POWER May 2021 - 6

Renewable Natural Gas
Emerging as Serious
Decarbonized Gas Contender
Last December, two giant Virginia-headquartered
firms-energy company Dominion
Energy and food manufacturer
Smithfield Foods-announced completion
of a novel renewable natural gas
(RNG) facility in Milford, southwestern
Utah. While the Milford facility is the
first of four similar projects that Align
Renewable Natural Gas-a joint venture
formed in November 2018 between Dominion
and Smithfield-is spearheading,
it is just one of a string of new,
notable developments that suggest
RNG is quickly gaining ground as the
energy transition unfolds.
RNG is essentially a gaseous fuel derived
from biogenic or other renewable
sources, which can be " upgraded " and
processed to pipeline-compatible, nearpure
methane. According to the World
Resources Institute (WRI), landfills account
for the bulk of current RNG production,
mainly because they already
have methane collection mechanisms.
A smaller share of RNG is derived via
anaerobic digestion (AD) of solid organic
matter removed in the wastewater treatment
process at municipal water resource
recovery plants, animal manure at
livestock farms, and food waste at other
facilities. RNG can also come from gasification
of " dry " organic wastes, such as
agricultural and forestry residues.
As Karen Crippen, Research and Development
director at GTI's Energy Supply
& Conversion, explained, RNG differs
from natural gas in that it's " nearly all
methane, none of the extra hydrocarbon
seen in natural gas. It also contains
some small amounts of trace constituents,
depending on the biogas source.
Great strides have been made in the
past decade with numerous testing programs,
so we now have a good understanding
of what the trace constituents
in RNG are, " she said. Modern biogas
" upgrading " technologies typically used
to achieve pipeline-quality standards include
membranes, pressure swing adsorption,
solvent scrubbing, and water
scrubbing. While these can add to production
costs, the resulting RNG can be
a form of gas that combines low to negative
lifecycle carbon emissions with the
high energy density, storage capability,
and transportability of natural gas.
6
1. Align Renewable Natural Gas' Milford facility captures methane from hog farming operations
via covered manure lagoons or digesters. The gas is then transported by a low-pressure biogas
transmission line to a central conditioning facility, where it is processed and then delivered to
end-users through existing underground pipelines. Courtesy: Align Renewable Natural Gas
These environmental attributes are
attractive to both policymakers and investors
alike because they offer both
a pathway for the natural gas industry
to meet energy sector decarbonization
goals, as well as future resilience
of the energy system by providing a locally
sourced supply of clean energy. According
to David Cox, founder and chief
financial officer at the RNG Coalition, a
member-led nonprofit organization dedicated
to RNG advancement, the recent
drive for decarbonization is fueling a
boom in the production of RNG. " RNG
has had a fairly consistent 30% growth
rate (by volume) in recent years, " he said.
" Ten years ago, there were 30 RNG facilities
in North America. Today we have
157 operating facilities-with another 76
under construction. "
Investors are bullish on the low-carbon
gas because it is economic today, said
Stifel Equity Research in a recent white
paper. " In 2020, dairy and landfill gas
projects earned average price realizations
of $100/MMBtu and $30/MMBtu,
respectively, well above their respective
average cost of supply. Based on our assessment
of over 20 projects across the
primary RNG feedstocks (landfill, animal
manure, wastewater), we estimate the
industry generates project-level [internal
rate of returns (IRRs)] in the 10% to 65%
range assuming strip prices, and current
federal and state programs. We expect
returns to improve as operators advance
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anaerobic digestion technology, improve
operating efficiency, and better integrate
digestate sales into their operations. "
It also offers remarkable growth potential.
While the International Energy
Agency projects an 18-fold increase in
RNG supply by 2040, Stifel suggests
dairy and swine farms alone represent
an 80-fold increase in potential projects.
Align RNG's Milford project in Utah
(Figure 1) represents a snapshot of such
facilities. The project consists of a network
of 26 family farms that raise hogs
under contract with Smithfield. At full capacity,
the project could produce about
650 MMBtu per day of RNG-enough
biomethane to heat more than 3,000
homes and businesses. Align RNG is
now looking to complete 12 to 16 RNG
projects over the next decade at farm
networks in North Carolina and Virginia.
Demand for the gas is set to increase
too. In 2011, nearly all RNG projects operating
in the U.S. were providing RNG
for power production offsite. Driven by
policy (Figure 2), most notably the federal
Renewable Fuel Standard (RFS) and
California's Low Carbon Fuel Standard
(LCFS), by 2017, 76% of RNG projects
were converting RNG into transportation
fuels, particularly for natural gas
vehicles designed for long-haul and
heavy-duty applications, while 24%
generated power offsite.
" Unlike the transportation sector, use
of RNG as a direct fuel in stationary end
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POWER May 2021

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