July 31, 2008
By Sara Sargent
Turning trash to treasure: local company begins push into U.S. market
Peat International Inc.
Peat's PTDR-100, shown here, takes a variety of waste and processes it to produce synthetic gas or obsidian silicate, depending on the nature of the waste.
What if a hospital or manufacturing plant could process its waste into synthetic fuel that would, in turn, provide power to that business? If that process could be done on site at a cost of just 22 cents per pound of waste, companies across the country would surely jump on the technology, right?
Not so fast.
Northbrook, Ill.-based Peat International Inc., which bills itself as a waste-to-resources company, has found success selling its waste treatment systems overseas in Taiwan and India.
NYMEX Henry Hub natural gas prices have risen 61 percent over the past year, which is good news for companies offering a cheaper energy alternative.
But the company faces potential obstacles in the U.S. as it tries to overcome the inertia of businesses sticking with traditional waste-removal means, including putting waste in landfills, taking it to incinerators or using a high-heat sterilization process called autoclaving.
With systems operating at a Taiwanese university since 2005 and at an industrial facility in India since February of this year, Peat has decided the time is right to push into the U.S. market, where high energy prices are encouraging a rush toward alternative fuels and technologies.
But although state environmental regulators have issued approvals for Peat's technology, in the six months Peat has been marketing to U.S. companies, so far none have purchased its system.
"We are just ramping up our sales force," Peat spokesman Daniel Ripes said, "however I would characterize the biggest challenges from existing technologies-incineration, autoclaving for example-and really educating potential users on the technology."
Although Peat's system has obvious environmental and financial benefits, technologies boasting advantages for the planet and business' bank accounts are not always quickly embraced. In Peat's case, potential barriers to the technology's widespread popularity include initial capital costs, environmental requirements and resistance on the part of business owners.
"The educational curve, while declining, is still very large. The more and more people become more comfortable with this new technology, the more it will be seen throughout the country,"Ripes added.
Peat's plasma thermal destruction and recovery (PTDR) technology uses extremely high heat to break up organic and inorganic waste streams and turn them into synthetic gas or an obsidian silicate used in road fill construction, concrete aggregate and sandblasting applications.
For example, one hospital in India pumps its medical and pathological waste through the Peat PTDR system and, at the end of the cycle, syngas is returned to the hospital's boiler system to provide power the same way natural gas would.
Peat's main selling points are the convenience of having on-site waste removal and the opportunity for companies to use low-cost syngas.
With natural gas prices on the rise, U.S. companies may have more of an incentive to find ways to offset their energy costs. However, experts question whether the system's start-up costs and the availability of other waste-disposal alternatives will hamper Peat's push into U.S. markets.
"I am seeing that there are limited growth opportunities for this kind of waste-to-energy process," said EIA renewable energy forecasting expert Robert Smith. "Nine times out of ten, the barrier is cost."
The PTDR-100, which is currently operational in India, has an estimated syngas production of 775,000 BTU per hour and costs $400,000-$450,000, with an operation and maintenance cost of 22 cents per pound of waste.
Despite those capital costs, Ripes estimates that a company could save approximately $50,000 per year on natural gas costs by installing a PTDR-100.
One reason Peat has been successful in rapidly growing countries such as Taiwan and China, the company said, is that those nations are quickly running out of landfill space and are interested in keeping pollution to a minimum. Moreover, particularly in India, reducing traffic volume is a priority; with on-site waste disposal, trucks are not needed to cart waste to a landfill.
In the U.S., however, companies might not feel the same immediacy when it comes to handling waste more efficiently--even though building new landfills is not an easy process.
Although it is difficult to get permits for new landfills, "we are not running out of landfill spaces or suitable places for landfills to be located," said Bill Plunkett, a spokesman for trash removal provider Waste Management Inc.
Plunkett added that, at least when it comes to the Midwest, landfills remain a popular disposal means because costs are low. Plunkett estimated that, on average, disposal rates in Northeastern Illinois are $40-$45 per ton of waste.
"But as landfill space diminishes those rates will climb and other technologies will become more viable—including waste to energy," he noted.
Fred Tolar, a spokesman for waste expert Blackhawk Technology Co. Inc., confirmed that it is growing more difficult to get landfills permitted. "There is a tremendous amount of regulation that goes into that, and long lead times," Tolar said. "In other words, from the time that you decide you need a landfill to the end of the regulatory process, it can take a number of years."
In the long term, waste-to-energy technology such as Peat's could prove to be a boon to companies that want to keep waste removal costs low and keep landfills from overflowing. But the trick is convincing them to deal with the issue now instead of later.
So what will it take for U.S. businesses to begin adopting Peat's technology and others like it?
In all likelihood, analysts say, the opportunity to offset high natural gas costs may prove most compelling to companies. Over the past year Henry Hub natural gas prices have risen 61 percent on the New York Mercantile Exchange. The most-active September futures contract closed down 11 cents Thursday at $9.14 per one million British thermal units (MMBtu).
"I think companies are probably excited because this represents another source of energy for them and, in this day and age, diversity of energy supply is a good thing," said EIA natural gas expert Kobi Platt.
Although Platt is unfamiliar with Peat, he said that with the price of natural gas experiencing wide swings lately, the extent to which the technology "can smooth out those higher price fluctuations and could help to save costs down the road if the price of natural gas indeed continues to increase."
Volatility in natural gas prices is likely to continue in the near-term, with hurricane season potentially impacting production on the Gulf Coast.
On the demand side, the EIA expects total natural gas consumption to jump 2.1 percent in 2008 and 1.1 percent in 2009, according to its July 8 Short-Term Energy Outlook. The agency will release its next report on natural gas consumption, prices and inventories on August 12.
"I don't know that we're necessarily a fixed world of ever-increasing natural gas prices, but it's certainly likely that the demand for gas is only going to grow," Platt said.
Companies like Peat hope such growth will translate into opportunities for them to turn good intentions in the U.S. into actual orders for its alternative waste-to-energy technology.