Love stinks: City should tweak waste-to-energy deal

Jeff Keeling, Associate Editor

Jeff Keeling, Associate Editor

By Jeff Keeling

There’s gas in that there dump!

Okay, so it’s a landfill, not a dump. Nomenclature aside, the methane rush of 2004 has certainly produced a feather in Johnson City’s “green friendly” cap, all the while helping the city coffers. That was when Energy Systems Group (ESG) completed work on a pipeline from Iris Glen Environmental Center (the dump, er, landfill) to the Mountain Home VA campus and began producing power for the VA using a waste-to-energy gas process.

Captured methane gas captured from wells at Iris Glen is piped to an ESG facility at the VA, where it’s cleaned of pollutants and refined into a purer form of methane, then used to run boilers that produce electricity. It’s great stuff, really, and it’s garnered several awards over the past decade. It has also put an average of $339,000 annually into the city’s bottom line as part of its contract with ESG.

But the world of energy, renewable and otherwise, is a constantly shifting one. So is the world of business, including that involved with how this throwaway society goes about throwing away its stuff. And when it comes to the viability of ESG’s project – its first of what now are several landfill waste-to-energy projects – both those worlds combined to put a double whammy on revenues.

Johnson City commissioners learned Monday night that the project faces the possibility of a premature demise. The shale gas revolution has pushed gas prices low. They ran around half their 2007 levels from 2010 through most of last year, and have dropped by another third since.

During that same period, other landfilling options came available for some of Iris Glen’s original customers from places like Sullivan County and Southwest Virginia – among them a new landfill in Sullivan County. That fact has resulted in decreased tonnage volumes at Iris Glen, also to less than half what they once were. The double whammy means ESG is piping less gas to the VA, and having to sell the resulting electricity for lower per unit prices.

(The fact that Waste Management’s use of crushed shale to cap landfill layers, rather than tighter compacted clay, is estimated to reduce production by at least 25 percent due to leakages, but that’s a story for another time.)

ESG took a $600,000 loss on the project in its latest year, and has lost an average of $325,000 through the project.

“A landfill’s kind of a complicated experiment, so we take a lot of risk, and we’ve learned firsthand these things aren’t givens,” ESG’s Russ Nelson told commissioners. Now ESG is seeking to get in on the “RINS” credit market, in essence selling its production of clean energy to petroleum companies seeking credits because they aren’t yet meeting renewable fuel standards.

The company’s contract with the city calls for any proceeds from such an arrangement to be split 50-50. ESG wants proceeds from the first 200mm BTUs, if this goes, to go to it, with a tapering ratio of sharing from there. “This will give us a fighting chance to provide revenue to you guys and give ourselves a chance.”

ESG can get out of its contract because of the losses. That would be a sad way to see a good thing end. The city should approve the request.


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