Alaskan Brewing Co. has entered the final stage of a 16-year process in setting a precedent in renewable energy. The Juneau-based brewery has a new boiler to make its own malt waste a sole energy source and has been selected for nearly $500,000 in federal money to finish the job.

Alaskan Brewing is in the commission and testing phases of a $1.8 million steam boiler fueled entirely by the company’s own spent grain. The grain is a protein-rich material that lends itself thoroughly with the combustion technology the company has been perfecting.

The idea is that the new boiler will eliminate the brewery’s fossil fuel use in the grain drying process and displace more than half of the fuel needed to create process steam in the brew house.

The brewery is currently a fairly intensive oil-related operation, currently running the grain dryer and other process heating from oil. Engineers estimate the completed boiler will help save an overall energy usage from oil and corresponding carbon emissions by more than 70 percent. This translates to a savings of nearly 1.5 million gallons of oil over the next 10 years.

The boiler was actually built last year and did an initial startup toward the end of the year. Testing showed the need for additional modifications. The company currently is waiting for additional design modifications to come and engineers hope it will be back up within a few months.

Brewing operations manager Brandon Smith said the entire system hopefully would be completed and running by the end of the first quarter this year and no later than the second quarter.

“This fuel, nobody’s ever burned it commercially before,” he said.

The U.S. Department of Agriculture has selected Alaskan Brewing for $448,366 in Rural Energy for America Program funds to support the development. Despite being a capital city, Juneau’s demographics still qualify the brewery for a rural development grant. Alaskan Brewery communications manager Ashley Johnston said the grant would hopefully offset up to 10 percent of the overall system costs. Smith said paperwork is under way for the official approval, which will be done after the completion of the project. This grant represents the highest amount an Alaska business has been awarded from the USDA Rural Development’s business division. This has been active in Alaska for three years, during which it has approved 49 projects.

USDA business and energy specialist Chad Stovall said the business division typically gets $200,000 to $250,000 a year for projects. The national office must approve anything over that amount, which was how Alaskan got its unusually high appropriation.

Stovall said that eligible areas are those with populations under 50,000, qualifying all Alaska municipalities besides Anchorage.

Alaskan will not accept the grant until after the project is completed, after which the money will be used to continue testing while helping mitigate some of the risks involved.

Smith said that since the company is so close to the end of the project, it made more sense to wait until they can document that the entire project works successfully. He said this also shows they are as much a partner in the risk of this as the government and taxpayers.

The whole thing started in 1995, when Alaskan Brewery installed a $900,000 grain dryer along with its brewhouse. The company used it to process the grain byproduct so it would make it through shipping times to be used as cattle feed in the Pacific Northwest. Shipping was necessary since there were no local farms to take the grain. About half of this byproduct was also used as a fuel source to heat the dryer itself.

Engineers have spent this time learning how this product burns to get the system where it can use more than half the source, since grain burns differently than many other products.

The brewery expanded on this in 2008, with the installation of a $1.7 million mash filter press to produce a finer grain with less moisture from the brewing process. The almost coarse powder makes for a better fuel source.

The better fuel produced by this press inspired them to invest in a system to convert this fuel for all of its energy, expanding it beyond just heating the dryer. Studies and consulting helped bring about the conclusion to use this boiler system as its sole fuel and still be able to get enough steam to run the dryer and have enough steam left over to power other brewing operations.

“The sky’s kind of the limit there,” Smith said. “It’s a very exciting thing.”

The cost of shipping the waste south versus keeping it here for use also adds up. Smith said Alaskan Brewery differs from other breweries that can give spent grain away for free since there are nearby agriculture sources to make use of it. Alaskan must ship its spent grain, which builds costs in unloading what is essentially a waste product.

“If you look at the value of a spent grain as a fuel in terms of the energy content in it versus its value just as a waste material, it goes from a net value of $30 a ton up to $350 a ton,” Smith said.

Johnston said this project represents a huge cost for a small operation, particularly one in a unique location like Juneau. She said capital could be a big challenge even though the brewery is successful.

“We are investing a lot of time and capital into our spent grain energy system, but we are confident that it will pay dividends in the future — for both the brewery and for Juneau,” she said.

Adding to the uniqueness of the operation is the absence of grain used as a sole source of energy in other small businesses.

“We did a patent search just to make sure we weren’t stepping on anybody’s toes and as far as we can tell we’re the only ones in the world that are going to be using spent grain as the sole fuel source for a steam boiler,” Smith said.

He said other breweries in Europe have tried using it as a sole source but were unsuccessful, while others have used it as a co-fuel with other sources.

“We’re certainly excited to pioneer this,” he said. “Whether we envisioned we would end up where we are today, who knows. But looking back it was certainly an integral part of it, putting in that first grain dryer.”

Smith is hopeful that this process, combined with the grant, will serve as an example to other breweries.