biogas-digesterIn this post, Dallas writes about bio natural gas a potentially disruptive renewable energy technology that may be poised to expand out of the niche markets it has so far been constrained in. After describing what bio natural gas is the post delves into some of the specifics for why this sector may be ready to take off, and why it has a big upside potential. The study, which this post summarizes suggests that bio natural gas may emerge as the lowest cost renewable power in the future, once available at scale.

by Dallas Kachan, Managing Partner, Kachan & Co., a cleantech research and advisory firm. Subscribe to The Kachan Letter. Read his blog. Connect with Dallas on Linkedin.

At the bustling intersection of renewable energy mandates, carbon emissions regulation, economic growth and legacy infrastructure lies untapped potential for producers of bio natural gas (BNG).

It’s new. It’s important. It’s certainly not to be confused with plain biogas. And particularly if you work or have invested in solar, wind or energy storage, you need to know about it.

BNG is known by other names—like bioSNG, renewable natural gas and biomethane—but as a biologically-created compound chemically similar to commercial fossil-based natural gas, it’s poised to make an impact on the natural gas marketplace and as a new entrant in the world of next generation advanced biofuels.

By BNG we mean a refined biomethane, typically obtained today from sources like landfills and dairy waste in a raw form via anaerobic digestion, and, in very limited quantities today, upgraded to a quality similar to its analogous fossil natural gas. In the near future, a small cadre of emerging vendors promise large quantities of pipeline-injectable BNG using thermal gasification from agricultural and food processing waste, forestry by-products, source-separated organic municipal solid waste and biosolids from wastewater treatment facilities.

By our definition, BNG must be of a high enough quality to be:

  • Combusted in any system that would use fossil fuel natural gas, including utility-scale power plants
  • Injectable into natural gas pipelines for transportation, and
  • Compressible in LNG/CNG forms for transportation fuels

To read more on the subject of on farm bio digesters and how they can transform noxious polluting waste streams of some farming operations into useful products like biogas, see our related post: “Making the Case for On Farm Anaerobic Digesters“.

BNG is not synonymous with raw synthetic gas, or syngas. Syngas is combustible and often used as a fuel source or as a process intermediary, albeit with a lower energy concentration than natural gas or BNG, but syngas does not meet the three bulleted criteria above.

As a drop-in replacement for natural gas, the biggest impact for BNG could be on its green energy brethren—traditional intermittent renewables like wind and solar. As the installed base of intermittent renewables increases, BNG could find itself playing an intermittency smoothing role, with “green” dispatchable resources like NGCC/IGCC turbines powered by BNG forestalling the need for other renewable storage. If solar and wind are peaky today, they could be made baseload, and still 100% renewable, by combusting BNG in utilities’ existing natural gas plants.

For that matter, with wide-scale BNG, would utilities even need solar and wind? An analysis by Kachan & Co. in conjunction with three North American gas utilities suggests BNG could emerge as the lowest cost renewable power in the future, once available at scale. Utilities might be able to avoid putting steel in the ground for capital-intensive solar or wind farms if they could simply source fungible, renewable gas from their exact same pipeline today and meet or exceed clean energy standards—even if the gas costs a premium over today’s fossil-based natural gas. That’s disruptive.

To read more on the subject of the challenges facing renewable energy as it tries to scale up see our related post: “Green Energy’s Big Challenge: The Daunting Task of Scaling Up“.

Technology Capacity Factor Input fuel costs ($/MWh) O&M costs ($/MWh) Cost of Capital ($/MWh) Unlevelized cost
of production ($/MWh)
NGCC (BNG) 85% $65.27 $2.83 $10.13 $78.23
NGCC (Fossil NG)  85% $44.23 $2.83 $10.13 $57.20
Coal Plant 85% $15.79 $8.91 $28.33 $53.03
NGCC w/CCS 85% $51.43 $5.13 $21.43 $77.99
Coal w/CCS 85% $23.36 $15.39 $52.95 $91.70
Biomass to Power 90% $33.56 $15.85 $58.54 $97.45
Biomass Co-firing 85% $28.64 $19.10 $66.50 $103.74
Wind 35% $ – $13.25 $87.90 $101.15
Solar Trough 22% $ – $24.35 $267.75 $292.10
Solar PV 25% $ – $12.10 $194.60 $210.70
Table 8 from The Bio Natural Gas Opportunity by Kachan & Co. Electricity generation cost comparison by fuel/genset type. Source: Vendors, US DoE, EPRI, California Energy Commission, Kachan analysis. See Appendix 2 of the report for detailed assumptions behind this table.

We had a chance to look at leading BNG companies for a report on the topic. Some of these companies are still running under the radar and don’t yet have web sites. If BNG produced by vendors profiled in this report and elsewhere can reach scalability and indeed leverage the global natural gas infrastructure, BNG could become one of the most valuable renewable fuels for electric power generation and other applications.

