Complete transcribed – and audio clip – of Grimsby Energy’s July 16 update to Grimsby Council

Grimsby Council Meeting – July 16, 2018

Town Hall Grimsby

Public Delegation by Grimsby Energy chair Shaffee Bacchus

Editor’s Note: The following is a transcribed passage – and audio clip – from the July 16 meeting of Grimsby Town Council at which Grimsby Energy chair Shaffee Bacchus made an oral report, refusing to provide note or a written version of his presentation. As part of the delegation, new hire Brian Hughes, site engineer at the biodigester, was also in attendance.

Mayor Bob Bentley:

Next we have Mr. Shafee Bacchus, the chair of Grimsby Energy Inc., to bring us an update on the biodigester.

Welcome Shafee. Welcome Brian.

Shafee Bacchus:

Thank you Mr. Mayor and members of council. I know I have 10 minutes on the clock. You stress that with me and so and I know you have a tight schedule so I will try to be brief. So, I am going to read from some notes that I have so if you can excuse that for a minute. I would like to begin by saying that most of 2017 was occupied with the final construction of the biodigester plant and I am here tonight to update you on what has been happening since then.

We received our, oh, the mic, sorry. Ok, sorry – I would like to begin by saying that most of 2017 was occupied with the final construction of the biodigester plant and I came to you back in, I think it was in July of last year, to give you an update on that construction.

We received our operations manual in April 2017 from Novatec, which is a German company that designed the plant and we hired our four permanent members staff to operate the plant.

The commissioning process began in 2017 and by July the construction was approximately 99% complete. I would like to digress for a moment to introduce Mr. Brian Hughes who is sitting in front here. He is a certified professional engineer and has been hired as our on site staff engineer. Brian comes to us with a wealth of engineering experience having worked for the Region of Niagara, the City of Hamilton and the City of London. Also on our staff is Mr. Adam Farkus (sp) who was suppose to be here tonight, but had an emergency and could not attend. Adam is our lead hand on site and is involved on a daily basis with operations and maintenance of the plant. He has been with us since commissioning of the operations so he is very well versed in the operations of the plant. He is assisted by two other individuals all of whom are on call 24 hrs. The plant requires on call 24 hrs because it is operating on 24 hrs basis 7 days a week.

Significant in 2007, 17, was an application to amend or renewal of energy certificate for the plant to receive source separated organics as a future feed stock. This was inadvertently omitted from the original documents that were submitted for approval. The application raised a number of concerns from members of the public in particular the perceived notion that we would be processing bio-solids.

These concerns were addressed by explaining to a public process through the newspapers that there was no intention of presently using SSO’s in it’s basic form but it was necessary for the amendment to take place for the certificate to be complete.

In the future if this were to occur it would require modification to the plan and for the capital investments. After the plan was commissioned for operation in August 2017, we experienced our first production of gas that generated electricity to the grid as planned. Although this was minimal at the time, given the anaerobic digestion of the process, it was never the less sufficient to prove the plants operation as a success.

Since that time the plants production of gas has been increasing slowly each month of it’s operation. This is expected to continue into 2018 as we progress through a slow learning curve, in particular where a combination of different feed-stock input is concerned.

Critical to the success of the operation of the plant is the supply of feed stock. In this regard, we have contracted with suppliers to ensure an adequate supply not only in terms of volume but also in terms of variety that would generate maximum gas output. Important in the digestion process is the fact that it takes approximately 125 days for a combination of inputs to produce gas. And this depends on the type of feed stock. Here, for example, sugars and certain types of food waste such as discarded dog food and fats and oils and greases will speed up digestion, but an incorrect combination of these feed stock, also, can cause the process to produce excess gas which is not usable as well as liquids much as though you are having a case of indigestion – so it is a balancing act.

You need to think of the biodigester plan as your stomach and whatever you put in, a couple of things happen to you. You have gas and you have digestate which is the end product and you have liquids. So its really the same combination and how you feed the plant. We feed the plant daily at the rate of 80 cubic metres of feed stock. So that is essential that we have sufficient quantity of the right combination of foods available. In terms of the feed stock we have been successful in negotiating the mid- to long-term contracts from several local and out of town sources at minimal cost to us.

