The key maintenance challenge is engines corroding from hydrogen sulfide, which also stinks. The Le Sueur plant has scrubbers to clean the gas, and hopes to avoid problems.
Price tag jumped 50 percent
Even before construction, the Hometown BioEnergy plant’s price tag climbed 50 percent, to $45 million, from the original estimate.
“This is the challenge of doing a first-of-its-kind-type project,” said Avant’s CEO Dahlen. “We didn’t have a good benchmark price for a facility like this in the U.S.”
The project is funded mainly with municipal bonds and a nearly $9 million federal stimulus grant. The project’s nearly $11 million in soft costs — for development, engineering and project management — chewed up 24 percent of the budget. That’s higher than wind energy projects, and most of the money went to Avant.
“One of the questions we kept raising over and over is whether there is any risk that falls back on Avant, but they make their money without any documented risk of any sort, ” said John Schultz, a Le Sueur City Council member.
MMPA, the plant owner, hasn’t released detailed financial data on the project, even to the council, he said. Although Schultz said he hopes the plant succeeds, “we will never know the bottom line” if it doesn’t.
Pollution is a separate worry. The Le Sueur County Board in September unanimously denied a permit for off-site storage of the plant’s silage, citing concern about runoff. That left the plant with no central storage for trucked-in corn silage. MMPA is appealing the board’s decision.
Dahlen has faith in the technology, and said he stands by promises he made at a community meeting four years ago that the plant won’t stink. The plant is on a rural site next to the city airport and a quarry, 60 miles southwest of downtown Minneapolis.
“Even if the biogas scrubber did not work, the hydrogen sulfide would be burned in the engines, which would render it odorless,” Dahlen said. “However, that would likely increase maintenance cost.”
He’s supported by Jørgen Ballermann, CEO of Xergi A/S, the Danish company that supplied key technology to the Le Sueur plant. He said Xergi has built 56 biogas plants, mostly in Europe, and the technology has improved in the past decade.
“Today, odor is really not a problem” Ballermann said in a phone interview.
Can the technology compete?
Dahlen said he expects the plant can generate power at 5 cents per kilowatt hour — less than MMPA’s wholesale price for conventional generation.
Biogas plants offer the potential to profit from fees to accept waste and from the sale of post-digestion liquids as fertilizer and a dried material as boiler fuel or animal bedding. Dahlen said the plant is pursuing such deals.
Applied economics Prof. William Lazarus of the University of Minnesota has studied smaller, farm biogas projects. He said many would have a tough time producing power at 5 cents per kwh. “That might be close to break even,” he said.
The question is whether the Hometown BioEnergy plant’s larger scale, innovative technology and storage will provide game-changing benefits.
Koppendrayer, of the plant’s operating company, is a former state utility regulator who was selected as chairman to give the board some independence. He said MMPA and Avant make a strong case that the technology will work.