Biofuels developers get a taste for waste
Yesterday’s story on the partnership between Solena and Qantas — which will investigate the prospects for a waste-based Fischer-Tropsch processing plant in Australia to produce aviation jet fuel — elicited a lot of strong commentary from the readership on the potential for Fischer-Tropsch technologies. And brought out some very strong feelings about waste.
On F-T, one reader wrote:
“Expansion of FT? Hardly. Its the narrowing of FT to the only feedstock source that makes sense to monetize with this incredibly expensive technology: garbage. Biomass from whatever cellulose pathway one picks is far more cheaply converted using other means. Its why Shell backed out of Choren. Ask them why, and if they are choosing to be candid, they will tell FT is just plain too expensive for cellulose biomass–there are other ways to convert cellulose.
“As for co firing coal and biomass in an FT plant. We will achieve warp drive before that ever makes sense, owing to the massive point source demand required by a single theoretical coal-biomass FT plant. That and there are other ways to convert coal into fuels less expensively as well.
“Solena correctly identified that the only place FT makes sense is to convert garbage, for which the business case is driven by large garbage tipping fees–i.e. someone pays you to take the feedstock. Nobody pays you to take coal, nat gas, or woody biomass, and therein lies the silliness of FT as a pathway for those feedstocks. Now the problem lies with this question: can Solena, who’ve yet to build anything, actually deliver at anywhere close to the cost they claim?”
On the issue of waste, a reader writes:
“There is something totally unreal about this issue. Using a garbage as a source of raw material is predicated on the material having a high gate fee. What absolute nonsense!
“There are already three companies taking the residual material (the biomass) from Municipal Solid Waste at a small fee of €uro 35-00 per tonne and using this to make the biofuel ethanol successfully with acid hydrolysis. And they can produce this ethanol at €00–25cents per litre (US $00–32cents per litre.) And with the capital costs being paid off within 5 years from commissioning the very idea of retaining a treatment fee is almost a nonsense.
“Returning therefore to the article the notion that spending $309 million on a 16 million gallon facility is totally out of [line]. With aviation fuel selling for nearly the same as gasoline (€00–90 cents a litre//US $1–125 cents a liter) making 16 million gallons (60 million liters …and selling that for a measly $68 million (even with a gate fee) and then allowing for cash pay-back does not stack up.”
Let’s go through some of these issues.
1. Where does municipal solid waste rate as a feedstock – the hottest, mid-hot, problematic?
MSW is hot. No matter how you feel about jatropha, algae, forest waste, ag residues, beef tallow or dedicated energy crops – and they all have their advantages in carbon, scale, or cost – there’s just nothing that is nearly as sustainable, affordable, reliable, and available – meeting the basic SARA criteria for a biomass feedstock of choice.
The downside. MSW is a mixed world of everything from biomass to refrigerator parts, and no two loads are exactly alike. Some technologies can’t handle the variation.
The upside. Cost is the factor we hear about the most – especially about how much can be obtained as a tipping fee and how long that can last. But, in our view, the main advantage is the aggregation that is already done, and the public support behind finding alternatives to landfill. There’s no food vs fuel in MSW – its Fuel vs Mount Garbage in somebody’s backyard, and municipalities that are facing the construction of alternative landfill space are, to put it mildly, aggressively looking at biomass processing technologies.
2. Can Fischer-Tropsch technologies make money without relying on tipping fees and negative-cost feedstock?
Good question. One of the commentators referred to Shell’s understated exit from the Choren project. At this stage, the two major developers of Fischer-Tropsch technologies on the biofuels scene are Rentech and Solena. Both are producing jet fuel, prospectively, from waste biomass – although Rentech’s Rialto project is slated officially to produce 35 MW of power and 640 bpd of renewable diesel.
Rialto’s total cost: $430 million, for a project that will produce around $62 million in annual revenue from power and fuel at today’s prices (this excludes the value of CO2 sold from the plant). Our conclusion: only super low operating costs could support projects at these scales and waste is likely the right option. But Rentech’s Natchez project (producing 30,000 barrels per day of renewable fuels, or 15,000 in an alternative configuration) offers opportunities for scale — and will require biomass sources far beyond what tipping-fee feedstocks such as municipal solid waste can provide.
Bottom line: For near-term, small-scale projects, think MSW and other negative-cost feedstocks. But at scale, biofuels will require broader sources, and can be expected (with affordable capital costs) to make low-cost feedstocks work as well as negative-cost feedstock works at small scale.
More news on waste
This week, the state of Ohio announced 11 projects that will receive $10 million in grant awards funded through the American Recovery and Reinvestment Act’s State Energy Program. The funds will be used to convert feedstocks, such as municipal solid wastes, food and farm wastes, or other biomass or waste materials, to electricity, heat, fuel, and/or other bio-products.
Ten of the winners, representing $9.5 million in awards, fund up to 75 percent of the cost of anaerobic digester systems. Collectively, the nine projects we have comparable economics for will process 275,000 tons of wet biomass per day, and will generate 51.1 million Kwh of power annually, and 203,000 MMBtus of thermal heat.
