Turning Waste into Energy Holds Big Opportunities

It’s no revelation that human activity generates a lot of organic waste. Whether households are discarding food scraps and flushing toilets, or food and beverage companies generate waste byproducts to create the delights we consume — the results are that we are continually creating a lot of biomass we need to get rid of.

But rather than looking at our organic waste as something merely to be dealt with, increasingly, it’s something that offers tremendous opportunity. On aggregate, our organic waste streams serve as a potential gold mine of an energy source.

According to Mike Theodoulou of Suez Water Technologies and Solutions, with whom TriplePundit recently spoke, in the U.S. alone, there are 436 million gigajoules (GJ) of energy available that could be derived from wastewater treatment, landfills, manure, and other organic waste streams. Basically, the availability of cheap energy from all the bits we don’t want.

To date, Suez alone via 46 installations of its anaerobic digester projects has generated the equivalent energy of powering 60,000 homes per year, while across North America there’s still tremendous untapped potential to expand.

The energy we are talking about is renewable natural gas (RNG) derived from breaking down organic waste in anaerobic digesters.

When organic waste is broken down in these digesters (see the accompanying picture of a Suez anaerobic digester) methane gas is the key output. Since methane is the essence of natural gas, when biogas from anaerobic digesters is upgraded to pipeline quality, resultant RNG can be injected into natural gas pipelines and sold into the energy markets. In short, waste becomes a revenue stream.

There are attractive additional financial benefits of producing RNG too. Producers not only realize the inherent value of the RNG itself, but also the value from renewable energy credits they generate with it. Key among these include renewable credits available under California’s Low Carbon Fuel Standard (LCFS), and RIN credits under the federal governments’ Renewable Fuel Standard (RFS) program.

As a rule of thumb, Theodoulou, a senior product manager of anaerobic digestion technologies at Suez, told 3p that these energy credits are worth roughly five times the value of the RNG itself. Refiners and fuel importers are the buyers of these credits who must prove they are in regulatory compliance with blending the requisite percentage of renewables into their energy pipelines.

In short, producing RNG is an attractive opportunity for entities that must manage organic waste streams, and broadly, there are four main categories of customers who are candidates for establishing an RNG facility using anaerobic digesters.

Municipalities who are in the business of wastewater and sewage treatment. Industrial entities like food and beverage or pulp and paper companies. Waste companies who haul away domestic waste and also private investors, who are interested in setting up a project, defining sources of waste and organizing financing and selling RNG into the market. Private investors, in fact, might sell to the other above-mentioned customers.

It’s worth noting too, that as well as generating revenue from both RNG and renewable credits, there’s another advantage that comes as a result of cost avoidance.

If you are, for example, a food and beverage company, you are already having to pay someone to manage your waste stream. If you establish an anaerobic digester facility, at the same time as you are generating revenue from your waste, you no longer have to pay someone to manage it. This saving helps offset the cost of setting up the operation.

All things considered, the return on investment in an RNG project is actually fairly rapid.

Theodoulou explained that for municipalities, it typically takes four to seven years for a project to reach its full payback, but for industrial customers that can be reduced to as few as two to three years. This is because again, they can immediately avoid existing costs like sewage surcharges they otherwise would have to pay.

Where companies like Suez add value is putting it all together. They not only supply the anaerobic digesters, but they also assess the viability of the project by assessing the proper feedstock (inputs) while they also warrant the production of the biogas itself. This includes assuring the quality of the gas and the amount of gas a project will produce based on the amount of feedstock that is going in.

Theodoulou explained that in Europe, the market for this is already pretty competitive and well established. In North America, however, he foresees growth potential exists for at least the next 15 to 20 years. Attractive opportunities also exist in Central and South America.

He stresses that although there are of course compelling reasons to set up anaerobic digesters for environmental reasons (significant CO2 and methane that would otherwise vent to the atmosphere is avoided), “a project does have to stand on its own from the financial aspect.”

At the moment, renewable energy credits certainly help establish the financial case, but in the future, he believes projects could function without them. For example, using RNG at point of generation to fuel fleet vehicles is a possible scenario where localization establishes viability without need for any extraneous regulatory mechanisms.

Image credit via Suez Water Technologies and Solutions