Realizing the long-term economic benefits of RNG projects

Northern Colorado Clean Cities recently interviewed CGRS and City of Longmont, Colorado, representatives about the ins and outs of constructing a system that converts biogas at a wastewater treatment plant to Renewable Natural Gas (RNG). The goal: provide useful information about the decision-making and construction processes so other jurisdictions can determine if a similar project is right for their facilities and their communities. The following article is based on the content of those interviews.

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Although the rewards of building a biogas project and even switching from vehicles that run on diesel to those that run on CNG are vast – from saving the environment to saving money – actually building such a system is a significant investment.

It may seem an even bigger one with the uncertainties surrounding the COVID-19 pandemic.

John Gage, P.E., City of Longmont Public Works and Natural Resources Civil Engineer, said he understands that municipalities and districts may be hesitant to pursue an RNG project at this time, but they’re still worth looking into if they consider the long-term goals and impacts.

“Even here at the city of Longmont, we’re doing similar things,” he said. “How do we prioritize with the point we’re getting lower revenues and where do sustainable projects fall as far as prioritization? There’s a little bit of uncertainty in the renewable space.”

Even with the uncertainties COVID-19 presents, it doesn’t change the need for fleets transporting waste or other necessities, said Cory Kahler, CGRS Water/Wastewater Operations manager and an expert in RNG/Compressed Natural Gas (CNG) systems.

“They’re always going to have to have these vehicles that are going to be running on RNG or diesel; it’s a known,” he said. “ROI (return on investment) is a long time, but really these projects are not meant to be short-term projects. … They’re life span is long term. You have to look at it long term for future. Just because we have all of this stuff going doesn’t mean that some of these sustainability goals and requirements that could be put on by EPA, state government, will go away just because of everything going on right now.”

Fortunately, the support for renewable projects is growing, providing more financial security for jurisdictions willing to invest in those systems.

State governments’ involvement in promoting RNG and other renewables is increasing, including a strong push in Colorado, Gage said. The Colorado Energy Office has issued a number of studies for RNG, completed a statewide RNG inventory, and completed a Low Carbon Fuel Standard – a state version of the EPA’s Renewable Fuel Standard for incentivizing RNG production. He noted the states standard will probably be the stabilizer when people are concerned about the EPA Renewable Fuel Standard.

“There are a number of different incentives that go along with pursuing renewable projects,” Gage said.

The EPA Renewable Fuel Standard that incentivizes long-term RNG production is currently set for review in 2022, but it’s likely to continue on and will benefit jurisdictions looking to pursue RNG and other sustainable projects.

Longmont obtained a $1 million grant from the Colorado Department of Local Affairs (DOLA) Energy/Mineral Impact Assistance Fund to offset its capital investment, Gage said, and DOLA‘s Renewable and Clean Energy Challenge may soon come up on a new grant cycle for other RNG projects.

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The Regional Air Quality Council (RAQC) awarded the City a grant that covered the cost difference of replacing its diesel waste services trucks with CNG trucks, and Longmont will realize the cost benefits by not needing to buy diesel to fuel those trucks, Gage said. Fuel prices at the pump are variable, but if diesel fuel is $3 per gallon, and the City is no longer using 100,000 gallons every year, that’s $300,000 saved each year.

By building the RNG Fueling Station, the City can also take advantage of valuable credits from the United States Environmental Protection Agency’s Renewable Fuel Standard program. The annual benefit associated with these credits is $150,000-$250,000 per year.

“We’re currently using about 70% of our fuel, of our RNG production, that’s through the Waste Services group,” Gage said. “We still have an additional 30% of that fuel that can be used for other vehicles. We’re looking to pursue other grant opportunities to add another fueling position or a fast-fuel spot for other city vehicles. It may not be public-basing in the short term, but it may be public-basing in the long term.”

Longmont is looking to build another digester in the next couple of years to produce more biogas, and it could look into obtaining biogas from fats, oils, and grease, as some larger cities are already doing, providing more opportunities for more biogas production.

“There’s a future for RNG in terms of the production side, and we’re finding a lot of interest from both internal services and some external people who’ve approached us about using our additional RNG,” Gage said. …“The future of RNG to me is pretty bright.”