The UK has some 7,000 dairy farms producing more than 90 million tonnes of slurry per year. Traditionally, this slurry has been recycled back on farmers' fields, but more are recognising that, by harnessing it and other feedstocks to produce biogas, they can generate electricity and/or heat and export any excess to the National Grid, thereby achieving an additional income stream.
Feedstock can come from several sources: for example, with increased separation of household waste, food waste can now be used, along with garden waste. Either way, in operation, slurry and feedstock are pumped into sealed concrete and/or steel tanks (digesters or fermenters) containing live bacteria but no air. The bacteria feed on the mix, so producing methane along with liquid digestate (returned to the farmer as clean fertiliser) and solid digestate (in theory, for sale to the public as a low-grade fertiliser).
So what are the issues? First, let's look at design. Most owners of biogas sites are professionals in other spheres so they depend on their contractors to deliver a working plant. But this is where difficulties can initially arise.
One of the biggest exposures of the process is the explosive nature of methane gas. From an insurance perspective, clearly there should be good separation between major components of the process, including the generation plant, so that if there is an explosion, minimal damage is done to the overall installation.
Unfortunately, though, on many small sites that is not the case and there is often little or no clear separation between the main plant components – even though they are surrounded by open fields often owned by the same farmer or company. As a result, several serious explosions have occurred in Europe, with all the main components on site destroyed, so this is a serious issue.
Moving on, there can be financial issues. To be profitable, this type of generation requires government subsidies, but subsidies vary considerably from country to country. With the financial environment favourable in the UK, foreign contractors are tempted to enter the market, and, accordingly, a large number of construction projects have currently been proposed.
However, some contractors have been in undeclared financial difficulties, which have resulted in poor build quality as the companies work to cut costs. Additionally, sometimes plants have been only partially built when the main contractor has been declared bankrupt.
Another problematic issue concerns construction. Over time there have been significant developments concerning the design and construction of digestate tanks. In the early days, tanks were mostly riveted with mastic internal sealing. Unfortunately, the industry experienced failures with this type of tank, due to the corrosive nature of feedstock during conversion to biogas and digestate. Corrosion of rivets and riveted seams created leaks and, in some instances, resulted in complete failure of the tank. As a result, sites were flooded with tank contents, digestate leached into water courses, and electrical components were completely destroyed.
Nowadays, tanks are either bolted or welded steel, or constructed from concrete. They also tend to be partially buried, have bunded membranes and are fitted with leakage alarms.
Perhaps one of the largest claims recently made during construction was when a site was in the final stages of testing. Nitrogen was left in the digester tanks overnight as a purge gas, prior to bacteria and feedstock being introduced. However, an adverse differential pressure was caused by the change in temperature from day to night, creating a partial vacuum. This is not usually a problem, because tanks are fitted with safety and vacuum valves. But, unbeknown to the insurer, the main contractor had fitted a shut-off valve between the digester tank and the vacuum/safety valve to prevent nitrogen leakage. The consequence of this was that the tanks collapsed, causing damage requiring major repairs, which delayed construction by approximately 12 months.
The third area of difficulty arises during operation. Plant operator skills vary from agricultural to a professional. This is often evident in insurance claims relating to plant operation, where the results of poor engineering and management are often evident. In one instance, the main gas line into the engine was supported on nothing more than a wooden prop. In another, food waste and packaging was stored adjacent to the main transformers for the site. An electrical failure in a transformer could start a fire, which, as a result, could easily spread to, and destroy, the main buildings.
To ensure professionalism, it is clearly essential for any insurance company involved in this business to have policy terms that require competent site operators. The main contractor for the build should provide training for site operators, which can be supplemented by off-site courses such as those provided by the Waste Management Industry Training and Advisory Board (WAMITAB).
That said, operations and maintenance contracts must also be in place, at least for the site engines themselves. The main engine manufacturers in the biogas business are Jenbaucher (GE), Rolls-Royce and Caterpillar. Other engines in the marketplace, such as 2G, are derivatives of these. Generally, engine contracts are based on plant availability of 92–95%, with call-out times within 24 hours.
However, as such engine contracts are not cheap, some insurers have experienced very expensive claims due to incompetent site owners attempting to maintain engines themselves. The fact is these engines require professional engineers with the correct knowledge and skills to maintain them: they are far more sophisticated than most farm machinery. Engineers should be from the manufacturer or its recommended agent.
As for management of feedstock in the biogas process, the main issue is ensuring the correct mix to maximise production of usable gas. If the mix is too rich, for example, with excess alcohol or fish stock, the bacteria overact and generate too much gas, which causes foaming. If the mix is too lean, bacteria die so very little gas is generated.
In general, the industry manages the feedstock process through a combination of rigorous plant design, careful input of the correct feedstock materials and, lastly, constant monitoring of the digestate tank. Samples are regularly taken and most sites send them to specialist laboratories for analysis. Feedback allows the input stock to be adjusted to prevent issues.
However, it is the experience of insurers that some owners look to maximise the output of biogas beyond the design of the plant. Consequently, the feedstock becomes very rich, resulting in excess foaming on top of the liquid level. To counteract the problem, a knock-down compound (silicone oil-based mixture) can be fed on top of the foam. However, some plant designs do not have an injection spray bar so excessive foam can then block the safety valves. That results in over-pressurisation of the tank, and, in turn, stretching of the soft double membrane beyond its design limits.
If this type of incident occurs, the tank must be emptied, and all valves cleaned and checked for operation. New membrane covers will also need to be fitted and checked. If the Environment Agency becomes involved, it can take more than a year before a plant can be brought back into operation, because the site owner has to prove competence and appropriate design and operation of the plant going forward.
Unsurprisingly, insurers are now insisting that biogas plant owners have the knock-down kit on site, and that it can be injected into the tanks. They are also demanding that large discharge valves be fitted, allowing emergency lowering of the digestate into a separate tank or trailer.
As a consequence of the significant losses insurers have experienced in the biogas industry, insurance rates have risen. Additionally, the excess period and money deductible before any claims can be made have been increased.