1660319777019 Ch4biogas

Diversified Power Portfolios

Sept. 10, 2014
Food companies aren't immune from price elasticity for energy, but they can seize new energy opportunities to better control cost and availability.

Gas, Wind and Solar sounds like a bad R&B group, but in fact they are the raw materials of a distributed energy portfolio that will help power food plants in the future.

Sustainable manufacturing and public image aside, financial self-interest drives American business, and mainstream companies embrace alternative energy options when they make economic sense. That principle is playing out at food and beverage projects across the country, most of them involving renewable sources but also with other technologies.

Manufacturers use these options not because they are new and exciting but because they solve a need and allow the business to continue to grow, points out Corey Wendt, senior manager in the Madison, Wis., office of Baker & Tilly, a management consulting firm that has served as an advisor on renewable energy projects geared toward the food industry. “Unless you find a way to manage waste, you can’t continue to grow on a site,” Wendt emphasizes. That reality helps explain the current boom in both gas and electrical generation from alternative sources.

Harry Pettit, manager of systems and infrastructure engineering at Pepperidge Farm, agrees. The firm’s Bloomfield, Conn., bakery is approaching self-sufficiency in electric generation, but the transition never would have occurred if it did not serve core needs. Positive experience with a 250 kW fuel cell -- a clean-burning electric generator using an electrochemical process -- installed in 2006 led to installation of a 1200 kW system two years later. Engineers are in the preliminary design phase for a second fuel cell that could start up next year.

Those types of projects bring intangible benefits like positive publicity and improved staff morale, but the projects never would have been undertaken if they didn’t serve solid business purposes. “It can’t detract from what we do, which is put out quality products,” Pettit emphasizes.

That said, forward-thinking organizations like Pepperidge also are hedging their bets against an energy market subject to volatile price swings and uncertain availability. Rather than being subject to the capabilities or caprice of their local utilities, firms are exploring options to lock in supplies and tame prices for the long term. What they often find is that regulations and rules imposed on other industries can work to the advantage of food and beverage manufacturers.

Motives for exploring energy alternatives vary, of course, and some initiatives are independent of hard-headed business needs. An example is Mars Inc.’s purchase of renewable energy certificates (REC) generated by a 200 MW wind farm under development in central Texas. Mars will use the REC to support a carbon-neutrality claim for its factories in support of its sustainability goals. “Mars is creating financial security for the project developers,” according to a company statement, while also locking in a 20-year fixed price for an amount of electricity equivalent to what the wind farm generates.

Biogas systems like the CH4 Biogas plant at Campbell Soup’s Napoleon, Ohio, facility address both energy needs and waste disposal for food processors. Photo: CH4 Biogas LLC

A more production-oriented project is the biogas system that came on line in late 2013 at Campbell Soup Co.’s Napoleon, Ohio, plant (our 2014 Green Plant of the Year). Engineers from Hull & Associates, a Dublin, Ohio, firm active in alternative energy projects, identified the feasibility of a waste-to-energy system as an alternative to an anaerobic-digester upgrade.

Napoleon’s system was built, financed and is operated by CH4 Biogas LLC in Atlantic Beach, Fla. The anaerobic digester takes in 300 tons of waste a day, capturing the resulting methane and using it to drive a combined heat and power (CHP) electric generator. Campbell has a 15-year contract to purchase all of the generated electricity at a favorable rate. Its capital cost: a whopping $0.

Capital angels

RECs are the lubricant for many of the energy projects taking place. According to Hull’s Steve Giles, vice president-alternative energy, 38 states have REC programs that can make renewable energy projects financially attractive to investors and relieve food companies of making a capital investment. Ohio passed legislation requiring investor-owned utility companies to either generate renewable energy or purchase REC from approved sources, kickstarting projects involving wind, solar, landfill gas and biogas.

