Company description: Local power from local waste
PowerHouse Energy Group is developing an innovative waste-to-hydrogen, distributed modular gasification (DMG) technology. This converts hydrocarbon waste streams including shredded plastic or tyre crumb into syngas or hydrogen. Syngas can be used to generate electricity for export to the grid or for use within an enterprise. Since the technology operates at a higher temperature than conventional gasification techniques, it produces no char or oil residue or toxic dioxins and furans. The syngas should therefore be sufficiently clean to power fuel cell electric vehicles and gas engines. Powering a gas engine is a more efficient route than using the syngas or the burning waste to produce steam to power a turbine. The conversion also permits storage of energy in the syngas until it is needed to make up shortfall from renewable generation sources.
The small footprint, modular design of the DMG system means that, once commercialised, PowerHouse will offer waste-to-energy systems based on one or more modules, each capable of handling 25 tonnes of waste per day, which is equivalent to the refuse from a small town of 6,000 homes. A 50tpd (tonnes of waste per day) DMG system would potentially generate c 2,000kg of hydrogen each day, sufficient to drive 2,000 FCEVs an average of 57 miles each. Alternatively, it could generate c 3.0MW electricity (equivalent to a large wind turbine), sufficient to power around 6,000 homes. This means that the DMG systems can be located close to where the waste material is produced and collected, and generate hydrogen or electricity close to where it is required, thus cutting down on the costs and energy used in transportation.
Although PowerHouse listed in 2011, it is still at a relatively early stage of corporate development. Over the last six years it has been refining its proprietary, patentable DMG technology. It has recently concluded extended combustion trials on a small 1-3tpd demonstration system situated near Ellesmere Port in the UK and moved to the design and engineering phase of a 25tpd commercial system. Management intends to be producing electricity commercially from one or more commercial scale systems by the end of FY18, potentially followed by over a hundred units located at waste collection sites throughout the UK over the next decade. Management’s preferred strategy is to build, own and operate these waste-to-energy plants, deriving revenues from the sale of electricity or hydrogen. Initially, it is likely to operate systems in partnership with third parties, supplementing this income with revenues from equipment sales to help with cash generation.
PowerHouse currently has only seven employees, although this number will increase as the company progresses towards commercialisation. To accelerate commercialisation, PowerHouse is partnering with industry expert, Waste2Tricity, which is facilitating introductions to parties interested in operating DMG systems, providing locations for systems or supplying the waste streams required, as well as advising on permitting and planning requirements. Local engineering consultancy, Engsolve, is providing support as the system design is refined. Volume manufacturing of the DMG systems will be outsourced, probably to Eastern Europe.
Technology: Ultra-high temperature gasifier
PowerHouse’s DMG technology is an innovative, patentable process that has been developed over the last 18 years. The DMG unit uses a process in which complex organic molecules are broken down through indirect heat in an oxygen-starved environment into their constituent elements. A typical composition of syngas output is 50% H2, 35% CO, 10% CH4 and 5% CO2. The proportions may be varied once the gasification process is complete to produce syngas suitable for different end-applications, for example maximising the amount of hydrogen if the system is intended to serve an FCEV refuelling station. A DMG module is based on rotary kiln equipment, which is an established technology and uses standard components. The current iteration system is a complete rework of older variants, learning from problems experienced when developing earlier-generation equipment. Management may patent some of the elements of DMG system operation.
The individual process steps are:
1.
Small granules of material with high calorific values, eg tyre crumb, shredded plastic or tiny chips of PVC pipe, is passed into the rotating, ultra-high temperature gasification chamber at atmospheric pressure in a non-combustive environment. The reactor, typically operating at above 1,000°C, breaks down the material, converting it into synthesis gas.
2.
The syngas passes out of the reactor. Any non-combustible material is removed. This waste is not classified as a hazardous material, even if the input material contains heavy metals, because these are fused into the glassy slag formed at high temperatures. The resultant slag may be sold for use in road-building in accordance with local environmental regulations.
3.
The syngas is tailored to maximise the hydrogen content and the hydrogen used to generate power for FCEVs or in stationary fuel cells. Management estimates that a DMG system processing 25tpd of waste will generate c 1,000kg of hydrogen gas each day.
4.
