Making Silk Purses from Sows Ears: Converting Waste Into Energy and Biofuels, Pt. II

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1 bio f uelsdigest.co m fuelsdigest.co m/bdigest/2014/03/27/making-silk-purses-fro m-so ws-ears-co nverting-waste-into-energy-andbio fuels-pt-ii/ Making Silk Purses from Sows Ears: Converting Waste Into Energy and Biofuels, Pt. II Jim Lane by Tim Sklar Special to The Digest Part I of this story is available here. Major Claims Made for Using FastOx Gasifier Technology The f ollowing is a list of ten claims that are believed to be the most signif icant. T hese claims have either been directly expressed by Sierra Energy in materials used in this case study, or they have been implied. 1 FastOx gasif iers can be sized to match the waste streams now being collected by waste management authorities serving smaller communities. And the lif e of existing landf ills could probably be extended if wastes are diverted to WTE and WTHVP plants using FastOx gasif iers. By implication, this of f ers the possibly of reducing or eliminating costs associated with landf ill operations. 2 Based on what is being implied by Sierra as to capital costs of FastOx gasif iers, overall capital costs of WTE plants using FastOx gasif iers are expected to be lower than competing WT E systems. 3 FastOx gasif iers may be able to process mixed waste streams without pre-processing, and at the same or less cost as when using landf ills. 4 WTV plants using FastOx gasif iers could probably be used to convert waste already in landf ills thereby adding capacity and reducing the need and cost f or additional landf ill development. 5 Diverting wastes now being disposed of in landf ills to WTV plants using FastOx gasif iers of f ers plant owners and by implication, waste management authorities, the potential f or obtaining revenues f or providing cheap power to the grid and/or f rom sale of high value products. 6 WTVplants using FastOx gasif iers produce biof uels cheaply, as f eedstock costs are expected to be minimal, being derived f or MSW and other combustible wastes. 7 The market prices f or ethanol and other high value products a WTV plant can produce, appear to of f er WT V plant owners unusually high margins. 8 Likewise power generated f rom syngas produced using FastOx gasif iers is expected to be competitive even if low f eed-in-tarif f s are obtained. 9 All by-products produced by WT V plants using FastOx gasif iers are marketable. 10 WT V plants using FastOx gasif iers are environmentally f riendly, which will f acilitate obtaining locations f or

2 them and little if any process waste is generated that has to be disposed of. A Crit ical Analysis of Sierra Energy s Claims Re: Claim 1 on Sizing Sierra Energy announced that a 250 tpd FastOx gasif ier can readily be produced implying that this is the size that they plan to market to the hundreds of smaller communities that are unable to support larger WTV plants. Based on metrics f or similar gasif iers a 250 tpd FastOxTM gasif ier can would probably be able to process ~86,000 tons per year of MSW. Even though such a waste stream may be typical of the amount of waste that is now being collected by numerous waste management authorities serving smaller communities, there are other considerations that have to be taken into account. Sierra Energy needs to look at the realities of how waste is managed today and adapt what it is trying to do to what is current practice. For example, the way MSW is waste collected today is primarily through waste management contractors or publicly owned waste collection authorities, using f leets of packer trucks T hese trucks have 7 ton payloads and must make short trips to unload and reload to be economically viable. This means that round trips of more than 35 miles are more than likely to be uneconomic. Another reality is that although the number of landf ills is declining, the ones that are being operated have more capacity and are designed to operate more ef f iciently and in a more environmentally compliant manner. As a consequence a network of transf er stations has been developed to serve these regional f acilities. Transf er stations are now being used consolidate waste collected f rom packer trucks operating locally onto trucks that have three times the payload to serve regional landf ills that require round trip distances of 35 miles or more. According to EPA, handling and transport savings amounting to as much as $10 per ton are now being realized when a network of transf er stations is used to support larger waste management f acilities such as landf ills and incinerators. In rural area, rural transf er stations of simple design and low cost, are used to consolidate waste collection f or movement to more distant f acilities, Even if WTV plants can be built to process 250 tpd of MSW and compete with ef f iciencies of WTHVP plants with twice that capacity, it may not be enough, if the savings of f ered by using transf er stations to consolidated loads to more distant larger f acilities are f actored in. If Sierra Energy ignores this, it will come to light when they of f er to build 250 tpd WTHVP plants to service smaller communities and they may f ind they have no takers. Re: Claim 2 on Capital Costs Sierra Energy has implied that they believe the overall capital costs of WTE and HVP plants using FastOxTM gasif iers are expected to be lower than those f rom competing processes that use high-temperature gasif iers. Sierra Energy also point out that those competitors that use lower cost low-temperature gasif iers, are limited in f eedstock versatility and ef f iciency and are not comparable. However, more substantiation will be needed. Re: Claim 3 on Mixed Waste Streams Sierra Energy would have a signif icant advantage over its competition if its FastOxT M gasif iers are able to process mixed waste streams, without pre-processing at the same or less cost as when using landf ills. But how compelling an advantage this really is depends on a) how much pre-processing specif ic landf ill operations are now perf orming and b) how much would be saved if pre-processing storage and handling operations no longer have to be perf ormed. Another consideration has to do with the amount of pre-processing that is done at the WTE & HVP plants that