Northwest Ohio is fertile ground for wind turbines, and multiple projects have taken root. Among the developers is Cooper Farms, a vertically integrated turkey processor based in Oakwood, Ohio. Developers of the Blue Creek Wind Farm, a 304 MW installation with 152 turbines, approached Cooper Farms about installing turbines on Cooper’s 280-acre parcel near Van Wert, Ohio. That prompted Cooper managers to investigate the feasibility of undertaking a project on their own.

“Each year customers ask us about our (sustainability) programs in terms of machine efficiency, recycling and other metrics,” says Eric Ludwig, director-corporate development. A wind project was viewed as a statement that would distinguish Cooper Farms from other suppliers.

The project had to make economic sense, and REC, along with the 30 percent federal Investment Tax Credit and the state’s net-metering program that lets distributed power generators sell electricity to the grid, added up to a five-year payback on a $5 million-plus investment that grew to include three 1.5 MW turbines.

The Customer Effect

As companies such as Cooper Farms have discovered, renewable energy projects can distinguish suppliers in the eyes of customers. Retailers such as Walmart and foodservice operators like McDonald’s want to tell a positive environmental story to their customers and investors, and their suppliers typically have had to foot the bill. Industry may be entering a more collaborative era, though, if the experience of Aurora, Ill.-based OSI Group is any indication.

Best known as a hamburger patty supplier to quick-serve restaurants, OSI also gets involved in custom manufacturing for customers. When a prospective client asked OSI to submit a bid for a southern California facility for cook/chill pouch production, the client also asked prospective partners if they had any ideas for a sustainability initiative that could be incorporated.

That provided an opening for Mike Yeager, OSI’s vice president-engineering, to pitch an ambitious plan to incorporate four 25,000-gallon, jacketed stainless steel tanks, two for hot water and two for cold. Instead of sending water to drain after heating or cooling product, water would be purified and recirculated through the tanks.

A price tag of “several million dollars” was attached to the proposal, but given the region’s severe drought and the positive image such a project would present, the client agreed to share in the added cost. OSI won the manufacturing contract, and the 135,200-sq.-ft. facility in Riverside, Calif., came on line in May.

“The upcoming generation of consumers is more concerned about where their food is coming from and how it was manufactured, and they’re tweeting about it,” says Yeager. “That is driving customer requests to help improve their image and separate them from the competition.” The fact they now are willing to share in the additional cost suggests many more energy- and resource-saving initiatives are likely.

The turbines met 80 percent of the Van Wert facility’s electric demand over the past 12 months and are providing a hedge against rising costs. “Our cost of electricity increased 7-8 percent in each of the three years prior to the project,” Ludwig notes. “Now, we’ve capped our electric costs for the 20-year life of the turbines.”

Cooper’s tract is outside the municipal limits, but the company solicited input from both local officials and neighbors before undertaking the project, which came on line in early 2012. “We informed the neighbors about what we were doing and took their recommendations into consideration,” he says. Noise was a concern, so the company selected turbines with the lowest noise levels.

The 30 percent federal tax credit for wind projects expired in 2013, making additional turbine installations by Cooper unlikely, and Ohio recently froze its REC program. The investment tax credit for solar power expires at year-end 2016, and Cooper is considering solar for its livestock buildings. “It’s proven technology, and as costs come down, we’ll look at it more closely,” says Ludwig.

The suspension of Ohio’s REC program put the kabash on two wind turbines planned for Pepperidge Farm’s bakery in Willard, Ohio. But new opportunities will arise, and food production’s need for both heat and power make the industry particularly fertile ground for cogeneration. “There is an evolution going on, and we’re really at the starting point,” suggests Giles.

Municipal-dump gas

EPA air regulations are the driver for methane collection systems at landfills, an energy source with untapped potential. A landfill is essentially a very large anaerobic digester, and more than 1,000 of the largest are required to take steps to prevent the greenhouse gases they generate from being released to the atmosphere or seeping into nearby homes.

Many landfill operators simply flare the gases, but many have built systems to collect it, dehumidify and filter out the sulfur, and compress the methane for transport through pipes to manufacturing sites miles away.

