Monday, September 3, 2012

A Successful Clean Tech Failure

An article in my local newspaper points to the success that the free market, if allowed to work, can have to weed out non-viable renewable energy projects.

An article entitled “Too Little of Litter” in the Harrisonburg (VA) Daily News Record describes the recent decision of Fibrowatt LLC to abandon plans to build a poultry litter-to-energy plant here in Virginia’s Shenandoah Valley.

The Commonwealth of Virginia had undertaken a feasibility study of the proposal, but stopped it in June 2012 after learning that Valley poultry operations produce about 345,000 tons of litter per year, in contrast to Fibrowatt’s estimates of close to 500,000 tons annually.

Fibrowatt had originally proposed in 2010 constructing a 40–55 megawatt litter-to-energy plant in Page County, Virginia, but very heavy local opposition to the project led the company to abandon that area as a potential site; they did not subsequently name an alternative location.

The Virginia Tech study by Dr. Jim Pease found, in addition to providing more realistic estimates of annual Valley litter production, that “demand for litter as a fertilizer in the central Valley exceeds the current supply … [f]armers would have to spend more than $13 million collectively to replace the litter needed for fertilizer that would be lost to the plant’s fuel needs,” according to today’s news article.

This is a successful clean tech failure. Market factors and local opposition were used by Fibrowatt in its decision to abandon the project. Government incentives (e.g., loan guarantees, grants, favorable tax rates, infrastructure support) were not lost by a business that went bankrupt. Taxpayers were not left holding the bag. Government agencies were not involved in choosing renewable energy winners and losers.

The market worked, as it can and should if allowed. Kudos to Fibrowatt for making an appropriate business decision, and to state and local officials for not spending taxpayer funds on a project for which there were insufficient raw materials.

Learn more about clean tech innovation.