaplan Turbine (Low Head, High Flow)

• Axial flow reaction turbine.

• Adjustable blades optimize efficiency across varying flows.

---

6. Efficiency Considerations

The overall efficiency of a hydropower system is the product of the turbine, generator, and hydraulic efficiencies.

$$\eta_{\text{overall}} = \eta_{\text{turbine}} \cdot \eta_{\text{generator}} \cdot \eta_{\text{hydraulic}}$$

Typical ranges:

• Turbine: 85%–95%

• Generator: 90%–98%

• Hydraulic: varies (depends on penstock, friction, etc.)

Losses due to:

• Friction in penstocks (Darcy-Weisbach equation)

• Turbulence and vortex formation

• Cavitation (especially in Francis turbines)

---

7. Real-World Applications

7.1 Power Plants

• Three Gorges Dam (China):
  Installed capacity: 22,500 MW.
  World's largest hydroelectric power station.

• Itaipu Dam (Brazil/Paraguay):
  Installed capacity: 14,000 MW.
  Supplies ~75% of Paraguay’s electricity.

7.2 Micro-Hydro Systems

• Used in remote or rural areas for local power generation.

• Typical range: 5 kW to 100 kW.

• Benefits: Off-grid capability, low environmental impact.

7.3 Integration with Smart Grids

• Pumped storage used for load balancing and frequency regulation.

• Supports integration of intermittent renewables like solar and wind.

---

8. Environmental and Social Considerations

While hydropower is cleaner than fossil fuels, it still has some drawbacks:

• Ecosystem disruption: Dams alter river flow, affecting fish migration and sediment transport.

• Displacement of communities: Reservoirs can flood large areas.

• Methane emissions: From decaying biomass in tropical reservoirs.

Mitigation:

• Fish ladders, sediment flushing, environmental flow regulations.

---

9. Future Trends and Innovations

• Small modular hydropower: Prefabricated units for rapid deployment.

• Hydrokinetic turbines: Extract energy from ocean currents or rivers without dams.

• Digital twin technology: Simulates turbine and dam performance for predictive maintenance.

• Hybrid systems: Combining solar PV with hydropower to optimize generation.

---

10. Conclusion

Hydropower remains a cornerstone of sustainable energy systems. Its theoretical foundation is robust, relying on principles of fluid dynamics and energy conversion. Through careful design, efficiency optimization, and environmental management, hydropower can continue to provide reliable and clean energy worldwide.

Understanding its physics—from the fundamental power equation to turbine selection—is key for engineers and policy-makers looking to expand renewable energy portfolios while maintaining grid reliability.

---

References

1. U.S. Department of Energy. Hydropower Basics. https://www.energy.gov/eere/water/hydropower-basics

2. Penche, C. (1998). Layman’s Guidebook on How to Develop a Small Hydro Site. European Small Hydropower Association (ESHA).

3. International Energy Agency (IEA). Hydropower Technology Brief, 2022.

Global hydropower generation up 10% in 2024

 

There is an increasing trend for pumped storage hydropower.

Hydropower remains the world’s largest renewable energy source, growing 10% to 4,578 terawatt-hours in 2024 in terms of generation.

In its latest World Hydropower Outlook, the International Hydropower Association (IHA) said this performance reflects a rebound from drought-affected lows the previous year.

The global hydropower capacity also added 24.6 gigawatts (GW) last year. It supplied 14.3% of global power and supports power system flexibility in more than 150 countries.

IHA said the global capacity additions included 8.4 GW of pumped storage hydropower (PSH), up 5% to 189GW, signalling an accelerating trend.

“Annual PSH additions have nearly doubled in the past two years, raising the five-year average to 6 GW per year, up from 2 GW to 4 GW across the previous two decades,” the study noted.

The development pipeline increased 8% to 1,075 GW by the end of 2024. This includes 600 GW of PSH and 475 GW of conventional projects, with most of the under-construction capacity expected to be commissioned by 2030. 

Despite this development, IHA warned of a potential shortfall of 60 GW to 70 GW by 2030 against the International Renewable Energy Agency’s hydropower target in its “tripling renewables” scenario.

“Continued momentum will require bold policy action, including reforms to reward hydropower’s multiple benefits, and faster permitting,” IHA President Malcolm Turnbull said.

Source