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Landfill Gas to Cold Hard Cash
April 1, 2001
9 Min Read
Lynn Merrill
Three communities and one waste company team up to turn a problem into an asset.
A Northampton County, Pa., landfill is turning gas into an economic opportunity that benefits the landfill owner, the environment and local communities. At the Grand Central Sanitary Landfill (GCSL) in Plainfield Township, purchased in 1996 by USA Waste Services Inc. (now Houston-based Waste Management Inc.), landfill gases that once were flared into the atmosphere now are running a 10-megawatt power plant as part of a regional industrial development project that generates electricity.
Originally permitted in November 1980, the landfill has grown from a local privately owned community facility to a regional site that serves communities in counties in eastern Pennsylvania as well as customers in New Jersey. The original 52-acre landfill was filled to capacity by 1990 and closed and capped. The permitted landfill was expanded in 1990 and again in 1998, totaling 87 acres on a 450-acre site. The landfill currently has a permitted average daily volume of 2,750 tons per day, with capacity expected to last until late 2006. A proposed expansion of the facility is expected to increase the landfill's life to 2014.
The landfill gas-to-energy (LFGTE) project began in 1998 when Waste Management (WMI) began exploring ways to use the 5,000 cubic feet per minute (cfm) of landfill gas being generated. WMI also was concerned about the economic welfare of the neighboring communities.
Although the landfill is located in Plainfield Township, the boroughs of Pen Argyl and Wind Gap both are located adjacent to it. These three communities are Northampton County's “Slate Belt Region,” an area that traditionally was the home of the slate quarrying industry. Later, the textile industry provided the region's employment base. However, in recent years these industries suffered and new economic growth in the area has been slow to supplant those job loses.
A Beacon Burns Bright
According to GCSL community affairs manager Harry Smith, Waste Management Inc., the landfill's owner, continued looking for an alternative to flaring the gas when it merged with USA Waste in 1998.
“Waste Management's GCSL was flaring the gas and was looking for a way to use it productively,” Smith says. At the same time, he says, GCSL also wanted the proceeds of the project to benefit the neighboring communities. “We came up with a concept of a landfill-gas-to-energy plant that would benefit the communities,” he says.
Plainfield Township, Pen Argyl and Wind Gap, which form the Pen Argyl Area School District, became involved in the effort in the beginning. “We asked the three communities to help create a task force to look into this concept,” Smith says. “We had a dozen volunteers from the three communities, including members of the Pen Argyl area concerned citizens group. They began their work in summer 1998, and we formalized the task force in January 1999.”
“The task force wanted to accomplish a couple of things early on,” says Mark Messics, director of landfill gas-to-energy for WMI's eastern area. “One way was to keep it apolitical and independent of the local governments.”
According to Messics, Waste Management also wanted to:
Put the LFG to productive use;
Funnel the proceeds from the LFG use into all three nearby municipalities; and
Spur economic development in the area to provide jobs and increase the real estate tax base.
The idea was to keep the proceeds in the three communities, Messics says. “But it became evident that there wasn't any existing organization that could partner with Waste Management to get this off the ground.”
According to Pete Albanese, one of the task force's local volunteers, “Waste Management contacted us through our mayors,” he says. “From what we found from the task force, [cooperating on an LFGTE project] seemed like a good way for a large business in the area to help bring money to the community in ways other than employing people at the landfill. Economic development was our main goal.”
To that end, Waste Management looked at the 450-acre site with an eye toward industrial development. Part of the site provides a setback or buffer area — which is zoned commercial/industrial and fronts Pennsylvania State Highway Route 512 — for the landfill.
“The company donated a 19-acre tract to the Northampton County Industrial Development Authority to help attract industry into the area,” Smith says.
Enter the Green Knights
As the mission of the task force developed, “it became apparent that we had to form a new corporation that would represent the three municipalities without any political attachment,” Messics recalls. “At that point [we] decided to form a nonprofit, 501C(3) corporation.”
In 1999, the task force, guided by Waste Management, incorporated as the Green Knight Economic Development Corp. (GKEDC), taking its name from the Pen Argyl School District mascot. Most of the task force members became board members of the new corporation. The bylaws ensured equal representation for each of the three municipalities, and that the corporation's mission would be to promote economic development within the municipalities. The board would determine how monies would be spent in the community.
Simultaneously, Waste Management developed a 10-megawatt power plant plan and finalized donation of the 19-acre property adjacent to the Northampton County Industrial Development Authority (NCIDA).
However, in order for the GKEDC to reap the net proceeds from the sale of power from the plant, the corporation needed to own the plant. As a result, WMI and GKEDC together convinced a local bank to provide $9.5 million in project financing. GKEDC was named the borrower, and Waste Management served as the loan guarantor.
