A complicated financing deal led by New Energy Capital of Hanover, NH, has provided $23.5 million for a renewable energy project in San Diego that uses methane gas from a sewage treatment plant to generate electricity from advanced technology fuel cells.

Construction is scheduled to begin next month on a “biogas” purification system developed by BioFuels Energy, an Encintas, CA, startup founded in 2007 to process gas generated at landfills, sewage treatment plants, and at large livestock facilities into usable methane. The plan calls for installing the gas processing at the Point Loma Wastewater Treatment Plant and the South Bay Water Reclamation Plant, which are both operated by the City of San Diego. The city currently flares methane gas generated during the sewage treatment process.

Molten carbonate fuel cells made by Danbury, CT-based FuelCell Energy (NASDAQ: FCEL) will be installed at the two treatment plants and on the campus of UC San Diego, according to Byron Washom, UCSD’s director of Strategic Energy Initiatives.

The fuel cell power plants at the three locations will be configured to provide heat and electricity, and excess methane gas will be injected into the natural gas pipeline delivery system operated under an energy credit initiative approved by the California Public Utilities Commission.

Methane needed to operate the largest fuel cell, a 2.8 megawatt plant at UCSD, will be supplied by San Diego Gas & Electric under the arrangement. Washom said the energy credit scheme, which is a first in California and probably nationwide, is comparable to withdrawing cash from an ATM in San Diego after making a deposit elsewhere. In this case, methane gas from the sewage plant is being processed to meet utility standards and injected into a gas pipeline near the sewage treatment facility in Point Loma. Meanwhile UCSD is withdrawing a similar amount of gas elsewhere for its power plant in La Jolla. The City of San Diego also plans to withdraw gas to power a sewage pumping station in Otay Mesa.

“We’re taking a waste product that is currently being flared and using it to … Next Page »

Bruce V. Bigelow was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Follow @bvbigelow

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