Although there are more than 300 landfill gas-to-energy (LFGTE) projects successfully operating in the United States, these projects are not immune to pitfalls. Problems such as landfill gas (LFG) production shortfalls or technical malfunctions do occur — even if they are not widely publicized. To increase the likelihood that your project will lead to success, avoid the following problems when developing a LFGTE project.
LFG Recovery Flow
Projecting LFG recovery is critical to LFGTE project sizing and solid economic performance. To fully cover debt service and operating costs, LFGTE facilities should operate at full capacity. Years ago, many LFGTE operators over-projected the amount of recoverable LFG, which meant there wasn't enough gas to generate sufficient revenue to support an LFGTE project.
Projecting LFG recovery rates has since improved with refinements in LFG recovery modeling. Most modeling work now is undertaken using a well-known and widely accepted first-order model. The selection of site-specific coefficients to drive the model requires considerable expertise.
Definitive guidance on coefficient selection is not always available in literature. Consequently, it's important to ensure that the person selecting the site-specific LFG modeling coefficients has the depth and breadth of experience to make proper selections.
The developer of an LFGTE project obtains LFG recovery projections early in a project's development process, or late in the development process to support the close of financing. This often leads LFGTE developers to try to obtain LFG recovery projections as cheaply and as quickly as possible. Like most technical efforts, the quality of the LFG recovery projection is directly related to the effort expended.
If a partial LFG collection system exists at a site to be modeled, then available information on the system should be considered. The modeler should verify the accuracy of the site's flow meter, and review wellfield operating practices and historic operating data, rather than conducting a “desktop” analysis.
Having LFG available for recovery does not guarantee that the LFG will be recovered. At active landfills, the build-out of LFG collection systems must lag waste placement. In many instances, this lag can be appreciable. Where wellfield coverage exists, LFG recovery often is temporarily disrupted when portions of the wellfield are taken offline to facilitate waste disposal. Older wellfields sometimes are not well-operated and maintained by the landfill owner or by the LFGTE facility owner.
Economic constraints or simply lack of attention and/or experience can result in failure to replace deteriorating wells, ineffective leachate management and/or condensate management, and other problems that can impair LFG recovery. Theoretical LFG recovery should be adjusted to reflect actual site-specific LFG recovery data.
The quality of LFG required by an LFGTE project also can affect LFG recoverability. A pipeline quality gas project (high-Btu project) will require LFG with a methane content of 55 percent or more, while a reciprocating engine project may tolerate a methane content as low as 40 percent. Generally, but not always, the demand for higher methane quality will cause a slight decrease in LFG capture — at least in the amount of LFG destined for the LFGTE facility. Some of the LFG from low-methane content wells, such as perimeter or side slope wells, may need to be directed to a flare for destruction or be directed to a more tolerable LFG use.
Product Sale Agreements
When developing a LFGTE project, a good product sales agreement is imperative. Technical staffers generally think of a project in terms of what technologies are available and what project size a landfill can support. However, a person first should determine what type of product sales agreement is obtainable and on what terms.
There is little value in evaluating electric power generation alternatives when the existing market offers a low power purchase rate. Vehicle fuel production may look economically attractive when its product is compared to prevailing local prices for gasoline or diesel fuel; however, market prices for fuel fluctuate greatly over time. LFGTE projects generally are financed based on product sales agreements that guarantee minimum purchase quantities and minimum prices. Such agreements are difficult to secure for vehicle fuel projects.
If the LFGTE developer has a large captive vehicle fleet, or can sign a contract with an agency that has such a fleet, then the necessary guarantees might be able to be secured. However, the fleet owner, prior to entering into a contract, probably first will consider all fuel options and prices, including conventional liquefied natural gas (LNG) and compressed natural gas (CNG). As a result of this review, he may be reluctant to enter into a long-term agreement if he suspects that prices may drop below the benchmark price required by the project.
Electric power generation facilities, whether they are exporting power to the grid or satisfying onsite loads, will interconnect with the local electric power company. Projects designed to satisfy onsite loads interconnect to the utility to secure standby and/or supplemental power. While interconnection requirements have been standardized somewhat (e.g., California's Rule 21 for investor-owned utilities), interconnections still are approved case-by-case.
In general, it is neither difficult nor extremely costly to satisfy a utility's technical requirements on the power plant side of the utility meter, but sometimes it can be difficult to determine what will satisfy the interconnection application reviewer. Different regional offices in the same utility may have different requirements. It's not unusual for the same office to change its requirements from one month to the next.
The interconnection costs on the power plant side of the utility meter generally are not great and are limited to protective relays and disconnect devices, but the utility's upgrades on the meter's utility side can vary from $50 per kilowatt (kW) to $250 per kW.
The time required to secure an interconnection agreement can vary and depends on the anticipated impact on the local utility's distribution system. While power plant size is an important factor in the utility's facilities upgrades, the size and characteristics of the utility's distribution system at the interconnection point is even more important. Securing an interconnection agreement can take from three to six months.
Because utility interconnections can introduce schedule delays and added project costs, interconnection applications should be filed early. Fortunately, and sometimes surprisingly, interconnection applications can be filed without having a fully detailed and completed design.
People generally want to take advantage of the potential environmental and economic benefits of new technologies. So most LFGTE developers will tolerate some technical and corollary economic risk, given the potential rewards associated with a new or improved technology; however, different LFGTE developers have different risk tolerances.
Risk can be mitigated through conservative economic modeling during the early years of operation and through vendor and contractor guarantees. Somewhat “substandard” performance of new technologies in the initial years of operation is only “substandard” if the project's economic model does not allow for potential impaired performance.
Technology selection is governed by the availability of product sales agreements, project size and the developer's posture with respect to risk. It generally is not a good idea to be the first adopter of a new or significantly modified technology, but embracing a new technology shortly after others have installed, operated and debugged one or two facilities can produce great rewards.
Eye on Industry Issues
While an LFGTE developer can do nothing to control natural gas prices, LFGTE's long-term viability is directly linked to natural gas prices. Medium-Btu gas and pipeline quality gas directly displace natural gas. The marginal cost of electric power increasingly is established by the price of natural gas because natural gas units generally are the first to be dispatched to match power demands.
While vehicle fuel projects compete with gasoline and diesel, they also compete with conventional LNG and CNG. As this article was being written, natural gas prices were rising after a long period of depressed prices.
In the past, tax credits helped the LFGTE industry weather a long period of low natural gas prices. As tax credits expire, the LFGTE industry is becoming solely dependent on the market price of natural gas.
Obviously, no foolproof plan will guarantee LFGTE project development success, but by taking a few precautions, landfill owners can avoid costly errors.
Jeffrey Pierce is a vice president for SCS Engineers, Long Beach, Calif.