Once financing was secure, WMI built the 11,300-square-foot power generation facility, which uses three Solar Centaur combustion gas turbine/generators sets with accompanying fuel gas compressor skids, with an expected average net output of 8 megawatts.
As owner of the facility, GKEDC was responsible for entering into construction, electrical interconnection and power sale contracts, while WMI handled the permitting, construction oversight and contract negotiation on GKEDC's behalf. Waste Management was named the facility operator under a separate, five-year operations and maintenance contract.
This agreement also includes operational guarantees that maximize the plant's operation while ensuring a minimal amount of downtime. GKEDC will sell wholesale “green” power to the Exelon Power Team (formerly PECO). And as guarantor of the loan, it's in WMI's best interest to ensure the plant is running at its maximum potential, Messics says.
“That plant will operate around the clock,” he adds. “It's modeled after a standard design that Waste Management has used for years. All these plants are designed to run unmanned. There are numerous safety alarm systems built into the design, and if there are any malfunctions detected, an automatic phone dialer calls up our operators.”
According to Smith, “The gas plant is located a couple hundred feet from the [proposed] industrial park. The intention is to transmit the green power to that industrial park.” To further foster interest in the industrial park, the NCIDA intends to construct a shell building on the site to attract energy-intensive industries with low-cost green energy.
“We are just starting to solicit businesses and companies to come in the area,” says Albanese, treasurer of GKEDC. Additionally, the plant is built to accommodate add-on back-end heat recovery equipment, which will enable GKEDC to also sell thermal energy (district heating/cooling, steam, hot water, etc.) to industries that could locate nearby. The hope is that eventually, the plant could legally sell electricity directly to these customers, bypassing the electric utility company's transmission and distribution costs.
“There is potential to lure businesses in for that as well,” Albanese says. “Our goals were to bring a company that has high heat or electric requirements and also a decent amount of jobs. In other words, we don't want a warehouse here. We want a production facility that offers well-paying jobs.”
But even if GKEDC is not successful attracting businesses immediately, Messics says the corporation stands to benefit from the project. “We're concentrating more on the thermal energy aspect in the interim,” he says. “We have a contract to sell power wholesale into Pennsylvania's grid. Even if we did nothing beyond the power plant, it makes money. It's gravy if we can find a buyer for the wasted heat.”
Wholesaling green power generates net revenues to GKEDC. After paying the bank and Waste Management for the gas, and for operating and maintaining the power plant, the corporation is guaranteed to net six-figure revenues, Messics says. The proceeds then will be reinvested by GKEDC in economic development projects, including infrastructure.
While actual returns are a year away, discussions on future fund distributions and which projects might be eligible already have occurred. In the beginning, the towns mentioned run-off water or sewer upgrades as possible projects, Albanese says. GKEDC also has suggested creating grants for schools to purchase new computers or for new building additions. “These kind of grants [stimulate] economic growth and also help to develop and attract businesses as well,” he says.
Repeating a Home-Run?
Based on its experience, GKEDC and Waste Management believe that turning a landfill waste byproduct into a regional economic growth strategy requires innovation, good will, trust and a desire to create a better community.
Fortunately, “the pieces fell together just by the developments that were happening all at the same time,” Smith says. “The need for economic development and the cooperation with the community [were essential for] a facility like this.”
Throughout the project, GKEDC's and Waste Management's primary focus was to determine the communities' needs, and decide how today's regional-type landfills could respond to them, he says.
But Messics agrees that the success of this collaboration was a result of opportunity as much as it was a result by design. “We didn't have a master plan going into this, and there wasn't any organization in place for us to work with,” he says. “We spent a lot of time, effort and money creating the organization … If the organization already existed, we could have probably done the job quicker and easier.”
In any event, Messics says people have to be dedicated to get a project off of the ground. “There was a year's worth of work in organizing and figuring out what we were going to do,” he says. “And then it took another three months of discussions with a bank to get financing.”
The Grand Central Sanitary Landfill and GKEDC's efforts have paid off in a number of ways, including receiving the Washington, D.C.-based U.S. Environmental Protection Agency (EPA) Landfill Methane Outreach Program's 2000 “Project of the Year” award. The award recognizes outstanding projects that include innovation and creativity, and success in promoting LFGTE projects with environmental and economic benefits.
Although the project's practical benefits will be realized in the future, the unique set of circumstances that brought the three communities, the landfill owner and a task force together prove that there's a lot more than hot air to be made from landfill gas.
Waste Age contributing editor Lynn Merrill is the director of public services for the city of San Bernardino, Calif. For more information on methane, visit www.wasteage.com.
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