Consent-Community Services # 7.
Board of Supervisors
Integrated Waste Management
- Meeting Date:
- 04/08/2025
- Brief Title
- Update on Landfill Gas Beneficial Use Project and Approve Request for Proposals
From:
Leslie Lindbo, Director, Department of Community Services
Staff Contact:
Rachel Davis, Senior Civil Engineer, Department of Community Services, x8859
Supervisorial District Impact:
District 3
Subject
Receive and file update on the Yolo County Central Landfill, Landfill Gas and Biogas Beneficial Use Project Request for Proposals (RFP) and approve RFP for Issuance. (No general fund impact) (Lindbo/Davis)
Recommended Action
- Receive and file update on the Landfill Gas and Biogas Beneficial Use Project and Request for Proposals (RFP);
- Authorize the Division of Integrated Waste Management to work with Procurement and County Counsel to finalize the attached RFP and Sample Agreement;
- Authorize the release of the RFP for a Landfill Gas and Biogas Beneficial Use Project to be located at the Yolo County Central Landfill; and
- Authorize the Director of the Division of Integrated Waste Management to negotiate with the preferred vendor and return to the Board for recommended contract award.
Strategic Plan Goal(s)
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Sustainable Environment |
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Robust Economy |
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Operational Excellence |
Reason for Recommended Action/Background
The Yolo County Central Landfill (Landfill) was opened in 1975 as a regional disposal site designed to handle the solid waste disposal needs for all of Yolo County. As with all landfills, landfill gas is generated as part of the anaerobic (without oxygen) decomposition of solid waste. Landfill gas contains approximately fifty (50) percent methane and is recognized in the Yolo County Climate Action and Adaptation Plan (CAAP) as a potent greenhouse gas and significant contributor to the County’s overall greenhouse gas emissions. Methane is approximately 23 times more potent as a greenhouse gas than carbon dioxide.
In 1985, the County entered into a Commercial Gas Production Agreement (Lease) related to the collection of methane generated from the Landfill. Under the Lease, the County granted rights to a gas developer (Developer) to install, operate and maintain a landfill gas collection system, electrical power conversion system and a transmission line to connect with the nearest commercial transmission line (intersection of County Roads 28H and 102). In exchange for the right to collect the methane from the landfill, the Developer was required to pay royalties to the County on sales of electricity to outside customers to maintain low disposal rates for our constituents.
The County and the Developer had several operational difficulties as methane collection operations conflicted with landfill operations and as environmental regulations continued to evolve. The Developer failed to address requirements to control landfill gas surface emissions and failed to address a number of other operational responsibilities that were not present when the initial agreement was negotiated. In February 2016, the County entered into a purchase and sale agreement with the Developer, Neo Yolo LLC, and MM Yolo LLC, to acquire the landfill gas to energy facility at the Landfill. The facility consists of five engine / generator sets and produces up to 3 megawatts of electricity.
Since the County purchased the facility, the day-to-day management and operation has been contracted to Ameresco Inc., a firm specialized in management of these types of facilities. Ameresco assisted with the assessment of the facility's condition at purchase, took over operation of the facility on January 29, 2017, and has assisted the County to implement recommended safety and operational upgrades to meet current regulations.
Revenues generated from the sale of energy from the facility were projected to cover its ongoing expenses and acquisition costs with a reasonable rate of return; however, higher than anticipated major maintenance and unavoidable equipment replacements, coupled with low royalties from electricity sales, have made the existing energy plant unprofitable in its current state. Much of the existing infrastructure and equipment has exceeded its useful life, with much of the infrastructure installed over 30 years ago and most of the engines having hundreds of thousands of hours of run time.
Since1985 when the energy plant was constructed, there have been significant advances in landfill gas transformation technologies. Coupled with significant royalties offered for reductions in greenhouse gas emissions, such as the California Air Resources Board’s low carbon fuel standard, voluntary carbon credits, and tax credit incentives, the marketplace now offers many profitable options for beneficial use products made using landfill gas other than electricity. These include renewable natural gas (RNG), sustainable aviation fuel (SAF), and hydrogen.
