The New Waste Business Model: Evaluation of Existing and Projected WtE projects

November 28, 2018 |

By Andrew Grant, member, Lee Enterprises Consulting
Special to The Digest

This article addresses the due diligence requirements for the increasing variety of waste-to-energy projects investors are now considering.  The topics apply to both early and later development stage project assessment.

Twenty-five years ago, the North American and European waste-to-energy business model was well-established, with the major issue being the value placed upon separation of recyclable materials as an integral part of a project. Different WtE technologies had comparable net kWhs of power per ton of MSW processed, and included a wide range of recycling technologies as a part of most projects.

Environmental requirements were comparable from project to project, tightening as newer emissions controls technologies became accepted. Management of public perceptions was as important to project evaluation as efficiency and the percentage recovery of recyclables. The definition of the available, and future, waste stream dedicated to the project was a vital part of project evaluation, and the waste stream was typically controlled by a municipal or county agency who would arrange for delivery to the project site.

Today, Europe is installing both traditional WtE facilities plus a complete range of technologies to handle different specialized forms of waste materials, while North America has installed only one traditional WtE facility in the last twenty years, and is catching up with the installation of specialized technologies for the conversion of wastes to energy and to other materials. Recycling goals are continually being re-defined as recycling facilities become more capable and more highly automated, and as recycled materials markets change.

To evaluate new, or existing, projects in the New WtE Business environment requires that we now evaluate the different technology types in accordance with the goals set for a given project, as well as against the benchmarks set by comparable projects, a major contrast to our previous evaluation to a standard set of industry parameters.

The major types of project being evaluated today, and their evaluation parameters, include:

Traditional WtE

Evaluation parameters now include not only traditional landfill diversion and energy efficiency per ton measures, but also the percentage and value of recovered recyclable materials in conjunction with local Material Recovery Facilities (MRF), future environmental compliance, socio-economic impacts, net GHG reduction, validity of performance and schedule guarantees and overall cost impact.  Classic WtE facilities play a major role under the New WtE Business Model, but their evaluation has changed.

Material Recovery Facilities, MRF

Evaluation may be of competing bids for a project, or for the valuation of a developed project at any stage in its life. Parameters include recovery percentages adjusted for compliance with recycling industry acceptance specifications for metals, paper grades and plastics grades. With ongoing Chinese and other Asian country limits on waste materials contamination, adherence to these specifications is increasingly important: non-complying materials are evaluated as requiring either landfilling or WtE disposal, with attendant GHG emission and cost impacts.

The range of recovered materials grows yearly requiring the ability to evaluate incremental costs versus increased recovery of special grades of materials which may be dependent on a limited market for their value.  Automation of MRFs provides another value point in most markets, and requires validation of the automation system used or proposed.

Anaerobic Digestion

AD projects serve a wide range of waste disposal requirements, well beyond the traditional municipal solid waste stream. Evaluation of AD projects can be performed at several levels:

  • Comparison of an AD project with traditional WtE disposal, and, for components of the traditional MSW stream, with composting.
  • Comparison of an AD project that combines MSW components with non-MSW components such as animal manures with both composting and traditional WtE.
  • Evaluation of competing AD proposals against stated local values for the factors described below.

The ability of most AD processes to handle a wide range of wastes not amenable to traditional WtE processes, and at a smaller scale than traditional 1,000 – 3,000 tons MSW/day projects, gives AD and its supporting technologies a growing role. This role includes improving the performance of existing WtE plants – some 70 operating units in the U.S. alone – by diverting the least desirable, highest moisture components of their MSW streams to AD use, and also by reducing the significant GHG impact of landfills by diverting cellulosic materials.

Issues to be evaluated include the costs or availability of liquid co-product disposal, and of solid “cake” disposal – or values from their beneficial use.  Regulatory requirements vary by State.  This is a developing area, and represents a risk for projects not having confirmed disposal arrangements for their co-products.

EPC costs must include the extended start-up required to grow and stabilize the necessary population of bacteria.  Raw AD gas must be purified for either genset fuel or, at greater cost, for conversion to RNG or other product.  The processes and costs for these steps are well known and will be evaluated.


While stand-alone composting of MSW may have a limited role, it is an effective component of an overall waste disposal strategy, and can be an effective partner to biomass power and AD facilities in generating marketable soil amendment or fertilizer products. Issues to be evaluated include environmental and safety impacts, which favor modern designs over open pile systems, but even these may not reduce heavy metals and certain toxic chemicals, depending upon the waste characteristics. Special steps are often required to obtain community acceptance – a risk mitigation factor.

Metals Separation

The technology of metals recovery from MSW streams, from Construction & Demolition waste, and from concentrated industrial waste streams, has improved beyond the wildest dreams of the first users of induced current – magnetic separation of non-ferrous metals.  As an example of this, it is now commercial practice to separate a dozen or so different aluminum alloys from recycled aircraft – alloys having a much higher value than generic recycled aluminum.  Similar technologies separate many precious metals from aircraft, automobiles, ships, and of course electronics of all types.