In fact we have negotiated a few contracts where by we receive an engine fee. We are not allowed to charge a tipping fee because we are not a landfill site. Ah so we are allowed though to charge an engine fee. In return for accepting certain feed stock. This will amount to approximately $155,000 per year in extra revenues which were not previously anticipated. And that’s a good news.

At the moment we have three bunkers were the feed stock is stored and there is a provision to add another three in the future. We have also entered into an agreement with the Niagara Region to lease the decommissioned Park Road landfill site, which is right next door to the site. We are leasing this to grow grasses as part of the plants feed stock.

I will note that depending on weather conditions at times there is odour.

This is mitigated by covering the feed stock when not in use as required by our certificate. This is something we have to do. I will also note that the Ministry of the Environment has assigned an officer particularly to the site, who monitors the sites performance regularly for compliance with the approval certificate to ensure the operation remain within the ministries guidelines at all times.

There have been some public complaints made to the ministry of the environment relating to odour in the vicinity. However, in all instances where the plant is concerned these were address to the satisfaction of ministry and documented as required by the approval certificate. And sent to the ministry.

From September to June of this year revenue from electricity produced has been increasing monthly at an average rate of approximately 5%. This is expected to continue as the plant approached full capacity which is anticipated by the end of 2018 or early 2019. At the present time we are at approximately 90% capacity or approximately 7,800 hours of production time an average per year.

Apart from the engine fee mentioned previously another source of revenue which we are currently investigating is the sale of the end product digestate as a fertilizer to farmers. An application for this to take place is currently being reviewed by the Federal Nutrient Management regulations to certify the digestate as processed agricultural source material. This will earn us extra revenues which was not anticipated when we

first developed the plan. We anticipate approval in the coming days. When this occurs we will receive a fee for each ton of digestate we are able to sell as fertilizers to the farmers in and around the area.

As we proceeded into 2018 we anticipated a higher degree of success in terms of the plants operation and production of gas and electricity. This should meet anticipated expectations when the plant’s construction proposal was first considered in 2010.

I will note that we have also entertained several enquires for partnerships and also for capturing excess gas and converting the same into renewable natural gas. These are all on the table for discussion and no decisions have been reached in respect to these inquiries as yet. Never the less this is another potential source of revenues should this take place in the future.

The good news is that we are beginning to service our debt to Novatec the German company and the bank and we will be remitting revenues to the Town on a regular basis beginning in October of this year. I will conclude by saying the plant’s operation is progressing as anticipated and we will continue to generate revenues for the town in the coming years.

Thank you, Mr. Mayor.

Mayor Bentley:

Thank you, Shafee. Are there any questions from the members of council? Alderman

Wilson.

Alderman Dave Wilson:

Through you to Shafee. Shafee, I still get the question, how come it took so long for them to get that thing going? I know some of the reasons, but give me a couple.

Mr. Bacchus:

Uh – The biggest reason is the approval of the application. It took three years just to get the approval of the application. Then we had to deposit a large sum of money to satisfy any environmental concern. The money which we will never get back, because as long as the plant is operating that has to stay with the ministry. Then we had weather conditions to deal with. And the last and the previous three years we had severe weather conditions. Uh, rain, snow and ice. So we had to dig into the ground to accommodate the 30m tanks which are fully, uh, into the ground. Uh, so we had significant delays in that process. Uh when I came to you in July, I mentioned all of this and I even showed you pictures of how the construction was progressing or not progressing for that matter of fact. There was a whole month, for example, as I recall where construction ceased because we could not do anything. So those were some of the factors that led to the delay. Uh, but finally we got it done. Um, and uh and I think is was August when the construction was complete and we were able to start producing gas. Uh – but the process itself, as I mentioned, it was 125 days before you can get any gas from the time you put input feed stock into the front end of the plant. By the time it gets to the back end where the gas is actually, uh, sent to the engine. So it’s a long process and we are still trying to figure out the exact combination of gas, of a feed stock to get the maximum efficiency from the plant.

