Beijing Branch of Industrial Bank approved a loan of RMB 16 million applied by Beijing Deqingyuan Agriculture Technology Co. Ltd (“DQY Agriculture” for short thereafter) to fund its Chicken Farm Biogas Power Generation Project. This is the first energy efficiency loan approved under the CHUEE program framework to the Chinese agribusiness sector. The project is expected to catalyze a CDM transaction, which means a new financing tool will be utilized by certain SMEs to fund their energy efficiency projects in the future.
DQY Agriculture was founded in 2000. IFC is one of its investors. Built in the suburb of Beijing, the fast-growing chicken farm produces chicken waste more than its current treatment capacity can absorb. Chicken waste has become a huge source of pollution if not treated effectively. At the same time, the waste itself is an untapped biogas resource with enormous potential. With the help of IFC, DQY Agriculture started the feasibility study and the design for a Biogas Power Generation project in 2006. The initiative has obtained great supported from IFC and local government.
Industrial Bank, the initial bank partner of IFC China Utility-based Energy Efficiency Finance Program (CHUEE program), provides a five-year loan to DQY Agriculture to fund its Biogas Power Generation Project. The chicken farm of 3 million chickens produces 212 tons of chicken waste and 318 tons of waste water per day, which can be converted into biogas of 7 million cubic meters per year. Through the power generators, the electricity generated will reach 14 million kwh annually.
The Biogas Power Generation Project generates sound financial returns—
The electricity will more than meet the company’s own needs, and the rest will be sold to State Grid. At present, the cost of purchasing power from the State Grid is RMB 0.65/kwh, while the cost of biogas produced electricity is merely RMB 0.19/kwh. DQY Agriculture supplies surplus electricity to State Grid at the price of 0.57/kwh, which results in a revenue of RMB 7.98 million every year. In addition, the heated flue gas generated by the power generators can be used to maintain the temperature of the biogas fermentation system and heat the vegetable greenhouses and office buildings. This directly reduces extra annual energy expenditure of RMB 2.73 million, equivalent to 4300 tce.
The Biogas Power Generation Project has remarkable outcomes in energy-saving and emissions control—
The project not only enables the borrower to minimize the hazards brought by the chicken waste and cut the treatment cost of waste, but also reduce CO2 emissions by 83,000 tons per year. Moreover, the biogas process system produces 150,000 tons of liquid methane and 6,600 tons of methane residues, which can be made into cheaper organic fertilizer. Thus local farmers can plant 10,000 mu of orchard and vegetables, and 20,000 mu of corn with much lower expenditure on fertilizer.
The chicken farm of DQY Agriculture consumes 60,000 tons of corn produced by local villages every year, which provides stable annual incomes of RMB 40 million for local farmers. The implementation of this Biogas Power Generation Project will enhance the enterprise’s connection with local community, drive the development of local organic agriculture and recycling economy, thus to achieve the business’ long-term sustainable development.