As part of the 2016 purchase agreement, the County also received a power purchase agreement (PPA) with the Sacramento Municipal Utilities District (SMUD) which obligated all power produced to be sold to SMUD. The term of this agreement expires on June 30, 2026, so the timing for a new LFG beneficial use project is now. Additionally, the current operating agreement with Ameresco expires June 30, 2026.
The combination of the old unprofitable energy plant, advances in landfill gas transformation, and the expiring of the SMUD and Ameresco contracts make this a logical time to release a Request for Proposals (RFP) for a new landfill gas beneficial use project. The new project will consist of a long-term lease and a gas rights agreement. The initial contract term will be for 20 years, with two possible 5-year extensions based on mutual agreement. The new Developer will be responsible for project design, permitting, construction, ownership, and operating of the new landfill gas beneficial use project and will compensate the County for the landfill gas in accordance with a negotiated royalty structure. The structure of the RFP is set up as technology-agnostic, allowing developers the freedom to propose the end use (electricity, renewable natural gas, etc.) which is best suited to the landfill and provides the highest economic benefit.
As discussed, the current operation does not achieve cost recovery. Though staff will not know the final monetary structure until proposals are received, and an agreement is negotiated and presented to the Board for approval, the expectation is that the financial terms will be significantly better than the current operation. Any increase in revenue will be used to offset other costs at the landfill, which would help offset future landfill fee increases.
The County has contracted with an engineering firm and a law firm, both experienced with landfill gas to beneficial use projects and procurement efforts, to assist the County in drafting the RFP and sample agreement.
Evaluation Criteria Included in RFP
1) 50% - Overall Financial Compensation - Price per MMBtu total biogas (landfill gas and digester gas) delivered to the Project and 20-year revenue projections
2) 20% - Proposer’s Qualifications, Experience and Demonstration of Proven Technology
3) 20% - Proposer’s Approach to the Project including Energy Marketing Plan
4) 10% - Customer References
5) Financial Stability (pass/fail)
6) Demonstrated Competence (pass/fail)
In 1985, the County entered into a Commercial Gas Production Agreement (Lease) related to the collection of methane generated from the Landfill. Under the Lease, the County granted rights to a gas developer (Developer) to install, operate and maintain a landfill gas collection system, electrical power conversion system and a transmission line to connect with the nearest commercial transmission line (intersection of County Roads 28H and 102). In exchange for the right to collect the methane from the landfill, the Developer was required to pay royalties to the County on sales of electricity to outside customers to maintain low disposal rates for our constituents.
The County and the Developer had several operational difficulties as methane collection operations conflicted with landfill operations and as environmental regulations continued to evolve. The Developer failed to address requirements to control landfill gas surface emissions and failed to address a number of other operational responsibilities that were not present when the initial agreement was negotiated. In February 2016, the County entered into a purchase and sale agreement with the Developer, Neo Yolo LLC, and MM Yolo LLC, to acquire the landfill gas to energy facility at the Landfill. The facility consists of five engine / generator sets and produces up to 3 megawatts of electricity.
Since the County purchased the facility, the day-to-day management and operation has been contracted to Ameresco Inc., a firm specialized in management of these types of facilities. Ameresco assisted with the assessment of the facility's condition at purchase, took over operation of the facility on January 29, 2017, and has assisted the County to implement recommended safety and operational upgrades to meet current regulations.
Revenues generated from the sale of energy from the facility were projected to cover its ongoing expenses and acquisition costs with a reasonable rate of return; however, higher than anticipated major maintenance and unavoidable equipment replacements, coupled with low royalties from electricity sales, have made the existing energy plant unprofitable in its current state. Much of the existing infrastructure and equipment has exceeded its useful life, with much of the infrastructure installed over 30 years ago and most of the engines having hundreds of thousands of hours of run time.
