In July 2022, BlackRock Real Assets acquired Vanguard Renewables in a deal that could nearly double the number of anaerobic digesters in the United States by 2026.
The potential for organics renewable-to-energy expansion could spell growth for the organics renewable-to-energy market.
“I am immensely proud to have helped build a company from the ground up into a national organic waste-to-renewable energy leader," commented John Hanselman, founder and chief strategy officer, at the time of the deal. "Vanguard Renewables’ mission has always been to help America realize a future where waste is a resource for renewable energy generation and regenerative agriculture practice.”
In a Q&A with Waste360, Vanguard Renewables' CEO Neil H. Smith recently discussed the current state of the U.S. anaerobic digestion market as well as the ability to rapidly scale as a result of the acquisition.
Waste360: What is the current state of anaerobic digestion in the United States?
Smith: Anaerobic digestion, to use a sports metaphor, is in the early innings of the ball game. The creation of the renewable natural gas (RNG) industry in the US is in its infancy, and I believe that it’s the next frontier for methane reduction.
Being a first mover in the space puts Vanguard Renewables in a position to continue to lead the way in both our Ag (manure-only) in partnership with Dominion Energy and Organics (Manure and food waste) business lines. We have strategic partnerships across all sectors of our business - from energy, farming, and food and beverage manufacturing, which provides us with a road map of where we need to build and develop our digesters.
Anaerobic digestion (AD) is not a new concept, Europe has been using AD for decades and has well over 9000 digesters across the continent, while here in the US we have approximately 200 digesters as of 2020.
What does this mean? It means that there is room to grow. There is a strong desire for renewable natural gas in the marketplace, and Vanguard Renewables’ mission is to meet that demand.
Waste360: Are there any particular regions that are growing, or others that are ripe for potential growth in the sector?
Smith: There is room for growth across the U.S., and we are focusing on the areas where there are larger dairy farms for our Ag line of business (manure-to-renewable natural gas) or where we have anchor partners to supply our digesters with organic food and beverage waste for our Organics line (organics-to-renewable natural gas).
Our business model is predicated on a few factors, which include the distance to pipeline, distance to our food waste partners, and the size of the farms we work with.
On the Ag side, these are large format dairy farms which tend to be in more rural areas of the country where there is plentiful land for farming and growing crops. On the Organics side, we are looking at smaller dairy farms that are closer to our target metro markets where we have anchor feedstock commitments from food and beverage manufacturers.
As the leader in the RNG space, we see the need from our partners across all sectors to grow this industry across the country, and we expect that we will be able to double the number of digesters in the US by 2026.
Waste360: Are there any projects that can be discussed that Vanguard is hopeful can now accelerate because of the acquisition?
Smith: The bedrock technology we are using comes from Europe and has been widely available for many years. The major technology pieces have already been proven, but what is most valuable to us are the lessons learned from abroad and in our own business.
We have built our learning lab here in New England, and that has allowed us to develop processes and systems to make creating renewable natural gas much more efficient in the future. Our first sites in New England constantly work to inform our decisions about future projects. We look at all aspects from geography to technology and ask ourselves: What can we do better? What would we change to make the project even better? What did we do differently here that we want to replicate elsewhere?
We are constantly looking to improve to become more efficient and are not afraid to look at new technologies to see if they are able to improve our processes.
Waste360: What particular aspects of this combination were favorable during discussions?
Smith: I believe BlackRock Real Assets wanted to invest in a company in the RNG space that was doing meaningful work.
In my opinion, it wasn’t just about us knowing how to create renewable natural gas, but about the work, we do to support our farm partners. BlackRock was interested and attracted to the partnerships we had built with the American farmer, and I think that says a lot about who we are as a company.
We partnered early on with Dairy Farmers of America to help solidify our commitment to working with farmers and helping them sustain their farms for future generations. That’s a big part of what we do. When we begin working with a farm, one of the first questions we ask is - “What’s their vision for the future?” We want partners that are as committed to tomorrow as they are to today.
Further, there just aren’t a lot of companies doing the work we do or who have long-standing relationships with major players in the agriculture, energy, and food manufacturing industries like Vanguard. Which I believe really showed that we were invested in growing our business to the next level, and with their vast portfolio of companies, they would be able to help amplify the work we are doing to decarbonize agriculture and food manufacturing.
Waste360: Are there any particular opportunities that this acquisition will advance in its Vanguard Organics and Vanguard Ag business lines?
Smith: This partnership will accelerate all of our growth plans tremendously. We are now able to fast forward our plans to reach not just our goals for our business lines but also bring on the staff we need to make those goals a reality. We are on track to hire over 100 new employees between now and the end of 2023, and human capital is one of the most important KPIs to reach our collective goals of building 150+ digesters across the US by 2026.
Waste360: How does this specifically aid in advancing Vanguard's and Dominion Energy’s ESG goals?
Smith: For our energy partners, we believe this investment in our company makes us a better partner. It will allow us to accelerate our green circular business model and repurpose more methane for good. That helps all of us reach our ESG targets.
Waste360: What does this mean for the future of anaerobic digestion in the United States?
Smith: One of the fastest ways to decarbonize our country is to remove methane from the atmosphere and repurpose that into renewable natural gas from anaerobic digestion. The market is there to grow this “new to us” technology across the country, and Vanguard Renewables is on the ground and doing the work. Further, we know that anaerobic digestion is the future.