To:

Holly Morrison, Township of Georgian Bluffs

Ref. No.:

11102058-03

From:

Mike Muffels, Dana-Jill Stroeder/mg/2

Date:

September 21, 2015

CC:

Will Moore, Township of Chatsworth

Re:

SusGlobal Energy Proposal Submission to RFP No. 2015-09

Review Comments and Clarification Questions

As requested, GHD reviewed the SusGlobal Energy (SusGlobal) Proposal received by The Township of
Georgian Bluffs and the Township of Chatsworth on August 20, 2015 in response to Request for Proposal
(RFP) No. 2015-09: Provisions for BioGRID Digester Operating Partner. This memorandum summarizes our
comments, suggested clarification questions, and technical scores with respect to the proposal.
Section 5.2 of the RFP outlines the evaluation and scoring criteria for the proposals. The three scoring
criteria are:
1. Bidder's Profile and Qualifications (25 points)
2. Approach to Operations, Feedstock Procurement, BioGRID modifications, and Transition Plan
(25 points)
3. Adjusted Township Annual Revenue (50 points)
Bidders must score a minimum of 37.5 out of 50 points on the combined rated requirements Items 1 and 2 in
the scoring criteria.
The memorandum is organized into three sections that correspond to each of the three scoring criteria.

1.

Bidder's Profile and Qualifications

GHD's comments and questions pertaining to the proponents profile and qualifications are as follows.

SusGlobal is identified as the prime proponent with Mr. Gerald Hamaliuk as the project lead. Mr. Ross
Slaughter (GSS) and Maple Reinders, who were both instrumental in the development and construction
of the existing BioGRID facility, are included as key members of the team. Mr. Hamaliuk is the lead and
responsible for all decisions and direction for all aspects of the project. Mr. Hamaliuk is also identified for
being directly responsible for feedstock procurement and fertilizer sales. Roles and responsibilities
appear to be well defined in the Proposal.

SusGlobal is a new startup as December 2014 (<1 year old) with no reference projects; this would be the
first undertaking for the firm. Thus, no relevant corporate experience or qualifications exist.

GHD Limited
651 Colby Drive Waterloo Ontario N2V 1C2 Canada
T 519 884 0510 F 519 884 0525 W www.ghd.com

The curricula vitae (CV) provided for Mr. Hamaliuk details his carbon/greenhouse gas (GHG) credit
experience. The CV does not include any relevant experience leading a team to design, build, or operate
a wastewater treatment or waste facility of any kind. In addition, the CV does not include any relevant
experience with procuring feedstock or marketing fertilizer or other products.
-

GHD recommends the Townships contact the references provided in Mr. Hamaliuk's CV and ask
about specific experience leading design, build, and operation project teams, specific experience
procuring waste feedstocks, and specific experience marketing end products (within agricultural
industry).

Maple Reinders is well represented in the proposal. They have constructed source-separated organics
(SSO) composting facilities in the past and an anaerobic digestion facility (which is not able to process
SSO). The Proposal does not identify any experience constructing SSO processing for an anaerobic
digestion facility but GHD does not have any significant concerns with their ability to successfully
construct and commission the proposed upgrades.

GSS's familiarity with SSO is not evident in the Proposal; the experience provided is almost exclusively
related to wastewater infrastructure. From the Proposal, it appears GSS, including Mr. Slaughter, has
never designed or been involved in the design or construction of an SSO processing facility. GSS's
ability to deliver a detailed design and oversee the construction of linear infrastructure and
water/wastewater treatment facilities is well presented in the Proposal.

Section 1.4.3 GSS is misspelled as GCC.

Operational experience of a waste processing facility is not evident in the proposal. Some evidence of
operating a wastewater treatment plant (WWTP) digester outside of Ontario (Aquatech) and in
Mississauga by Tekno (a sister company of Aquatech). No experience operating an SSO facility is
provided. Significant wastewater treatment facility operations experience is provided and this is
considered to be similar experience.

Score: 14/25 SusGlobal and Mr. Hamaliuk have demonstrated little to no relevant experience.

2.

Approach to Operations, Feedstock Procurement, BioGRID

Modifications, and Transition Plan
The Executive Summary states that SusGlobal will guarantee a minimum payment of $200,000 annually
once two conditions detailed in Appendix D.1 are met. Appendix D.1 was not included or labelled with
the copy of the Proposal GHD reviewed.
-

GHD recommends the Townships clarify with SusGlobal where the two conditions referred to in the
Executive Summary can be found.

