Bio-Based World News
February 2, 2018
"I've got more of an entrepreneurial spirit so that has always got me excited about going out and creating something cutting-edge from nothing" Greg Bafalis
Aries Clean Energy came to being in 2017 after formerly being known known as PHG Energy. The name change was made to highlight the company’s new focus on sustainable waste disposal, converting wood waste into synthetic gas. That business shift was enabled thanks to the financial backing of construction machinery giant, and owner of Caterpillar, Thompson. and since then Aries Clean Energy has gone from strength to strength. The company announced at the beginning of 2018 that it had secured £17.5m ($25m) of funding to invest in future gasification projects.
So it’s with great pleasure that Bio-Based World News caught up with the Aries Clean Energy CEO, Greg Bafalis, for this week’s 5 Minutes With… In a wide ranging interview that gives a real insight into the workings of the company, Greg shares with Dave Songer the potential of its products for emerging markets, the challenging nature of securing funding and not falling into the trap of making promises that can’t be kept
Dave Songer (DS): Great to speak to you, Greg. Can we start with a description about what it is that Aries Clean Energy does?
Greg Bafalis (GB): Aries Clean Energy (@AriesCleanEnrgy) is very gasification-centric. We have two gasification technologies: fluid-bed, which focuses on the use of sewage sludge; and downdraft, which mainly uses urban wood waste – we operate a downdraft site in Lebanon, Tennessee. We designed the whole Lebanon facility from end to end and the core part of that facility is our gasification system, but we’re also developers.
And now, the new deal with Spring Lane Capital provides us with the equity we need to go out and actively pursue deals in the US; mainly coastal locations like California, Oregon and Washington State, and also in the North East. Right now we’re focused in Massachusetts and New Jersey primarily because they have a lot of the things that we need: mandatory landfill diversion requirements, high tips fees for disposal and preferential energy pricing. Our system is a distributed system, it’s small scale and we need a population centre of around 200,000-300,000 people. We can produce around 100-150 tonnnes of feedstock a day, which generates in the region of three to four megawatts of power.
(DS): You’ve presided over three bio-based companies in your career – what do you most like about working in this industry?
(GB): I grew up working for large corporations, starting out in waste energy and then working in the energy space, but one of the nice things about the renewable energy side is that they’re mostly start-ups, which means you can go out and create a whole new industry and business. I’ve got more of an entrepreneurial spirit so that has always got me excited about going out and creating something cutting-edge from nothing. Sometimes it works and sometimes it doesn’t.
And while the algae side of business I used to work in was interesting, there are so many variables that go into growing it consistently that it’s just – on a cost basis – very difficult to make work. Whereas now I’m working with a proven technology and catering for a marketplace that’s looking for something like this system. I think we’re well positioned for success.
(DS): You’ve been with Aries Clean Energy for a year and a half now, what does your role there entail?
(GB): Aries Clean Energy was founded by the Thompson family, which have been involved in the Caterpillar brand for the best part of 50 years. They brought me in because of our equipment, which is relatively new and requires us to do a lot of development work. Aries realised that in order to make the most of it and to get a number of these facilities up and running they needed to shift the model. My forte is development, which is what I did in the waste energy and the power sector, so I came in to transform the company: to bring in the equity required and also the talent to carry out the work.
(DS): Over your career you’ve worked in Argentina, Brazil and also Hungary. To what extent has working in those different markets helped you in your career?
(GB): The markets in those countries were more concerned with acquisitions or actual project development efforts. I learnt a lot from them, not least different languages and cultures, but I think at the moment my US-based experience in the waste energy sector is really what I rely on the most.
But, going forward, I really think that the market for this tech is international – in places like South America, Europe, Asia, and predominantly in places where there’s no natural gas or where gas and energy prices and still fairly high. Currently we’re focusing on our own back yard where it’s easier to roll-out new systems and I think that over the next five to 10 years you’ll see this technology being used internationally. So that’s when I think my international experience will really start to become an advantage.
(DS): What is the biggest professional challenge you’ve faced in the bio-based space?
(GB): It’s always a challenge to get the capital required, and also to get the technology out in the marketplace and accepted without spending too much of that capital. There’s been a lot of interesting technology that went through a lot of capital but got to the point where it just wasn’t going to be financially feasible, so it failed. Being able to balance the capital versus releasing the technology has always been a difficult balancing act. I’ve worked on some technology that was too far away to see the light at the end of the tunnel, whereas now we can see that light and we’re more or less ready to go.
(DS): What advice would you give someone looking to get started in the bio-based industry?
(GB): Make sure that you do things in a very cost-conscious, benefit analysis way. A lot of companies have a tendency to come out and spend a lot of money, but I think doing things a little bit more sequentially, making sure that you have a product that is a little more primed before you go out and start selling it on the market – or start making promises that you can’t yet deliver on – that’s critical.
You see examples of massive failures like Solyndra where they promised the moon and stars and they weren’t quite there yet. New start-ups have a lot more convincing to do. You can go down the list of great concepts other than Solyndra like Range Fuels and Sundrop Fuels – great ideas but the capital required, promises and objectives didn’t line up. This meant there were hundreds and millions of dollars going into the system that probably needed a lot more work, at a lot smaller scale, for a lot less money.
That’s soured a lot of investors to part with their money for new technologies and it certainly makes it harder to raise capital. It was an issue with us in going out to the marketplace, but we happened to find a good partner in Spring Lane Capital, which understood what it was we were trying to do and understood that it wasn’t still in that pilot phase where we’re saying “we’re doing a tonne a day but don’t worry we can jump to a thousand”. We already had a unit that’s exactly the size that we’re going to be rolling out.
(DS): What is Aries Clean Energy’s focus for 2018, can you give some details?
(GB): Closing projects. We’re actively pursuing a number of projects and our objective is to close three or four over the next 12 months and to get them into construction. We believe that once we do that a number of other opportunities will follow on and we’ll continue to build the business.
(DS): What is your favourite bio-based product and why?
(GB): I think that the most interesting space – other than gasification! – is what’s happening with batteries. Everything that we see in cars, solar and renewables and to make sure they all have a consistent energy supply revolves around the ability to store all that energy. Take solar panels for instance, I think big advances are going to come whereby those panels which run all day can go on to help run houses, factories and businesses all night long as well. That’s the next big leap that will really get renewables and everything else moving forward.
(DS): Thanks so much for your time, Greg. Bio-Based World News hopes 2018 is a great year for Aries Clean Energy.
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