Opportunities abound in Anaerobic Digestion

Anaerobic Digestion as a method for dealing with food waste has rocketed in certain countries, such as Germany, and this trend is set to continue as the rest of Europe works towards the legislation that brings it to the forefront of creative solutions.

Anaerobic Digestion as a method for dealing with food waste has rocketed in certain countries, such as Germany, and this trend is set to continue as the rest of Europe works towards the legislation that brings it to the forefront of creative solutions. Peter Baker looks at AD in the context of the UK market...

Pre-treatment plant with BioSep technology

Anaerobic Digestion (AD) is creating a buzz in the waste sector as one of the most efficient systems of dealing with biowaste. Those using this technology in the UK find that it greatly contributes to targets for deriving electricity from renewable energy set by the government – which currently stand at 15% by 2020.

The UK government has created significant incentives for renewable energy use, chief among which is the availability of Double ROCs (Renewable Obligation Certificates) – a scheme not dissimilar to the principle of carbon credits. The ROCs scheme issues certificates to producers of renewable energy which is then purchased by conventional producers of energy who need to satisfy requirements to provide a proportion of renewable energy on an increasing scale up to 2020.

It is estimated that in the UK alone almost 17 million tonnes of food is wasted every year (WRAP figures), made up of:

6.7 million tonnes of household waste 4.1 million tonnes of industrial waste 4.6 million tonnes of food service and supermarket waste 1.3 million tonnes of commercial and agricultural foodwaste.

Various statistics are quoted on the average amount of food wasted per house, but one statistic that stands out is that the UK throws away approximately one third of the food it buys.

Of course, aside from the appalling waste of resources – food grown using fresh water and fossil fuels – there is also the issue of 17 million tonnes of rotting organic matter to deal with, much of which has been landfilled in the past. The climate damage caused by gases emitted from landfill is almost as reprehensible as the actual waste of gas, particularly the methane component, which could be used as energy. It is estimated that food waste has an energy-producing capability, through biogas, of 12-15 times that of conventional animal wastes (the principle feedstock in many AD facilities). This is not only because the quality of human food is much higher than animal feedstuffs, but also because the food waste has not previously been eaten and digested.

Directives and incentives

Fortunately, the UK government has recognized this problem and has incentivized investment into renewable energy. The Double ROCs introduced in April 2009 has certainly helped things along. In practice, it means that the producer of renewable streams of electricity receive approximately three times the price paid for normal wholesale electricity. The government has stated that the ROCs scheme will be in place at least until 2027: a very powerful 'underwriting' to an investment appraisal on any renewable energy business.

This increased interest in renewable energy, combined with the EU Landfill Directive, explains why there is so much interest and activity in this field. Annual reductions in the amount of organic waste entering landfill sites start from 2010, and landfill taxes already in existence are being increased annually.

AD (Anaerobic Digestion) has been recognized and actively promoted by the UK government as a proven method of dealing with much of the organic waste created. Various government-sponsored bodies such as DEFRA, WRAP, NNFCC and numerous regional agencies, have mandates that focus on 'resource efficiency'. This can be interpreted as education in reducing waste, whilst enabling players in the market to extract efficient renewable energy from the unavoidable base waste. This enabling process comes in the form of advice and grant-aided schemes covering, among other things, infrastructure investment in AD facilities. Whilst the figures quoted by WRAP relating to the annual tonnages of food waste are enormous, and clearly it would be society's goal to reduce this, those providing the technology to the AD market see it as a fantastic opportunity.

Benefits of Anaerobic Digestion

Clearly the idea of landfill as a method of dealing with organic waste issue is dated and not sustainable. Composting, which has been the more traditional method for biowaste, will always have a role but does not allow us the extra benefit of energy extraction.

AD is well recognized as being the closest method we have to a complete solution for organic waste. AD is sustainable in the fact that it extracts energy from it and returns the used digestate to the land. Not all farmers have yet recognized the value of this digestate. This has happened for various reasons – one being a suspicion of the origin of the waste used. Time, and the spiralling costs of artificial fertilizers, should eventually change this view. There are now strict guidelines and protocols established for the AD sector in the form of PAS 110, which set out the strict criteria for collection, heat treatment and disposal of the waste material.

