At Bio-bean’s London office, co-founder and chief executive Arthur Kay is explaining what the business has been up to since MRW last interviewed him a year ago – over a cup of coffee, of course.
The main development has been the setting up of its commercial operation in Cambridgeshire, near Huntingdon. Having proved that its technology works at a test plant in north London and undertaken several trials, it won investment worth several million pounds from a combination of private investors, as well as grants and awards from organisations including Shell, Santander and Innovate UK.
Kay explains that the capital enabled it to build up its team, from a handful of people last year to “a seriously competent engineering and management team, which allowed us to build our factory and set up a number of major contracts”. It now employs 20 people.
As well as its qualified engineers, the company has two, soon to be three, researchers at a lab in University College London (UCL). Essentially, the business is sponsoring the researchers, including one PhD student, to look into some of the higher value waste chemicals and oils that can be obtained from waste coffee grounds. Coffee grounds have about 25% oil in them, by weight.
Kay says: “[The UCL project] has enabled us to bring a lot of capital spend forward and do R&D now, which has been a real asset.”
Bio-bean’s main focus and achievement in the past year has been building its factory “from finding a site, going through the joys of permitting, the Environment Agency, planning and consent and all the rest of it”.
When we speak during the summer, the plant had recently completed commissioning and it was looking to ramp up the amount of feedstock going through it. The 20,000sq ft factory has good transport links, making it accessible from most major UK cities.
“Crucially, it is also quite close to big instant coffee factories, which produce a lot of the waste,” Kay explains. The three main hubs generating waste for the plant are two instant coffee factories and London, so the plant is well sited for feedstock from those areas.
It can process 50,000 tonnes of waste coffee grounds a year, which Kay says is roughly one in 10 cups produced in the UK: “It is quite decent volumes, which has been our focus: to go from small scale to quite a decent sized factory.”
Three main types of coffee waste generator have been identified as supply sources to the business: retail coffee chain outlets, instant coffee factories and ‘aggregators’ such as train stations, airports or shopping centres, where there are multiple generators of coffee waste on one site.
Kay explains that each of these sources could provide the plant’s entire feedstock but it is looking for a spread across the three.
“Commercially, it is most attractive for the aggregators and the large chains, so it works very well at scale. For the small independent coffee shops there is still a saving but it is towards the bottom end simply because of economies of scale,” Kay says.
Preliminary interest has been from instant coffee producers and aggregators while Kay says there has been a fair amount of cynicism from the big coffee chains. But by working with aggregators such as Waterloo station, which houses coffee chains, it has been able to prove its business and the benefits it can bring to chains if they were to roll it out across their stores.
“If we take Waterloo station as the example, we have a couple of million people walking through it each day. If you make it work in such a busy, high-volume place, where the waste is collected two or three times a day then, from a logistics and operational perspective, it can work in most other places.”
Bio-bean’s process results in two fuel products: a pellet and a liquid. The closed loop vision is that generators of coffee ground waste buy back the fuel at a subsidised rate to power their operations or vehicles.
“One example is a big office just outside London, with 7,000 people in it. It has a large biomass boiler on-site which previously was set up to burn wood pellets. It would import pellets, mainly from the US, then burn thousands of tonnes of them each year. It would also, separately, produce about 800 tonnes of waste coffee grounds a year.
“You can provide a cost saving on the disposal of that waste. It then goes to us and we manufacture it into fuel pellets, and then, at a subsidised rate, sell them back to the company. It then sees not only cost savings in waste disposal but also cost saving in its generation of heat energy,” Kay explains.
Bio-bean’s target for pellet fuel users is businesses that already have biomass boilers installed – they would simply change to using coffee waste pellets. The fuel could also be used by housing associations, for example, who would not necessarily produce coffee grounds but would see benefits in the fuel product itself.
Kay says the pellets are more clean burning than wood and their calorific value is about 30% higher than wood. The company prices its fuel pellets against the wood pellet market, so that it competes directly.
To help the business “weather a lot of the storms” that might affect the sale and prices achieved on its waste fuel products, it is looking to diversify its revenue streams. As well as its two fuel products, R&D is being conducted into the higher value chemicals that can be extracted from coffee waste, albeit in much smaller volumes.
“The backbone of the business is really the pellets in terms of the bulk of material coming through,” he says. “If you get in 50,000 tonnes of coffee grounds, 80% will be solids that you turn into pellets and 20% would be oils which we then turn into diesel, for the most part. But also [we’ll get] some of these higher value chemicals as well,” he explains.
