Vanguard Renewables 10 years on

“In a very short timeframe over several months back in 2012 for a series of completely disassociated reasons – I had a whole bunch of folks coming to me and talking about anaerobic digestion.”

So begins John Hanselman in telling the 10-year evolution of Vanguard Renewables, which has become an anaerobic digestion industry leader and a most interesting and successful company. Now as Vanguard Renewables celebrates its 10th anniversary, there have been so many projects and advances and Hanselman and I have spoken many times, we’re relaxed as he leans into the origin story.

The Origin Story

“One of the folks that reached out about anaerobic digesters was a technology company that was looking for funding and was really interested in providing a front milling attachment for anaerobic digesters around the world. I, of course, said what’s an anaerobic digester?”

Anaerobic digesters were common in Europe for several decades, but in the United States they weren’t something that many people were talking about, except for a limited number of farmers back in the early part of this decade.

“Simultaneously, I went to a solar conference in Germany. At the time, I was a solar developer. And they offered a trip out into the countryside, to look at solar arrays that had been located near the farmlands of Germany. I joined the tour and headed off to a farm. My family has had a dairy farm for generations in Vermont, so I was excited to see the farm and the solar farm. We got off the bus, and everybody took a right out of the bus and I looked over at the farm, and there was this big dome, and I was like, what the hell is that?”

“So, I took a left while the other guys went off and were looking at transformers and inverters, and I was trying to make myself understood in some very broken German. Luckily, the farmer had a much better command of English than I had of German. He gave me a tour of his digester and I had my mind blown as I just heard about this the other day. That was it for me. It was one of those brain worms that I thought about during my entire flight home. Once I hit the US, I was obsessed. At the time of my visit, I think Germany had something like 9,000 digesters, and was in a country that is roughly the landmass of New England. Every landfill had one, municipal transfer station had one, every wastewater treatment plants had them, and you just start seeing these vessels everywhere when you travel through the E.U.

“I came home and thought how is it that we (the U.S.) can be so far behind on this type of renewable energy generation? I went out and did a bunch of research and chatting with folks. I spoke to a bunch of my friends at MIT to understand what they knew.”

“I went to all the energy investors who had invested in my solar company, and I said I have this great idea – we’re going to try anaerobic digestion. They said, ‘Hell, no.’ Literally. My traditional investors and my energy investors were completely disinterested.”

“We had raised hundreds of millions of dollars for battery storage and solar. I pressed on to find a way to start this. I decided I needed to go find some patient capital. Having raised venture and private equity money and strategic investments in the past, my goal was to find some impact funds that would be willing to take the long view. We were incredibly fortunate to be introduced to Vision Ridge Capital. Vision Ridge was our first and only investor until Blackrock acquired us in 2022.”

“I first met with them by chance when I was in the British Virgin Islands, at the invitation of Sir Richard Branson. He was hosting a Caribbean Renewable Energy Conference, and we had done a bunch of solar infrastructure work in Puerto Rico. We discussed my idea of bringing anaerobic digestion to the U.S. at scale, Sir Branson said, ‘You know, let me introduce you to George Polk, who runs my Carbon War Room.’ George and I hit it off, and I told him: ‘I’ve got this great idea to do anaerobic digestion’. And he said, ‘I love anaerobic digestion.’”

“Vision Ridge ended up investing in our company. With that initial investment, we went out and bought a couple of existing digesters in Massachusetts that had been built under the Commonwealth’s net metering protocols. These digesters were smaller scale and not anything that we would build these days, but we bought them as our learning laboratory, took them apart, and rebuilt them. We then went out and operated those two sites to learn what the pain points were and how we could optimize operations. We decided that we needed to upgrade our initial design. So, we went and talked to a whole bunch of people in Denmark, Germany, and Austria to learn what made their projects successful. We picked a Canadian/Austrian company as our engineering group to help us define what our newest prototype would be. Think of our first two sites as the iPhone 1 and our next sites as the iPhone 3. We took that engineering prototype and built three new systems in Massachusetts, and then built a fourth system in Vermont. About that time is when the California Low Carbon Fuel Standard showed up. We saw the opportunity to find an energy company that would partner with us to build digesters at scale to take advantage of this new opportunity. Our business expanded from there.”

