Optimizing the Digestion Process to Maximize Methane, Power and Payback – A Discussion of

Treatment, Co-Generation and the Evolving Methods of Paying Off the System

Optimizing the Digestion Process to Maximize Methane, Power and Payback – A Discussion of

Treatment, Co-Generation and the Evolving Methods of Paying Off the System

Joseph C. Cleary, P.E., BCEE

Principal

HydroQual, Inc.

1200 MacArthur Boulevard, Mahwah, NJ 07430

jcleary@hydroqual.com

Michael Curtis, Ph.D., P.E.

Senior Vice President

Fuss & O’Neill

146 Hartford Road, Manchester, CT 06040

mcurtis@fando.com

OutlineOutline

Anaerobic Digestion Overview and History Available Technologies and Configurations Design Considerations & Optimization Project Delivery Approach Paying for Alternative Energy Upgrade Renewable Energy, Carbon Credits and Bonds Entrepreneurial Approach and Investor Partnering Summary

Anaerobic Digestion Overviewand History

Anaerobic Digestion Process

HistoryHistory

1940’s – Low rate anaerobic municipal sludge digesters

1950-60’s – Two stage and heated digesters 7 Thermophilic

1960-70’s – Anaerobic contact process used in meat packing and food industry wastewater.

1965-85 – Development of Egg-Shaped Digesters for municipal sludges

1966-68 – Fixed film reactor lab studies 1972 – First full-scale anaerobic filter with pall

rings (Celanese)

HistoryHistory

1980-85 – Hybrid anaerobic filter (ADI)

Downflow filter (Bacardi)

Upflow anaerobic sludge blanket (UASB)

(Biothane & Paques)

Fluidized Bed 1990s – Expanded Granular Sludge Bed (EGSB)

(Biothane) 1990s-2000 – Pulsed sand bed system (Ecovation) 2000-Present - Co-Gen Advancements, “Carbon

Engineering” TM

Number of Industrial InstallationsNumber of Industrial Installations

Industrial Sector Number

Beverage 623

Food 310

Pulp and paper 137

Chemical/pharmaceutical 107

Dairy/Ice Cream/cheese 67

Sewage 67

Meat/poultry/fish 23

Other 265

TOTAL 1599Reference: Chemical Engineering April 2003

Typical Industrial Application Typical Industrial Application

Reactor ConfigurationsReactor Configurations

Reference: R.E. Speece, 1996

Design ConsiderationsDesign Considerations

Organic loading rate (e.g. Kg COD/M3-day) Gas production rate Alkalinity & pH balance Reactor configuration / mixing Concentration of biomass inventory Volatile Solids / Mass Reduction Temperature / Heating Toxicity Inhibition Biosolids Quality – Pathogen Destruction

Digester Process OptimizationDigester Process Optimization

Improved Mixing New Low-Energy Mixing Enhancements Increase Methane Production / VS Reduction Staged Reactors Temperature (meso / thermophilic) pH / Alkalinity Feed Rate Optimization Co-Digestion – Carbon Engineering TM

Project Delivery ApproachesProject Delivery Approaches

Design/Bid/Build (most traditional) Design/Build (D/B) Design/Build/Operate/Maintain (DBOM) Design/Build/Own/Operate/Maintain

(DBOOM)

So How do You Pay for it ??

Paying for Alternate Energy UpgradePaying for Alternate Energy Upgrade

Resource is Methane Payback Based Upon Avoided Power Purchase

and Much More 1 mgd plant with Flared, well-maintained

digester 20,000 SCFD – 60% Methane – 30 kW $45K per year at $0.16 per kWhour Helps – but will not pay for $ 0.5 – 1M

investment

Paying for Alternate Energy UpgradePaying for Alternate Energy Upgrade

Must Install Gas Treatment – Sulfur and Siloxanes Condensate Collection Pressurization Co-Generation Unit (turbine, engine, etc.) Electric Switch Gear Heat Exchange Capabilities (Exhaust / Engine Jacket

Heat to Process)

Not Rocket Science – but Not Trivial!