Alderman Wilson:

Thank you.

Mayor Bentley:

And a part of the process changed at the very beginning as well, because renewable energy was under the RESOP program when we first applied and they halted that program while they started the renewable energy application program so there was a time delay in them actually having a program available after we had already started. We applied under the Renewable Energy Standard Offer Program and they halted it. So, I think it was 59 months all together before it all started – from the start till we finally got approval.

Alderman Wilson:

I find people, oh they want a real simple answer there and one I mostly give them and you just reiterated, and I thank you for that, was that government doing the hoop – the people saying. “Are you sure?” and that kind of thing so thank you for reiterating anyway. Thank you.

Mayor Bentley:

Thank you. Are there any more questions? Alderman Kadwell.

Alderman Dave Kadwell:

Thank you Mayor Bentley and thank you for the presentation. Uh, I was kind of hoping that we could have had a report beforehand that we could have read, digested and maybe…I was just writing stuff down here now as you’re, as you’re reporting, and it’s been tough so I hope we can get a copy of this report? And will this report be public, too. That’s my first question.

Mr. Bacchus:

Mr. Mayor, I didn’t write a report, these are just some notes I had that I did last night, in fact (laugh), so, um, when you asked me to bring an update – it said just an oral report and that’s what I did…uh, so.

Mayor Bentley:

The request was for an update and you’ve given us an update it wasn’t for a formal report it is a business that is still in commissioning and in an operation but the request that you made for an update – so Shafee has given us an update now and, uh, I asked if you had any questions ask them and I will pass them along and if Shafee doesn’t have them in his notes we will certainly try to get them answered but I’ve got no reply, so I’m not sure what kind of questions you had, but if you still have some we can certainly get them answered either through the board or…

Mr. Bacchus:

Mr. Mayor, I would happy to answer the questions if he would put them in writing to you…

Mayor Bentley:

Yep

Mr. Bacchus:

…and transmit them to me and I will get them answered…

Mayor Bentley:

OK

Mr. Bacchus:

…For sure.

Alderman Kadwell:

Thank you. Ya, just sometimes you ask questions you have to read a report first to understand, you know, what’s involved, so I’ll leave that. Uh, now, you mentioned in back in your last report, I’ll keep calling it a report ’cause I was educated on it – so, um, we are over $10 million. The project was about $10 million dollars budget-wise. Where are we now, roughly, now for the cost of this, uh, biodigester?

Mr. Bacchus:

Mr. Mayor, um, like I mentioned the last time the same question came up, I think it was from Alderman Johnston, um, GEI is a private incorporated and that type of information is not public. But, if the council wants that information, uh, a request the GEI board…We can certainly provide it, if that’s….

Mayor Bentley:

The construction was basically completed when you brought the update in July anyway, so…

Mr. Bacchus:

Ya.

Mayor Bentley:

…so that number hasn’t changed a whole lot and…

Mr. Bacchus:

Ya.

Mayor Bentley:

…and, uh, so…

Alderman Kadwell:

So what is it, 10?

Mayor Bentley:

10. It’s 10. That’s the number he gave.

Alderman Kadwell:

Alright, so that’s a number we can count on?

Mayor Bentley:

It’s already been reported, so, yeah you can count on it.

Alderman Kadwell:

So a lot has happened since that report, too, though, so a lot of construction…

Mayor Bentley:

And a lot of revenue has been made, too, so what’s your point?

Alderman Kadwell:

Now, there was, uh, a you mentioned there was the tarps and that, now how does that work? Is the stock feed or whatever it is, is that covered all the time?

Mr. Bacchus:

It has to be recovered all the time because that’s a ministry requirement. Uh, we are planning a some kind of a permanent structure to go over it. That was in the original application, we haven’t gotten there yet, but right now it is covered with tarp and weighted by tires.

