WASHINGTON, DC, FEB 10, 2020 -- Diverting food waste feedstocks like fats, oils and grease, food scraps, and food processing residuals to anaerobic digestion at water resource recovery facilities (WRRFs) can provide significant benefits to WRRF finances, as well as to our environment and community well-being; however, WRRFs face a number of hurdles that leave this potential sustainability strategy largely untapped. Fewer than 1 in 10 WRRFs use anaerobic digestion to process wastewater solids, and only 1 in 10 of these are co-digesting high-strength organic wastes. In hopes of stimulating and informing further evaluation and adoption of co-digestion, a new report, Food Waste Co-Digestion at Water Resource Recovery Facilities: Business Case Analysis, provides insights about the strategies WRRFs have used to address the range of risks and impediments they face in adopting co-digestion. The report also outlines a diagnostic framework that individual WRRFs can use to analyze opportunities and potential business strategies for co-digestion at their own facilities.
“A successful business strategy for co-digestion will create value for the WRRF while managing potential risks,” explains lead author Carol Adaire Jones, an economist and visiting scholar with the Environmental Law Institute. “But a successful business strategy needs to be tailored to the utility’s policy and market environments, as well as to its long-term mission and strategic goals, organizational culture, and resources,” she added. “There is no simple menu of business case options, or a set of economic rules of thumb for revenues or costs. That’s why we wanted to provide a framework that each utility could use to inform the development of a business strategy for co-digestion over the long term.”
Co-digestion is a core element of the wastewater sector’s “Utility of the Future” (UOTF) initiative, which envisions the sector shifting to a circular economy business model—whereby wastewater treatment plants disposing of waste are transformed into WRRFs managing critical resources. By co-digesting food waste with wastewater biosolids, WRRFs are able to substantially expand the recovery of valuable renewable energy, as well as soil amendment and nutrient products from digestion residuals. To accomplish this transformation, the UOTF initiative identifies a clean water “innovation ecosystem” in which wastewater utilities are at the core of an ecosystem of innovative technology developers and suppliers, the finance community, energy utilities, public and private elements of the solid waste sector, and state and municipal governments. The UOTF innovation ecosystem framework provided the analytical framework for the report. “Through the combined efforts of all ecosystem members, utilities can take and manage risks as they increasingly manage valuable resources to the benefit of customers, the community, and the environment,” noted Jones.
The report presents six major case studies and 25 thumbnail sketches, which represent the full range of WRRF characteristics, policy and market environments, and strategic choices in food waste feedstocks, energy uses, biosolids uses, contracting, and financing options. Included in the case studies are WRRFs that decided against adopting co-digestion, or suspended or cut back programs in place. The report also summarizes lessons learned, both from a public policy perspective and a utility perspective, and identifies solutions to the financial impediments and risks of co-digestion identified in the research.
The report highlights that the right context is important for a successful co-digestion program, including:
- a co-digestion champion in the utility or municipal government;
- enough site space for vehicles to deliver feedstocks and for other equipment needs;
- a business mindset to resource recovery;
- a visionary utility board or municipal decisionmakers who will support projects beyond the core wastewater mission that make economic sense to ratepayers;
- and a location with access to a sufficient supply of feedstock at a good price.
In addition, successful strategies typically evolve over time, adding additional projects that build on past successes and reflect learning from challenges encountered.
Best practices identified for creating a successful business strategy include:
- demonstrating the project will not compromise plant compliance with its environmental permits and the WRRF’s responsibilities for public health and environmental quality, which are central to its mission;
- using a life-cycle perspective, taking into account revenues and costs from the time of initial investments through replacement investments;
- leveraging available policy, market, and community drivers in sync with WRRF mission; and
- incorporating strategies to address financial risks, including diversification, long-term contracts, built-in redundancies, and public-private partnerships.
The full report is available for download at https://www.eli.org/research-report/food-waste-co-digestion-water-resource-recovery-facilities-business-case-analysis.
