Waste to Fuel Technologies: Why investors are interested

The high cost of energy resources is an obstacle for companies around the globe.  The common concern is the scarcity of traditional fuel sources, which has led investors and entrepreneurs to investigate non-traditional sources as viable alternatives.  Technologies that transform industrial waste into energy are becoming popular in global markets, as evidenced by recent endeavors and funding.  Even Biofuels Digest notes “There’s nothing growing faster in the bio-based world than waste based projects.” in a recent newsletter

According to a report by Boston’s Lux Research, in 2010, investors placed $930 million into alternative fuel technologies; however, funding for companies with technologies capable of using a variety of feedstocks or generate a diversity of end products was at an all-time high of $698 million that year.

The increased funding is not simply from an increase in market participants; Lux notes that investors’ selectivity is also increasing; investors are providing larger amounts of funding to fewer companies and tend to select companies that are flexible in the feedstocks they use or deliver an end product that can provide secondary revenue streams and limit price volatility impacts.  New corporate investors are also expected to participate in the waste-to-fuel arena; specifically, Lux predicts waste management companies will be the next investors.

A number of local entities are exploring flexible technology endeavors.  One company is using their technology to take advantage of on-site waste production.  Feed Resource Recovery’s pilot operation provides restaurants and supermarkets the opportunity to use on-site waste processing systems to convert discards food waste into renewable energy and organic fertilizer.

Even quasi-public government entities have gotten in as investors.  A funding round last year, by Arlington, MA based Purpose Energy, whose technology recycles brewery waste into energy, attracted Green Mountain Power and Vermont’s Clean Energy Development Fund.  The company creates a biodigester that converts the brewing process’ waste byproduct into a burnable gas that can make electricity and be sold to local electric utilities.  Meanwhile, the brewery reduces its waste disposal needs and costs. 

Why are these endeavors so valuable to investors?  One key to their popularity appears to be in their flexibility.  The variety of feedstocks makes these technologies applicable in a diversity of industries and installations, allowing for large-scale rollout.  Meanwhile, the endeavors also carry strong protection against volatile prices.  Producing a usable end product doubles the value of these services, offering businesses a tool to reduce end costs for waste cleanup as well as a source of fuel for future use.  Investors are starting to recognize the dual roles of these technologies and are showing real interest in them.