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Local Energy and Compost Project Can Save $4 Million to $38 Million

posted Mar 15, 2011, 12:24 PM by Bob Wenzlau   [ updated Mar 29, 2011, 12:08 AM by Cedric Pitot de La Beaujardiere ]
by Cedric de La Beaujardiere, Co-Chair, Palo Alto Blue Ribbon Task Force on Composting

An economic feasibility study indicates that through public-financing of a local Dry Anaerobic Digestion (DAD) facility, the City and rate-payers could save $4 million over a 20-year period, compared to the City's default plan, and save $8 million compared to sending our food-waste to San Jose. Furthermore, if the City received a 30% grant, we would save $19 million over the same period, or the equivalent of nearly $1 million per year.

These are some of the options being studied for what to do with the city's organic wastes (food scraps, yard trimmings, and sewage sludge) after the landfill closes next year, and in the face of needed upgrades to the City's aging sewage sludge incinerator. Currently, yard trimmings are composted in windrows at the landfill, food scraps are sent 53 miles away to Gilroy, and the sewage solids are incinerated. When the landfill closes, a 1965 ordinance says it must be converted to Byxbee Park, so the city's default plan (referred to as Case 3 in the study) is to send yard trimmings and food scraps for composting in Gilroy, and to continue to incinerate our sewage sludge. A variation on that would be to send the food-waste to a regional DAD soon to be built in San Jose (Case 2). In contrast, the local DAD facility would convert Palo Alto's organic wastes into renewable energy and compost, and reduce or greenhouse gas emissions by the equivalent of more than 11,000 metric Tons of CO2 each year, all while saving millions of dollars (referred to as Case 1a, Sensitivity Analysis #3). These net savings include debt financing for the capital construction costs.

What's more, there are reasons to believe that the savings will be even greater as the study is refined, because certain costs have not been included in the default option. These include increasing fuel costs for transportation and long-term maintenance costs of the sewage sludge incinerator past its remaining 10 year of life and to conform to likely new regulations on emissions such as mercury. Furthermore, while a 30% contingency has been applied to the local DAD option, no contingency was added to GreenWaste's rough quote of $85/ton to accept food-waste at its yet-to-be-built DAD facility in San Jose. A 30-year study-horizon would likely show even greater over-all savings for the local option.

Another local option is to use Wet Anaerobic Digestion (WAD) for our sewage and food-waste, and to compost the digestate with yard-trimmings. WAD is a proven technology for handling sewage, so it would not be subject to the high 30% contingency which was applied to the local DAD, and so would be an affordable alternative. However, compared to DAD, WAD uses more energy to move all the extra water around, so its net energy production and GHG offsets are lower.

The Palo Alto Green Energy and Compost Initiative currently being circulated would put on the ballot a vote to make 10 acres of the former landfill adjacent to the sewage treatment plant available for a facility such as the Dry Anaerobic Digester. If we get enough signatures to qualify the initiative for the ballot, and if the initiative passes, it would then be up to the City Council to choose a municipal organics management option.

When the study first came out, most people (including myself) got hung-up on the year-1 costs, and failed to notice the year-20 and 20-year total costs. Or we looked at the private financing of the facility (Base Case 1a), which made it seem like the Dry AD was more expensive, and didn't look as closely at the public financing option.

The study's Preliminary Cost Analysis Summary ( indicates the following:

This shows that, over a 20 year period, the public financing of local Dry Anaerobic Digestion (Case 1a Sensitivity Analysis #3) saves $4 million compared to Case 3, and saves $8 million compared to Case 2. With a 30% grant (Case 1a Sensitivity Analysis #2), we save the rate-payers $19 million to $23 million, which comes out to about $1 million a year in savings through handling our wastes locally.

Phil Bobel has indicated that a Fluidized Bed is the technology that would likely be used if the sewage treatment plant were to try to keep the incinerator operational beyond its expected lifetime. He has estimated that a Fluidized Bed would cost in the “tens of millions of dollars”. From this estimate, we can expect to add about $20 million to the lifetime cost of Cases 2 and 3. If a 15% contingency is added to the estimate for processing food waste at the San Jose DAD, this adds $3.6 million to Case 2. CO2 emissions cost adders are estimated to range from $20/ton to $60/ton. If there were a conservative $20/ton CO2 emissions cost added to all the alternatives, they would cancel each other out except for the differences in emissions between them. Case 2 emits 11,796 Metric Tons more per year than Case 1a, increasing its cost over 20 years by $4.7 million. Case 3 emits 11,183 Metric Tons more per year than Case 1a, increasing its cost over 20 years by $4.5 million. In total, Case 2's cost increases by $28.3 million, and Case 3's by $24.5 million. If we then update the 20-year costs from the table above with these adjustments, the comparison becomes:

With these cost adjustments which we expect to see in the final feasibility study, the Local Dry AD option becomes the most affordable, whether privately or publicly financed. The publicly-financed Local Dry AD now saves the city and rate-payers between $30 million and $38 million over the 20 year study-horizon.

It's not that often that doing the right thing, taking care of our own wastes while reducing our green house gas emissions, also saves us money. This is a great opportunity for the City that we would be foolish and irresponsible to pass up.

Bob Wenzlau,
Mar 15, 2011, 12:37 PM