To introduce more Minnesota farmers to the benefits of on-site anaerobic digesters, the Agricultural Utilization Research Institute (AURI) published a new report, The Biogas Opportunity for Minnesota Farmers: A Business Guide for On-farm Anaerobic Digestion.
Anaerobic digestion is the breakdown of organic waste—like manure and food waste—in the absence of oxygen. It can create biogas to produce renewable natural gas, electricity, vehicle fuel, and heat. The digested materials from anaerobic digestion can also be used as fertilizer, animal bedding, and more.
The Biogas Report is a valuable resource for any producer considering adding anaerobic digestion to their operations. The text outlines the fundamentals of adding on-site anaerobic digestion and explains the business models and considerations producers should examine before making the decision. It explores many of the benefits of adding anaerobic digestion capabilities, including additional revenue, nutrient recovery and reuse, energy production, water quality enhancement, and reduction in odor and greenhouse gas.
The study is divided into chapters on all phases of on-farm anaerobic digestion, including considerations for herd size, challenges for specific livestock, business ownership models, building and operating an on-farm system, capital and operating costs, revenue sources, regulatory considerations, risks, benefits, and project development.
There is a significant opportunity for on-farm anaerobic digestion. According to the American Biogas Council, the U.S. has the potential to install more than 17,000 new biogas systems. These potential systems would create significant economic, environmental, and energy benefits.
Further, the report states that Minnesota’s agricultural producers have the potential to make more than 63 billion cubic feet of biogas, or enough to meet more than 13% of the state’s natural gas demand. There is much more work to do before the state can reach that potential. In 2022, Minnesota had 2,185 dairy farms and 2,928 swine farms, but there were fewer than 20 on-farm anaerobic digestion systems in 2025.
Among the general population, there is a widespread lack of understanding and knowledge on the topic of anaerobic digestion, says Brad Matuska, AURI’s business development director of biomass feedstocks. Knowledge about renewable natural gas and biogas is also limited, often resulting in skepticism or negative opinions. Once the process of anaerobic digestion is explained, people are much more receptive and comfortable with the energy source, he notes.
“Farmers are busy enough doing what they do to grow crops and take care of their animals. So when a developer contacts them and says, ‘We are interested in installing a biogas operation at your farm,’ the farmer may not have a clear idea of what that means. This guide fills in some of those gaps and answers a lot of the key questions to explain the process and results,” Matuska says.
The report’s authors say there are a few important questions farmers should consider before installing an on-site anaerobic digestion operation. They are:
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- Does anaerobic digestion fit your farm’s mission, vision, and strategic plan?
- How does anaerobic digestion impact your farm’s succession plan?
- Does your herd size provide enough manure for a meaningful project?
- Do you have plans to increase or decrease your herd size?
- Are you open to accepting off-farm feedstocks or hosting a facility that consolidates manure from other farms?
Creating additional income is one of the most attractive aspects of adding on-site anaerobic digestion. The digesters can create several new revenue streams. They include the sale of energy as either electricity or renewable natural gas, the sale of the digestate created during anaerobic digestion for products like fertilizer and bedding, the sale of environmental attributes, and tipping fees.
There are three primary ownership models for on-farm anaerobic digestion: contractual, joint venture, and self-ownership. In the contractual model, a developer owns the facility, takes care of the permitting and financing, and operates it in exchange for leasing fees. In this arrangement, the developer collects the revenue from the sale of natural gas and any tipping fees from co-digestion. The farmer provides the manure and, in return, retains the digestate. In a joint venture, the farmer and a developer form an LLC to build and run the operation. Digesters can cost anywhere from a few hundred thousand dollars to tens of millions, depending on the size. Operating and maintenance costs vary depending on the size, farm location, and cost of equipment.
The benefits of installing on-farm anaerobic digesters are also discussed. In addition to generating renewable natural gas and additional revenue streams for farms, the systems positively impact local economies through capital investment and increased tax revenue. The projects also create jobs and can lead to improvements to local roadways and pipelines.
Meanwhile, an installation can help farmers manage nutrients and improve soil health while decreasing the demand for synthetic fertilizers. The process reduces the volume of manure stored on farms and can help minimize odors. Anaerobic digestion facilities can also improve water quality through better nutrient management practices and reduce greenhouse gas emissions by capturing methane from being released into the air.
With the installation of any system, there are risks that should be considered as well. On-farm anaerobic digestion systems require training to run and operate. There are also safety and health risks from the handling of manure and biogas. The most common environmental risks are gas leaks, spills, and the release of odors. The proper permits are essential for any project, and operators must remain in strict compliance or risk enforcement actions ranging from fines to shutting down the operation. During the permitting process, neighbors may have concerns about an on-farm anaerobic digestion system creating safety issues, increased traffic, or harming the environment. Farmers and operators are encouraged to maintain strong relations with the community and articulate the benefits of the project and the safety precautions in place to address these concerns.
AURI’s Biogas Report involved input from numerous key industry stakeholders from across the landscape, who brought diverse backgrounds and perspectives. Producers, researchers, scientists, and environmental advocates provided valuable insights and knowledge.
Mindi DePaola leads the Environmental Defense Fund’s (EDF) agriculture methane team’s community and equity work. EDF conducts active listening and stakeholder engagement. Her current work focuses on building and maintaining constructive partnerships with rural community groups and farmers to better inform agricultural methane mitigation solutions and policies.
She says the EDF was drawn to collaborate on this project because AURI was deliberate about addressing the topic from several different vantage points. In addition to the economic benefits to farmers and climate benefits of reducing methane, on-site anaerobic digestion can also create environmental concerns if not managed properly. She notes that when farmers and neighbors understand the risks, concerns, and benefits of digesters throughout the process, it makes it easier for everyone involved to move forward together on a common footing.
“Part of our work is to encourage farmers and neighbors to work together on solutions to reducing greenhouse gas emissions so they can be more robust and longstanding,” she explains. “Anaerobic digesters can be part of an overall strategy of reducing greenhouse gas emissions. But installing a system is a complicated decision with many different issues that need to be addressed and sometimes there are competing priorities from the farmers, the biogas company, and the neighbors. We have found these projects are the most effective when all parties take the time to build trust and understand each other better through open and honest conversations.”
Minnesota has a rich tradition of environmentalism and conservationism, which will serve the state well as anaerobic digestion advances and farmers add more facilities across the state, DePaola continues.
“At the end of the day, farmers and neighbors in Minnesota all care about clean lakes and clean water, and they have a connection to the outdoors and the environment. There is a desire among people to be open-minded with their neighbors and to come to the table to find the way forward to protect and preserve what they value,” she says.
AURI is uniquely qualified to help producers weigh their options and make informed decisions on adding on-site anaerobic digestion. Business development consultants can provide technical and economic analyses, supply chain market development, validation on third-party technologies and developers’ claims, and assistance with permitting and regulatory issues. AURI can also make referrals to legal and financial resources, technical experts, and provide guidance on securing financial assistance and governmental programs.
AURI’s scientists and technical experts can conduct feedstock and digestate characterizations, assessments for biomethane potential, pilot digestion for complex and multiple feedstocks, and assessments of digestate fertilizer value.
“We can help initiate the conversation and continue with the next steps to help grow a robust industry,” Matuska says. “The advancement of anaerobic digestion is part of Minnesota’s vision to reduce our dependence on fossil fuels, and it provides an opportunity to build our biogas future.”
To access the Biogas Report, visit https://auri.org/the-biogas-opportunity-for-minnesota-farmers-a-business-guide-for-on-farm-anaerobic-digestion/ or scan the QR Code.