Public-Private Partnerships Enable Project Success

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Post date: April 29, 2015
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* This originally appeared as a column in Biomass Magazine here.*

Public-private partnerships that conduct essential research, commercialize technology, and institutionalize new operating practices are vital to several economic sectors, including energy.

There are numerous examples of early and ongoing public investment—matched with private investment—that have led to significant changes in the energy sector. Biobased projects, including biogas, need public-private partnerships to bring the potential resource to scale.

Public-private partnerships for biogas project deployment are at a critical juncture. The U.S. biogas industry is going through a period of tremendous growth, but growth is uneven from state to state. State and local efforts to implement public-private partnerships could increase biogas project deployment where growth appears to be stagnant.

Although several biogas projects are finding ways into the market, many proposed projects still struggle with access to capital and project financing. A new proposal by the Minnesota Metropolitan Council is aiming to help projects secure access to low-cost capital and develop a stronger partnership between the municipal and industrial sources of biogas. The Metropolitan Council is the regional policymaking body, planning agency, and provider of essential services for the Twin Cities metropolitan region. Metropolitan Council Environmental Services is a division of the Metropolitan Council and provides wastewater collection and treatment services for approximately 2.7 million residents in 108 communities in the seven-county Twin Cities region.

Beyond the barrier of access to low-cost capital, some communities are encountering capacity constraints at their municipal wastewater treatment facilities. Capacity limitations can hinder economic development of commercial and industrial facilities in these communities. Municipalities are faced with costly decisions about expansions and upgrades. A proposal from the MCES would work with current industrial customers who are sending high-strength solids to the municipal wastewater facility to instead treat high-strength solids and wastewater on-site.  MCES is proposing to help finance pretreatment technologies such as anaerobic digestion to be installed at the industrial facility. Industrial facilities would have access to low-cost public financing and would be able to reduce or eliminate strength charges currently paid to MCES.

Eligible industrial facilities must currently send wastewater to the municipal plant for treatment. Industrial customers are required to submit an application to MCES for program participation. There are several steps in the project application and execution process that require the private facility and the public entity (MCES) to work closely together to design the project, secure financing, execute service contracts, and monitor the successes and challenges associated with the project.

If this model is successful, the Metropolitan Council could avoid significant investments that would increase the capacity of wastewater treatment facilities, saving taxpayers money. At a minimum, MCES should be able to decrease some operating costs if they are able to reduce the volume of high-strength wastewater sent to the municipal system. The industrial facility could see a positive return on investment for an anaerobic digestion project by utilizing low-cost public financing and potentially add revenue to their operation by offsetting energy costs. There are also positive environmental benefits by reducing reliance on fossil fuel energy sources at the municipal or industrial facility.

MCES has described this program as a triple win with benefits to the council, industrial facilities, and the environment. I agree.  This program could potentially serve as a national model for public-private partnerships to effectively deploy anaerobic digestion projects. The program is gearing up for implementation over the summer, and I hope to be writing about its enormous success in a future column.