3 are expected to receive waste streams that are not pre-processed and are using Ref use Derived Fuel ( RDF ) technology and whether there are expected to be signif icant savings if pre-processing costs could be eliminated by converting to FastOxT M gasif iers. Re: Claim 4 on Landfills T he claim that FastOxT M gasif iers could probably be used to convert waste already in landf ills is only partially correct. The claim that (widespread use of WTE & HVP plants using FastOxTM gasif iers} would add capacity and reduce the need and cost f or additional landf ill development is at best, unsupported. And this claim may not hold true in a majority of jurisdictions that operate landf ills. Further, the implied claim that by sending mixed waste streams without pre-processing to WT E & HVP plants using FastOxT M gasif iers would eliminate the need f or landf ills is an over-reach. As a point of f act, that in addition to collecting solid wastes (MSW), landf ills also collect moisture laden materials and hard to dispose of wastes, some of which is non-combustible and some, non-recyclable. For the most part, these wastes still end up in landf ills and would in all likelihood, have to be removed f rom the mixed waste streams that FastOxT M gasif iers use. And adding capacity to existing landf ills by recovering wastes f rom them and sending them to WTE & HVP plants using FastOxT M gasif iers instead, or diverting landf ill waste streams to such f acilities to avoid having to landf ill capacity, are f alse choices. In a recent f act sheet published by the EPA titled Facts About America s Landf ills, national landf ill capacity in the US is expected to be adequate f or the f oreseeable f uture, even though the number and capacity of WTE & HVP plants remain unchanged. Here are some of the pertinent f indings based on the f ollowing table: Landfill Statistics Source: EPA Fact Sheet % Change (MSW in millions of Tons) :2000 MSW Generated % MSW Recycled % MSW Composted neg. neg % MSW Combusted % MSW to Landf ills % MSW/#/Person % Population (mm) % From 1960 to 2005, MSW generated in the US has increased nearly threef old but the annual rate of increase based on years 2005 and 2000 was lesss than 1%. MSW discarded to landf ills is f ollowing a similar pattern, with little change expected over the million tons per year reported in This can be attributed in part to the f act that the MSW that is being recycled and composted has increased signif icantly and is expected to increase in the f uture as well. Excess capacity in landf ills is also being caused by a decrease in the average amount of trash per person

4 Excess capacity in landf ills is also being caused by a decrease in the average amount of trash per person being generated to ~2.5 lbs, which has of f set modest increases in population in the US. It should be noted that MSW being combusted seems to have hit a plateau, as use of incinerators has declined due to environmental constraint. And the low growth in the number of WTV plants has not yet changed this pattern. Further the outlook f or obtaining adequate f eed-in-tarif f s f or WTV produced power is a pessimistic one, based predictions of abundant supplies of cheap natural gas that is expected to be used by power utilities in the f uture. And according to EPA and others, the number of landf ills has declined but the landf ill capacity has increased enormously. T his is due to such f actors as landf ill consolidation, increased recovery of materials being recycled, and through more widespread use advanced landf ill technology and innovative practices, that have increased tonnage to volume used by 33% by burying trash more tightly. Another f actor reported by EPA, is the increased amount of waste that is being shipped to China and other export markets, which could reduce the need f or landf ill capacity in the Us by as much as 4%. Developers of WTV plants need to be aware of these realities and the f act that three giant waste management f irms who collect more than half of the nations trash who own and/or operate most of the country s large landf ills. Developers and technology providers must also be prepared to win over these three giants, if they are planning on having them divert their landf ill waste to a WTV plant that is to be developed. The bottom line of all of this discussion on landf ill capacity is that f uture needs f or landf ill capacity ought to be ascertained in discussions with representatives of these three companies, Waste Management, Allied Waste and Republic Services, bef ore using the added capacity argument as a selling point f or WTV plants. Re: Claim 5 on Economic Advantages to WMA s of the WTV option T here should be little disagreement with the claim that FastOx gasif iers (when installed in WT V plants) have the potential to of f er waste management authorities added sources of revenue, as tipping f ees received by operators of landf ills and incinerators are substantially of f set by the costs incurred in operating landf ills and incinerators. There should be little disagreement that the raison d etre f or WTV plants is their potential f or using wastes to generate power and/or produce high value liquid f uels and related products at a low cost. But it is still an open question as to whether this added revenue that is expected to f low to the owners of WTE & HVP plants is high enough not only to attract investment, as it will have to be high enough to provide the project s waste providers with incentives to change current practices. Ways must be f ound f or sharing WTV plant revenue with waste providers. The amounts to be shared must be high enough to cover their cost of diverting their wastes streams and curtailing operations at existing disposal f acilities, as well as added costs incurred f or preparation, storage, handling and transport of such wastes to specif ic WTE & HVP plants. And this revenue sharing must also cover the recovery of capital investments made in transf er stations, equipment and inf rastructure that will be needed. In other words, the economics of each proposed WTV plant and how it will impact its waste suppliers will determine whether specif ic WT V options are worth undertaking. Re: Claim 6 on Economic Advantages of WT V Plants T here are strong arguments supporting Sierra Energy s claim that WT V plants using FastOx gasif iers could produce biof uels cheaply. As with all WTV plant projects, it ought to be assumed that wastes to use as f eedstock will primarily be MSW and other combustible wastes that are obtainable at a low cost.