Mayor Bentley:

Except when they’re receiving or feeding the machine.

Mr. Bacchus:

The rule is, Mr. Mayor, it has to be, sorry Mr. Mayor, the rule is, uh, it has to be covered at all times except the portion that is lifted so the back hoe can get into there to get the load out of there and it should, it has to be recovered immediately. So it should, it has to be covered, um, whenever it’s not in use. Let me put it that way.

Alderman Kadwell:

And it is, as you mentioned…

Mr. Bacchus:

Ya…We have, as I mentioned, there is a ministry officer that has been assigned to the plant and I can tell you he’s on our backs regularly.

Alderman Kadwell:

Thank you. Uh, I see they are building a berm. Is that is that was that suppose

to be done prior to the up and running of the facility or do we have to build it higher? Why is the…

Mr. Bacchus:

As far as I know, we don’t have to fill it higher. We did have to a requirement for us to have a some kind of a fencing, but we were to, uh, get extra dirt from, I think it was from Rankin who was doing some construction and wanted to dispose of some dirt, so we negotiated with him. We didn’t pay him anything. He actually, they sent the dirt over to us and they actually provided a the dozer to shape it up. So, I think that was good for the plant.

Alderman Kadwell:

One last one and I’ll keep it brief. You mention gas to maybe Enbridge. Your gas is called sour gas, right – which means it doesn’t comply with…

Mr. Bacchus:

It’s not…It’s Methane.

Alderman Kadwell:

I’ve spoken with the folks at Enbridge…

Mr. Bacchus:

It’s methane gas. Sour gas is, um, this is outside my league. I think that’s, um, I know that when I was in Yellowknife one time I could smell sour gas. It comes out from the dirt

earth right? Yeah.

Alderman Kadwell:

My question is, in order to allow your byproduct of gas to be used by Enbridge, which I did work with them for a couple of years anyways, but ours is, how they explained it to me, yours is or ours is sour gas so you have to do some type of a…

Mr. Bacchus:

It has to be processed. It has to be processed.

Alderman Kadwell:

That is, obviously, at our expense, too, if we want to…

Mr. Bacchus:

No, not necessarily. We had a meeting with, uh, with was it Enbridge, and, um, they are prepared, right now to say they will provide the, uh, the type of equipment we need to make this possible.

Mayor Bentley:

We need a pasteurizer. We need a pasteurizer to condition it to get to the (inaudible)

Mr. Bacchus:

That’s right.

Mayor Bentley:

.But that depends on the feed stock quality that you have…

Mr. Bacchus:

Ya.

Mayor Bentley:

…In order to get the gas quality in order to feed it into the gas grid. We know that.

Mr. Bacchus:

The gas that is being produced now cannot be, cannot go into the system as renewable energy gas. So it has to be pasteurized as the, uh, as there is some, uh, I forget the chemistry of it, but they have to be processed.

Alderman Kadwell:

I understand that. Are they going to pay for the cost?

Mr. Bacchus:

We made that clear to them that we are not up-fronting anything. If they want us to do that, uh, they have to come up with the funds and the equipment.

Mayor Bentley:

We have a couple of parties that are interested in doing that so, uh, we haven’t committed to anybody yet but we did have 26 of Enbridge engineers up there to thoroughly go through the site, but they are one of the people that are looking to provide equipment if we go that route, but there is a couple of others as well, so…

Mr. Bacchus:

But that’s another source of revenue that will will, um, that will be a positive sign for operations at the plant.

Mayor Bentley:

Alderman Johnston.

Alderman Johnston:

Just one question, as Alderman Kadwell had spoken – if we want to produce the quality that Enbridge wants, does that mean we have to somehow increase the type of feed that we are feeding this bio-digester?

