Restructuring Plant Operations and Contracts to Make a First Generation RDF Plant Competitive in a Cost-Driven Market

Abstract

In 1989, United Power Association (now Great River Energy) and Northern States Power (now Xcel Energy) formed a partnership and entered a 20 year contract with five local counties to turn MSW (municipal solid waste) into RDF (Refuse Derived Fuel) and combust the RDF in converted grate-fired boilers in Elk River, MN. Great River Energy owned and operated the Energy Recovery Station (ERS) and Xcel Energy operated the Resource Processing Plant (RPP) a few miles away. The Resource Processing Plant processed 400,000 tons/year of MSW into RDF for the Energy Recovery Station and other RDF plants owned by Xcel Energy. The project was successful, but required significant subsidies from the counties to maintain competitive tipping fees. At the end of the original 20 year contract, a number of the counties wanted to reduce or end any subsidies and restructure the contracts. In the fall of 2009, lack of contracted MSW created difficult financial conditions that threatened to end the project and divert 400,000 tons/year of MSW to area landfills. In May of 2010, Great River Energy purchased the Resource Processing Plant and reorganized the project to be able to better control operating costs and maintain competitive electric rates for its customers. In 2011, Great River Energy restructured processing contracts with three of the original counties and also directly contracted with the regional MSW haulers while implementing sweeping changes in the processing of MSW. A cleaning system was installed to increase the value of the ferrous material collected during the production of RDF. The installation of a bulky waste shredder and processing changes increased the efficiency of converting MSW to RDF. In addition, the recovery of non-ferrous materials from the MSW and heavy residue was optimized. In one year of operation, the Resource Processing Plant has increased RDF production from 84% to over 95% and decreased landfilling to near zero while increasing the revenue from recovered materials. County subsidies have been significantly reduced and will phase out after 2015, tipping fees have been adjusted to be competitive with local landfills, and electric costs have been stabilized at comparable renewable energy rates.