Last month, Billy’s Chowder House in Wells, Maine, started using the 6,000 gallons of waste vegetable oil it produces annually to produce its electricity and heat its water. The restaurant uses a Vegawatt waste vegetable oil generator, created by James Peret, president and CEO of Owl Power Company in Westport, Mass.

The refrigerator-sized Vegawatt produces renewable on-site power and hot water from used vegetable oil—up to 120 gallons a week. The system delivers electricity in the same way as a solar electric panel. I talked with Peret about how Vegawatt works. Excerpts of our conversation are below.

How did you get into the cooking oil business?

I graduated from Rensselaer Polytechnic Institute with a mechanical engineering degree. I got a job at Insight Product Development, where I got practice in how to take a crazy idea and turn it into something.

I had started looking into biodiesel and was turned off by the danger of it--people burn their garages down every year trying to make biodiesel for their cars. And not only is it dangerous, it’s labor intensive. Biodiesel requires the use of caustic chemicals and fossil fuel products and produces a significant proportion of glycerol.

So I went from there to straight vegetable oil.

What was your solution?

I had the epiphany—I could develop this product that could fit in the back of a truck and could pump heat into the restaurant, offsetting their hot water cost. So the vegetable oil is replacing natural gas and electricity. And there’s none of the inherent losses associated with grid transmission—up to 25 percent of that energy is lost in transit—because we’re right behind the restaurant. Traditional power plants are maybe stretching the truth a little bit when they talk about efficiency—most are 35 percent efficient. My little box is up to 93 percent efficient.

So we’re displacing electricity from the grid, natural gas from the environment and saving a lot of petroleum fuel from not hauling it around.

What’s the current situation with restaurants and their waste oil?

Health code says you have to dispose of it in a safe manner. It’s unsafe to pour it down a drain. Lots of money is dedicated to cleaning out what’s called FOG--fats, oils and greases. Some restaurants were at one point getting 25 cents a gallon. Now most restaurants pay to have their waste oil removed.

How much oil might restaurants go through in a month?

Fine fish restaurants might consume 60, 80, 100 gallons a week. More typical non-chain restaurants: 40 to 60 gallons. And 120 to 200 gallons a week for a supermarket or college/university.

How big is your Vegawatt, and what is the cost for restaurants?

It’s about the size of a two-door commercial freezer, or two soda vending machines. The unit will pay for itself in two to four years. The savings generated from the smallest one will be $7,000 a year. From the largest, over $25,000. And with all the federal and state incentives, the payback could be as little as six months.

How many have you sold?

Twelve. They range all over—a couple seafood restaurants, two major chains, American University, a Marine Corps base in California.

How long does the process take?

Turning it on is just turning a switch. Pouring oil into the drum will be recognized by the system. It will turn the engine on, clean and refine the fuel, consume all the oil that’s deposited and shut the engine down. The oil can come straight from the fryers.

How does vegetable oil energy compare to other types of alternative energy?

Comparing it to the more well-known green energy sources—wind and solar--our 5-kilowatt system produces power 24/7. Whereas solar only produces peak power at noon and nothing at night. So our system is comparable to a 30-kilowatt solar panel which retails for half a million dollars. We have dramatic savings because we operate at a small level continuously.

The economy of scale is small. Basically everyone tries to build a bigger system, but with oil, if you build a bigger system, you get bigger overhead and negative benefits. By being a small co-generator on site, it’s very efficient. If we were 100 times larger, we’d have trucks, the trucks would have drivers and we’d have a very large central combustion unit.

American University is using Vegawatt. Read about it here: AU: One of nation's greenest campuses, thanks to cooking oil and more.

This post was originally published on Smartplanet.com