Thermal Drying Economics: Integrating Market Analysis and Lifecycle Costs to Assess Thermal Drying Feasibility

Introduction In recent years, several regions of the country have experienced skyrocketing biosolids management costs. Though the triggers may be unique to each region, management capacity constraints are at the heart of these trends. Additional factors, such as concerns over PFAS in states like New Hampshire and Maine, have placed additional pressures on an already tight market. As utilities in regions like New England, Metro Atlanta, and the New York-New Jersey metro area are experiencing increases of 50-100% in biosolids management costs, the option of thermal drying may be a logical solution with respect to volume reduction and improved product quality. In several recent projects, Brown and Caldwell has integrated local market analysis, particularly trends in biosolids management costs, with traditional life cycle cost analysis in order to assist utilities in determining whether thermal drying could be a solution to mitigate risk around biosolids management. While no single answer applies, there are markets for which drying simply for volume reduction can curb rapid cost increases today, while other markets (particularly where natural gas costs are high and end use costs are not rising at as rapidly) would not necessarily trigger the need for such an upgrade. We will present an overview of the factors that go into such an analysis, as well as two recently completed case studies with different outcomes. Methodology The analysis begins with the end in mind, by assessing the regional market pricing trends for biosolids management. Opportunities for use of thermally dried products were also assessed at this point, to understand whether market capacity exists regionally for product acceptance. When coupled with costs associated with the current operation, this constitutes the baseline and provides some boundary conditions for a sensitivity analysis around end use costs. Alternatives were then built to incorporate both capital and life cycle costs including additional labor, chemicals, natural gas, and end use costs. Sensitivity analyses were then run live in a workshop setting around areas of risk, including end use and energy costs. Results and Discussion In the first case study, the cost of continued landfill disposal of unstabilized solids was compared against installation of a thermal dryer. Given regional market volatility and shrinking landfill capacity, landfill disposal cost projections were escalated at current (10%) and historic (5%) annual trends. A conceptual dryer design was developed to identify realistic capital and annual operating and maintenance expenditures and assessed over a range of end use scenarios from landfill disposal, contracted land application, sale to specialty markets, and onsite dried product pyrolysis. The lifecycle cost assessment, displayed in Figure 1, demonstrated that (1) thermal drying provided a strong economic benefit at the current rate of landfill disposal cost escalation, (2) thermal drying was economically viable even if landfill tipping fees returned to more steady, historic escalation rates and (3) the resulting volume of dried product did not provide the cost differential required to justify the additional capital expenditure for pyrolysis or added operational and maintenance complexity for pelletizing and bagging operations to sell to specialty markets. In the second case study, solids are already digested to Class B, and management costs are approximately $50/wet ton. When compared against other Class A alternatives, thermal drying was the preferred alternative on a life cycle cost basis. However, with multiple capital upgrades necessary, this utility wanted to assess when the best time — purely from a cost standpoint — would be to upgrade to Class A. Market analysis was used to predict possible cost trends for biosolids management over the next twenty years. Looking at a range of scenarios, shown in Figure 2, the BC team assessed the possibility of constructing a thermal dryer near term, 10 years out, or 20 years out. Given the anticipated rate of change of end use management fees, it was determined that building the project immediately was not necessary. Given the great degree of fluctuation in the regional biosolids market, it was preferred to monitor market trends and plan for a thermal drying facility as tip fees approached $150/wet ton. While it is anticipated that tip fees will rise that high within the 20 year planning period, it is unlikely to occur within the next 10 years, thus allowing this utility to prioritize other necessary projects. Conclusions The economic justification for installation and operation of a dryer is based on its resulting cost differential in residuals management. Emerging trends such as potential PFAS regulations and shrinking disposal outlets bring uncertainty to planning projections, but economic assessment tools that incorporate market fluctuations can be used to characterize a targeted set of future scenarios to provide a transparent and defensible basis for dryer feasibility. In comparing thermal drying against multiple scenarios for landfill tipping fee escalation, the utility in the first case study developed a clear understanding of the dryer's economic viability and the relative value of additional investments (e.g. pelletizer or pyrolysis). Market assessment can also bring greater certainty to economic evaluations by identifying target markets for dried product distribution and future trends within those markets. The second case study highlighted that understanding the market's anticipated rate of change can help pinpoint when installation of a dryer will be most effective in achieving cost control compared to alternative management options to assist with capital planning. Given that biosolids management costs are expected to continue to pose a threat to multiple US geographies, these case studies provide a valuable framework for the utilities assessing thermal drying to deploy the most viable solution given their local conditions.