As the US generates 35m tons of food waste yearly, biodigesters could be big business. Harvest Power hopes to crack the code. Governments and companies alike are interested in digesters that turn
food waste and biosolids into biogas, like this Harvest Power system.
Millions of people a year visit Magic Kingdom at Walt Disney World,
the world’s most popular theme park. These days, some of the food that
they don’t eat – as well as some of the food they do – ends up being
used to make electricity for the resort’s theme parks and hotels.
How? Food waste – including table scraps, used cooking oils and
grease – is collected from selected restaurants in the Disney World
complex, as well as area hotels and food processors, and sent to a
system of giant tanks at a facility near the park. There, the food waste
is mixed with biosolids
– the nutrient-rich organic materials left over after sewage is treated
– and fed to microorganisms that produce biogas, a mix of methane and
carbon dioxide. The biogas is combusted in generators to make
electricity, and the remaining solids can be processed into fertilizer.
The circular economy
at Disney World may not be as pretty as Cinderella’s Castle, but this
process for turning organic waste into energy, which is known as anaerobic digestion,
could turn out to be the best way to extract value from food scraps and
treated sewage that would otherwise wind up in a landfill.
“We’re able to turn all of the waste stream into productive products,” says Kathleen Ligocki, the chief executive of Harvest Power,
a venture capital-funded clean-tech company that built the Florida
facility. “This is our goal – pumpkins to power, waste to wealth.”
Founded in 2008, Harvest Power is headquartered in Waltham,
Masachusetts, and operates in New England, California and the Carolinas,
as well as Florida. The company operates anaerobic digesters in
Vancouver, British Columbia, and London, Ontario, as well as the one
near Orlando. Elsewhere it recycles organic matter the old-fashioned
way, by composting. Harvest Power has been named to the Global Cleantech 100, a list of the top private clean tech companies, for five years in a row.
Last week, Ligocki, who was installed as CEO in January,
spoke at the unveiling of the Cleantech 100 list in Washington. She was
bracingly honest about Harvest Power’s strengths and weaknesses,
comparing the company to a teenage boy – “gangly, awkward, big and not
quite organized” – that needs to mature into a well-functioning adult.
The company has raised $225m in equity from funds including including
Kleiner Perkins Caufield & Byers (KPCB) and Generation Investment
Management, along with $100m in debt. While it will generate about $150m
in revenues this year, it is not yet profitable.
It’s going after a big market: in 2012, according to EPA,
more than 35m tons of food waste was generated, with only 5% diverted
from landfills and incinerators. Most of that is composted – accurate
and timely data is hard to come by – but local governments and companies
are increasingly interested in digesters that turn food waste and
biosolids into biogas. A Gold River, California-based company called Clean World designed and built a biodigester for the city of Sacramento that turns about 100 tons of food waste per day into natural gas, electricity and fertilizer. Neo Energy is developing several anaerobic digestion projects in Massachusetts, which now requires colleges, hospitals, hotels and supermarkets to recycle food waste.
In Europe, meanwhile, anaerobic digesters are widespread, with more
9,000 of the plants in Germany alone, most of them small-scale and
devoted to recycling farm waste.
The economics of biogas digesters in the US are promising, Harvest
Power’s Ligocki told me the other day by phone. The company relies on
three revenue streams: one set of customers pays Harvest Power to take
waste. Another, typically the local utility, buys its electricity. And
its fertilizers are used in agriculture, horticulture, professional
turf, and retail lawn and garden applications; the company’s biggest
retail distributor is Lowe’s.
Not surprisingly, Harvest Power’s business model works best on the
east and west coasts of the US, where landfill capacity is tight and
thus tipping fees are high, and where electricity prices tend to be
higher than in the middle of the country, which burns a lot of low-cost
but dirty coal. The trick is to generate enough revenue to repay the
capital investment in a large-scale facility – the one at Disney World
cost about $30m to build, Ligocki says.
“The Florida operation is profitable, and as we build the fertilizer
business, it will be more profitable,” she said. The plant will process
about 120,000 tons of organic material per year and produce 5.4
megawatts of combined heat and electricity, which is enough to fuel
2,000 Florida homes. That meets only a fraction of the energy needs of
Disney World, which has more than 30,000 hotel rooms.
Scaling Harvest Power is at the top of Ligocki’s to-do list. Other
cities are potential customers, but she notes that “municipalities are,
by their nature, a little bit conservative, as they should be since they
are using taxpayer dollars.” Another option is to work with garbage
companies who want to extract value from the waste they now dump. “Many
of the haulers – the Waste Managements and the Republics of the world
who run landfills – know this is happening, and so we are going to
collaborate with them,” she said.
Ligocki came to Harvest Power after a stint as a partner at Kleiner
Perkins. She previously led Next Autoworks, an auto start-up backed by
Kleiner Perkins and Google Ventures, and before worked at General
Motors, Ford, United Technologies and auto suppliers, traveling to about
180 countries. For her, this assignment is personal.
“I’ve traveled a lot around the world, and I understand that we are
very fortunate to live in a wealthy, industrialized country,” she told
me. “But when wealth goes up, waste goes up as well.” If Harvest Power
and its rivals succeed, at a scale that matters, food waste, at least,
will no longer go to waste.
