Cleantech column

By Published On: October 26, 2007

There are many opportunities for waste-based electricity and fuel, however, financing and regulatory setbacks create hurdles, according to panelists at an October 18 workshop. ”There are 50 terawatt-hours of untapped waste-energy in California,” exclaimed David Wheat, president of GCF Associates. Waste energy refers to the capture of potential energy, be it electricity, heat, and/or fuel–from recovering methane, creating ethanol, or converting forest and farm wastes into energy in place of landfill disposal or open burning. “Of the 100 million dry tons of organic waste/yr and 1 billion tons in landfills in CA, only 6 percent are currently used for energy,” said Wheat, the moderator of a Pacific Gas & Electric-sponsored waste-to-Energy panel hosted by MIT’s NorCal Clean Tech Entrepreneurship Program. Biomass-based fuel alone could displace half of the annual U.S. petroleum supply, according to Sanjay Wolfe, VP VantagePoint Venture Partners. The biggest hurdle to tapping the potential of waste energy is financing. Most waste-energy companies are small, under capitalized, and looking for third party financing from parties who demand minimal risks. Risk reduction, which is not an easy task for young companies, requires the generation of performance guarantees, credit-worthy supplies, and/or multi-decade contracts for feedstock and refineries. This challenge is further exacerbated by the lack of subsidies for waste-energy companies. But, the ground rule for survival is enduring without subsidies. ”No one will finance you if you are depending on tip fees and subsidies. You must have a sustainable business model with feedstock flexibility,” advised Dave Konwinski, Founder & chief executive officer, Onsite Power Systems Inc. Such was the case for BioEnergy Solutions, an animal waste management company, with a large PG&E contract to deliver up to three billion cubic feet of renewable natural gas a year. They receive a large sustainable supply of feedstock from large and medium-sized California cattle farms and provide them with suitable infrastructure necessary to create renewable natural gas from animal waste at their expense. They then share revenues from the sale of gas and carbon credits with the farmer or food processor. Although still prevalent, the financial hurdles are not as high as they once were. Government incentives and public funding has increased for waste-energy. Irvine-based BlueFire Ethanol, for instance, is striving to raise $200 million and was recently awarded one of the six Department of Energy grants, valued at $40 million. The awards provide up to 40 percent of project cost capped at $20 million a year. The agreement was signed in October. BlueFire Ethanol seeks to deploy a great deal of their cellulosic ethanol business in the state. “Not only is there currently 1 billion gallons of ethanol in demand in California, there is a massive transportation market, vast amounts of available biomass, and a large environmental community,” said Necy Sumait, senior vice president and director of BlueFire Ethanol.Regulatory hurdles are another big challenge to commercialization. “Time and money consuming California Environmental Quality Act regulations should be improved to look at overall benefits, not just point source benefits,” added Sumait.

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