LEBANON — After a year of operation, the landfill’s methane gas-to-electricity system at the solid waste facility may not be as economical as city officials had hoped.
“The very detailed financial projections were very wrong,” Councilor Tim McNamara said at a Sept. 3 meeting.
“I have to ask, when do we call it?” said Councilor Lori Keys.
Chris Kilmer, assistant public works director, addressed the city council last week to provide a status update on the system’s capabilities and the associated costs since it began operating in June 2025.
“We’re still learning the system; we’re still making changes,” said Kilmer.
Back in 2024, Lebanon broke ground on a $6.6 million project to convert greenhouse gas emissions from the landfill on Plainfield Road into electricity redistributed to the electrical grid and used to power the city’s buildings.
While some of the project cost had been covered by Solid Waste Division revenue, a $3.75 million bond will be financed by revenue generated by the system. Based on projections at the time, the city would break even on the bond within 20 years.
But the projected numbers for the city’s return on investment were based on the assumption that the system would produce 1,000 kilowatts of energy with all five microturbines working at 100%. However, not enough methane has been released to reach that threshold.
In reality, the system generates 600 to 750 kilowatts from four microturbines, with insufficient methane amounts to run all five of them.
“That is a condition we’ve seen right from the get-go,” Kilmer told the council.
The annual electricity produced was expected to be 6.7 million kilowatts, but ended up falling short at two-fifths of that, producing 2.7 million kilowatts from June 1 of 2025 to June 30 of this year, said Kilmer.
For 2026, the loss of funds from operating alone is projected to be $68,500, which is an improvement from last year, when the city spent $159,000 in operating costs.
Including the debt service, however, the anticipated 2026 cost is $401,000.
Revised estimates for 2027 indicate a profit of nearly $17,000 above operating costs, which can be applied to the $324,000 going toward the bond next year.
In total, between July 2025 and June 2026, power generation offset the total bill by $383,000, according to a spreadsheet shared by Kilmer.
“We’re doing everything we can operationally to get as much generation as we can,” Kilmer said at the meeting.
The bond payments will remain regardless of whether they run the plant or not, and eventually, running is expected help offset those costs. While Kilmer hopes the system will surpass its operational costs in a couple of years, he said he can’t guarantee it.
“We are making a positive gain, but it’s not enough to offset the bond payment as well as operational costs,” said Kilmer.
The department entered into a protection plan with a $171,000 annual cost that ensures equipment replacement as needed and new microturbines after 10-years.
While the system produces energy less efficiently than expected, shutting it down won’t save much, because the bond exists regardless. In April, May and June, they had up to four microturbines running, producing enough power to generate about $40,000 a month in revenue.
“Once stable and running, things seem to work pretty well,” said Kilmer.
Mayor Doug Whittlesey noted that the initial assumptions were completely unrealistic, which has led to misinformation over what the system is actually capable of.
“I would not recommend this consultant to anyone else ever again, frankly,” said McNamara. “They painted a very, very, very rosy picture.”
Whittlesey asked about the cost of selling the system, but Kilmer responded they’d be looking at the cost of scrap metal, since the use is so specific. On top of that, they’d assume financial penalties, along with the current debt.
Councilor Laurel Stavis inquired about a timeframe for possibly shutting it down.
Based on the information provided, it seems unwise for the city to pull the plug, said Councilor Devin Wilkie, and it would make more sense to keep it running due to the debt service. But if it’s ever more expensive to keep the system alive, that would be a good indicator to call it quits, he said.
Councilor Eric Cole suggested a break-even analysis based on the more realistic numbers to determine how long it would take to pay off the bond.
Kilmer said he could add information about production for kilowatt hours in the monthly solid waste reports.
The City Council plans to reevaluate the project in six months.