Since1985 when the energy plant was constructed, there have been significant advances in landfill gas transformation technologies. Coupled with significant royalties offered for reductions in greenhouse gas emissions, such as the California Air Resources Board’s low carbon fuel standard, voluntary carbon credits, and tax credit incentives, the marketplace now offers many profitable options for beneficial use products made using landfill gas other than electricity. These include renewable natural gas (RNG), sustainable aviation fuel (SAF), and hydrogen.
As part of the 2016 purchase agreement, the County also received a power purchase agreement (PPA) with the Sacramento Municipal Utilities District (SMUD) which obligated all power produced to be sold to SMUD. The term of this agreement expires on June 30, 2026, so the timing for a new LFG beneficial use project is now. Additionally, the current operating agreement with Ameresco expires June 30, 2026.
The combination of the old unprofitable energy plant, advances in landfill gas transformation, and the expiring of the SMUD and Ameresco contracts make this a logical time to release a Request for Proposals (RFP) for a new landfill gas beneficial use project. The new project will consist of a long-term lease and a gas rights agreement. The initial contract term will be for 20 years, with two possible 5-year extensions based on mutual agreement. The new Developer will be responsible for project design, permitting, construction, ownership, and operating of the new landfill gas beneficial use project and will compensate the County for the landfill gas in accordance with a negotiated royalty structure. The structure of the RFP is set up as technology-agnostic, allowing developers the freedom to propose the end use (electricity, renewable natural gas, etc.) which is best suited to the landfill and provides the highest economic benefit.
As discussed, the current operation does not achieve cost recovery. Though staff will not know the final monetary structure until proposals are received, and an agreement is negotiated and presented to the Board for approval, the expectation is that the financial terms will be significantly better than the current operation. Any increase in revenue will be used to offset other costs at the landfill, which would help offset future landfill fee increases.
The County has contracted with an engineering firm and a law firm, both experienced with landfill gas to beneficial use projects and procurement efforts, to assist the County in drafting the RFP and sample agreement.
Evaluation Criteria Included in RFP
1) 50% - Overall Financial Compensation - Price per MMBtu total biogas (landfill gas and digester gas) delivered to the Project and 20-year revenue projections
2) 20% - Proposer’s Qualifications, Experience and Demonstration of Proven Technology
3) 20% - Proposer’s Approach to the Project including Energy Marketing Plan
4) 10% - Customer References
5) Financial Stability (pass/fail)
6) Demonstrated Competence (pass/fail)
Collaborations (including Board advisory groups and external partner agencies)
Civil and Environmental Consultants, Inc. for the RFP
Procurement for the RFP
Hawkins Delafield and Wood LLP for sample agreement
County Counsel for sample agreement
YCPARMIA for insurance provisions
PG&E and SMUD for potential renewable natural gas offtake
Valley Clean Energy for potential electricity offtake
Procurement for the RFP
Hawkins Delafield and Wood LLP for sample agreement
County Counsel for sample agreement
YCPARMIA for insurance provisions
PG&E and SMUD for potential renewable natural gas offtake
Valley Clean Energy for potential electricity offtake
Fiscal Impact
No Fiscal Impact
Fiscal Impact (Expenditure)
- Total cost of recommended action:
- $ 1,500,000
- Amount budgeted for expenditure:
- $ 0
- Additional expenditure authority needed:
- $ 0
- On-going commitment (annual cost):
- $ 1,500,000
Source of Funds for this Expenditure
- Sanitation Enterprise
- $1,500,000
Further explanation as needed:
This is the estimated revenue that would come from a landfill gas rights and site license agreement annually. Actual revenue will be determined as a part of the RFP process and contract negotiations and will be budgeted accordingly in the Sanitation Enterprise Fund starting in Fiscal Year 26/27. (No General Fund Impact)
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Marissa Juhler | Marissa Juhler | 03/24/2025 04:26 PM |
| Marissa Juhler | Marissa Juhler | 03/25/2025 09:21 AM |
| Berenice Espitia | Berenice Espitia | 03/28/2025 01:02 PM |
- Form Started By:
- Rachel Davis
- Started On:
- 03/21/2025 01:18 PM
- Final Approval Date:
- 03/28/2025