The evaluation of a new WtE project must include the extent to which this literal goldmine can be realized.  While ferrous and non-ferrous metal recovery from our traditional WtE plants is well established, it compares poorly with individual extraction of targeted metals before they are mingled into the MSW stream. Values are expressed in terms of market prices for the recovered metals, net of the extraction costs.

Automobile and major appliance recycling projects require careful evaluation of the revenues and risks involved.

Waste tire recycling technology has developed such that truly metals-free material can be supplied, while arrangements for beneficial use of crumb rubber, fine carbon, and zinc oxide from downstream energy recovery must be evaluated.

Non-Recyclable Paper & Plastics

As noted above, export markets for mixed waste paper, and for waste plastics, now have specifications comparable with those of North American recycling facilities. The evaluation of MRFs and other systems must account for this.  Once the non-recyclable, or zero value recyclable, components have been separated, they are either charged with landfill / WtE tip fees and transportation costs, or an alternative disposal route must be identified.

In the case of non-recyclable waste paper, many biomass power plants, and the newer modular waste conversion units suitable for use at a MRF etc., site, can accept such waste as fuels given appropriate feed systems.  Some permit modification, or test burns, may be required. Project evaluation should include a lower disposal cost available via this route, and lower GHG impacts, if such disposal routes are used.

Similarly, non-recyclable plastics can either incur tip fees, or can be used by modular waste conversion units and some biomass power plants if proper technology is used to separate PVC and similar environmentally hazardous materials.

The changes in markets for recycled paper and plastics require that evaluation of modern waste recycling projects include risk analysis of changes in commodity market prices, unless firm off-take agreements are in place. Risk analysis also has to include possible changes in the regulation of recycling facilities.

Construction & Demolition Recycling

C&D recycling is a major component of the overall waste disposal picture, and is a major contributor to the WtE sector. Like other recycling sub-sectors, C&D recycling has evolved with the use of both improved source separation techniques and improved separation and processing at central C&D recycling facilities.

Evaluation of projects that include C&D disposal is a specialized version of overall WtE evaluation.  Key factors include tip fee/transportation cost avoidance, reduction in GHG impacts by diversion of cellulosic materials, metals separation efficiencies and revenues, plastics separation and revenues, constructive end uses of inorganic concrete, dirt, and aggregate materials.  Several C&D facilities operate under agreements with local biomass power plants which use C&D wood as fuel; new projects must evaluate whether necessary fuel pre-treatment has been included to protect the power plant equipment from possible damage.

C&D facilities do not enjoy flow control, so an evaluation of the sources of their raw material over time, and in response to competitive pressures, is a necessary part of their risk analysis.

Individual WtE projects have additional parameters that require evaluation to support the launch, or acquisition, of a reliable asset. These can be incorporated into the structure described above, and summarized into a combined written report and spreadsheet, including the identification of issues to be addressed, and their significance.

Biomass Power Plants

The roughly 100 existing biomass power plants in North America perform an essential role in managing cellulosic waste disposal. Contrary to the assumptions of the 2010 Manomet Biomass Sustainability and Carbon Policy report, it is not affordable in North America to grow and harvest trees as fuel for biomass power. The primary revenue-producinguses of harvested trees are for sawmills, pulp and paper and large-scale pellet production.  Forestry wastes, utility Right of Way wastes, land clearance and urban waste wood will rot on the ground or go to a landfill if not transported to a biomass power plant. Many sawmills find valuable end-uses for their sawdust and offcuts, others send their wastes to biomass power, and there are still enormous piles of unwanted sawmill waste where there is no available use.

The use of such a biomass power plant to accept allowable grades of cellulosic wastes as a part of an overall WtE scheme is readily analyzed, with extensive experience and usually several facilities available. Market risk is a factor of the off-take power contracts used by, or available to, each facility.

Risk & Mitigation Analysis

All of the WtE methods discussed above require risk analysis as an integral part of their evaluation.  A spreadsheet of identified risks, and the probable costs of their impacts, accompanies a written discussion of each significant risk, and of the mitigation methods commonly used.  See Table 1, Waste-to-Energy Project Evaluation/Risk/Mitigation Spreadsheet Parameters; the parameters should be selected from these, adjusted for local requirements. All mitigations have a range of costs, listed in the analysis spreadsheet.  Certain risks may have the potential to stop a project, or to cause the closure of an operating project; these are discussed, with any mitigation available if not already provided.

The schedule for evaluation, or due diligence review, of a project depends upon the availability of data on the particular project, and on the availability to the evaluation author of data on comparable projects.  A clear definition of the report contents is required before starting work.  Useful preliminary assessments have been performed in a couple of weeks, while formal analysis, investigation, and benchmarking requires two to three months.  And may require follow-up of major impact items.

About the Author

Andrew Grant, Managing Member at Biomass Power Corp, is a member of Lee Enterprises Consulting, the world’s premier bioeconomy consulting group, with more than 100 consultants and experts worldwide who collaborate on interdisciplinary projects, including the types discussed in this article. The opinions expressed herein are those of the author, and do not necessarily express the views of Lee Enterprises Consulting.

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