Crain’s Indianapolis: Landfill generation a gas for Wabash Valley Power

View All News

In White County, a place where wind turbines dominate the renewable energy landscape, it’s what’s under the soil that’s of most interest lately to Wabash Valley Power Association.

This October, the Indianapolis-based generation and transmission co-op, which serves 23 member companies in three states, switched on its biggest generating plant from garbage yet, the 6.4-megawatt Liberty III unit at a Waste Management landfill.

The power association’s 16th landfill gas unit since 2002 has burnished the agency’s reputation as king of the hill when it comes to landfill gas power in Indiana.

In fact, Wabash operates two-thirds of the 24 landfill gas units in the state, based on the Environmental Protection Agency’s 2016 site inventory.

Crunching those numbers shows Wabash helped Indiana earn the distinction as 9th among states (tied with Georgia) with the most of these methane-burning peculiarities. That’s in contrast to a utility industry enamored with hugely expensive (and thus profitable for shareholders) natural gas and coal-powered plants.

Wabash isn’t finished with its garbage-to-gas-generation empire, now capable of generating 54 megawatts, or enough to power 40,000 homes for a year.

It could add seven more 3.2-megawatt plants through 2034—providing another 22.4 megawatts, according to its 2015 integrated resource plan filed with state utility regulators.

Of course, that’s a long way out to say for sure. But, says Lee Wilmes, WVPA’s executive vice president for risk and resource management, “we’re always looking.”

Value in diversification, less volatility

At 54 megawatts, landfill gas is still less than 5 percent of Wabash’s total capacity, according to the figures in its 2015 annual report. But the investment is significant, according to Wilmes. Beyond the obvious environmental benefits, one upside of landfill gas is that it diversifies the fuel mix beyond coal, natural gas and wind, he said. And in the annual report, Wabash officials noted landfill gas and wind will help fill the void in its supply portfolio caused by the closure of a synthetic gasification plant and steam turbine at its West Terre Haute plant.

“We really design our supply portfolio for diversification,” Wilmes said. “We’re motivated to bring stable, low-cost rates to our members.”

The capital investment for such plants is small. According to the EPA, a typical 3-megawatt engine and generator and related components generally costs around $5 million.

In its 2015 integrated resource plan, Wabash estimated that a landfill plant has a total average cost of $43 per megawatt hour, as compared to $42 for a combined cycle gas plant.

Landfill plants also incur less volatility than natural gas or coal units.  Beyond the initial construction costs, the price of the methane is essentially fixed under the contract with the landfill operator.

Moreover, landfill units are a potential source of secondary revenue. They’re classified as renewable energy and as offsetting carbon dioxide, so they can be monetized as greenhouse gas reduction credits.

“They’ve become a good, reliable, steady, low-cost renewable resource for us,” Wilmes said.

Not front-burner issue

Wabash isn’t alone in landfill methane generation in Indiana.

Since 2007, Bloomington-based Hoosier Energy Rural Electric Cooperative has been operating a 3.5-megawatt unit at Clark-Floyd landfill downstate. It’s latest and greatest is a three-engine, 14-megawatt unit at Republic Services’ 460-acre Livingstone Landfill in Pontiac, Ill.

But landfill gas generation is an issue that rarely comes up in Indiana’s regulatory scheme, where proposals for coal and natural gas baseload units are hotly contested.

“Landfill gas is not a resource that we’ve spent a lot of time looking into, primarily because it’s kind of a no-brainer,” said Kerwin Olson, executive director of Indianapolis-based Citizens Action Coalition, which advocates for consumers in rate cases and generally favors diversification.

“Yes, we should be doing a lot more of it …. Last time that I checked, landfill gas was a fairly inexpensive resource with very low capital costs. We need to enable and incentivize both the owners of landfills and the utilities to invest in the projects.”

But Olson said a lack of public policy in Indiana related to clean energy and emission reductions “is likely playing a role in the lack of investment.”

With or without incentives, about 652 landfill gas generation projects have sprung up around the country, a more than 300 percent increase since 1995, according to the EPA.

The agency estimates 415 additional landfills could cost-effectively use their methane for power generation.