While carbon emissions policies remain in flux given the world economic situation as of this writing, BNG could also represent potentially massive carbon savings for end-users of natural gas, providing a significant commercial opportunity for entrepreneurs, investors, and potential strategic partners, including natural gas suppliers and utilities.

Additionally, an opportunity exists for BNG to serve as a drop-in biofuel that can leverage new and existing natural gas and power generation infrastructure, while using renewable biomass feedstocks with little destructive exploration that satisfies existing renewable energy mandates and carbon emissions rules.

Other findings of our research include:

Policy support expected – Existing renewable energy mandates in the US and elsewhere already recognize biogas as an acceptable fuel source. A new Clean Energy Standard from Washington (a new US national RPS) could create an energy portfolio mix cementing natural gas as a bridge fuel. These could create a template for other countries and an incentive infrastructure for BNG.

Taking pressure off transmission – While coal-fired power plants will need to be modernized in most developed countries, electricity transmission lines are more problematic. Building new electrical transmission lines is litigious, costly and slow. Producing power from BNG transmitted through the existing natural gas grid would lessen the pressure to build new power transmission to satisfy renewable energy mandates.

Benefiting from natural gas’ growth – Both developed and developing nations are adding new gas-fired generation capacity quickly, and seeing growth in natural gas vehicles in response to rising oil and gasoline prices, and, as a result, will be turning towards natural gas more frequently.

… that’s not expected to slow anytime soon – Increasing exploitation of non-conventional shale gas fields onshore means that more capacity and more gas transmission infrastructure will come online in more diverse locales.

Inside the fossil fuel timeline – Emerging BNG technologies such as biomass gasification could still be a decade away in scale, but a new offshore gas field discovered today also takes 10-13 years to bring online, suggesting BNG has a market window.

New partners arise – In addition to traditional fossil fuel providers, BNG technology should incentivize a whole new cohort of “raw fuel” producers, especially in the forestry sector—hard hit by the economic downturn that dried up demand for its main products of lumber and paper, it could find new vigor as a producer of biomass fuel.

With BNG technologies still in their early stages and energy prices ramping up from increasing demand and political turmoil, there are many twists and turns ahead for this segment of the green energy market, but its positioning could be dead-center of the energy world’s sweet spot: a fungible, storable and renewable fuel that moves and burns like natural gas.

Kachan & Co.’s new report, The Bio Natural Gas Opportunity, equips the reader to better understand the potential market impact of BNG, identifies benefits and market barriers, and makes recommendations for removing these barriers and seizing opportunities in this emerging technology.

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© 2011, Dallas Kachan. All rights reserved. Do not republish.

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Author: Dallas Kachan (6 Articles)

A former managing director of the Cleantech Group, Dallas Kachan is now managing partner of Kachan & Co., a cleantech research and advisory firm that does business worldwide from San Francisco, Toronto and Vancouver. Its staff have been covering, publishing about and helping propel clean technology since 2006. Kachan & Co. offers cleantech research reports, consulting and other services that help accelerate its clients’ success in clean technology. Details at

  • John Whitney AIA

    Great information. A couple of questions:

    Is there a reason why you did not use U.S. EIA Annual Energy Outlook 2011 LCOE (levelized cost of energy) figures for your Table 8?

    Why use unlevelized cost of production?

  • Gregory Bell

    This author gives a good overview of the potential for an American biogas industry. However, for three reasons I believe that his use of the phrase “bio natural gas” is very poor. To begin with, this phrase is not being used at all in the US or anywhere else.

    Next, “bio natural gas” is a terrible phrase to start using because it intentionally creates confusion in the mind of potential consumers and policy makers. The terminology for biogas should never be associated with natural gas. This is because of the environmental disaster being played out nationwide over the use of 200 toxic chemicals at high pressure in hydrofracking for real natural gas. Natural gas is getting a very bad image, especially in the East. Recent studies show that, when the entire life cycle is included in the analysis, natural gas releases as much greenhouse gases as does coal. It is hardly the clean fuel that the endless natural gas industries advertisements imply.

    The third reason is that natural gas is a fossil fuel. Biogas is not. Biogas is renewable. Natural gas is not. Why would anyone in our industry want to give up this major public relations and policy benefit by intentionally confusing the issue?

    Because of hydrofracking and significant methane leakage from natural gas extraction, the biogas industry should avoid at all cost any confusion with the natural gas industry. Instead of the phrase “bio natural gas”, I believe that the two proper terms which need to be used are simply “biogas” or “bio methane.” Both of these phrases are used in Europe. Both describe the gas properly and without creating confusion.