Feedstock procurement: The Proposal identifies three potential sources of SSO: Simcoe County,
Markham, and local municipalities that may eventually implement SSO programs. SusGlobal has no
confirmed sources of SSO. Municipalities, particularly larger ones, generally require proven capabilities
before committing to any long-term agreements. Thus, SusGlobal will likely first need to build the facility,
operate it for a time, and then trial SSO from different municipalities to demonstrate performance and
reliability. The fact that they don't have a partner with SSO contracts currently is considered a risk to the
success of the project.

11102058Memo-2

The guaranteed minimum payment of $200,000 annually does not appear to be contingent upon
SusGlobal procuring feedstock contracts, only on constructing the facility.

Markham permits plastic bags (requires material to be in closed bags), meat absorbent pads, pet waste,
diapers, shredded paper, and cardboard in their green bins. Simcoe permits compostable bags (no pet
waste or diapers). This is a relatively dirty SSO stream with high levels of contamination; more than the
10 percent assumed in the mass balance. This dirty SSO material requires more than a simple
depacking line; which is what is proposed. A search on the Mavitec website shows that the units
identified in the proposal are not intended for "kerbside" bins or SSO. For SSO/kerbside materials they
utilize a series of two presses and then a drum washer. GHD has serious concerns regarding the
suitability of the proposed organics processing system for the type of SSO they have identified as initial
and key sources. GHD is not aware of any facilities in Canada that process SSO using Mavitec
equipment.
-

GHD recommends the Townships request clarification as to where the proposed Mavitec food
processing equipment (MAVITEC Food Depacking System and Residue washing system) has been
successfully used to process SSO materials similar to those proposed. Request that they provide
reference facilities.

The transition plan is reasonably well thought out for activities starting from contract award to facility
commissioning. It does not however address length of time required to obtain fertilizer registration
(1 year from facility start up) and implications on digestate management and the overall water balance of
the system for that year.

Permitting: The Proposal contemplates adding a new digester and 500 kW genset to (or changing) an
existing renewable energy generation facility. GHD's understanding is that this meets the definition of
"Renewable Energy Project" under the Green Energy Act, 2009. A Renewable Energy Project requires a
Renewable Energy Approval under O.Reg. 359/09 unless exempted by Section 9 of the Regulation.
Section 9 of O.Reg. 359/09 does provide an exemption for the changing or retirement of a renewable
energy generation facility under the follow two circumstances:
-

In respect of which all approvals, permits and other instruments referred to in paragraph 1 (namely:
ECA/CofA) have been obtained on a day before the day Part V.0.1 of the Act (EPA) comes into force
(September 24, 2009) or in respect of which none were required.

In respect of which, on a day before the day Part V.0.1 of the Act comes into force, a notice of
completion referred to in paragraph 3 was issued or published before changing or retirement
occurred.

11102058Memo-2

The application to amend the site's ECA/CofA was submitted on September 17, 2009 but the approval
was not obtained until December 15, 2010; after the day Part V.0.1 of the Environmental Protection Act
came into force. Thus, GHD's understanding is that the proposed upgrades would not be exempt from
requiring a Renewable Energy Approval. The Renewable Energy Approval would be in place of:
1. Amended ECA/CofA for Sewage Works
2. Amended ECA/CofA Air
3. Municipal Class Environmental Assessment Schedule C
-

Odour concerns are generally downplayed in the Proposal which is a concern. SSO has the potential to
generate significant odours if not managed properly. The odour control proposed is to use the building
and process air as the make-up air for the cogen engines. GHD is not aware of an SSO facility that uses
the cogen engines as the primary means of odour control. Process air from SSO storages can be high in
hydrogen sulphide (H2S) under certain conditions and this is corrosive to engines. GHD has concerns
with the longevity of the engines if building and process air is fed to them. The Proposal does not provide
any details on air pre-treatment prior to the engines. In addition, Section 4.5 of the Proposal states that
any exhaust air that cannot be used in the generator sets will be treated before being released to the
atmosphere, but no details on the type of treatment proposed are provided and this process step is not
included on the process flow diagram.
-

GHD recommends the Townships clarify make and model number of each piece of equipment in the
organics process system and request a proposed layout drawing with the equipment labelled.