Alternatively, the syngas may be used to generate electricity in a gas-powered generator, turbine or fuel cell. Management estimates that around 30% of the energy represented by the calorific energy of the waste material is converted to electricity, and 30% of that electricity is used to power the DMG system. Depending on the calorific value of the waste material, management estimates that a 25tpd DMG system will generate c 1.5MW of electricity.
Competitive position of technology
Exhibit 1: Competitive waste disposal technologies
Incineration |
Pyrolysis |
Gasification |
Plasma arc gasification |
DMG process |
Combustion in unrestricted amounts of oxygen to give CO2 and H20 |
Combustion in absence of oxygen to give syngas |
Combustion in limited amounts of oxygen to give syngas |
Combustion in limited amounts of oxygen to give syngas |
Combustion in limited amounts of oxygen to give syngas |
>850C° |
300-850°C |
>650°C |
>5,000°C |
>1,000°C |
Heat from burning waste raises steam for steam turbine |
Syngas impure so burnt to raise steam for steam turbine |
Syngas impure so burnt to raise steam for steam turbine |
Syngas pure so potentially used to power more efficient gas turbine or fuel cell |
Syngas pure so potentially used to power more efficient gas turbine or fuel cell |
Non-combustible material forms non-toxic bottom ash |
Non-combustible material forms toxic char |
Non-combustible material forms non-toxic bottom ash |
Non-combustible material forms non-toxic bottom ash |
Non-combustible material forms non-toxic bottom ash |
Potential airborne pollutants treated with toxic chemicals. Still risk of emitting furans and dioxins. |
Reduced amount of airborne pollutants. Still risk of emitting furans and dioxins. |
Reduced amount of airborne pollutants. Still risk of emitting furans and dioxins. |
No furans or dioxins |
No furans or dioxins |
Typically 50-300k tonnes of waste processed/year |
Typically 25-150k tonnes/year |
Typically 60-650k tonnes/year |
Typically 20-700k tonne/year, although MagneGas has a small scale system |
Potentially <18k tonnes/year for distributed power generation (2x25tpd system) |
Source: Edison Investment Research
PowerHouse’s DMG technology potentially has numerous advantages compared with other waste-to-energy techniques. Crucially, since it operates at a much higher temperature than pyrolysis, standard gasification or incineration processes, it atomises the waste material, avoiding the formation of tars and potential pollutants such as dioxins and furans. As the syngas is not contaminated with tar it can potentially be used in a fuel cell or in a combined-cycle gas turbine engine. A gas engine gives an electrical conversion efficiency of 30% compared with 14-27% for steam boiler and turbine systems associated with incinerators. Greater efficiencies may be achievable if the heat produced is harnessed effectively. A higher electrical efficiency may be realised if the output gas is optimised for hydrogen content and used to power fuel cells.
Importantly, as a DMG system generates electricity from material that would otherwise incur a tipping fee on disposal, the technology does not need to achieve a comparable energy conversion rate to conventional generation systems to be commercially viable, or to secure green subsidies. This is because PowerHouse will receive a fee from the third party whose waste they are destroying, effectively subsidising the energy generation. For example, according to industry analyst, WRAP, in 2016 the median UK gate fee for incineration with energy recovery was £83/tonne.
Macro opportunity driven by green economy
PowerHouse Energy is positioned to take advantage of the small but rising demand for pure hydrogen to power FCEVs, the increasingly onerous restrictions regarding the disposal of waste, and in demand globally for energy, especially energy generated close to the point of consumption and energy to balance the variable output from wind and solar power.
PowerHouse’s technology provides a way of not only of disposing of waste, but also of extracting financial value from it. In the UK and other European countries the amount of waste per head of population has fallen over the last couple of decades as a result of the EU Landfill Directive. This stipulated that the amount of biodegradable municipal waste must be reduced to 50% of 1995 levels by 2009 and to 35% of 1995 levels by 2016. In the UK, the average amount of waste produced per person in 1995 was 498kg. The amount peaked at 602kg in 2004, dropped to a low of 477kg in 2012 and has since risen slightly to reach 485kg in 2015. While the amount of waste produced per person is expected to continue to rise, the rate of increase is expected to be small. Forecasts from the European Environment Agency predict municipal waste increasing at 1.1% CAGR between 2015 and 2030 in countries covered by the Organisation for Economic Co-operation and Development (OECD), 1.3% in Europe.
