Despite $1 million federal grant and commitments from REC buyers, plant’s contract denied PUC approval

By VDC staff

An attempt by Vermont Renewable Gas (VRG) to get a special, high-value contract to build a 2.2 megawatt biomass power plant in Lyndon was stopped by the regulators at the Public Utility Commission (PUC) because the project didn’t fit the rules.

The PUC’s September 19 decision can be seen here. Had the PUC approved the contract, Vermont utilities would have been obliged to buy power from VRG at a set ‘standard offer’ rate, typically higher than the market rate for electricity. Standard offer rates are currently enjoyed by approved electricity generators using solar power and other renewable energy sources.

In October of 2024, VRG’s Irvine, CA parent company Clean Energy Technologies Affiliate obtained a $1 million federal grant to assist the progress of the proposed Lyndon power plant. In a press release, CETA predicted more federal funding would follow.

Instead of using common fuels, they invented a process called high-temperature ablative pyrolysis (HTAP) to turn woody biomass (like wood chips and residues) into a synthetic gas for generating electricity.

To get their contract, VRG categorized their plant as a “farm methane” plant. This designation was crucial because the state’s standard power program (called the Standard Offer Program) was already full and closed to new applicants. The farm methane category is a narrow exception that allows projects to receive contracts anytime.

This “farm methane plant” category offers two huge benefits:

1. It bypasses the capacity limits of the main program.

2. It allows the plant owner (VRG) to keep the valuable Renewable Energy Credits (RECs), which is a significant financial perk not usually offered to other power generators. 

Keeping the RECs was part of the company’s plan for success, because it had already had a willing buyer. A February, 2024 ruling by the Maine PUC allowed VGS to sell its RECs into the Maine market, parent company Clean Energy Technologies Affiliate announced. But without a standard offer contract, VGS will have no RECs to sell.

Historically, this “farm methane” category was created exclusively for “cow power” plants that use anaerobic digesters to convert manure from livestock into methane gas. The goal of this law was very specific: to help farms by addressing major environmental problems like methane emissions from manure storage and nutrient pollution in waterways.

However, the Commission investigated and found that VRG’s proposal failed to meet the definition of a farm methane plant for two primary reasons:

1. The Fuel Wasn’t Methane

A true farm methane plant (like a cow digester) produces a fuel gas that is mostly methane, typically between 53% and 70% methane by volume.

VRG’s process was entirely different. The fuel gas it created was a synthetic mix, and methane was a minority ingredient. The expected gas composition was mainly:

• 36.2% Hydrogen

• 30.2% Carbon Monoxide

• Only 26.7% Methane

The Commission determined that to qualify, the majority of the combustible components of the fuel must be methane. Since methane was only the third most abundant fuel, the plant did not qualify as one that “uses methane”. The regulators concluded the project was more accurately an ordinary biomass facility using gasification, not a special farm methane plant.

2. The Plant Wasn’t Connected to Farming

The law intended the special farm methane contracts to go to facilities that are deeply integrated with and support farm operations. These plants are meant to help solve the daily problems of livestock farming, like manure management.

VRG’s facility failed this integration test, the PUC decided. The regulators also disqualified most of VRG’s proposed fuel source. VRG planned to source over half its fuel from wood products, including timber harvested from farm woodlots. The Commission ruled that logging or general forestry activities are not considered “farming” under the law, which is primarily focused on growing crops like food, fiber, Christmas trees, maple sap, or raising livestock. Since most of the woody fuel VRG proposed did not qualify as being derived from a true agricultural operation, the project was ineligible.