L&S Sweeteners commissioned construction of a 3.2 MW electric generation station powered by methane from two Pennsylvania landfills, expanding on earlier use of the methane as a substitute for natural gas. Photo: Granger Energy Services

In 2012, Coca-Cola began using methane from a landfill six miles from an Atlanta syrup factory to generate 48,000 MWh of electricity annually and using waste heat for both heating and cooling. Last November, the Zook generating station came on line in Leola, Pa. A $5 million partnership between Zook Molasses Co. and Granger Energy Services, the Zook station receives gas from two landfills through 23 miles of piping to drive a 3.2 MW generator. In both the Coca-Cola and Zook projects, the food company’s capital contribution was nil.

The station is on the site of L&S Sweeteners, a division of Zook and a supplier of bulk sugars and syrups. Along with aseptic-copacker Advanced Food Products and another manufacturer, L&S began using gas from the Lanchester landfill 13 miles away in 2005, using it to fire steam boilers.

The pipeline system was built by Granger, a Lansing, Mich., engineering firm with 17 landfill gas-to-energy projects, mostly in Pennsylvania and Michigan. “Customers typically don’t invest any money into a project,” and their 10-plus year purchase contracts are pegged to a discount off the prevailing natural gas price, explains Joel Zylstra, Granger’s CEO.

The Zook station is Granger’s first hybrid installation, supplying both compressed gas and electricity from two Caterpillar 1.6 MW reciprocating engine-generators. An additional nine miles of pipe was laid to supplement the methane supply from a second landfill, according to Zylstra. Most of the piping is on railroad right-of-way, which considerably eased installation.

Upgrades to L&S’s electric system were required by Pennsylvania Power & Light, but otherwise the only impact on operations is a 15 percent discount on consumed gas, says Shawn Sensenig, general manager. The key to building the generating station in Leola instead of a landfill is heat reclamation: Exhaust gas from stacks, motor oil and waste heat from the engines are reusable commodities that L&S expects to begin using in the spring. “We need that heat to CIP and sanitize the tanker trailers,” Sensenig says.

Under its Landfill Methane Outreach Program, the U.S. EPA encourages projects like Zook. The majority of the 1,178 landfills with at least one million short tons of waste that could support an industrial-gas project have a collection and control system in place, but more than 400 additional sites are candidates. States with the largest number of untapped landfills are Texas, Illinois, Alabama and California, which also has the highest number of operating projects, followed by Pennsylvania and Michigan.

Waste to energy

Biogas conversion in CHP systems is a boon for Caterpillar, and the engine builder reciprocated by providing most of the financing for GreenWhey Energy Inc. The Turtle Lake, Wis., operation pumps 500,000 gallons of liquid food waste a day into two 2.5 million gallon anaerobic digesters to generate methane to power two Cat 2200 HP engines with 3.2 MW capacity. “GreenWhey solved a big problem for a lot of people” in the food industry, says Wendt of Baker & Tilly, which helped arrange funding.

Waste disposal was the specific problem, and GreenWhey’s founder can attest to the impact of waste. Tom Lundy was the owner of Lake Country Dairy, a cheesemaker on a parcel adjacent to GreenWhey. After being fined $500,000 for overloading the municipal treatment plant, Lundy sold the business and decided to specialize in whey treatment and energy extraction.

The digester’s diet has expanded to include spent yeast from the Leinenkugel brewery 70 miles away, glycerin from a biodeisel plant and other sources. “Anything a human can take, we can take,” says Lundy.

Liquid waste with less than 3 percent solids is piped from Lake Country Dairy to the digesters, and talks are underway to pipe in waste from another food operation one mile away, but trucks are used for longer distances. Lundy selected upflow anaerobic contact technology from Ecolab because of its low retention time and ability to digest a broad variety of food wastes, an important virtue because of the variability of feed stock.