Co-Gen UnitsCo-Gen Units

Fuel Cell – 7K per kW Micro Turbine4 K per kW

80-90% EfficientPower and Heat

Paying for Alternate Energy UpgradePaying for Alternate Energy Upgrade

First Consideration – app. / up to 50 % Sludge Mass Reduction – sizable Sludge Disposal Cost Reduction

Possible Elimination of some / all Fossil Fuel Use to Maintain Digester Temperature

Avoided Power Purchase – Power Parasitized On-Site - Highest Value

Low Energy Plants (RBC’s, Trickling Filters) can actually export Power to Grid - Net Metering Research

Renewable Energy Credits and Carbon Credits

Renewable Energy Credits and Carbon Credits

Renewable Energy Credits (REC’s) for generated power

Current value approx 3-7 cents per kWh Based Upon Utility Mandates to Offer

Increasing levels of Renewable Power Capitalism at Work – Given Market Brokers – Buyers - Sellers Value of Power ($0.05 per kWh)

$0.21 per kWH $55K for 30 kW Installation

Renewable Energy Credits and Carbon Credits

Renewable Energy Credits and Carbon Credits

Carbon Credits market still very young Adds some revenue now Has Potential to add very significant

revenue stream for larger projects Example – Mid-Size Digester Offsetting 500,000 gal fuel oil per year Reducing 5,000 tons/year CO2 Ten year period Total value approx $500,000

Renewable Energy Credits and Carbon Credits

Renewable Energy Credits and Carbon Credits

Purchase of Carbon Credits and REC’s Lump Sum Up front – Buy Down Capital Long-Term Annuity Approach Need Good Financial Analyst Long-Term - Carbon Costs Going to Rise

New Jersey ProgramsNew Jersey Programs

http://www.njcleanenergy.com/renewable-energy/programs/renewable-energy-incentive-program

New Jersey Clean Energy Program Large and Growing Never Take ANYTHING on Face Value Programs Set up for Flexibility and Success NJ BPU BioPower Rebate Program

$1,500 - $2,000 per kW at Typical Installation

Clean Renewable Energy BondsClean Renewable Energy Bonds

The Energy Policy Act of 2005 (P.L. 109-58) establishes Clean Renewable Energy Bonds. A "CREB" is a special type of tax credit bond providing the equivalent of an interest-free

loan for financing qualified energy projects.

Clean Renewable Energy BondsClean Renewable Energy Bonds

For the 2007 round of awards, there were 786 applicants from 40 states seeking a total of $2.5 billion in bond authorization (three times what was available).

610 projects were approved including 78 private projects in 24 states ranged from $120,000 to $31 million.

25% of the applicants were in California (presumably high solar pv project count); other active states were New Mexico, Montana, Minnesota and Colorado. There were few applicants from the East and South other than Massachusetts.

Entrepreneurial ApproachEntrepreneurial Approach

Well run Digester an Environmental Bonanza Can Take Organic Wastes and Treat for Money CA – Food Wastes New England –

Flammable Hazardous Petroleum / Waste Wastes Food and More

Pluses – Tipping Fees – Can Greatly Increase Methane Production Power Payback

Essex Junction VT

Investor PartneringInvestor Partnering

Digester Projects are Wanted Commodities by the Investment Community

Shared-Savings – Open Book Approach ESCO’s Value of Carbon seen as ‘sure thing’ Private – Public Partnership can make project

happen

SummarySummary

Trend towards Increased Sludge Digestion in US and World

Reverses Trends (EPA) of Previous 25 years Alternate Energy Market – Driven If you Have Methane – Easy Analysis to Develop If you are Planning Stages, my belief is that

Switch to Digestion Will and Can Pay Expert-Driven Field Integrating Design,

Construction and Financing

QUESTIONSQUESTIONS