August 13, 2007

ORM signs 20-year supply deal to help farm-based anaerobic digester produce bioenergy

Organic Resource Management (ORM) has signed an exclusive, 20-year contract to supply organic residuals as feedstock to the anaerobic digester at the Klaesi farm in Cobden Ontario. The material will be used to produce renewable biogas energy. This follows the ORM's receipt this spring of all necessary permits, including a certificate of approval from the Ontario Ministry of Environment (MOE) for the use of off-farm organic residuals as feedstock for an on-farm anaerobic digester.

This unit will be the first on an Ontario farm to receive off-farm organic residuals. ORM expects to begin delivering feedstock sometime this month, at a delivery cost (tipping fee) less than current recycling alternatives. Because the exact amount of energy the ORM feedstock will produce is still uncertain, this fee will be adjusted on the basis of how much biogas is produced. This could, in fact, result in ORM earning a rebate instead of paying a tipping fee during the term of the contract.

The first stage of the two-stage contract calls for delivery of a minimum of 700 tonnes per year of residuals. The second stage, running to June 30, 2009, providing an option to increase the contracted volume to a maximum of 5,000 tonnes per year.

ORM's off-farm feedstock is expected to generate significantly more biogas than any on-farm feedstock. This contract, along with the MOE certificate of approval are significant steps toward achieving the Ontario Ministry of Energy's goal of developing renewable energy from biogas on Ontario farms, says the company.

The practice of using high-energy-potential off-farm organic residuals in farm-based anaerobic digesters is a successful and long-established one in Europe. "We have researched the European success stories extensively," said ORM president and CEO Charles Buehler, "and are now poised to facilitate the duplication of those practices on multiple farms in Ontario."

The anaerobic digester, integrated into Paul and Fritz Klaesi's 140 milking-cow dairy farm, is unique in that it is the smallest of its kind in Canada, and demonstrates that anaerobic digesters can be feasible at a typical farm. At four years, it is the longest-operating farm-based unit in Ontario in recent history.

The Klaesi farm digester currently processes only manure from the dairy herd, producing enough biogas to run a 50-kilowatt (kW) generator. This energy powers all the farm production processes, buildings and two residences, making the entire complex self sufficient with respect to electricity, hot water and winter heating requirements. In addition, a small surplus of electricity is fed into the Hydro One distribution grid under the Ontario Power Authority's (OPA) net metering program.

In the first stage of the contract, Klaesi farms will add a Canadian-produced European-style 100 kW containerized generator set. ORM's off-farm feedstock will provide all the additional biogas required to power this expansion. The second stage would significantly expand the existing digester capacity and replace the two small generator sets with a much larger one (~500 kW). The additional biogas needed to power this expansion phase will be supplied by a combination of energy crops (corn silage) and additional amounts of ORM's off-farm feedstock.

Klaesi Farms and ORM will also participate in an economic and environmental assessment of anaerobic digestion funded by Agriculture and Agri-Food Canada's (AAFC) Environmental Technology Assessment Program (ETAA) program. Natural Resources Canada (NRCan) is also providing financial support to conduct research and development at the site through the Technology Innovation Program in partnership with the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA). The overall goal of this R&D is to test the digestion of off-farm feedstocks and to measure their effects on biogas production.

More information is available on the ORM Web site, www.ormi.com.

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