Procuring Organics Processing April, 2018 SWANA NW Symposium HDR, Inc., all rights reserved.

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1 Procuring Organics Processing April, 2018 SWANA NW Symposium 2014 HDR, Inc., all rights reserved.

2 Procuring Organics Services: Key Elements of a Successful Project Project Champion and Political Support Bondholders Do Not Take Any Risks

3 WASTE SUPPLY ATTRIBUTES AND UNCERTAINTIES Attributes Type and Source of waste Waste collection practices o public vs. private o source separated Uncertainties/Risks Control of waste stream Quantity fluctuation Composition & Quality o Digestibility content o Contaminant level Impacts of current and future diversion programs Regulations Must Provide Supply of Acceptable Waste

4 WASTE SUPPLY / FEEDSTOCK FUNDAMENTAL ISSUES Key to identifying suitable technologies Key for financial sustainability Who has control of feedstock streams Private sector influences Approaches to control waste supply include long term supply agreements, flow control

5 WASTE SUPPLY: EXPECTATIONS VS. REALITY

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10 WASTE SUPPLY PRE-PROCUREMENT DECISIONS What material streams will the RFP guarantee? Would the public be willing to solicit other feedstock (e.g. inter-municipal agreements)? Would the public want the Respondents to solicit other feedstock? Would capturing additional waste streams be an aspirational goal but not for selection?

11 TECHNOLOGY ATTRIBUTES AND UNCERTAINTIES Attributes Waste Stream Dependent (wet vs dry) Best-Fit Technology Class Site Requirements Performance Guarantees Environmental Performance Uncertainties/Risks Costs o Capital o Operations & Maintenance Schedule for construction Vendor Experience/Capabilities Readiness Performance The Technology Must Work on the feedstock committed

12 VARIATIONS IN TECHNOLOGY Co-Digestion at WWTP Excess capacity System integration Dedicated Digestion High/Low Solids Continuous/batch Dry Fermentation Green/yard/food

13 RESIDUALS ATTRIBUTES AND UNCERTAINTIES Attributes Character Location Capacity Responsibility for Management Host Community Uncertainties/Risks Types & Quantities (if problematic) Environmental Characteristics Disposal Location & Costs Beneficial Reuse Options There Are Always Residuals

14 SITE ATTRIBUTES AND UNCERTAINTIES Attributes Size Access Utilities Existing zoning/land Use Location/neighborhood Uncertainties/Risks Permit-ability/ Time Subsurface conditions Pre-existing environmental conditions Political and Public Acceptance Must provide or have an Acceptable Site

15 PRODUCTS/MARKETS ATTRIBUTES AND UNCERTAINTIES Attributes Available Outlets Market Demand/Price Other By-Product Users Competition Duration of typical off-take agreements Uncertainties/Risks Market fluctuation Quality/quantity of products Demand cycles Environmental character Availability/Sustainability of markets Price/revenue Technology Choice Affects Market Uncertainty

16 Product/Market trends Economic drivers vary (compost/digestate markets) Regulator drivers Highest economic value to offset tip fees Consider technology specific product guarantees Feedstock quality strongly linked to product quality (and quantity) guarantees

17 PRODUCTS / MARKETS PROJECT SCOPING RFQ needs to describe proposed scope of project including expectations for generation of products: Should identify: Any market restrictions that would apply The role of the respondents and the public in securing markets The approach that may be used for revenue sharing Who will be responsible for marketing by-products? Who will be responsible for energy offtake agreements?

18 OWNERSHIP / DEAL STRUCTURE Attributes Ownership is central to deal structure, financing and allocation of risk Technology risk is a key consideration: o Ownership often linked to conventional technologies o When respondent providing proprietary technology some form of public/private partnership usually used Procurement approach reflects deal structure o Less complex procurement documents for DBB and Private Models o More complex requirements for DBOM and DBFOM Uncertainties/Risks Who manages operating changes Assurance of technology performance Evolving changes of technology Evolving materials markets Owner guarantees payment Contracting with private sector can reduce some risks

19 OWNERSHIP PRE-PROCUREMENT DECISIONS Who is best suited to own the facility Who manages operational flexibility Who manages market fluctuations Who can secure an acceptable site Who can secure economies of scale Who can manage technology performance risk Can the Public contract out private services to reduce risks yet retain ownership?

20 FUNDING ATTRIBUTES AND UNCERTAINTIES Attributes Source of Funding- Public or Private Required Security/Equity Strength of Parent Strength of Counterparties/Off Take Agreements Uncertainties/Risks Availability Changes in Market Conditions Interest Rates Will Banks loan money (FINANCEABLE PROJECT?) All the key elements affect Funding

21 Private Ownership Public Ownership OVERVIEW OF PROJECT DELIVERY OPTIONS Delivery Model Design-Bid-Build (DBB) Type Traditional Fixed Price Design-Build (DB) or ( DBF ) Design-Build-Operate/Maintain (DBO/M) P3 Models Design-Build-Finance-Operate-Maintain (DBFOM) Dedicated Private Facility Long-term Service Contract Private Models Merchant Facility(ies)

22 RISK ALLOCATION PRIVATE RESPONSIBILITY Demonstrated Facility Performance Treating Similar Feedstock Proof of Scale-Up or demonstrated operating at throughput rate Design/Performance Guarantees Environmental & Emission Performance Securing Permits Realistic Economics Private Sector Champion Requires a proven/viable Technology

23 RISK ALLOCATION PUBLIC RESPONSIBILITY Defined Quantity of Feedstock at Set Fee (Put or Pay Risk) Long term commitment Defined Range of Feedstock Composition Political Willpower / Public Sector Champion Site (specifically Land Use compatibility) Requires Waste Flow Commitment/Support

24 Tim Raibley PROCURING ORGANICS PROCESSING 2014 HDR, Inc., all rights reserved.

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