Joe Carroll, left, and Martin Redeker, president and vice president of Montauk Ag Renewables, LLC, respectively, give an overview of their company’s operations during a Turkey town meeting back in December 2021.
Company says Duke interconnectivity not ‘viable’
TURKEY — A biogas swine waste-to-energy generating facility has run into obstacles that will render interconnection with Duke Energy Progress “infeasible,” with company officials facing inflated costs and longer timeframes to meet mandates to connect to the power grid — hurdles that are threatening the project unless modifications can be granted by the North Carolina Utilities Commission, the company said.
Back in December 2021, Montauk Ag Renewables, LLC, a subsidiary of publicly-traded Montauk Renewables, Inc., announced it would be locating ZNC Turkey Creek LLC off Highway 24 in the former Bay Valley Foods Distribution Center in Turkey. It has been working to bring the project to fruition since that time.
A March 5 letter sent by Brooks Pierce firm on behalf of ZNC Turkey Creek, LLC to Shonta Dunston, chief clerk of the North Carolina Utilities Commission, seeks a second amended New Renewable Energy Facility (NREF) registration.
The commission approved the initial registration in January for the Sampson facility, based on the provision of electric power from ZNC Turkey Creek to Duke Energy Progress (DEP), with the two having entered into a power purchase agreement last year. As part of that PPA, an interconnection request was submitted from ZNC to Duke.
According to the March letter to the commission, Duke provided ZNC a Phase 1 Report that identified several obstacles “which will render interconnection infeasible,” the company stated.
Specifically, preliminary estimates were that the cost of interconnection upgrades will total roughly $13.5 million, and ZNC will be required to construct, own and maintain approximately 5 miles of new conductors along newly obtained right-of-way to bring the point of interconnection to Duke’s first zone of voltage regulation.
The estimated lead time for the construction of the network upgrades is six years, the company stated in its letter.
“Neither the cost estimate nor the time-of-completion estimate factors in costs and time associated with the construction, ownership, and maintenance of 5 miles of new conductors on new right-of-way,” the company stated. “For these reasons, after significant investigation and due diligence, it has become apparent that the planned interconnection of ZNC’s facility with DEP is not presently economically feasible, nor, in any event, is it achievable within a time frame which would permit the level of investment required.
“Consequently, if the ZNC NREF registration cannot be amended as requested, the ZNC project will need to be terminated, along with the projected $1.2 billion in health and economic benefits to the rate payers in the low income and disadvantaged communities that the ZNC project will serve,” the company’s letter further stated.
Amending the NREF registration would permit ZNC to construct its facility without the need for interconnection to Duke’s grid.
“For the local community Montauk’s technology will address numerous social and environmental concerns associated with the hog production industry by permanently removing tens of thousands of tons of swine waste annually from the both the watershed and the low-income and disadvantaged communities that ZNC would serve,” the letter stated.
ZNC noted that it has worked closely with Duke Energy on the plans and “is authorized to represent that Duke Energy does not object to the commission’s acceptance of this amended NREF.”
In the Phase 1 Report, released by Duke in November 2023, it estimated that ZNC would be allocated $13.5 million in Interconnection Facilities and Network Upgrades costs and projected a 72-month lead time for transmission upgrades associated with ZNC’s facility. The Phase 1 Report also stated that ZNC would be “required to construct, own, and maintain new conductors along newly obtained right of way (outside of Duke Energy’s right of way) to bring the point of interconnection to the first zone of voltage regulation.”
However, company officials said that the $13.5 million cost estimate “did not include any costs associated with the required right of way, and DEP was unable to provide an estimate of such costs.”
Hoping to pursue interconnection if at all feasible, ZNC entered Phase 2 and engaged engineering and land use contractors in order to estimate right-of-way acquisition costs and analyze the feasibility of such a project. The results of that analysis “confirm that the costs and uncertainties associated with acquiring the required right-of-way are prohibitive,” the company stated.
According to the company, the shortest possible distance for the right of way is approximately 5 miles and crosses approximately 100 separate parcels. Factoring in the potential and highly uncertain costs associated with land acquisition, together with costs for maintaining and operating the right-of-way, ZNC estimated the total right-of-way costs — including land, construction, maintenance and replacement costs, as well as property, casualty, and liability insurance premiums — between $80 million and $100 million over the 15-year term of the PPA.
“Even if ZNC were able to procure easements from 100-plus landowners, it is estimated that the premiums for liability coverage associated with the maintenance of private power lines over the 15-year PPA term would likely add tens of millions of dollars to the project costs,” the company stated.
Even if all of the conditions could be met, construction of the grid interconnection could not begin until the right of way had been completely acquired and the privately-owned poles and powerlines had been completely installed, which would push the estimated interconnection completion date out to more than 100 months — in excess of eight years, company officials stated.
“Given all these factors, it has become apparent that interconnection with Duke is not presently feasible or viable,” the letter stated.
