Biogas created from anaerobic digestion on dairy farms can be used to generate electricity, produce coproducts, and reduce reliance on off-farm inputs. We incorporate risk into simulation models representing dairy farms in Texas and demonstrate the profitability of new anaerobic digester installation. Based on this market, results indicate projects that have low investment costs, receive grant support for construction, utilize coproducts, or have some combination of these factors have higher net present value at the end of the study period; however, even with generous grant support and high electricity prices, projects with average investment costs remain unprofitable.
