The Mandate
A multi-generational dairy operation with 1,860 milking head engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a USDA REAP financing request for a project located in Lancaster County, Pennsylvania. Total project capitalization fell within the $3M-$5M band. The capital provider, a regional credit union with USDA REAP guarantee, required documentation consistent with current program review standards. The analytical question put to the team: Did manure throughput, RNG offtake economics, and federal tax credits support a digester installation.
Engagement Scope
- Primary market area defined as a n/a radius
- Comparable supply set of 5 properties
- Demand model framework: manure-throughput biogas yield and RNG offtake build
- Financial projection horizon: 15 years
- Site inspection completed; operator interviews where applicable
- Primary data collection through field reconnaissance and third-party market data
Methodology Applied
Primary Market Area
The PMA was defined as a n/a radius from the subject site, calibrated to the demand catchment behavior typical of renewable energy assets in Pennsylvania. The boundary captured the population, employment, and competitive supply base relevant to the subject's operating thesis.
Supply and Demand Reconciliation
The comparable supply set comprised 5 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a manure-throughput biogas yield and RNG offtake build approach over a 15 years horizon. The reconciliation tested whether incremental supply, including the subject, could be absorbed within the projection window without compromising stabilized occupancy assumptions.
Capture Rate Calibration
The subject's capture rate was calibrated against the absorption capacity of the PMA. The analysis concluded that PMA absorption capacity exceeded subject build-out by a factor of 1.8 across the projection window, with a stabilized capture rate of n/a.
Exhibit 1: Comparable Supply Set, Pennsylvania PMA
[Table or chart rendered in delivered report.]
Exhibit 2: Demand Projection Summary, 15 years Horizon
[Table or chart rendered in delivered report.]
Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- Modeled annual biogas production of 84.6 million BTU aligned with USDA AgSTAR digester benchmarks.
- RNG offtake agreement at $24 per MMBTU supported the revenue projection.
- Federal investment tax credit and Section 45Z production credit reduced effective payback to 5.4 years.
- REAP eligibility confirmed; rural designation and renewable-technology criteria satisfied.
Deliverable
The delivered report ran 112 pages with 25 exhibits distributed across nine analytical sections, plus appendices documenting comparable supply data, demographic inputs, and financial projection assumptions. The document was prepared to the documentation standards of the regional credit union with USDA REAP guarantee. The corresponding USDA REAP review framework guided exhibit selection and supporting documentation.