The renewable natural gas (RNG) sector is developing a sub-sector of project development, technical expertise and financial services, experts said Wednesday during a webinar.
The event, hosted by the Northwest Gas Association and NW Alliance for Clean Transportation, heard from a biogas project developer, gas conditioning technology provider and a bank executive who said interest in RNG is growing.
DMT Clear Gas Solutions LLC’s Robert Lems, general manager of U.S. operations, said developing technology is key. “It is not a matter of one technology being better, it is how well you incorporate the technology that matches with a specific site.”
Operators want a technology that has few operating costs and no waste stream to manage, Lems said. The source of the fuel from landfills, wastewater treatment, dairies, et al, and end uses for transportation, power generation and utility gas systems may help direct technology choices, he noted.
Ameresco Inc.’s James Bier, senior project developer, said the advantages for RNG and biomethane projects are growing. He pointed to a project in San Antonio, TX, where for a decade “we’ve been taking biogas from a wastewater treatment plant and turning it into RNG…
“This was our first project, and it was the first of its kind as a public-private partnership with the city. And Phoenix has our newest and largest U.S. RNG project from a multi-city-owned wastewater treatment plant.”
The market was “hot,” and biogas is versatile, Bier said. ”You can do a couple of things with it…produce electricity, or sell it to industries in a medium-BTU state…” The markets have their “ups and downs,” but the RNG sector “is still very healthy and robust.”
Bier said he could not “overstate the importance of having a local partner.” For example, San Antonio uses a royalties system, while a deal with Dallas involved a tolling agreement structure. In Philadelphia, the city wanted a tax-lease structure.
Project financing is at work in the development of RNG facilities, but some of its traditional hurdles are changing, said Live Oak Bank’s Max Vernier, who runs bioenergy projects for the North Carolina-based lender.
“As this industry advances and we make more loans, it is very important that we are supporting the integration of systems that really work,” Vernier said. “As this industry coalesces around a framework that actually works, we don’t want to be still experimenting, especially when there is a big push from consumers and producers for RNG that we need to capitalize on.”
Vernier said fixed prices for landfill gas are up by almost $1/MBtu/year, a positive signal for the banks. “We’re seeing more creative financing with a new senior debt involved that involves more construction risk and more project specific risk, and that signals confidence in the market.”
Live Oak is “cautiously optimistic” about the market for RNG and biogas.
“We intend to deploy probably $200 million to the space over the next few years,” Vernier said. A “big push” is coming from the transportation, animal agriculture, and utility sectors.
In other news, Clean Energy Fuels Corp. announced a seven-year contract with Richmond, VA-based Estes Express Lines to fuel 50 more trucks with RNG “sourced from agricultural waste and low carbon index sources in California, and from a portfolio of landfill and wastewater treatment facilities for national fueling outside California.” TheClass 8 natural gas trucks are equipped with the Cummins Westport engines for the California fleet. Plans are to use 2.8 million gallons a year of RNG.
Meanwhile, the New York City Metropolitan Transportation Authority is transitioning its entire 800-bus fleet to run on RNG; the fleet is now fueled with compressed natural gas. Clean Energy Fuels is expected to supply an estimated 25 million gallons/year for the fleet.
On the electric vehicle front, Southern California Edison Co. (SCE) is expanding its charging build-out with 38,000 locations across the service territory. The $436 million program is said to be the nation’s largest light-duty charging program. SCE already has more than 1,8000 chargers at 100-plus sites.
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