Inflection Points

I asked John if the California LCFS was that key inflection point that everyone from entrepreneurs to sports broadcasters talk about. That moment when it seems that victory is finally at hand. John blanched at the idea of “destiny picking a winner” but knew what I was pointing towards.

“Definitely California was one of them. Yet, we’ve had a couple of those ‘Holy Cow’ moments, pun intended. Certainly, the California LCFS was an impetus for us to expand at scale. We knew that we could not afford to build a lot of these on our own, and we ended up partnering with Dominion Energy, out of Richmond. Since that partnership was announced in 2019, we have built something like $1 Billion worth of digesters, consisting of approximately 55 different vessels. We began building these projects at lightning speed. And you know, it was fun, and it allowed us to be able to go on the farm and talk to our farm partners and create a very different relationship with them. We wanted to buy their manure, which if you’d asked a dairyman 20 years ago, or even 15 years ago, that someone’s going to pay you for your manure, they would have laughed in your face. It was this moment of recognizing that organic waste is just a misplaced resource.”

“We dove headfirst into the deep end. Now, the economics for a large dairy system really needs at least 5000 milking head. And the number of dairy farms in the United States that have 5000 cows, or more is a very short list. We knew that that was a fantastic market opportunity, but it wasn’t going to be the end of our adventure. “

“We said, let’s get good at building digesters fast and building them with safety in mind, and at scale, then bring that learning back home to the organics side of the world. We went to our board with a plan for 100 organic digesters and said, ‘Great news. We have this fantastic opportunity, and we only need $3 billion dollars, and can you guys round that up?”

“They said geez, $3 billion? We got a great idea. Let’s hand you off to the next level of capital. That’s how we ended up being acquired by BlackRock.”

“When we started Vanguard Renewables, we thought we were a renewable energy company that happened to use organic waste as our feedstock. What we were really was an organic solutions company that happened to make renewable energy, bedding for our farm partner’s animals, a nutrient dense fertilizer, and renewable CO2.”

“There’s a whole lot of products that you can create out of the back end of a digester, and we’ve got this cool technology. But that’s not the point.”

“The point is, we’re really dealing with this incredible resource, the organic materials in the United States that currently get sent to landfills and incineration. We understood that there is a better home for all that organic material, and we are the next evolution of materials management. The United States has been handling organic materials the same way our great- great grandparents did – which is throw it in a hole or you burn it.”

That was Vanguard Renewables aha moment and we might just have ended our conversation, and this column, on that point. But we were on a roll, so I asked what the happiest day had been, of all the days of Vanguard’s decade long journey?

The Happiest Day

“It was a day we were in Vermont, starting construction on our sixth anaerobic digester. It was the first renewable natural gas focused system we had (up until this point in Massachusetts we were converting the RNG to renewable electricity). This is the state where my family’s farm is, and I’d grown up swimming in Lake Champlain, just below our farm. When we had the groundbreaking, we had Unilever with us because of Ben and Jerry’s. We had the Cabot Agri-Mark Dairy Cooperative. We had our farmers there. The governor was there. It was the convergence of everything that I loved in Vermont and in the food world. Great cheddar cheese, ice cream, and good Vermont beer. Knowing that we were creating this solution to decarbonize Vermont and reduce their reliance on fossil fuel, we built our site to remove all phosphorus from the digestate. When the farm previously spread raw manure on its fields there was a potential for run-off into the Lake Champlain watershed. This was not just our goal, but also the goal of our farm partners. They wanted to ensure that they could protect the watershed. Knowing that I had spent so many years a kid swimming in Lake Champlain, and that we were helping it repair itself was a pretty mind-blowing day.”