The Proposal does not discuss grit. SSO has grit (i.e. eggshells) that will accumulate in the storage tanks
and digesters if not removed.
-

GHD recommends the Townships request written confirmation from the genset supplier (Martin
Machinery) that they are aware of the intent to use building and process air as the make-up air in the
gensets and ask if this will impact the warranty, service intervals, longevity of both the existing and
proposed gensets, as well as any air treatment steps required ahead of the engines to knock out
particulates, moisture, sulphur compounds, etc.

The second paragraph in Section 4.2 states that the front end system will consist of two trains of
10,000+ tonne per year processing capacity to grind the food wastes, take out plastics, clean the
plastics, and deliver the ground food wastes to a slurry tank. Section 4.3 lists the MAVITEC Food
Depacking System and MAVITEC SSO residue washing system. The Building and Tank Layout drawing
appear to depict other processing equipment. The drawing does not show two lines of the same
equipment. It appears to illustrate the MAVITEC grinder (hammer mill), followed by two organics presses
and then the drum washer to clean the plastics.
-

GHD recommends the Townships confirm with the Ontario Ministry of Environment and Climate
Change (MOECC) the permitting requirements for the upgrades proposed.

GHD recommends the Townships request clarification on how the proposed organics processing
system addresses grit and how it will be disposed of.

SusGlobal wishes to retain ownership of any environmental benefits including GHG reductions.
-

GHG recommends that should the Townships start negotiations with SusGlobal that the Townships
start with the position of retaining ownership of all environmental attributes with revenues shared

11102058Memo-2

with SusGlobal. It is noted that if SSO is obtained from other municipalities, the ownership of the
GHG credits may also need to be negotiated with those municipalities.

No onsite storage for digester solids/fertilizer product proposed. The facility will rely on off-site storage,
possibly on-farm storage. No details on off-site storage arrangements are provided in the Proposal. For
at least one year following the start-up of the facility the digestate will need to be managed as a waste
and/or land applied as a Non-Agricultural Source Material (NASM). There is no indication in the Proposal
that SusGlobal is aware of this and has a plan to address this.
-

The Proposal does not indicate what the intended use, if any, of the existing large digestate storage tank
will be.
-

GHD recommends the Townships ask SusGlobal to confirm their intended use, if any, of the large
digestate storage tank.
3

The Process and Instrumentation Diagram (P&ID) shows 300 m /d biogas, whereas Section 3.1 of the
3
Proposal references 300 m /hr biogas.
-

GHD recommends the Townships ask for clarification as to when SusGlobal expects to receive
fertilizer registration status, if they have been successful in registering similar products elsewhere,
and what would be the plan if the fertilizer registration is delayed.

GHD recommends the Townships clarify which is the correct value.

From the Process Flow Diagram all process water appears to be recycled within the process. The P&ID
drawing shows a connection from the Septage and Centrate Storage Tank to the wastewater lagoons
through an existing manhole.
-

GHD recommends the Townships clarify how much process water will be recycled and its potential
inhibitory impact on the digesters (ammonia build-up, etc.) and how much process water will be
discharged to the lagoons, and if the lagoons can accommodate the additional volumes and loading.

The overall mass balance in terms of the SSO entering the facility (20,000 tonnes per year SSO) and the
energy output (500 to 600 kW) from the facility is consistent with other similar facilities and generally
considered reasonable. However, GHD generally does not agree with the material flows through the
process and question the efficacy of the primary digester being mesophilic with approximately 2 days of
hydraulic retention time coming ahead of the secondary thermophilic digester with almost 10 days of
hydraulic retention time. GHD questions whether 100 kW of energy can be generated in a mesophilic
digester with only 2 days of hydraulic retention time. Typically, the thermophilic stage would come ahead
of a mesophilic stage (in which case 100 kW may be able to be generated). The fractionation of flows
through the centrifuges is also not what we would typically expect or base our designs on.

Score: 12/25 while the transition plan is reasonably well thought out, there is no supporting evidence to
demonstrate SusGlobal's ability to procure feedstock and SusGlobal's approach to operations does not
take into consideration the type of material (i.e. SSO) and the difficultly in preparing, processing, and
marketing of this material.

3.

Technical Score

GHD's combined technical score is 26 out of 50 points. This is below the minimum technical score of
37.5 points.

11102058Memo-2

4.