AD as a business

For those already in, or who are considering entering, the UK AD sector, the business model revolves around three main areas:

Gate fees (variable) Electricity revenues (aided by Double ROCs) Digestate fertilizer (albeit limited in the short term)

Interestingly, there are currently less than 50 AD units in the UK whilst there are almost 4000 units in Germany. Many of these German units are of farm-scale, where farmers use combinations of animal waste and energy crops such as maize silage. There are currently over 60 planning applications in progress in the UK for AD facilities, so the level of interest in the sector is booming.

BioSep food depackager.

At a recent EBEC (European BioFuels Expo and conference) event held in Stoneleigh, UK, there were no fewer than 10 biogas technology providers, many as new entrants into the UK market and quite a number of these companies of were German origin.

There are however other challenges, not least the fact that a considerable amount of the food wasted is actually still in its packaging. Again EU legislation comes into play as it demands specific sell-by dates on food which forces food retailers to dump vast quantities of it on a daily basis. The challenge to the AD sector is in how to effectively depackage the food waste. A priority for the process is to have an homogenous, accessible substrate entering the digesters. This allows effective breakdown and gas production. There is also the issue that the digestate needs to be spread on land after the methane gas is extracted, and clearly it would be unacceptable to have plastic wrapping blowing around the countryside.

BioSep, is a company mainly focused on the front end treatment of food waste and preparing it for AD. Depackaging has been the Achilles heel to the industry, and BioSep aims to match its front end technology – which effectively separates and washes the plastic packaging component as well as removing tins, glass and other non-organic foreign material – with any biogas technology that caters for the back end conversion into energy.

Many of the companies considering entering the food waste market will be looking at processing upwards of 30,000 tonnes per annum. This will comprise various food waste streams.

Supermarket waste has traditionally been stored in wheelie bins or Dolavs. Waste companies have often had to collect these bins and empty, wash and return them to the supermarkets. This logistical issue has proved both time consuming and expensive. One of the key advantages of BioSep technology is that, aside from washing the depackaged fraction, it also is capable of processing large plastic liners which can be placed within wheelie bins. This effectively eliminates the need for the collection, transportation and washing of the bins. The challenge for BioSep is to remove the highest percentage of organic waste from the plastic whilst using as little water as possible, and the separated plastic must be as clean as possible for further processing.

Challenges to the AD sector

Aside from technical issues related to the pre-treatment and processing of the food waste there are other challenges.

At the recent annual WRAP conference held in London, David Palmer Jones, chief executive of Sita, highlighted planning as the key challenge for the sector. He suggested that there may be a need for more of a centralized approach to improve the process. Currently the impression is that local authorities own the planning process. There would be a need for an average of one planning permission per week for the next 10 years in the UK to provide enough waste treatment facilities.

Open view of waste feed to BioSep depackager.

BioSep working in a Norwegian waste plant.

There is understandably a 'Nimby' (Not-in-my-back-yard) attitude to anything waste related. However, if the UK government is serious about reaching its 2020 goals, it must facilitate developers and private equity interests to enter the sector. Despite the very welcome back-end pricing incentive of Double ROCs, planning delays need to be urgently addressed. Otherwise prolonged delays may mean that private equity will seek other homes for its investments.

The other form of financing – bank finance – is still available, but on different terms and at lower ratios than the UK has been accustomed to over the past decade. A commercial AD development may require in the region of £10 million ($16.24 million. Therefore, clear business strategies for each development are required. Some developers suggest that bank finance is conditional, and will only be provided if there are 'guaranteed' long term waste stream contracts. This is something that often proves difficult, if not impossible, for waste companies to deliver on.

One of the advantages of many AD developments is that they will be based in relatively rural locations. This is because of the need to be close to large tracts of land on which to spread the valuable digestate. The 'hedge' for many of these companies is that if food waste contracts diminish, or disappear for periods of time, they can grow or buy energy crops that can be fed into the AD plants. In this way they offset the risk of single streams of feedstock. Banks also recognize the attractiveness of the 'certainty' of payment for the renewable electricity, covered by the UK government until at least 2027.

UK businessman and TV star of the entrepreneurial show Dragons' Den, Duncan Bannantyne has revealed how he made his fortune through nursing homes in the UK. He was happy to enter a business where he was underwritten by the UK government in the form of a weekly supplement. The AD sector in the UK has a similar situation. EU legislation directs food waste anywhere but to landfill, and the UK government provides incentives for the energy produced from that waste. The industry is in its infancy but over the next five years, there will surely be a fascinating period of growth and development in the sector.

Peter Baker, managing director, BioSep Limited.
e-mail: peterfbaker@gmail.com

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