Once a successful southern restaurateur, Daniel Rickenmann is a bio-energy pioneer who sees the future of urban energy (and food, and fuels, and maybe even plastics) in the scraps his restaurants threw out. Fast forward to today, and he’s gone from building bistros to building anaerobic digesters (AD) for biogas production. His company, W2E Organic Power, recently announced its partnership with German environmental tech giant EISENMANN, a global leader in AD technology, to build the first merchant AD power plant in the United States that runs on “urban organics”. The plant will consume 48,000 tons of organic waste and produce 3.2 MW of electricity, enough to power around 2,400 homes, or offset electrical consumption emissions from around 2,300 homes. That’s small, but when you consider that it’s the first of a fleet of facilities that will dot the Southeastern U.S. cityscape the impact could be huge.

In this latest entry in the BioViews Interview Series, Mr. Rickenmann is joined by Adam Halsband, Business Development Manager for EISENMANN USA, to talk turkey about the future of food, fuel, and why you should clean out your refrigerator thoroughly and often.

YD: So Daniel, how did you get involved in organic waste to energy?

Daniel Rickenmann, project developer, W2E Organic Power (DR):
My background is in the restaurant business: I’ve owned several restaurants over the last 16 years, from Ben and Jerry’s to fine dining. I’m also a first-generation American: my family is fromSwitzerland. Because of that, I’ve spent a lot of time overseas.

The use of anaerobic digesters (AD) for handling urban organics is growing in Europe. A family friend owns several AD facilities, and visiting those plants is how I first became aware of the concept of using urban organics to generate power. I was captivated, so I decided to look into developing it here in the U.S.

Unlike the usual suite of biomass sources, urban organics is readily available in the community that will ultimately use it as a power supply. I wanted to build my first plant in Columbia, SC because I wanted to go after an urban market with a mix of universities, military installations (like Fort Jackson), food processors, and of course, restaurants.Columbia is the state capital, so it fit the profile, and I wanted to build something that would provide a benefit to the place I live as well as the people living in it.

So I came back home, left the restaurant business, and then I spent about six months travelling back and forth between here and Europe. I interviewed 13 companies looking for a partner to develop the project.

YD: What about EISENMANN made it the ideal partner?

DR: I went with EISENMANN for a couple reasons. In the U.S., biogas power plants live or die, so I wanted a partner with experience, and EISENMANN has that. They’ve built over eighty AD plants in Europe, and not only have those plants survived, they’ve thrived: each one of those plants has become more efficient and increased their gas yields. EISENMANN has a worldwide scope when it comes to biogas. It’s a segment that hasn’t gotten the attention of other renewable technologies, but EISENMANN views it as a global opportunity.

YD: That must be nice to hear, Adam!  Who is EISENMANN, what role do they play, and what’s the mile-high view of this team?

Adam Halsband, EISENMANN, Business Development Manager:

Well, it’s also been an absolute pleasure working with Daniel. He’s a leader in his industry, and it’s really people like Daniel—and I’m serious about this—people with his kind of vision and commitment who are out there walking the walk that will make this industry a reality.

EISENMANN is a company in the business of providing tech solutions to a range of industries. In addition to the eighty or so AD plants inEuropethat Daniel mentioned, EISENMANN also has 800 water treatment systems (a sister technology to AD) operating worldwide. EISENMANN has been in theU.S.for thirty years of an over sixty-year history. In that time we’ve built close to a thousand facilities of all kinds throughout the U.S. We’re experts at dealing with the major challenges of these projects but also the small but important details: what the controls should look like, how the man-machine interface ought to function, and so on, in a facility in the U.S. There’s a huge difference between deploying this tech in EU and in the U.S. For the past ten years, EISENMANN’s global focus has been developing AD technology. We’ve got a lot of experience taking the advanced tech that we’ve developed globally, looking at the needs of a particular market, and then configuring that system to match that market.

Working with Daniel, we’ve   developed a modular solution that meets the needs   of theU.S.market. That’s the “mile high view” of the team.

