Eric Villagómez
Director of Operations
Verde Alterno
/
Insight

Venturing Into Innovative Waste-Energy Projects

Wed, 02/24/2016 - 11:30

Verde Alterno has positioned itself in the Mexican energy efficiency sector due to its innovative use of LED lighting. However, the company decided to expand into new territories, entering the relatively risky area of waste-toenergy. Eric Villagómez, Director of Operations at Verde Alterno, says his company has three landfill projects: one generating 1,000t/d, another of 500 tonnes, and a small one of 150-200 tonnes. “In the early stages, we considered the idea of installing processing plants in these landfills, but then we realized the opportunities represented by waste-to-energy,” he explains. Verde Alterno is presenting an integrated solution, as it will provide municipalities with energy generated from waste, with additional energy savings resulting from the company’s LED lighting solutions

Villagómez thinks navigating this sector is a rather complicated endeavor, since most of the large landfills in cities, and even the concessions of trash collection, are contracted to large companies. The development of these projects will depend on the size of the landfills and Verde Alterno’s chosen partners. “Landfill projects that are between 300-1,000 tonnes will be developed alongside our commercial partner, a Mexican company. While there is a lack of Mexican manufacturers for biogas engines, we will be using top of the line equipment imported either from the US or Europe,” details Villagómez. The Mexican company will provide the turnkey solutions and Verde Alterno will be in charge of obtaining the capital, permits, and interconnectivity agreements. For projects exceeding 700 tonnes Verde Alterno has spotted an ideal Spanishbased partner. In this case, the Spanish partner will focus on the financing and construction, and Verde Alterno will be in charge of obtaining the permits, sites, and PPAs. Villagómez says there is a third option, with a European company providing the investment, but this option is onlyviable for projects that exceed 1,000 tonnes and cost at least US$331 million.

Villagómez points out that obtaining financing is a crucial component to the development of these waste-to-energy projects. “When approaching entities like NAFINSA and Banobras, they ask for 40% equity, which roughly equates to US$12 million. This impedes many companies because they are unable to meet this requirement,” he shares. “After approaching private banks, risk capital banks, the InterAmerican Development Bank, Banobras, and the World Bank, we found a US fund that helps us in the financing of the projects that oscillate between US$40-100 million.”

Eduardo Silva, the company’s Director General, is swift to note that the technology that goes into a waste-to-energy project is extremely complicated, so developers must always make sure they are choosing the right equipment that suits the characteristics of the site. He explains that studies have to be carried out prior to the development to ensure the correct gas on-site. At the moment there are many municipalities being fined for establishing landfills of less than 500 tonnes due to the contamination caused. These municipalities do not have the financing to invest in a proper landfill site and they are a tempting business opportunity for budding developers like Verde Alterno.