Adjusted Township Annual Revenue (50 points)

As the Proposal was the sole proposal received by the submission deadline, the score for the Adjusted
Township Annual Revenue is automatically the full 50 points; provided it is scored. Comments and questions
related to the Revenue Sharing Detail Form are provided below.
1. Item 1: with respect to electricity revenue, the second last paragraph (top of page 18) of Section 3.1
states, "We did not include (sale of power to Harold Sutherland Construction (HSC)) in the project
revenues because the approach to HSC has received approval from the principals, but we did not enter
into detailed negotiations since the Contract with BioGRID is not finalized and HSC felt it more
appropriate to wait until that time before final negotiations were conducted." However, Item 1 of the
Revenue Sharing Detail Form includes Note 11 which states, "Additional 800,000 minimum kWh/a power
sales to HSC across the road at a price at least the FiT price." Thus, additional revenues were included
ultimately without a letter of commitment or support from HSC; or any participation by HSC in the
proposal at all. GHD recommends securing written commitment from HSC to purchase a minimum
quantity of electricity at a minimum price when it becomes available before entering into an agreement
with SusGlobal.
2. Items 2, 3, 4: with respect to receipt of sewage and septage, Note 5 states that the maximum combined
3
sewage and septage volume received will not exceed 14,600 cubic metres (m ) per year and the Annual
Quantity values provided in the RFP were not meant to be open to modification (implicitly implied by
Note 1 but not explicitly stated). In this Proposal, SusGlobal is basing their proposed revenues on a
3
combined volume of 16,600 m . The reason for the change in quantities is not provided in the Proposal
but given that SusGlobal has not offered to reduce tip fees from the current rates, it is highly unlikely that
these tonnages will be realized without bylaws from both Townships requiring septage be treated at the
BioGRID facility; which SusGlobal has made a condition of their bid.
3. Item 5: with respect to Fertilizer sales, registering a new Fertilizer under the Fertilizer Act takes at least
one year after the facility is operational and the fertilizer has been in production. Thus, fertilizer sales
would not likely begin until year 4 of the agreement. As noted above, the proposed mass balance has
inconsistencies that will have an impact on the either amount or value of the fertilizer generated at the
facility (i.e., the facility will not produce as much cake at 35 percent dry matter with a higher
3
concentration of nutrients or it will produce 35,000 m of fertilizer but it will be more dilute with a lower
concentration of nutrients and thus lower fertilizer value). This may have an impact on the proposed
revenues outlined in the Revenue Sharing Detail Form and further clarification is required during contract
negotiations.
4. Item 6: with respect to SSO tip fees, the condition requiring septage flow control within the Townships is
discussed in Section 2 of this memorandum above. The condition requiring the SSO processing facility
to be constructed implies that this proposed revenue would not begin until year 3 of the agreement. No
supporting letters or agreements have been provided to substantiate the proposed SSO quantities or
projected revenues.
5. Item 7: with respect to Greenhouse Gas Offset sales, the current Western Climate Initiative (WCI not
WTI) pricing is closer to $11/tonne carbon dioxide equivalent (CO2e) at the moment. The rationale for the
$20/tonne price is not provided in the Proposal. Assuming that Ontario's cap and trade system is
implemented in-time before the proposed upgrades are operational, this proposed revenue would not
begin until year 4 of the contract.

11102058Memo-2

As noted above, a number of proposed revenues streams will not be realized for the Townships until after
the proposed upgrades are operational and in some cases, not until some time has passed to clear
administrative hurdles. The Townships should consider a phased approach for the revenue sharing model
during any contract negotiations. This phased approach could be tied to contract performance milestones
(i.e. Townships share of existing electricity, sewage and septage revenues will initially be higher and will
decrease to 10 percent in a step-wise approach as SSO feedstock agreements are finalized and
construction is completed, as an example).
It is noted that in Section 3.4 of the Proposal, SusGlobal plans to apply for 35 percent of the capital funding
for the upgrades to the facility through the Sustainable Natural Gas Fund administered by the Canadian Gas
Association, with the expectation that the Townships with work with SusGlobal to obtain this grant. The
Proposal does not specify the validity of the Proposal should grant funding be unavailable.

5.

Summary

In summary, based on the number of questions, concerns, and inconsistencies identified during the review
and summarized above with the information provided in the Proposal, GHD is not confident that SusGlobal,
and their partners, will be able to successfully procure, process, and market the proposed SSO feedstock
materials and therefore will not be able to successfully operate the BioGRID facility and provide the
Townships with required revenues.
Should the Townships decide to enter into contract negotiations with SusGlobal, it is recommended that the
Townships retain an Owner's Engineer to represent the Townships and to assist with the review of the
proposed technologies and process changes.

11102058Memo-2