YD: Where do you consider the W2E project in the bio-based value chain?

AH: With respect to the value chain, on the front-end you’ve got waste generators, and on the back end you’ve got your off-takers, and we consider this project right there in the middle, with Daniel as the key to the pulling it all together. EISENMANN has the tech development skills and the global resources that give developers like Daniel the leverage he needs to execute his project.

YD: What’s the shape of this market, and how has that influenced the          development of your model and project?

DR: I view this market operating in small, urban-centered clusters: your plant, feedstock supply and product off-take work best when they’re in the same area with a relatively small radius. Over the course of developing my project’s particular model from the ground-up  I’ve come to realize that there is a “sweet spot” you want to reach, both in terms of the size of your plant, and the logistics for feedstock and off-take agreements. When you get to around 48,000 tons of organic waste per year (which is the capacity of our plant) you’re at a good level where your logistics are easy to map out and orchestrate. I like to say that these projects are recipe-based: in order to generate a specific type and amount of an end-product you need to be able to control everything that’s going into it.  I’ve heard of folks building plants on a much larger scale, on the order of 200,000 tons of waste per year, and there you start running into a lot of logistical variables in terms of getting your waste streams under control.

Operating in small, tightly managed clusters has other advantages as well. As a power plant, if you operate under the five megawatt level, you’re a small generator. That makes it a lot easier to work with local utilities or co-ops when it comes to setting up PPA’s (power purchase agreements) and looking at producing gas for distribution.  Looking to the future, where I hope to see us going is entering the renewable compressed natural gas (CNG) market for transporation fuels. If your production is spread out over a number of small clusters, it’s much easier for a CNG transportation consumer to “fill’er up” by moving from production cluster to production cluster, rather than getting into all the challenges of bringing the production to that consumer!

AH: You want to have your waste supply and off-take, whether its gas or power,          close to where the demand is. Obviously though you can’t have a landfill in the             middle of densely populated city for a lot of very good reasons. The model we’ve developed enables us to keep our supply and our off-take in close proximity to the demand.

DR: And we’re pretty close. Our plant is sited 4.5 miles from the capitol.

AH: We’re talking about a site that is less than six acres, and the plant itself has a footprint of only four acres. So within spitting distance from the capitol/capital you’ve got a state of the art waste conversion facility that’s virtually innocuous, right where the need is!

YD: Would you say this is almost the urban equivalent of an ethanol plant that’s     sited to provide local farmers with a permanent customer for their corn?

DR: W2E’s business model is more like a recycling center. In the restaurant business, I knew on what day my cardboard or my glass was picked up. The concept here is the same. We’re not opening the gate for a random amount of food waste is coming in. We have set clients who have set delivery dates, and they are contracted to deliver set amounts. This model allows us to make more precise calculations when it comes to production and gas yield.

YD: How did this deal come together? What is the role each member of the team    will play in the development of this deal? 

DR: Instead of announcing the project before developing it, we developed it first: we bought the site property and got it permitted for air quality and solid waste. We have also secured all our construction permits. I like to say we’re “backhoe ready”, and the key to getting to this point was an investment in time equity.

That time equity is what helped us attract our finance partners to the table (CIYCOR, who will also be helping us strategically plan some cascade units and will also bring in contacts from the federal and municipal spheres), secure power purchase agreements (PPA) with Santee Cooper and create innovative waste stream agreements with private companies like Pascon Recycling and McEntire Produce (a supplier for McDonald’s) —and it’s because of all that we’ve been able to actually accelerate the project.

We had originally planned to tier the building of the plant: build a 24,000 ton plant, and add modular 12,000 ton units until we reached a 48,000 ton capacity. However, we’ve reached a stage where we have waste stream and off-take agreements that are secure enough and large enough that we’re able to build out the entire 48,000 ton facility now.

YD: Adam, small plants (relatively speaking) are a big part of the bio-economic future: In other words, a greater number of smaller facilities.  What is the definition of commercial-scale for waste-to-energy in this context, and what opportunities does localization create for companies like yours?