“While electrical interconnection with DEP is not feasible, ZNC remains committed to its mission of converting swine manure into renewable fuels,” the company stated. “In order to realize the benefits of the green energy production from its NREF, ZNC now intends to supply electrical power from its NREF to either or both planned swine manure processing and biofuels manufacturing facilities or other behind-the-meter uses. Electrical power supplied by ZNC’s NREF will directly offset energy that, under ZNC’s previous interconnection plan, would have been supplied by DEP’s electrical grid.”
Operations to begin this year
Upon the announcement of the Turkey plant in December 2021, Montauk officials said they anticipated a five-year process for the Turkey Creek facility to become fully operational. Company officials said earlier this year that the facility is scheduled to begin operation in the third quarter of 2024 and is expected to be fully operational at projected capacity by the third quarter of 2025.
Earlier in 2021, Montauk Renewables, Inc acquired Greenboro-based renewable energy company NR3, LLC, seeking to exclusively deploy the specialized, near-zero-emissions technology of NR3, which converts animal and agriculture waste into forms of environmentally friendly, 100% organic, renewable energy alternatives that can replace the three-primary fossil-fuels of the global energy infrastructure: oil, gas and coal.
Montauk retained the founders of NR3, Joe Carroll and Martin Redeker, long-time members of the agricultural community in North Carolina, with the focus placed on the enormous U.S. swine industry.
Some Turkey residents have said that, while they were in favor of tax base and jobs, they didn’t want it to come with potential odors, traffic, spills and a diminished quality of life. Carroll and Redeker, how president and vice president of Montauk Ag Renewables, LLC, respectively, have attempted at multiple town meetings in recent years to assuage concerns and said all protocols were being followed.
They explained the plan of conversion of animal agriculture waste to renewable natural gas, with a goal of reformulating renewable energy residuals into other a potential organic, pathogen-free, soil supplements and chemical fertilizer alternative renewable energy products. They were specifically focused on the conversion of swine waste and other biomass associated with the swine growing process.
The facility consists of a series of interconnected 200 kW Capstone micro-turbine generators and auxiliary equipment. The facility is fueled from swine-derived biogas, which is fed to the micro-turbine generators from a biogas storage vessel. Auxiliary loads, including turbine control and monitoring equipment, lube oil pumps, and exhaust fans, are powered with un-metered electricity supplied by the micro-turbine generators.
In the March letter, it was explained that, through the amended NREF, electricity produced in excess of auxiliary loads will not be sold to the local utility, but rather supplied to ZNC Turkey Creek’s swine manure processing and biofuels manufacturing facilities, offsetting power that otherwise would be sourced from the electrical grid.
“Through this amended NREF, ZNC is seeking to leverage technology of its affiliate, Montauk Ag Renewables, which transforms swine waste into useful products,” the company stated.
To aid in evaluating the potential public benefits associated with this technology, Montauk engaged Dr. Michael Walden, professor emeritus of North Carolina State University and president of Walden Economic Consulting, to analyze and present estimates of economic benefits of applying Montauk’s technology to the region where ZNC’s facility is located in Turkey.
In his report, Walden notes that Montauk’s technology, upon implementation, would be a “revolutionary development” in the sequestration and removal of hog waste.
Walden projects annual economic development benefit of $145.5 million from the removal of hog odor; an increase of $36.2 million in annual revenue associated with hog farm expansion; and approximately $215.8 million in annual economic benefit associated with removing CO2e emissions in the region.
Redeker has said the ag waste issue is one that has only compounded over the years, and businesses like Montauk were needed to alleviate what is a pressing issue that won’t get any better. There are no smokestacks and no emissions, company officials said. He noted the bio-gas, bio-oil and bio-char that is produced as part of the process.
“We are very excited to be working to open a facility in Sampson County and believe it’s a great place for our business to take the next step in our development,” Carroll stated previously. “We look forward to working with the county, and the great people living there, to offer quality, stable jobs, while working to positively impact the environment.”
The goal, company officials said, is to operate in a centrally located facility that has quick access to surrounding farms, where solid waste is taken from the hog houses and transported to be processed. That waste would be processed within seven days, because after 7-10 days is when that material tends to degrade, at which point valuable nutrients are lost and an odor might become an issue.
“There is more opportunity for us here in Duplin and Sampson County than there are most other places in the United States,” said Carroll. “There’s more hog farms here than just about anywhere else.”
Once at full capacity, the operation of ZNC’s facility in Sampson will generate 271 permanent jobs, $20.5 million annually in labor income and benefits, and $145.1 million annually in gross business revenues in the region, according to Walden.
Additionally, at full build-out Montauk’s investment is estimated to generate economic and health benefits to the low income and disadvantaged ratepayers in the communities that the project will serve totaling between $658 million and $778 million annually, or $9.8 billion to $11.67 billion over the initial 15-year term.