Funding advances for 3 Mid-Atlantic anaerobic digestion projects

RNG Energy Solutions

Dive Brief:

  • Leyline Renewable Capital'� recently announced new bridge financing for RNG Energy Solutions to develop two anaerobic digestion projects. Each will see approximately $3 million for pre-construction activities such as permitting, engineering, site analysis and securing interconnection agreements.
  • One RNG Energy site will be in Philadelphia, on a former refinery site, and plans to create renewable natural gas to be sold as transportation fuel. The other, in Linden, New Jersey, will be focused on creating pipeline quality gas. The two sites, each with processing capacity for up to 1,100 tons per day, are expected to begin construction in Q3 of 2020.
  • Meanwhile, Bioenergy DevCo (BDC) signed a 20-year deal with Perdue Farms to manage poultry waste by constructing a new digester near Seaford, Delaware. The site is projected to have at least 274 tons per day of capacity. The company also acquired Perdue's existing Sussex County AgriRecycle composting operation and will continue to run it as a companion project, in part to handle digestate from the new facility.


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Dive Insight:

While the two announcements are for distinctly separate ventures, they include shared financial backing from Newlight Partners, which spun off from Soros Fund Management in 2018.

BDC announced its own $106 million investment from Newlight in August, around the same time the company announced the acquisition of European company BTS Biogas. This latest project will be its fourth U.S. site. BDC declined to comment on how much of the Newlight funding would be going toward the Delaware site.

Like the company's Maryland project, which is centered around a food distribution center, this latest announcement with Perdue is premised on local need and scale more so than regulatory drivers. The poultry processing company's compost operation is currently permitted to handle up to 30,000 tons per year of hatchery byproducts and farm litter.

"What's nice about these projects is if you put them in the right place they really do stand on their own," BDC CEO Shawn Kreloff told Waste Dive in August. "I think that's rare for this type of renewable energy investment."

Erik Lensch, CEO of Leyline, also recently described growing investment interest in such projects. What was once largely a farm-based model has now expanded to multiple other streams of organic waste, including food scraps.

"The market is undergoing a bit of a renaissance right now," Lensch told Waste Dive. "You're seeing food waste added into the mix and a continuation of the growth in the agricultural sector as well."

The two projects from RNG Energy are both geared toward food waste. The New Jersey site is expecting to capitalize on rising demand in neighboring New York City - and soon all of New York - due to organics diversion mandates. While Philadelphia doesn't have any diversion mandates in place, the city's "zero waste" goals have put a big emphasis on ramping up organics recycling in the coming years.

As a player that aims to help kickstart further projects with pre-construction financing, Leyline sees a lot more potential for anaerobic digestion - as well as solar and other renewables - in various states. Lensch said Leyline had deployed roughly $20 million in development stage lending, the majority of that for landfill gas or anaerobic digestion projects, prior to the Newlight funding. Now Leyline reports the company plans to pursue "multiple additional projects under the same structure" with RNG Energy, and potentially others.

While some companies, like New England's Vanguard Renewables, have been steadily expanding with the backing of climate-focused investors, others have seen more mixed results. Some large-scale digestion projects have failed, or still not come to fruition.

Lensch said the industry now feels like it's "growing up," giving investors more confidence. In his view, a combination of state and local reaction to the Trump administration's lack of movement on climate policy, rising corporate sustainability interest and improving technology all make this an appealing area for further growth.

"We can't continue to burn fossil fuels forever and continue to pack our landfills full of waste forever," said Lensch. "We're seeing just a lot of positive momentum out there and it sort of feels like - knock on wood - this time is different."


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