AH: For EISENMANN, the opportunity lies in finding what makes the most sense and in identifying the most viable solution for a given project. Daniel’s model called for a modular solution that pivots around a 12,000, 24,000, 48,000 ton scale. Daniel understands the development and commercial side, and we were able to merge his understanding with our technical know-how to develop a standard product.

When you ask about commercial scale in this context, I’ll say that EISENMANN understands the technical recipe and Daniel understands the commercial development recipe, so scale-up is very easy for this team. We’ll be able to go into any site that Daniel develops and start out at a commercial scale, and then expand that site to reach its maximum efficiency.

YD: Anaerobic digester facilities are capital intensive. Does this mean the participants in this deal will be seeking investors? What are the toughest aspects of selling your model to investors in a slow economy?

DR: We’re going into the commercial business of organic diversion, which is a cutting edge industry, at least in the U.S[1] . It’s new, so we’re the new kids on the block—but we’re also the first ones out of the gate. We’re the first merchant facility to the take on MSW. Not only that, when you look back to how the project has developed, you’ll see that instead of trying to get seed money from investors first and development second, we went in and got it ready first: we put our skin in the game first and foremost.

When investors see that kind of dedication they will see the excitement behind it. They’ll also see that AD is a proven technology and that we’ve got executed contracts for our waste streams and PPA’s, ensuring both our supply and our off-take.

AH: I’d say it’s better to view this is an infrastructure play.

DR:  Usually in the renewable energy field, you see investors who are in for 3-5 year time horizon. We’re looking at a 7-9 year time horizon, because it’s not an investment in a single market or technology. It’s a stable, closed loop system. Besides waste diversion and power, we serve a third market, agriculture, through the soil amendment—the digestate the AD produces as a by-product, that will help produce the food, and the waste, that the system needs to work. The digestate doesn’t get as much press as waste and power, but it’s a significant market nonetheless. 

YD:     As the first to break in, what does the competitive landscape look like? Is that a concern for you yet? Do big players like Waste Management pop up as    threats on your radar?

AH: With respect to the “competitive landscape” as a whole, this is an emerging market with a number of firms across the value chain exploring how they can participate.  Some of those companies are taking a leading position while others are taking a wait and see (aka fast follower) approach.  There are countless statistics capturing the huge market potential that exists in the organics diversion space.  Given the available supply of organic waste, at least for the foreseeable future, it is simply a matter of taking the initiative and making the investment to develop the projects.

DR: There are a lot of people in the space. We’ve taken the opportunity to make an       investment on the front end, so we’re a little further along. We also took an opportunity to build in what would not be a typical location, either.

AH: In this business it’s a matter of walking the walk, and making the commitment and leading in the way Daniel has. It’s also about recognizing that there’s plenty of opportunity out there. There’s capacity for hundreds of plants out there. In other words, there’s plenty of room!

DR: It’s not about us versus them. It’s about working together to move forward.

YD: Let’s return for a moment to the closed loop you mentioned, between energy, agriculture, and waste. Do you think that paradigm will soon become the norm? How can increased development of waste-to-energy projects play a role in balancing out the food vs. fuels and chemicals debate, and are there opportunities for you there? 

AH: There’s no question that diverting urban organics from landfills to generate energy is here and now. But the paradigms that will need to change, to close the loop between energy, food, and waste—that shift will take decades. The organic movement is taking decades for example, so I don’t expect the market for soil amendments to happen overnight. However, we’ve been monitoring the trends in the EU, and Daniel has done a lot of work developing this on a local and regional level with the local generators, as well as the folks who will be using the digestate. So it will take a long time for that paradigm shift to happen, but it will happen. For now I will say that there are many different pathways toward a sustainable future and W2E and projects like it are one way for us to reduce our dependence on fossil fuels.

DR: I think it’s fair to add that W2E will be using post and pre-consumer food waste—we’re not growing food for fuel. We’re able to side-strep that debate, because food is one thing, and food waste is another. Think about the fact that 22% of  everything grown never makes it to the market, or to the kitchen table. 55% of every takeout that comes to your house is thrown out. It’s staggering how much food we throw away.

