FAIRBANKS — When local businessman Bernie Karl first launched his ambitious idea to turn waste paper into electricity more than two years ago, the idea seemed like a perfect plan for a community starved for both a recycling program and cheap power.
Today, things aren’t quite working out the way Karl had hoped.
The experimental biomass-burning generator at K&K Recycling is indeed making electricity out of garbage, as evidenced by the exhaust tumbling out of the towering smokestack on the property along the Richardson Highway. However, nothing about the project has been easy, Karl said.
“There is no game book. There is no blueprint,” he said. “We’re making it up as we go.”
The project is costing more and generating less revenue than he figured. It doesn’t make as much electricity as planners had expected. Karl’s dreams of using the generators as a cheap power source for rural Alaska villages have been abandoned.
Karl said he plans to push ahead with the nearly $6 million project, despite mounting debt and countless challenges.
“Failure is if you don’t try,” Karl said. “We’re never going to quit.”
Big dreams meet reality
The plan to transform Fairbanks’ waste paper into electricity began in late 2010. A new recycling program, launched by Karl’s K&K Recycling, collected items like mixed paper, plastic and glass from the University of Alaska Fairbanks and area military installations.
The paper, which is shredded and formed into large pellets, is the feedstock for a series of biomass-burning generators. The process meets federal emissions standards, and Karl said most of the material exiting his smokestack is water vapor.
The generation system, however, uses technology that remains experimental. A business partner, United Technologies, developed the generators with Karl. The payback was expected to come by selling electricity to Golden Valley Electric Association.
With a nearly $2 million grant from the Alaska Energy Authority, Karl reached a 20-year deal with GVEA to sell electricity to the utility at a rate a half-cent lower than its avoided costs.
Getting the new system to live up to its potential has been the key challenge — its real-world performance isn’t matching its projected output. Karl said the generators provided power at about 38 percent of his target in 2012, and only three of its five units have been fired up while he figures out how to improve the system. Connecticut-based United Technologies has stepped back to focus on other projects, Karl said, leaving him to work through a tedious process of re-engineering its various components.
The three generators are making about 270 kilowatts, less than the 375 kilowatts that he projected ahead of time. After a year of operation, Karl has concluded that the generators are simply too complicated to be used for one of his initial goals — powering remote villages using garbage and biomass.
“It’s too technical. It’s too new,” Karl said. “But that’s why you do these kinds of projects — to find out what works and what doesn’t.”
Karl figures he’s spending $100,000 per month on the project, while generating little revenue. He wasn’t specific about how much he’s made so far by selling electricity to GVEA, but said it’s not nearly enough to cover his expenses.
“Minuscule is the right word,” he said.
That, he said, is no surprise. GVEA knew up front that Karl was using experimental technology and never expected a consistent source of electricity. Gardner said an adjustment period was anticipated.
“If it would have worked perfectly on day one, everyone’s jaws would have dropped,” he said. “There’s absolutely nothing unusual about that.”
Despite the challenges, Karl is characteristically optimistic about the future of his operation.
He also owns Chena Hot Springs Resort, which is powered by harnessing geothermal resources to make electricity. Much of that technology also was unproven when it was installed, and Karl hopes his plans for electric generation follow a similar path.
While he works the bugs out of his generation system, Karl is hopeful he can find other sources of revenue.
Later this month, K&K Recycling plans to begin making concrete, using ingredients that include waste ash from the electric generators and ground glass from recycled bottles. He wants to market larger, brick-sized pellets as fireplace logs. Karl also hopes to convince the Fairbanks North Star Borough to pay him a portion of its savings for keeping materials out the landfill.
K&K Recycling has collected 9.1 million pounds of recyclables since August 2010, and Karl said he burns as much as 14 tons of pellets made from recycled paper each day. Karl gestures at a mountain of cardboard and paper, which takes up half of a 60-by-60-foot warehouse. It’s merely a blip, he said, for his voracious system.
“I’ll go through that like Sherman went through Atlanta,” Karl said. “This is not going to take long.”
By the end of 2013, Karl vows, enough revenue streams will come together to make it all work. When it does, he’s confident that two years’ worth of effort will be worth it, both in terms of innovation and profit.
“I’m not stupid — I do have a plan,” he said, pointing to a whiteboard jotted with numbers. “But I’ve paid one hell of an entry fee to get here.”
Contact staff writer Jeff Richardson at 459-7518. Follow him on Twitter: @FDNMbusiness.