Agriculturally related industries are major energy consumers with large quantities of digestible waste, and many have direct associations with waste producers, which are also large energy consumers. These small and medium enterprises (SME) could very easily, and at low cost, become self-sustainable, off-the-grid solutions with biogas digestion systems.

Food waste has vastly more methane potential than other waste. About 9.3 million tons of food waste is dumped every year, while the food producers continue to use fossil fuels for cooking, heating and electricity. Depending on the waste substrate, it can have as much as 30 times more energy potential than other wastes.

The real problem is that food and agricultural producers only look at renewable energy projects as “income generating” projects, but should instead view them as a way to reduce or even eliminate energy expenses.

Dwindling Interest

The South African parastatal utility Eskom, and the only licensed buyer and distributor of energy, must purchase at least 1 MW of capacity from any Independent Power Producer (IPP). This mandate has crushed any interest to produce energy below 1 MW of capacity. For example, a farm with 7,000 pigs downgraded their biogas installation from 260 kW to a mere 40 kW because there was no reason to run the bigger system — its surplus methane is simply flared.

In an attempt to attract the 1-MW SMEs, the State offered a rebate system for renewable energy projects, but then put the incentive on hold in 2013 citing financial constraints.

These uncertain rebate offers and unstable utility finances do not spur renewable energy solutions.

Consequently, biogas potential is not generating interest. There is only a handful of agriculturally orientated operations that have more than 1 MW of capacity potential at any one site, such as cattle feedlots and few large dairies, but since most could never reach 1 MW of capacity, they do not produce anything at all.

This table shows the awarded Renewable Energy Independent Power Producers Procurement Program (REIPPPP) from 2011 to 2014. Note that zero biogas projects were approved. Clearly it seems as though biogas is not welcome. 

An estimated 640 medium to large poultry farmers baulk at converting the millions of tons of poultry dung to energy. However the Gut Mennewitz Poultry Farm in Koethen Germany has 2.1 MW of biogas capacity and the Minhe Poultry Farm in China has 3.8 MW. These are highly intensive and technical installs, and the benefits are deeper than pure methane production — they also contribute to improved waste management.

Gut Mennewitz’s system mixes 70 percent poultry dung with silage and landscaping cuttings. This technology is almost impossible to use in South Africa, since it traditionally re-incorporates the silage into the lands for the next crop. This practice takes years to change, regardless of studies that show as much as 37 percent of the nitrogen gas in the silage will be lost.

Food waste to energy and fertilizer cycle

Leading by Example

We believe the answer lies in leading by example, and the only example that really matters is when the example really makes a good profit.  Therefore, we are beginning to install our own renewable energy systems on strategic sites, collect the wastes, digest them and sell back the methane to the farmers and business, while keeping the fertilizer effluent for our own profit. Because we need to cover the start-up costs to do this, we have started a crowdfunding campaign that you can see at this link.

Our belief is that once businesses see that the process is viable, they will buy in and hopefully buy out the installation, for their own gain.  Then, between the profits earned from selling the fertilizer as well as income from possible buyouts of our “lead by example” sites, we will be in the position to replicate this model again and again. Through our efforts perhaps at some point, renewable energy  will become more important and will subsequently spread to the rural communities as well as the informal settlements, where sanitation is nonexistent.

There is no question that biogas digesters can improve the quality of life in Southern Africa, reduce greenhouse gas emission and be a small but positive step towards making us a greener country. 

Kelp can be turned into a kind of «bio-crude» that can be further refined into a biofuel. Credit: Rune Petter Ness, NTNU Communication Division

“What we are trying to do is to mimic natural processes to produce oil,” said Khanh-Quang Tran, an associate professor in Norwegian University of Science and Technology’s (NTNU) Department of Energy and Process Engineering. “However, while petroleum oil is produced naturally on a geologic time scale, we can do it in minutes.”

Tran conducted preliminary studies using sugar kelp (Laminaria saccharina), which grows naturally along the Norwegian coast. His results have just been published in the academic journal Algal Research.

Learn about more kelp biofuel initiatives here.

The Breakthrough

Using small quartz tube “reactors” — which look like tiny sealed straws — Tran heated the reactor containing a slurry made from the kelp biomass and water to 350 degrees C at a very high rate of 585 degrees C per minute.

The technique, called fast hydrothermal liquefaction, gave him a bio-oil yield of 79 percent. That means that 79 percent of the kelp biomass in the reactors was converted to bio-oil. A similar study in the U.K. using the same species of kelp yielded just 19 percent. The secret, Tran said, is the rapid heating.

Falling Short on Biofuel Production

Biofuel has long been seen as a promising way to help shift humankind towards a more sustainable and climate friendly lifestyle. The logic is simple: petroleum-like fuels made from crops or substances take up CO2 as they grow and release that same CO2 when they are burned, so they are essentially carbon-neutral.

In its report “Tracking Clean Energy Progress 2014,” the International Energy Agency (IEA) says that biofuel production worldwide was 113 billion litres in 2013, and could reach 140 billion litres by 2018.

That may sound like a lot — but the IEA says biofuel production will need to grow 22-fold by 2025 to produce the amount of biofuel the world will need to keep global temperatures from rising more than 2oC.

The problem is the biomass feedstock. It’s relatively easy to turn corn or sugar beets into ethanol that we can pump right into our petrol tanks. But using food biomass for fuel is more and more problematic as the world’s population climbs towards 8 billion and beyond.

To get around this problem, biofuel is now produced from non-food biomass including agricultural residues, land-based energy crops such as fast-growing trees and grasses, and aquatic crops such as seaweed and microalgae.