AH:  I’d like to add a thought about the digestate. In the future those nutrients, which come off the backend of the system, will definitely increase in value. Its development as a market will actually be very similar to what exists today with distiller’s grains as a premium feed for the livestock industry. When that product first came out, people didn’t know what to do with it; consequently it had a sub par market value. However, as the agricultural community began to consume and use distiller’s grains, there was a huge ramp up in the value and demand for that product.

Digestate is the same exact thing. It will take quite some time for the agricultural supply market to understand and quantify the value of digestate, and then it will take some time to communicate that value and build confidence in the community. Eventually though, at some point in the midterm, you’re going to have an agricultural community that will accept digestate and pay a premium for it as value-added co-product, just they do with distiller’s grains today.

DR: The market for digestate will exist on a national level.

YD: So the digestate your plant produces inColumbia, you could sell it to an     agricultural producer in the area around, sayBaton Rouge,Louisiana?

DR: Sure, you could do that—except we’re going to build a plant inBaton Rouge, too!

YD: Do you think a day will come when waste becomes commoditized?

DR: You might see that in the future, but there’s just too much of it for it to be a           commodity.

AH: Waste will continue to be a low to no cost product. However, as we continue to     build out these facilities, you’ll see that they are extremely efficient, and the   infrastructure we’re building is the most cost-efficient mechanism to convert that      extremely low value waste into valuable products.

YD:  With its diversity of raw materials the bio-economy has a great deal of upstream flexibility but in many instances it lacks the downstream flexibility of the petrochemicals sector? Is there an opportunity for urban organics to      meet that challenge?  Can “organics-to-energy” switch easily to “organics-to-            chemicals”? 

AH: It’s not a roadblock. There are several channels coming off the backend of the plant right now: electricity, which is sold on the grid; biogas, which can be scrubbed and compressed and then put into either a pipeline as a utility or sold as CNG for transportation, and you’ve got the digestate for agriculture. When it comes to chemicals, you could convert the biomethane into syngas, which means methanol.

There’s no end to what you can do with the gas. You create a balance between what makes the most sense economically speaking. Keep in mind all these projects have secure, long-term off-take agreements. What you want to do with the gas just depends on how creative you get with your off-take agreements.

This technology does a number of things, but the most powerful thing that it does is divert emissions. It’s an environmental play, a waste play. In a waste-to-energy plant you have a number of services, and electricity is just one of those. You see electricity more right now, as a result of policy.

YD: What would be the policy changes you’d like to see?

AH: EISENMANN is one of the founding members of the American Biogas Council, and  that organization has done a phenomenal job of trying to educate our congress people, and there is definitely policy we’d like to see amended. Specifically, I’m talking about the need to create parity between thermal and electrical power.  Basically, right now policy favors kilowatts over BTU’s. The way the tax code is written, if you’re an electricity producer, you can get an investment tax or production tax credit, which feeds into the 1603 program. Currently you can get that tax credit based on kilowatts produced, but not BTU’s.

You want the off-take to be whatever makes the most sense depending on the location. Let’s say your plant is located next to an industrial processing facility that has a boiler. The way it’s written now, you won’t be rewarded for making gas to send to the boiler. The challenge is when you use electricity to operate that, you’re only 42% electrically efficient. The rest of that energy is lost as low-grade waste heat, that’s harder to make use of.

It’s important to note however that we have great friends in the electrical combined heat and power space, and we’re using some amazing technology to convert biogas into electricity, which is an extremely valuable and important service. With respect to policy, however, we like to say “the highest and best use”.

YD:  What challenges keep you up at night?

DR:   One challenge is how to continue replicating the same success we’ve had with our clientele, and  maintaining the ability to work with folks to ensure that you have   the same quality waste stream and off-take agreements, but that doesn’t keep me up at night. Trying to keep my nine year-old in bed; now, that’s a different story!

AH: We’ve got the team in place.  At this point, it’s just a matter of figuring out where to next. If anything keeps us up at night it’s excitement, not worry.