Mayor Bentley:

Not necessarily. It’s the types of feed stock and the methane is an off gas – it’s like your backyard composter. It heats up when its decomposing and giving off gas. Depending on the type of feed stock that you are using, you will get off gases of different types. In order to get into the gas grid, it’s 99.8% pure. And in order to get there there is some impurities or, solocsins (sic), solocsins (sic) are one of them that are in most of the bio-gas that would need to be removed or pasteurized as part of it. But that’s equipment that would need to go on the front end, and we’ve said upfront, its a great opportunity but we’re not spendin’ money on it. If someone wants us to be a partner or if they want us to take…We’ve got capacity in the tanks. Uh, we built the tanks large enough. We have excess capacity, so we can or we can expand if need be. It is a significant revenue opportunity but we’re not putting out the capital to do that right now. It’s a matter of, we have two or three people that…groups that are actually looking to be a partner in that. Alderman Johnston.

Alderman Johnston:

So, the other question that I want to ask is, from Day 1 when we went into this process, is everything going forward the way it should be? Are we…are we pleased with it for our community? Um and um, are we doing what we are expected to be doing?

Mayor Bentley:

I would say absolutely. When we have farmers calling us almost every day asking us to help take their waste: their fruits, their vegetables, the peppers. Uh, a guy emailed me two days ago saying, um, I need a place to put this, can you take this? And it’s great pomace. We already have contracts with farmers for grape pomace. If we don’t take it, they have to haul it somewhere and pay to have it landfilled and you can’t do that after 2020, so we have a lot of opportunity, a revenue stream as Shafee had mentioned. We’ve got more revenue opportunities now than we had planned originally. Uh, the output now is up around 90% and it’s still growing. In our business plan we had we had conservatively said around 80, 80-85. You’re going to have some down time and stuff like that, but it’s running well. So we are pleased with it and it’s steady.

Mr. Bacchus:

We produce some excess gas, Mr. Mayor, which we flare off right now because we can’t accommodate the amount of gas that’s coming out. So we have to flare some of it. It’s that flaring that what’s going into the flare that we can turn into renewable gas energy and sell it to companies like Enbridge. So we have the potential to make excess revenues, not that was never anticipated in the original proposal to build the plant.

Mayor Bentley:

OK. Alderman Berry.

Alderman Berry:

I’m, just, um, just two things: First of all the renewable natural gas is a huge potential for the plant, um,…

Mayor Bentley:

It’s actually larger than the hydro contract if and when we go that route.

Alderman Berry:

Ya, I was going to, actually, mention that but I didn’t want to get everyone too excited but it might, uh, if it does pan out that, uh, it might be beneficial to get away from the FIT contract and get into the RNG but, um, that’s to be determined. But I really wanted to address Alderman Johnston’s point about are you happy with it and, as a person who sat on this council, along with some other people, who wasn’t totally supportive of the idea, I’m pleasantly pleased to say that I think I was wrong. I know we went through a lot of stress and turmoil to get to this point, but now that the revenue is coming and we are seeing the, uh, revenue sources coming back to the town and I can see the future potential sources there are, I, I, you know I’m not afraid to admit that, uh, one person that got up and was bantering that he didn’t want it, didn’t want it, that, uh, it, uh, throughout the turmoil we went through it’s going to be beneficial for the town and the future of the town and the taxpayers. So, if the other different things pan out, the engine fee being $150,000…If the RNG ever works, the renewable natural gas works out…we’ve had people who wanted to come and look at it and either partner or buy out. They’ve haven’t made formal offers but they looked at it, but my point is, you know, as one of those naysayers at the beginning, I think we are at the point we want to be. So it isn’t losing money and we’re not looking at, uh, the sky is falling scenario for the Town of Grimsby. So I just wanted to reiterate what, uh, Mayor Bob had said to ensure that everybody…As anyone who has sat on this council and in those meetings knows, I was not a big supporter, but, uh, I think we are in the right direction and it’s certainly going in the right direction with the revenue.

Mayor Bentley:

Alderman Mullins.

