An aversion of debt investors to ‘technology risks’, combined with public reticence to provide capital or financial guarantees is holding up development of Waste to Energy projects in the U.S.

According to a recent report published by Renewable Waste Intelligence - Waste Conversion Technology: A Progress Report North America - this situation is exacerbated by the fact that most waste to energy projects have yet to achieve commercialisation.

However, in the report, John May, managing director at the invest¬ment bank Stern Brothers, explains that “the rating agencies have said to us that properly structured insurance can lead to a better rating on a piece of debt”.

In terms of equity investment, as opposed to taking on debt, May goes on to add that while equity investors are prepared to take greater risks, the return they are looking for is typically in the region of 15% to 20%.

According to May, the key for equity investors looking for substantial returns then is identifying those projects or technologies that will be “transformative”, and he doesn’t feel that Anaerobic Digestion (AD) or fluidised bed boilers are perceived as “high return generators”.

Meanwhile, Michele Young, organics manager for the City of San Jose, California says that “municipalities have the ability to direct feedstock, and assure the rates paid by generators support the process¬ing plans to reach diversion goals”.

San Jose itself is currently finalising feedstock agree¬ments to support a commercial-scale AD facility and is also involved in a feasibility and demonstration project for a gasification unit for both wood waste and bio-solids.

“What we hear from the vendors is that they are anxious to work with municipalities that already have political buy-in for innovative technology projects. Without such support, there are examples of projects that fall apart,” Young adds.

However, Harvey Gershman, president of Gershman Brickner & Bratton, a consulting firm specialising in solid waste management believes that “the public is reticent about providing capital, or guarantees, until the technologies are more proven”.

He goes on to add that companies should focus on developing their demonstration facilities to prove the technology and mitigate the risk from moving to commercial scale plants. Such facilities should be operating at a minimum of between 100 and 200 tonnes per day.

“We don’t have a disposal crisis here in the US, so it’s hard to make a case for new technologies. It’s not something that waste management people necessarily need. Landfill provides about two-thirds of our disposal capacity, and there is plenty of capacity. To change from what we have now, you have to convince people the technology works better,” adds Gershman.

Paul Relis, senior vice president at CR&R, an Orange County-based waste management company feels that the biggest challenge for companies looking to commercialise is securing long term feedstock supplies.

“We’re relying on a $4.52 million grant from the California Energy Commission,” says Relis. “This grant is very important to the feasibility of the project. We believe if we achieve scale at 450 tons per day or greater (ours is 150 tpd) an AD project could compete in the marketplace within 5 years. But that depends on the policies California adopts?”