Most fortuitous partnership moment? 

”I was fortunate to spend some time with Michael Kobori at Starbucks, their Chief Sustainability Officer and a brilliant guy. We met at a sustainability conference in California, and over drinks at the hotel, I said, Michael, I really think we could do something cool with Starbucks. I want to take all the food waste from all your stores in New England and see if we can turn it into energy. And he looked at me and said – let’s do it.“

“It took us a while to go through and get everything documented. But it was that late-night tequila, somewhere in Southern California, that turned into one of those fantastic times where that moment has led to an amazing partnership. They’ve been in our corner ever since, and it’s been a lot of fun too.”

Partnerships matter, because that’s where the trust comes from. Not just the rewards that flow from a win-win relationship. Sometimes it’s the hard work that goes into building a trusting relationship that connects two supply-chains that have never been connected before. That’s circularity. But it is something more. Those new connections — like a neural network newly expanded by new synapses — make it possible to do new things, sometimes the extraordinary things that create value, sometimes the human things that address something more important than money – like working to mitigate greenhouse gas emissions and fighting climate change.

So, Starbucks and Vanguard, joined not only by two supply-chains now connected — but connected in other ways that can have extraordinary outcomes. So, there’s one more story, from the pandemic period, that John Hanselman shared. During this period, project development and plant operations got tough, dark, and difficult.

Values drives habits, habits drive actions, actions change the world

“The pandemic, for all of us – no matter what industry – was rough and scary. Not to mention how our lives pivoted from being in the office or on the road to working from home, but also worrying about our employees and their family’s well-being, as well as our own families,” John remembered.

Safety was harder to reconcile with progress — even though that’s always been so easy to align those two vectors in renewable energy — the more progress that was made, the safer the society was. Then COVID came.

John thought back to those times. “We had 50 or 60 employees out in the field. We wanted to keep them safe.”

“The supply chain was completely broken. And we were starting to get raw milk coming into our digesters, which we’ve never seen before. We’ve seen expired milk that had already been processed coming in, but we had raw milk that was being dumped by the dairy manufacturers, because they had no cafeterias and no restaurants to send that product to. All their large bulk processing, half of most of those plants, was suddenly gone. They were overloaded with milk.

“This isn’t about the digester; the milk would have been great for us to use for our projects and make energy. However, this milk was drinkable. This was milk that people, at that moment, needed more than anything.”

So, here’s where something about Vanguard comes into clear relief, and not coincidentally, something about Starbucks — which as you might imagine uses a lot of coffee, and even more milk.

“We went on this crazy mission, to go back to the dairies, to tell them to stop sending us the raw milk. We were going to raise money, and we reached out to Dairy Farmers America, Starbucks, and other partners so that we could give away that excess milk to those who needed it.  We raised the money to bottle that milk and we gave it away. We went into downtown Boston, Boston Latin High School, and then to Springfield to the casino. We handed out gallon jugs of milk, and we put them in the trunk of these cars as people were driving through. We had Governor Baker and the National Guard helping to support us, and we had something like 4000 cars show up in downtown Boston alone – just to get something that so many of us take for granted.

“It was a terrifying time, but it was great that we could pull our network together and help feed our neighbors. It was made more special, because it allowed our team to come together in a safe way after so many months of Zoom calls and wondering what was coming next. It was in that moment that I was grateful for the team we assembled, and how selfless they all were to help in that singular moment in time and truly make a difference.”

So, there you have it, the origin story, the expansion days, a tale of partnership, and one from the dark days. That’s what you’d expect a great company to have, one of each of those, as we look beyond the building of renewable energy technology, or the identification of feedstock and finance, beyond the building of physical structure. Towards something that needs to be built for the long haul, and that is the construction not of the things that personify a company but the company itself, as an organic unit, with values that drive habits, habits that drive actions, actions that are aimed at changing the world.  We are reminded here in Digestville, if you want to change the world, start with values.