5 Sierra Energy claims its FastOx gasif iers are ef f icient. The specif ications reported f or FastOx gasif iers indicate that they have a Cold Gas Ef f iciency of 66 to 79%; a Parasitic Load range of 16 to 20%; and the dry syngas produced has a high Net Caloric Value of ~8.56 MJ/kg. Sierra Energy claims that when its syngas is used in a gas turbine generator, each ton of waste processed will generate is 1,500 kwh of electric power. Sierra Energy also claims that when its syngas is used in a F-T module to produce ethanol, the waste-toethanol conversion rate is 100 gallons per ton. At this stage there is no reason to challenge these very f avorable ef f iciency claims. Re: Claim 7 on Waste-to-Ethanol Pathway Claim 8 on the Waste-to-Energy Pathway and Claim 9 on Marketability and Value of Byproducts Electricity vs. Ethanol To examine these claims, Sierra Energy s metrics were used along with recent typical f eed-in-tarif f rates f or electric power and rack prices ethanol. T he f ollowing is what these analyses revealed and what was concluded. It was assumed that syngas was produced using a FastOxT M gasif ier with a rated waste processing capacity of in a 250 tons-per-day, and consumed 80,000 tons-per-year of waste. If power is generated at a WTE plant at the estimated rate of 1,500 kwh/ton, then annual power generated would be 120 million kwh/yr. If power were sold to the grid at the f eed-in-tarif f rate $0.06/kWh, then $7,200,000 in revenue would be realized in the WTE. conversion. On the other hand, if the syngas was converted into ethanol, 8 million gallons of ethanol could theoretically be produced in a year s time, assuming Sierra s estimated conversion rate of 100 gallons per ton. And if the price realized at the WTV plant rack were $2.60/gallon, the revenue realized would be $20.8 million. This is 2.8 times more revenue that would be realized by the WTV conf iguration. Clearly, with such revenue potential f or plants using FastOx gasif iers, it appears that making ethanol f rom waste is the pref erred conf iguration, even though power generation using gas turbines is less complex and requires less capital investment and know-how. Renewable Hydrogen In T he Biof uels Digest Magazine February 6th article, Sierra Energy revealed a longer term strategy of using syngas to produce renewable hydrogen that can be used in f uel cell vehicles. Sierra claims that the renewable hydrogen made f rom MSW would cost $0.50/KG, which is equivalent to $0.25/gallon gasoline based on range. Of course there is a catch-22 in this strategy. Moderately priced f uel cell vehicles are still under development and f ueling stations f or f uel cell vehicles do not now exist. This in turn, will retard development of a market f or such vehicles. Sierra Energy envisions a way around this conundrum. T hey believe that the cost of manuf acturing their smaller gasif iers can be reduced by to 1/3, if manuf actured in large numbers. They then would be able to install gasif iers at existing waste transf er stations along with equipment to ref ill f uel cells. This strategy implies that renewable hydrogen produced at each transf er station will not have to be distributed to thousands of gas stations at great cost, and these gas stations would not have to install hydrogen storage tanks or pumps. Sierra Energy contends that in a state like Calif ornia with its many transf er stations, it would only pose a modest inconvenience to owners of f uel cell vehicles. Unf ortunately, such a strategy could work only if the many pieces, such as cheap gasif iers, af f ordable f uel cell vehicles, widespread investment in transf er station modif ications, and driver acceptance, come together at roughly the same time. Re: Claim 10 on Environmental Issues Although Sierra Energy s environmental and emissions claims appear to be plausible, f urther verif ication will be

