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LANDFILLS: Partnerships Power LFGTE Project

May 1, 1999

5 Min Read
LANDFILLS: Partnerships Power LFGTE Project

Aaron DeWeese

Too many cooks didn't spoil the broth, at least at Elk River Landfill's methane gas collection/electricity generation project. In fact, it was the sprit of cooperation between the public and private sectors that fueled this project. Just as impressive was the speed in which the project developed and was placed on-line.

The project was unveiled last October at the landfill in Elk River, Minn., a rapidly growing community between the Twin Cities and St. Cloud.

"The industry standard for this type of project is between a year and a half to two years," says J. Randall Morgan, from Houston-based Power Strategies L.L.C., the company that designed, developed, owns and operates the new system.

Specifically, the project was completed in about 10 months from initial negotiations to the day the system went online. But of course, a lot of due diligence was needed before the project could be pursued.

Preliminary talks began in fall 1996 between Elk River Municipal Utilities (ERMU); Power Strategies; Waste Management Inc., the Houston, Texas-based landfill owner; and the city of Elk River. One year later, negotiations began in earnest to form a power purchase agreement.

A major hurdle to any landfill gas-to-energy (LFGTE) project is getting the local utility to purchase power. While federal laws require electric companies to purchase renewable resource power, they only are obligated to do so at their avoided cost rate. This can be a deal breaker for LFGTE projects because avoided cost payments normally don't yield enough revenue to meet prudent investment criteria.

"These projects actually are much more viable on the East and West Coasts than in the Midwest where energy costs are lower in general," says Bryan Adams, ERMU's general manager.

First, ERMU was obligated to purchase 100 percent of its electricity from two local power companies - Connexus, Ramsey, Minn., and Great River Energy, Elk River - through an exclusive contract. Before ERMU could purchase power from Elk River Landfill's gas recovery system, the two local power companies had to grant an exemption which, in turn, had to be approved by the Federal Energy Regulatory Commission, Washington, D.C. To further complicate matters, the local power companies' avoided costs indeed were less than the rate in which the landfill could sell its electricity.

Getting all the parties to reach a mutually beneficial agreement seemed impossible. Enter Energy City, Minneapolis, a nonprofit partnership between the city of Elk River and Energy Alley that promotes the development and growth of energy-efficient and renewable-energy industries in Minnesota. Energy Alley is a program of the Minnesota Environmental Initiative, a Minneapolis-based nonprofit that works with business, government and advocacy organizations to promote environmental excellence in policy, industrial management, land use and energy generation and use.

Through the Energy City partnership, the city of Elk River has become an energy conservation and alternative power generation model. More than 20 Minnesota companies have participated in several demonstration projects, including a geothermal heated and cooled model home, and a high school with energy-efficient lighting and a computerized energy management system. Consequently, the controversial project that could provide electricity to the city of Elk River seemed to fit the Energy City concept, which motivated the nonprofit's representatives to make the project a reality.

"Energy City representatives acted as facilitators to make sure everybody was talking with each other," says Sarah Coppock, program coordinator for Energy City. "The largest challenge by far was the whole contract agreement. There were a lot of negotiations amongst the utility, the landfill and the contract manager. We brought the city to the table and helped to keep the negotiations going."

Soon, a long-term power-purchase agreement was signed by ERMU, and the project was funded through a series of grants from various government agencies, including the city of Elk River and federal Section 29 tax credits.

According to ERMU's Adams, both Great River Energy and Connexus also were able to provide credits to overcome the avoided cost shortfall. "Our power suppliers were willing to step up to the plate to make this project work," Adams says. "They provided credits, as did Elk River Utility. These types of projects are good for the environment and good for society. It's just a question of making them feasible."

The generator system installation was completed by Reco Ventures, a partnership between Power Strategies and Waste Management. Using its tuned-reflux generator technology, Power Strategies was able to tie into the existing power grid without synchronizing switch gear.

Originally, there was a pre-existing gas collection and flare system at the landfill to manage all the methane generated by the 2,000 ton per day facility. With the installation of the new system, the existing gas main was relocated for better accessibility.

"If we had approached the project using conventional technology, the cost of the project wouldn't have been viable," says Bob Hawthorne, Power Strategies' president. According to Hawthorne, the new system has performed at 98 percent up time. The system currently generates 310,000 kilowatt hours per month, enough to power approximately 250 homes.

"It turned out to be a very nice project," says John Kellas, regional manager for Waste Management. "Hopefully we can add some more engines to it in the future as the landfill grows."

There are approximately 12 years of life and 8 million cubic yards of airspace remaining at the landfill. Power Strategies currently is investigating whether to increase the system's capacity by 1 megawatt. Hawthorne says the landfill could generate three additional megawatts.

"We're only using about 20 percent of the total gas," Kellas adds. "We're still looking for alternatives for the gas instead of flaring it."

For its efforts on the Elk River project, Power Strategies recently received the U.S. Environmental Protection Agency's Landfill Methane Outreach Program (LMOP), Washington, D.C., Project of the Year award.

"[It] was a fun project to develop," Power Strategies' Morgan says. "It was refreshing to work with so many parties that all were willing to make it work."

He emphasizes that cooperative efforts of all the parties brought the project to fruition.

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