There’s a competition going on for your trash.
Some 187 Maine towns and cities will have to decide this year where they’ll send their municipal solid waste starting in 2018.
One facility wants it so it can stay in business. Another wants it so it can get off the ground, advancing from concept to reality.
But the chances are slim that the 187 northern and central Maine towns and the 180,000 tons of trash they produce each year — with a strong possibility of generating less long term — can support the operation of two major waste-processing facilities in a single, geographically large and sparsely populated region.
That leaves the towns and cities that make up the Municipal Review Committee, the organization that represents their waste-disposal interests, with the challenge of choosing the most viable path forward since there can likely only be one.
The facility that wants to stay in business?
That’s the Penobscot Energy Recovery Co., whose Orrington plant has incinerated waste and produced electricity for nearly three decades. PERC, Maine’s largest waste-to-energy facility, takes in waste from the Bangor and Waterville areas and from towns as far north as Mars Hill and as far south as Wiscasset. The combustion reduces the volume of waste passed to the Juniper Ridge Landfill in Old Town by 85 percent, and it produced enough electricity in 2013 to power 25,000 homes.
But PERC’s financial underpinnings change significantly in 2018. That’s when a power purchase agreement with Emera Maine that guarantees PERC a favorable, above-market rate for its electricity expires. (Under the contract, PERC collects 14 to 15 cents per kilowatt-hour for its power. By comparison, Emera’s current standard offer for residential customers is 6.6 cents per kilowatt-hour, more in line with current market rates.)
In 2011, the Minnesota firm that manages PERC operations and is the facility’s majority owner recommended preparing the facility for closure, stating it would no longer be “economically feasible” to operate after 2018.
But the managing partners now argue PERC, which employs 74 people, can remain viable, even if it loses a portion of its waste supply to the facility that wants to start up.
Waste-to-energy is “still the best commercial-scale technology for municipal solid waste,” said Bob Knudsen, vice president of operations for USA Energy Group, which has a 52 percent stake in PERC.
In 2018, Knudsen said, PERC could scale down and process 200,000 tons of waste annually instead of its current 300,000-ton load. The facility at that point would no longer have to pay out a third of its profits to Emera Maine as a 1990s profit-sharing agreement lapses, and PERC would be debt-free within a decade. On the operations side, an engineering study done for PERC suggested the facility can run efficiently at least until 2035.
PERC would charge towns and cities $89.57 per ton of waste over a 10-year commitment and $84.36 per ton over 15 years — rates that would change annually with the Consumer Price Index. The towns currently pay $79 per ton before earning rebates, based on PERC’s financial performance, which can lower the net rate.
With the new tipping fees applied, a financial projection PERC prepared shows the facility coming out in the black. But its net income would fall to $376,000 in 2018 from $4.87 million in 2014 before rising to $786,000 in 2027. Specifically, PERC projects revenue from selling electricity would fall to $5.3 million in 2018 from $25.7 million in 2014, meaning the electricity side of the operation would lose money.
PERC developed those projections assuming it will continue to take in 200,000 tons of waste, but there’s only so much waste to go around. In 2013, PERC took in 106,000 tons of waste from commercial sources — more than Maine’s two other incinerators combined — in addition to residential waste, according to the Maine Department of Environmental Protection.
Knudsen said PERC will try to expand its commercial load, but its viability depends on its ability to retain a significant portion of the 187 towns’ 180,000 tons of waste, which easily could fall as more towns implement waste-reduction strategies, such as pay-as-you-throw.
Dirigo on waste?
In 2014, the Municipal Review Committee started pitching a yet-to-be-built facility in Hampden as the region’s solid waste future. The $67 million facility would use technology to extract recyclables from unsorted municipal solid waste and, through fermentation, process what remains into “Trashanol.” Fiberight, the Maryland company that would own the plant, would sell the trash-derived — instead of corn-derived — ethanol as a fuel additive.
Today, Trashanol is no longer part of the plans. Instead, Fiberight plans to use organic materials in the waste stream, such as food scraps, paper and yard waste, to produce biogas — a renewable fuel with a similar composition to natural gas.
Fiberight founder and CEO Craig Stuart-Paul said his company’s process is capable of producing ethanol— though a University of Maine review of the technology in late 2014 estimated the process was three to five years from commercial deployment. Fiberight produced and sold small amounts of it at a closed-down ethanol plant it bought in Blairstown, Iowa, he said.
“What is more difficult is the market conditions and price volatility of ethanol, which make financing the industrial systems required to make it very difficult,” Stuart-Paul said. “Given the demand for natural gas in Maine, converting our sugars to renewable biogas makes the most commercial sense.”
Fiberight would clean its biogas on site to remove contaminants and pipe it into the Loring Pipeline operated by Bangor Natural Gas, which runs through the proposed Hampden site on Coldbrook Road. Stuart-Paul said Fiberight also would make some of the compressed natural gas available as a fuel for trucks that haul large amounts of garbage to the plant. The process also would generate enough power to run the facility, he said.
The process would reduce the total garbage volume by 75 percent, compared with PERC’s 85 percent. The remaining waste would end up in Crossroads Landfill in Norridgewock.
“This is all going to evolve over the years and decades, but what we’re installing is new, state-of-the-art infrastructure that Maine can essentially be a leader in the waste management industry rather than a follower,” Stuart-Paul said.
The business plan
Fiberight’s plan is to find industrial customers in the region for its biogas. Bangor Natural Gas, as the pipeline operator, would ship the gas and collect a standard transportation tariff, according to Andrew Barrowman, the gas company’s sales and marketing manager. Barrowman said Bangor Gas serves 1,500 commercial and industrial users; 63 of them purchase gas from a third party under the arrangement Fiberight would use.