All of these feedstocks have their challenges, especially those that are land based. At least part of the issue is the fact that crops for biofuel could potentially displace crops for food.

However, seaweed offers all of the advantages of a biofuel feedstock with the additional benefit of growing, not surprisingly, in the sea.

Scaling Up

But turning big pieces of slippery, salty kelp into biocrude is a challenge, too. Some studies have used catalysts, which are added chemicals that can help make the process go more quickly or easily. However, catalysts are normally expensive and require catalyst recovery.

The UK study that resulted in a 19 percent yield used a catalyst in its process.

Tran says the advantage of his process is that it is relatively simple and does not need a catalyst. The high heating rate also results in a biocrude that has molecular properties that will make it easier to refine.

But Tran’s experiments were what are called screening tests. He worked with batch reactors that were small and not suitable for an industrial scale. “When you want to scale up the process you have to work with a flow reactor,” or a reactor with a continuous flow of reactants and products, he said. “I already have a very good idea for such a reactor.”

The Outlook

Even though the preliminary tests gave a yield of 79 percent, Tran believes he can improve the results even more. He’s now looking for industrial partners and additional funding to continue his research.

In Part I, we looked at the supporters, the detractors, the problems of targets, the Projection Problem, optimistic timelines — and the question of whether targets were “juiced.» This brings us to the problem of financing, which we’ll continue with in Part II of this special report.

The Smoking Gun: The Failed Loan Guarantee Program for Cellulosics

No one ever, ever thought that cellulosic fuels would get off the ground without a loan guarantee program. First-of-kind technologies are simply too risky for conventional project finance lenders and costs — and credit-card interest rates made the projects not economically viable.

So, DOE-backed projects — into which DOE would have extraordinary oversight and insight — weresupposed to have access to DOE-backed loan guarantees for their first commercial projects — which theoretically would allow them to zero out the project risk to the lender and allow them to tap conventional project finance at conventional interest rates — something like 4-7 percent. After the first commercial, the technology risk would be eliminated, and the companies could tap conventional project finance on their own — so went the theory.

Did DOE get a start on the program? Sure, In fact, it was not authorized under the 2007 EISA Act, one was originally established under the 2005 Energy Policy Act. By 2007, Ethanol Producer was reporting, “The DOE is also developing a loan guarantee program for cellulosic projects as authorized in the Energy Policy Act of 2005.”

As of today, the DOE has only two loan guarantees in its portfolio for this 1703 program — both for nuclear energy.

What Happened?

Bottom line, of the 11 projects we outlined, only one received one of those DOE loan guarantees, and that one was not finalized until September 2011 — $132.4M for the Abengoa Bioenergy project.  The INEOS New Planet Energy project and Range Fuels (ironically) received USDA loan guarantees. BlueFire has a conditional USDA loan guarantee commitment, but no lender of record yet. The rest of them had to find wealthy corporate backers.

Numerous projects attempted to attract DOE loan guarantees, and no dice.

A house oversight committee found that:

“DOE invested a disproportionate amount of its funds into solar technology leaving taxpayers vulnerable by overemphasizing a single technology. 16 of the 27 1705-backed projects employed solar technology – that represented 80 percent of DOE’s funds.”

And noted that:

“DOE has engaged in a disturbing pattern of suspending the approval of a credible project that adheres to all stated standards, only to later approve massive funding for a project proven to be nowhere nearly as far along in the process as DOE purported. DOE’s favoritism significantly harmed numerous companies that had relied on the promise of 1705 financing. The perception is that DOE actively misleads applicants about the status of their loan application, thereby encouraging these firms to misallocate capital, which has led to financial harm.”

Bottom line, financing woes have been the biggest cause of delay — primarily, the government’s inability to construct the loan guarantee program it knew would be needed for first commercials.

The Abengoa project that received funding was, in fact, the lowest-rated project in the DOE’s entire technology loan portfolio — receiving a CCC rating, which is rated as a “highly-speculative investment”. In fact., Abengoa was exposed to criticism in the House Oversight Report because of the Abengoa Bioenergy loan:

A single Spanish firm, Abengoa, received an aggregate $2.45 billion in loans and loan guarantees plus $818 million in Treasury cash grants.54 This reveals excessive risk and subsidies provided to a single firm via multiple subsidiaries. Abengoa has a credit rating of BB, which is considered Junk, thus making this concentration of investment in one company speculative and highly questionable. Exemplifying the risk DOE took in the case of Abengoa, the company managed to obtain a DOE loan commitment for the lowest rated project across the entire DOE Junk portfolio; Abengoa Bioenergy Biomass of Kansas received an extraordinarily low CCC rating and yet the DOE approved a direct loan to the project.

In a 2011 independent review of loan guarantees ordered by the White House, former Assistant Secretary of the Treasury, Herbert Allison, found: «A lack of clarity in the lines of authority within the loan program office; A lack of clear guidance regarding DOE’s standard of “reasonable prospect of repayment;” and “A lack of clarity with regard to DOE’s goals and tradeoffs with respect to financial goals versus policy goals”

The Crisis of Innovative Technology Financing

The problem of the Loan Guarantee program is that it simultaneously required a “reasonable prospect of repayment” while at the same time focusing, in the language of the Energy Policy Act: The Secretary may only make loan guarantees under §1703 for projects that employ “new or significantly improved technologies.” DOE’s implementing regulation defines this as an energy technology “that is not a Commercial Technology, and that has either (1) Only recently been developed, discovered, or learned; or (2) Involves or constitutes one or more meaningful and important improvements in productivity and value, in comparison to Commercial Technologies in use in the United States…”