Okay… that’s not really the original headline, even if it should be
Food scraps and trashed Christmas trees could one day be a source of a billion-dollar business, according to Harvest Power Inc., a start-up that just raised $110 million to help convert organic waste to energy and fertilizer.
The funding comes amid a broader movement in the U.S. to get more value from waste, rather than expensively transporting it to municipal dumps. Waste Management Inc., the largest trash processor in the U.S. and a Harvest Power investor, has vowed to stop using landfills altogether in a number of years, and New York City is evaluating new waste-to-energy facilities for some of its trash.
Meanwhile, cities including San Francisco and Seattle have begun to separate food and yard waste from other forms of trash.
Generation Investment Management, a firm co-founded by Al Gore, is also an investor in Harvest Power, as are venture capital firms Kleiner Perkins Caufield & Byers and DAG Ventures. Leading the latest financing was True North Venture Partners, a new investment firm launched by Michael Ahearn, interim chief executive of solar panel manufacturer First Solar Inc.
Harvest Power is hoping to replicate in North America what countries such as Germany and Spain have been doing for years. World-wide, the capacity for processing municipal solid waste using anaerobic digestion—in which bacteria digest organic material and emit biogas, which can then be converted into compressed natural gas or burned for power, with the byproduct used as soil fertilizer—grew five-fold between 1995 and 2008, according to a 2010 report by Ljupka Arsova, formerly a research associate at the Earth Engineering Center at Columbia University. But the U.S. has only a couple of pilot facilities.
“We’re basically building the first nationwide organics management company,” said Paul Sellew, chief executive of Harvest Power.
The U.S. generates about 40 million tons of food waste annually, representing about 12% of all waste, but less than a million tons is separated from the general trash, according to Nickolas Themelis, director of the Columbia earth engineering center. The country also generates the same amount of yard waste, half of which is collected and mostly composted, he said.
Harvest Power generates revenue from selling fertilizer made at its composting facilities, by charging municipalities and other waste producers fees for picking up their trash, and by selling power from its power-generation facilities. It had less than $50 million in revenue last year, and expects to get to between $75 million and $100 million this year. It says that its fees for collecting trash are lower than those charged by landfills.
The company is currently building two commercial-scale power-generation facilities in Canada. It will sell power for about 13 cents per kilowatt-hour to local utilities, cheaper than most renewables but more expensive than the prices for natural gas-powered electricity.
The company is also planning a waste-to-electricity facility in Florida for a theme park, and is planning to buy an organic-waste processing company in New Jersey, which would give it access to New York City organic waste streams, according to its presentation.