“We have to compete on commodity value, but there are certain customers in the region who do appreciate the renewable attributes [of the biogas], and that has value to them,” Stuart-Paul said. “We know that there is sufficient demand in the market, that we will have no problem finding a home for our natural gas.”
But there are many developments that must fall into place before Fiberight can deliver gas, not even considering the financing and waste commitments Fiberight needs before facility construction begins.
To start, it needs customers. Michael Swartz, energy and utility manager at the University of Maine, one potential customer, said he has met with Stuart-Paul, but the university would have to solicit energy service through a competitive bid process.
“Our meeting with Fiberight was not unlike any other initial outreach and inquiry that we’ve had with other prospective vendors,” Swartz said.
The stretch of pipeline running through the Fiberight site also would have to start operating, Barrowman said. Currently, gas on the pipeline — which the federal government used to transport jet fuel from Searsport to the now-closed Loring Air Force Base in Limestone — flows only between Bangor and Mattawamkeag.
Bangor Gas would have to repair any deteriorating portions on the Bangor-Hampden section of pipeline and change valves so they’re fit for natural gas rather than oil, Barrowman said.
The gas-cleaning operation on the Fiberight site would have to bring the biogas up to pipeline standards so it can mix with other gas in the pipe without detracting from its energy potential. Bangor Gas wouldn’t allow in gas that didn’t meet its standards.
Biogas and natural gas are primarily methane, but biogas can have components that detract from its energy potential, according to Marianne Mintz, an energy systems analyst at Argonne National Laboratory in Illinois.
Biogas can be commercially viable, especially in a market such as Maine with otherwise limited access to natural gas, Mintz said. But the viability can depend in large part on the gas’ ability to qualify for RINs — essentially, greenhouse gas reduction credits under the federal Renewable Fuels Standard that a fuel producer sells to fossil fuel importers and refineries as a separate product from the gas.
“There is a lot of money to be made in RINs,” Mintz said. “And that is the question, whether this pathway would qualify for RINs.”
Stuart-Paul said it would, though Mintz said fuel producers don’t know for sure until they apply to the Environmental Protection Agency for credits.
The choice for towns
In 2014, the Municipal Review Committee asked UMaine’s Forest Bioproducts Research Institute to evaluate the Fiberight technology — in use at a smaller, pilot facility in Lawrenceville, Virginia — to determine whether it could be deployed at a commercial scale.
Apart from reservations regarding the readiness of Fiberight’s ethanol production process, the team concluded Fiberight’s technology was “sound” and that its processes were similar to those used in other industries, such as papermaking.
“The question is, is it viable and feasible?” said Hermon Town Manager Roger Raymond, who was involved with setting up PERC in the 1980s as Bucksport’s former town manager. “I’m not sure how financially feasible it is. It costs a lot of money to do these things. That’s where a lot of the concern is. It’s not with the program that they’re proposing.”
There’s no similar, commercial-scale facility operating anywhere in the U.S. In recent years, there have been numerous stories of plans for solid waste-to-biofuel facilities, then indefinite delays — such as Fiberight’s planned facilities in Iowa — or halted production.
Towns that commit to sending their waste to Fiberight would pay a $70 per ton tip fee for the first year; it would change each year based on Fiberight’s operating expenses and revenues. Towns would be eligible for rebates based on financial performance once they send more than 180,000 tons of waste to Fiberight, said Bangor City Manager Cathy Conlow, who serves on the Municipal Review Committee board.
“We’ve already identified the majority of capital,” Stuart-Paul said.
The towns would not pay to build the facility, though $5 million they have built up in a tip fee stabilization fund from their stake in PERC would go toward purchasing the property and preparing it for development, including road construction.
The Municipal Review Committee has pledged to secure commitments of at least 150,000 tons of solid waste per year by this summer. If it can’t, construction may not happen. Each year of operation, the MRC towns would have to stick to their 150,000-ton commitment. If they fall short, the group — and, by extension, its member towns — would be liable for “delivery sufficiency payments” to Fiberight.
Meanwhile, participating towns would have limited flexibility to lower their tip fee bills through measures that reduce the amount of waste they produce. While they can continue operating recycling and pay-as-you-throw programs, Fiberight would have to sign off on any efforts to divert organics — which Fiberight’s process depends on — from the waste stream. Organics, after all, make up 40 percent of Maine’s waste, according to a 2011 UMaine study.
The Municipal Review Committee doesn’t plan a full market analysis to assess the commercial viability of producing and selling biogas. Conlow said the fact that Fiberight is attracting investment shows the facility can be viable.
“There are folks who are willing to invest without a guaranteed rate of return, I think, because they believe long term this technology offers opportunities going forward,” she said.
An MRC consultant last year prepared an economic analysis based on the facility taking in at least 180,000 tons of waste. Under that scenario, the tip fee revenues (at least $12.6 million) would exceed annual operating costs ($10.2 million to $11.6 million).
“It follows that project revenues from tip fees alone are sufficient to generate positive cash flow from operations, before any return to capital, even if there are no revenues,” the consultant, George Aronson of Commonwealth Resource Management Corp. in Sharon, Massachusetts, wrote.
But the whole picture leaves several unknowns for towns deciding where to send their waste. For example, what happens with waste determined to be unacceptable to Fiberight, and how do towns cover those costs? What happens if Fiberight fails and PERC fails with it?
A group of towns including Hermon recently commissioned a legal review of all contracts involved with Fiberight, MRC and PERC so town officials would know their provisions and know if they sufficiently protect the towns’ interests.
“There’s risk involved in this, and the degree of risk that someone can bear is what is going to determine whether they can commit to this or not,” Raymond said. “The more that the MRC can reduce that risk, it’s going to make it easier for them to sign up communities.”