This article originally appeared in the Spring 2013 issue of Update, and is reprinted with permission of Certified Management Accountants Society of BC.

The term "angel" originally comes from Broadway where it was used to describe wealthy individuals who provided money for theatrical productions.  Modern angels take on various forms ranging from friends and family to venture capital to crowdfunding websites, and yes, even the Canadian government.  But although the latter hands out roughly $24 billion per year in grants and matching contributions, a successful partnership with the government may seem daunting to some.  

One private company that wasn’t put off by the idea is Cedar Road Bioenergy Inc., which recently leveraged over $1.6 million in grants, loans and equity investment from the province’s Innovative Clean Energy (ICE) fund and BC Bioenergy Network (BCBN).  Update sat down with Paul Liddy, founder and Managing Director of Cedar Road, to discuss the NBC and the public-private arrangement that helped bring it to life.

UPDATE: Tell us about the Nanaimo Bioenergy Centre and its mission.

PAUL:  The Nanaimo Bioenergy Center is a for-profit, collaborative innovative platform to develop and demonstrate the viability of harvesting methane from landfill gas and converting it into clean, usable energy.  Our facility is located at the Nanaimo landfill and the Regional District of Nanaimo (RDN) is one of our public partners.  We also have a partnership agreement with BCBN, who funded our facility expansion in a combination of investment loan/equity.

UPDATE: How did the project, and the private-public partnership behind it, come into being?

PAUL:  There is the project vision and then there is the partnership with public stakeholders.  Public partners can be very supportive to the project vision but they tend to shy away from leading the project, as they have other pressing issues to deal with or they are engaged in many different projects.  In our case, Cedar Road Bioenergy entered into a royalty agreement with RDN in 2006 with a vision to convert waste methane gas from landfill to electricity for sale to BC Hydro.  With the support of an investment loan from BCBN, we commissioned our first two modular units in 2009 to generate 1.3 MW of electricity from biogas.  In recognition and promotion of our local base and regional mandate, the name of the facility was designated as Nanaimo Bioenergy Center (NBC) in 2010.  NBC is owned and currently operated by Cedar Road Bioenergy under a Standing Offer energy supply/sales agreement with BC Hydro and RDN for 20 years.

UPDATE:  The Nanaimo Bioenergy Center was featured as a site tour at the recent 2013 Global Methane Expo in Vancouver.  For those of us who have missed the opportunity, can you describe the facility?

PAUL:  We just started our Phase 2 expansion which will be completed by October 2013. The goal is to optimize energy efficiency and to improve methane gas collection from the landfill.  Gas produced from landfill tends to fluctuate depending on temperature, rainfall and other environmental conditions.  However, the conversion process works best when there is a steady continual stream of input.  So we upgraded our facility with innovative add-on components such as a membrane gas holder unit to buffer any interruptions in the gas collection system – this allows us to increase our net output efficiency by 30 per cent.  We also installed a new biogas cleaning system to allow us to investigate other revenue streams for different utilization platforms such as transportation fuels or natural gas.

UPDATE:  The funding mechanism for Phase 2 (equity) is different for Phase 1 funding (loan).  Was this a deliberate business decision?

PAUL:  Yes, we have free monthly cash flow and we feel it is better to use it than to take on more debt.  With the new gas holder, we anticipate that the facility can be operated more efficiently during peak times to capture peak pricing rate.  Presently, we are implementing a new thermal waste heat recovery system to capture and redistribute the high grade exhaust heat from the generators to further maximize the electricity output.  This allows us to leverage expansion at a lower unit cost, which will benefit all our stakeholders. 

UPDATE:   In a 2012 study report conducted by Globe Advisor on B.C.’s clean energy sector, private-public partnership and innovative demonstration projects are suggested as possible solutions to create job growth in a knowledge-based economy.   What are some of the barriers in deploying knowledge-based innovation? 

PAUL:  Innovation requires implementation.   Unfortunately, our society has evolved to a point where universities teach theory and white-board innovation.  The practical application of knowledge to build and integrate technical elements into a functional process is lacking.  This requires us to search for skill sets that create synergy based on attitude and willingness to think and act in alliance.  To sustain productivity, strategic partnership between design (idea generation) and strong execution is important.  Otherwise, as in many cases, the disconnect between the two can become costly when rolling out an innovation process.   My approach is to engage directly with the team from concept design to implementation and operation in order to build internal capacity.

UPDATE:  Finally, what would you say is the most critical factor in implementing a successful private-public partnership, what would it be?

Paul:  To attract angel investors, a solid management team with leadership ability is a must.  Same with private-public partnership – to make the partnership work, the private partner needs to provide the management leadership.

Creating long-term value and leveraging the strength of each partner is the key to any successful partnership.  The overriding difference in a private-public partnership is how results are being defined for the public partner and the private partner; and consequently, how operational decisions are being guided.  A hallmark of CMA’s core competence is our ability to strategize and synergize across diverse stakeholders’ expectations - an ideal fit for facilitating a private-public partnership.  

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Karen Chan, M.A.Sc., P.Eng. is a CMA candidate in the Strategic Leadership Program and a Professional Engineer in environmental services.  She is a Manager with KPMG LLP SR&ED (Scientific Research and Experimental Development) Tax practice and a member of the Update Editorial Taskforce.