Whey protein has great energy potential, but high demand has meant lower levels in whey discarded by cheesemakers, points out Jeff VanVooris, director-project development at Symbiont, a Milwaukee engineering firm involved in the GreenWhey project. Variability in raw materials’ energy content and volume results in inconsistent performance, and that has delayed plans to supplant the dairy’s boilers with hot water created from the engines’ waste heat.

Part of the infrastructure to create compressed natural gas (CNG) is in place, and Lundy intends to make the remaining capital improvements to tap into the emerging market for CNG as an alternative to diesel and gasoline for vehicles.

Waste disposal drives many anaerobic digester installations, as was the case at Gills Onions, an Oxnard, Calif., supplier of diced and sliced onions. Southern California’s strict air standards precluded a permit for CHP engines’ exhaust, so the firm stores electricity in fuel cells. Even with six-figure annual savings for electricity and waste hauling, the $10.8 million project has a six-year ROI, but the days of land-application of the 2,000 tons of weekly waste generated by the plant were ending. “We either had to find a solution that addressed the waste or relocate,” according to Nikki Rodoni, sustainability director.

The onion energy project was unusual because of the fuel cells, but that technology is becoming more widely deployed. It also stands out because of the financial investment required by the food company. In today’s market, organizations that consume energy on an industrial scale are valued and sought-after partners, as was the case when Pepperidge Farm committed to a long-term purchase of electricity from a fuel cell owned by Pennsylvania Power & Light and installed at the Bloomfield bakery.

Tom Lundy stands in front of one of two 20-cylinder Caterpillar engine-generators powered by methane from the anaerobic digester at GreenWhey Energy. Food waste is the raw material for the energy company he launched last year. Photo: GreenWhey Energy Inc.

A grant from the Connecticut Clean Energy Fund helped subsidize the purchase of the 1200 kW system, which came on line in August 2008. “It’s not without its warts and issues,” says Pettit, “but from a financial perspective, it’s performed very well.”

The stack module was billed as a five-year component, but none has lasted more than two. Two stack rebuilds and four replacement modules in six years lowered uptime availability to about 85 percent. While rated at 1200 kW, output has averaged about 900 kW, although “as long as it’s steady, that’s not a bad thing,” he says.

“From an industrial point of view, it’s still an infant technology,” and technology providers are prone to over-promise and under-deliver. On balance, however, the experience didn’t dissuade the company from securing state LREC guarantees for a 1400 kW unit, which may receive final corporate approval by early 2015 or sooner.

The fuel cells, manufactured by Danbury, Conn.-based FuelCell Energy, deliver 47 percent of the energy potential from the natural gas that powers them. By comparison, a motor-generator delivers up to 40 percent as electricity, though both technologies perform considerably better in a CHP scenario. The Bloomfield plant uses latent heat for hot water and steam, resulting in an energy yield in the 65-70 percent range, Pettit calculates. The plant’s two boilers have been in standby mode since CHP capability was added.

Installation is under way of a 1 MW solar array on five of Bloomfield’s 42 acres, with a November start-up anticipated. The state’s zero emissions program is helping fund the project, which is expected to generate 1700 MWh of electricity a year. If a second fuel cell is installed, waste heat may power adsorption chillers and space heating. “We have a very real possibility of doing 100 percent (electrical) generation in the next few years,” says Pettit.

That’s music to many customers’ ears, and because the power typically comes at a discounted rate, it also should make investors and stockholders perk up. “The green halo is great,” observes L&S Sweeteners’ Sensenig, “but it has to make (economic) sense.” Food plants are huge energy consumers, and powering them at a lower cost makes all the sense in the world.

The energy-generation landscape is changing. Older coal-fired plants will be phasing out, and utility companies are not inclined to replicate the centralized generation model. Distributed power will become a much larger part of the mix.

Small-scale power generation is most efficient when energy inputs are optimized, and food production usually can make use of the latent heat created during electric generation. That will create many more opportunities for energy partnerships involving food companies.

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