Alderman Carolyn Mullins:

Thank you. Yes, I, too, just wanted to reiterate to Alderman Johnston’s comments about are we satisfied? I’ve been sitting on this board, Grimsby Energy Board, for quite some time and I will be the first to say, ‘Hey, listen it’s had its challenges’. We’ve had a lot of challenges. Weather, getting all the proper approvals, the weather we’ve had to deal with. The knowledge that we’ve gained on this, now, my technical knowledge now on this whole thing is far superior than it was a few years ago. But I have to commend the folks that…I mean Shafee and such has done a tremendous amount of work to get us to where we are and just the knowledge that we have now. We are now, really, in this market we are the experts and and the fact that we have been built into our budget, the Town’s budget for this year to have funds come back to the Town, and we will be seeing that, so, yes, am I satisfied with how it’s going? Yes, I am. Has it been easy? No, it has not. But have we learned a lot? And I think on going forward, we can certainly…there are a lot of things we can improve upon, but we’ve got a strong knowledge base on which to build.

Mayor Bentley:

A question, ok, Alderman Johnston, then I’ve got Alderman Dunstall.

Alderman Johnston:

I just want to make it very, very clear and I think with Alderman Berry saying it very, very clearly that, um, because everybody seems to be in favour that, I think the more transparent we are with everything going forward with the community, I think that’s what we want to show and I think that’s what Alderman Berry is trying to say and I hope that’s what comes forward out of this – that the transparency of this company to the community and to the stakeholders that we see what is coming forward.

Mayor Bentley:

Thank you. Alderman Dunstall

Alderman John Dunstall:

Thank you, your worship. Shafee, good report. Thank you very much. And since I’m the newest boy on the block, I’m the only first-time alderman, and come into it kind of in the middle of everything, and it was pretty tense at some points, but I gotta tell ya, I love what you said there about these engine fees. There is an extra $150,000…

Mr. Bacchus:

$155,000

Alderman Dunstall:

….Do you know how hard it is to make money in this world anymore? I commend you. And I gotta tell ya, you guys are pioneers, that’s what you are and I hope that the news media reports that that these guys are pioneers. You’ve done a fabulous job. It really is, it’s…and I’ve been through the plant a couple of times, what an undertaking. That couldn’t have been built in six months even though was suggested. That was quite a project. And to see what it is today and what it’s doing and the future opportunities, it just blows me away. Kudos to you. When Alderman Mullens went on there and was paying attention to the finances, I had no doubt that things would run well, because she knows how to manage those finances. And look at it now, you know. We’re going to get dividends, what more can we ask for? Oh, so it went over, but when you first looked at the project the dollar was at par and now it’s at 75 cents, no wonder things cost more. The dollar goes up and down all the time, it’s ridiculous. So a project that takes three or four years longer to build isn’t going to be the same cost as it was three for four years earlier. Anybody in business knows that. So my hats off to you. I’m just elated. Thank you.

Mayor Bentley:

Thank you, John, and we would hope that it would be reported as such, but even the $400,000 dividend was bad news apparently. So, you never know how it’s going to be taken. But it is has been a lot of work, for sure. I know that Joe has secured a lot of input materials for us. He’s done a great job and under your leadership we are in a good spot and looking forward to working with Brian. We worked together at the Region for a number of years. We’ve got a good person there as well, so…We gave him a list, did you give him a list of the things that we need to have done?

Mr. Bacchus:

I was meeting with him today for about an hour and, uh, he was totally silent (laugh). If that was an indication of fear, I don’t know. Mr. Mayor, before I close, before I leave the podium, the last time I was here my closing remarks were that the Town of Grimsby and in particular the council here should be proud of that plant and I think it will be even more proud as the years go by because of the potential for the plant to grow in different directions and for the potential of revenues that you can earn for the Town. So, I thank you for the opportunity to come before you and I will come again when you request me to do so. Whenever you want me to come I’ll come, so long as I’m on the board, obviously but…

Mayor Bentley:

Thank you very much, Shafee, thank you. So I have a motion by Alderman Kadwell, seconded by Alderman Dunstall, the result of the delegation of Shafee Bacchus, chair of Grimsby Energy Inc., in reference to an update of the biodigester, be received. All in favour.

That’s carried.