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The Economics of Anaerobic Digester Technology for Ontario Farmers

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Title: The Economics of Anaerobic Digester Technology for Ontario Farmers
Author: Anderson, Robert
Department: Department of Food, Agricultural and Resource Economics
Program: Food, Agriculture and Resource Economics
Advisor: Weersink, Alfons
Abstract: Anaerobic digester (AD) technology is a form of renewable energy that’s economic feasibility assessment is required site by site. This thesis presents a freely available workbook to determine the financial feasibility of a farm-based AD and to demonstrate its use for the Ontario livestock sector. To assess the profitability of ADs for farmers in Ontario with uncertainty included the theory of real options is used. Investment in an AD is financially feasible only for the largest dairy farms in Ontario under current electricity prices, which are approximately six times greater than the wholesale price. Shifting to a duel fuel continuous system would improve returns, as would the availability of additional substrate material in the form of solid grease waste. The real options approach shows that even higher net returns are necessary, than indicated by more traditional approaches, in order for AD investments to be feasible for Ontario livestock farmers.
Date: 2012-05
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