Solar power took off because solar panels got cheaper and better, and because state and federal governments have helped subsidize the industry. But those aren’t the only reasons. A big part of solar’s success has come from new financial models, like solar leases and power purchase agreements (PPA), which save end-users from having to buy equipment upfront.
Now other environmental industries are hoping to copy solar’s success.
Boston-based Cambrian Innovation, which makes a modular wastewater treatment system for food and beverage plants, has come up with something called a water-energy purchase agreement (WEPA). Like a solar PPA, it saves users from startup costs and effectively turns infrastructure into a service. Plant owners pay a monthly fee based on the amount of wastewater going through the system, and in return they get clean (or nearly clean) water and energy in the form of methane, which can either be burned for heat, or converted to electricity. Cambrian’s EcoVolt product, which comes in a cargo container, is basically a supercharged anaerobic digester.
“It’s taking a page out of the solar industry, where they moved from selling panels to selling clean electricity,” says Matthew Silver, Cambrian’s CEO. “They shifted from selling panels to selling power and that’s what we’ve done. We’ve shifted from selling reactors to selling clean water and energy.”
Cambrian,which was spun out of MIT, recently announced its first deal, with the Lagunitas Brewing Company. Under a 20 year contract, Cambrian will install and run EcoVolts at two brewhouses, retaining ownership of the underlying machinery. Silver says Lagunitas could save about $22.5 million over the project’s lifetime, meet up to 15% of electricity demand at one site, and substantially cut its water footprint. Once cleaned, the wastewater can be used to clean machinery or floors.
The WEPA agreements are financed through a new $30 million fund created by Cambrian and Generate Capital, which looks to finance infrastructure on a service fee basis. Generate was set up by Jigar Shah, the founding CEO of SunEdison, which pioneered PPAs in the solar industry in the 2000s. (SunEdison filed for Chapter 11 protection this year, though that doesn’t invalidate the PPA concept as such).
“Investors can get a return from what is essentially a new asset class–a distributed portfolio of wastewater treatment plants,” says Silver. “This has potential to do for the distributed water industry what the PPA model did for the solar industry, which is to accelerate adoption of technologies.”
Shah adds in an email: “It’s a good time for water infrastructure as a service. With rising treatment costs, water scarcity, and under-investment in water infrastructure, many companies are very concerned with water risk.”