6 needed, especially if HVPs are to be produced and the waste stream to be processed contains higher than average mix of materials containing toxic substances. Strategies for Accelerated Roll-Out of WTV Plants It is contended that the critical analyses of Sierra Energy s claims f or its FastOx gasif ier, highlight the obstacles and impediments that any purveyor of new biof uels technology may encounter in having that technology incorporated into WTV projects as these are same obstacles and impediments that f ace WTV project developers. The strategies that are presented f or accelerating the rollout of these types of projects f all into f our major categories, namely, those that are designed: 1) To assure an adequate and ongoing stream of low cost wastes; 2) To f ind and secure a strategically located plant location; 3) To obtain a suf f icient number of of f - taker commitments; and, 4) To obtain project f inancing.. These strategies are presented below in the order in which they ought to be undertaken. 1. The project developer and technology providers must agree on what economy of scale is appropriate f or the type of plant that will be needed and what amount of waste is required to support operations of the scale that is pref erred. 2. If the strategy is to produce electric power using wastes, will there be a captive end user with a limited need. If not, should the sizing be done to produce power at the lowest possible cost, so the project can survive on pessimistic projections of f eed in tarif f s that can be expected or should sizing be determined on most likely estimates. 3. If the strategy is to produce a high value product, such as methanol, olef in intermediates or ethanol, sizing will have to take into account the added capital cost and operating cost of having this capability as well as the market outlook f or the products to be produced. 4. Once sizing is agreed to, then a determination of how much waste is needed and how much could be obtained directly f rom waste providers who operate in the same general area. 5. Waste collection estimates made would have to include waste obtainable f rom collection f irms and municipal waste authorities, wastes that can be diverted or reclaimed f rom landf ill owners and operators, as well as wasted that could be obtained f rom timberland harvesters, f rom known sources of construction and demolition wastes and f rom industrial waste generators. 6. Discussions with a cross-section of potential waste providers will be needed in order to ascertain the amount that can be obtained on an ongoing basis in the same general area. 7. Estimates will then have to be made as to the tipping f ee revenues that can be expected and the added costs that may have to be incurred in order to deliver the wastes to a plant strategically located in the same area. A preliminary search f or plant sites that meet potential requirements will be needed and a prioritized list of sites developed. 8. An initial consensus must then be reached among the project developers, and other parties-in-interest as to the project s sizing, the waste stream requirements, the plant location and the product slate to be of f ered. Parties-in-interest would include project sponsors and potential JV partners, technology providers, and government authorities. 9. Of f -taker commitments will then need to be obtained. If the of f -taker is a single entity, such as a military base as in the case of Sierra Energy, of f -take agreements should be obtained containing tentative contractual

7 commitments f or power and HVPs, base period power rates and HVP prices and provisions f or changing rates and prices over a f ixed contractual period. 10. If the of f -taker is a f uels blender, a bulk terminal reseller, a ref iner, a petro-chemical plant, or a buyer of gasif ier by-products, such as cement/clinker and asphalt plants, letters of interest or memoranda of understanding may be suf f icient to obtain initial backing f or the project. However, long-term of f -take agreements will be needed in order to secure permanent project f inancing. 11. Once f easibility studies and business plans are completed, investment memoranda can be draf ted in order to attract strategic partners and investors to the project. T he project sponsor should try to target as strategic investors, waste management companies who collect waste in the selected area, as well as those f irms who plan to be major of f takers. This list could include crude oil ref iners, bulk distributors and blenders of f uels, and petrochemical companies. 12. If the project is to provide power to the grid, the power utility could be asked f or concessions in return f or backstopping some of the debt. Likewise government waste authorities and/or the county or municipality to which they report could be asked to hold equity in return f or their being able to provide low cost government backed bond f inancing. The Bottom Line Hopef ully this article will prove usef ul to those trying to accelerate the roll-out a new biof uels technology as well as those who are involved in undertaking commercial-scale biof uels projects development and want to accelerate the process. It seems that there are no shortcuts and we have tried to show what needs to be done. As previously stated, our f ocus was on waste-to-energy and waste to high value products projects. And one such company was used in the case study in order to illustrate what kind of strategic plan may be needed in order to better assure a widespread commercialization of their technology. It is hoped that this article will prove usef ul to some developers and technology providers and lead them to improving project development plans. At the very least this article will convince readers that more is needed in biof uels technology and biof uels project development than better biof uels technology mousetraps. Tim Sklar is a longtime Digest contributor on biocoal and torrefection topics. He can be reached here.