However, even though the amount of waste produced per person in the UK has fallen, the lack of landfill capacity means that disposing of the waste has become increasingly difficult. UK government initiatives exhorting consumers to “Reduce, Reuse, Recycle”, combined with retailers’ programmes to save on packaging costs, have helped cut the percentage of domestic waste going to landfill from 83% of the total in 1995 to 22% in 2015. The reduction is partly the result of greatly increased recycling rates: 7% of domestic waste was recycled in 1995 compared with 27% in 2015. There has also been a sharp increase in the amount of waste incinerated: 9% in 1995 compared with 31% in 2015. There is a similar pattern elsewhere in Europe. While the UK may not be subject to the EU Landfill Directive for much longer, the lack of suitable landfill sites suggests that the imperative to avoid landfill will become even stronger. In April 2017 the standard tax rate payable by operators of landfill sites was raised from £84.40/tonne to £86.10/tonne. We note that the shift to recycling will be significantly affected by the recent decision by the Chinese government to ban the import of plastic waste. Greenpeace estimates that since 2012 British companies have shipped more than 2.7m tonnes of plastic waste to China, ie two-thirds of plastic waste exported. PowerHouse estimates that around 30% of this plastic is non-recyclable and that if this was gasified, it would support 20 DMG facilities and generate 30 tonnes of hydrogen per day.
Outside the OECD the issue is simply one of dealing with rising volumes of waste arising from increasing urbanisation and growing populations. A report for the World Bank published in 2012 predicted that, without changes in behaviour, global solid waste generation was on track to increase by 70% between 2010 and 2025, rising from more than 3.5m tonnes per day in 2010 to more than 6m tonnes per day by 2025. The global cost of dealing with the waste is predicted to rise from $205bn/year in 2010 to $375bn by 2025, with the sharpest cost increases in developing countries. This presents significant challenges for the governments of developing countries. For example, in December 2011 Mexico City closed its main landfill site at Bordo Poniente, which at its peak had received 12,000 tonnes of waste per day, following initiatives to recycle or compost around half of the waste collected. However, no alternative disposal sites were allocated for the remainder of the waste, and plans to incinerate it were pulled following opposition from people living close to the proposed sites of incinerators.
Providing balance in the renewable energy mix
Energy demand in the UK fell by 14% (on a temperature-corrected basis) in the decade between 2005 and 2015, reflecting a continued shift from manufacturing to service industries, more efficient cars, better insulated homes and more efficient domestic appliances. UK government statistics predict that the total amount of electricity supplied will decline by 14% from 322TWh in 2015 to 276TWh in 2025. It will then return to 2015 levels by 2031 and reach a level 18% higher than 2015 by 2035. However, even though energy demand is expected to decrease in the short term, the power generation industry needs to address the challenges created by the closure of 72TWh of coal generation capacity between 2015 and 2025. The government survey predicts that 19TWh of natural gas generation capacity will be added during the period and 31TWh of renewable energy, increasing the proportion of energy generated from renewable sources from 25% in 2016 to 40% by 2025. This increase in renewable sources means that the power generation industry will need to invest in improved transmission networks to move the energy to where it is required, in storage (the government study estimates 3GW of battery storage by 2030) and in intermittent generation systems to address the variability in output from wind turbines.
Waste-to-energy is currently a very small proportion (3.3% in 2016) of all renewable energy generated in the UK, where at least 70 waste-to-energy facilities collectively output 2.7TWh power (source: wrap.org.uk). The majority of these are incineration plants, generating electricity during the time that the waste material is being burnt. In contrast, the syngas produced by PowerHouse’s gasification technology may be stored until additional generation capacity needs to be brought online to offset a drop in output from wind or solar sources, making it a better addition to the renewables mix. Moreover, the PowerHouse technology is scaled to be appropriate for disposing of waste close to where it is produced and generating electricity close to where it will be consumed, reducing the financial and energy cost of transporting both waste and electricity. In centralised power generation systems around 8% of the initial energy content in the gas is dissipated as the electricity is distributed over the grid to household or business premises. We note that the economics of waste-to-energy generation are different from wind or solar plants, because local authorities currently pay an average of £83/tonne for waste to be incinerated. This means that adoption of PowerHouse’s DMG technology is not dependent on green subsidies to be commercially viable, although it may be eligible for support under the Renewables Obligation scheme, nor does it need to achieve an energy conversion rate comparable to conventional generation systems.