Feasibility of Grass-to-Gas on dairy farms: a probabilistic techno-economic comparison of renewable natural gas and electricity production

Farm-scale anaerobic digestion (AD) of dairy manure has been economically constrained due to limited financial returns and high investment risks in the U.S. Co-digestion with lignocellulosic biomass, particularly grasses, has been proposed to enhance methane production while providing additional ecosystem services. Using techno-economic and uncertainty analyses, this study evaluates co-digestion of dairy manure with corn stover, switchgrass, and winter rye in a 1,000-cow dairy farm system. Two biomass sourcing strategies (i.e., on-farm and purchased) and two energy conversion pathways, electricity generation via combined heat and power and renewable natural gas (RNG) production via biogas upgrading, were assessed under existing and alternative policy support. Co-digestion consistently reduced the minimum selling price (MSP) of electricity and RNG relative to manure-only AD; however, electricity generation remained economically infeasible, net present value (NPV) < 0, under current market conditions. RNG production provided substantially greater economic potential, with purchased corn stover and winter rye achieving positive NPVs in 22% and 45% of Monte Carlo simulations, respectively. Winter rye exhibited the strongest overall performance and was the only feedstock to approach profitability under existing policy conditions. Nevertheless, profitability remained highly dependent on policy incentives, indicating persistent investment risk. Additional capital support requirements to achieve positive NPVs decreased from 47% for manure-only AD to 4–40% across purchased co-digestion scenarios. These results demonstrate that co-digestion can enhance the economic performance of manure-based AD, but long-term feasibility depends on feedstock selection, biogas end-use pathway, and policy support.