At 12 cents per KWh and $4.25 per MMBTU for natural gas, the systems are offsetting roughly $6.1 million in power costs and $0.86 million in heating cost – total of around $7 million in offset costs for a $12 million capex investment, and undisclosed operating costs. (We’re estimating the capex, based on the requirement that each project include a 25 percent cost share from the project developers – we’ve used 25 percent, though the costs could be higher).
On a BTU to BTU basis, the power being generated by the systems is comparable to the power available from a 1.5 million renewable diesel process, or a 2.5 million gallon ethanol process. That gives us some decent capex benchmarks for comparing the utility of waste biomass systems – the breakeven point between the digester systems and biofuel-generating systems is at the $8 per gallon capex mark for renewable diesel and around $5 per gallon for waste-to-ethanol.
The Digest’s take: Rome burns while Nero fiddles. It’s probably a better use of time for biofuels developers to perfect, market and distribute a $4 per gallon (capex) waste-to-ethanol system that works with slurries and wet mixed biomass, and handles 50-100 tons per day – or an $8 renewable diesel technology – rather than simply beating up Fischer-Tropsch technologies in the back pages of Biofuels Digest.
Meanwhile, congrats to the winners in Ohio. We salute their entrepreneurship – for sure, developing projects and winning grants is tough work.
Comp Dairy Energy (Dorset Township, Ashtabula County), will receive $1 million to own and operate an anaerobic digester in Dorset Township. The dairy will supply 66 wet tons of manure per day, and a waste hauler will supply 66 wet tons of regional fats, oil, and grease per day to generate more than 4.7 million kWh of electricity and 22,910 MMBtu of thermal heat annually.
French Creek BioEnergy, LLC (Sheffield Village, Lorain County) will receive $1 million to own and operate an anaerobic digester for the City of North Ridgeville’s “French Creek” Waste Water Treatment Plant in Sheffield Village. The treatment plant will supply the digester with 20.5 wet tons of biosolids per day, and a waste hauler will supply 57 wet tons of regional biosolids, mixed soaps, and food waste per day to generate approximately 5.5 million kWh of electricity and 13,850 MMBtu of thermal heat annually.
Forest City Land Development, LLC (City of Cleveland, Cuyahoga County) will receive $1 million to construct and operate an anaerobic digester on a site that was once a General Motors Fisher Body Plant in Cleveland. A waste hauler will supply the digester with 88 wet tons of mixed biomass per day to generate more than 5 million kWh of electricity and 23,200 MMBtu of thermal heat annually.
Haviland Co. (Village of Haviland, Paulding County) will receive $1 million to own and operate an anaerobic digester in Paulding County. A waste hauler will supply the digester with 92 wet tons of mixed biomass per day to generate more than 8.6 million kWh of electricity and 40,600 MMBtu of thermal heat annually.
Hord Livestock, Inc. (City of Bucyrus, Crawford County) will receive $500,000 to install an on-farm anaerobic digester and cogeneration system to convert approximately 7.7 million gallons of beef and swine manure and 230,000 gallons of food waste to 2.9 million kWh of renewable electricity and 21,000 MMBtu of thermal energy annually.
Lime Lake Energy LLC (City of Norton, Summit County) will receive $1 million to own and operate an anaerobic digester on 200 acres undergoing reclamation by PPG Industries, Inc. in the City of Norton. A waste hauler will supply 52.1 wet tons of mixed biomass per day to generate more than 3.5 million kWh of electricity and 16,800 MMBtu of thermal heat annually.
Northwest BioEnergy (Toledo, Lucas County) will receive $1 million to own and operate an anaerobic digester in Lucas County. A waste hauler will supply the digester with 90 wet tons of mixed biomass per day to generate more than 5.3 million kWh of electricity and 25,900 MMBtu of thermal heat annually.
Sidco-Development, Inc. (City of St. Clairsville, Belmont County) will receive $1 million to own and operate an anaerobic digester to transform regional biomass waste into renewable energy to power the neighboring limestone mining operations in the City of St. Clairsville. A waste hauler will supply the digester with 90 wet tons of mixed biomass per day to generate more than 7.5 million kWh of electricity and 34,700 MMBtu of thermal heat annually.
Solid Waste Authority of Central Ohio (SWACO) (Grove City, Franklin County) will receive $500,000 for the expansion of a gas collection system. SWACO expects to capture an additional 158,900 MMBtu per year of landfill gas from this expansion, which equates to a savings of 128,141 short tons of CO2 annually.
Wooster Renewable Energy, LLC (City of Wooster, Wayne County) will receive $1 million to own and operate an anaerobic digester at the City of Wooster’s Water Pollution Control Plant. The treatment plant will supply the digester with 73 wet tons of biosolids per day, and a waste hauler will supply 60 wet tons of regional food waste per day to generate more than 5.7 million kWh of electricity and 25,230 MMBtu of thermal heat annually.
Zanesville Energy, LLC (City of Zanesville, Muskingum County) will receive $1 million to own and operate an integrated anaerobic digestion system in Muskingum County. The system will lower operating costs by reducing or eliminating liquid effluent treatment and handling, producing a salable, compost-like material, and substantially increasing energy generation potential of the current operation.
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