With its diesel fuel, Kay sees a great opportunity –and a corporate social responsibility story – in coffee waste producers fuelling their vehicles on diesel produced by the waste from their own coffee shops, in much the same way as McDonalds powering its trucks on its own used cooking oil. “It’s that same idea, of having a Starbucks van driving around the UK on diesel from its own coffee shops. It is crying out to happen and plays on that synergy of ‘power by coffee’.”
It could also be used by waste management partners. The win would be a cheaper fuel price for users, alongside a good consumerfacing story.
Bio-bean’s diesel product, which it would generally peg to current biodiesel prices, can go into a standard combustion engine, either as B100, or it can be blended with mineral diesel. It is not yet commercially available, but has been tested in engines in the lab. Kay explains that while the volumes it produces will mean it can only ever be a small part of the transport fuel energy mix, it is “talking to and exploring opportunities with some of the big oil and gas companies to blend it in with their fuel, which is the quick and easy win”.
Kay is rather more coy about the company’s R&D into high-value chemicals: “It is for application in niche industries, working with a variety of companies. One or two of them are waste-related but it is not their core business and they are more in the chemicals sector.”
He explains that the products it is looking into would compete with petrochemicals, such as chemical glazes. “[It is] everything from sprays to the aroma released in air conditioning to glaze in wood. We are still refining some of the applications but for certain ones we are moving fast,” he says.
There are no plans for Bio-bean to run its own collection vehicles, and instead it wants to work with “as many waste management companies as possible”. Kay describes the reaction from waste management firms as “seriously positive”, and the company is working with four of the biggest in the UK, signing a number of deals.
Kay adds: “We are a young company and I am a young chief executive which has meant, sadly, that the cynicism is three-fold: one is ‘what is this idea? – it sounds like it won’t work’; the second is, ‘even if the idea in principle works, does the technology work? – is this the team to make it happen and so on’; and thirdly, it is ‘is this person going to deliver?’
“Ours is an unproven business model, an unproven technology and I’m an unproven entrepreneur. Those three have been the main hurdles.”
But the business has focused on proving itself with small trials and then scaling up: “It is about taking a slightly slower approach, which I think is necessary for the limitation we have as a small business entering a very competitive marketplace.”
Securing funding was about demonstrating the economics of the business. “It stands or falls on the commercials of it,” Kay says. “At the end of the day, it is a commercial offering, it saves companies money and that is what we are set up to do. The fact – which personally I get very excited about – is that it saves phenomenal amounts of carbon and is the way I think the sector is moving.
“But the key benefit over other end points for waste is that this is really the circular economy. We are constantly saying ‘this is what we have got, now let’s try and get as much valuable stuff out of it as possible, and try to replace existing stuff with it’, particularly those that are damaging to the environment, whether they be petrochemicals, diesel, coal or wood.
“If we take a number of energy-generating solutions, often it is a one size fits all – ‘put it all in there and light the fire’, or ‘let it degrade’ – whatever it happens to be. We are saying that this is the starting point for the coffee waste, so let’s look to give it a second life in another form rather than saying that is its end state.”
With its plant up and running, the plan now is to “bring in some additional technologies to it, at scale” during the next year or so. “We are looking not only at different outputs in terms of products but also different inputs in terms of feedstocks as well,” he says. “And after that we will start to look at other opportunities both nationally and, in the longer-term, internationally.”
The business wants to prove the concept at scale in the UK first. “We see our role as a clean technology provider for urban and industrial organic waste streams. It is particularly for segregated waste streams, and it is not about saying that electricity generation is the dream end point.”
The business is looking to build up its processing capacity to 200,000 tonnes by 2018 and is looking at solutions for other waste streams, too, although this work is at test stage and will not be commercialised for at least 18 months: “We see coffee very much as the starting point, proving the technology and the concept.”
Kay is deliberately vague about what these other waste streams would be. He rules out cooking oil. “It will be a by-product of food – cryptic!”
The bio-bean business proposition
Bio-bean takes waste coffee grounds and turns it into high-value fuels: a biomass pellet and a biodiesel. It is also looking into creating a high-value chemical output.
Its business proposition is to save coffee waste producers in disposal costs, creating fuels that can be supplied to the open market or back to the producers of the waste coffee grounds, so creating a closed loop system.
It sees itself as a clean technology company, not a waste management business, so it seeks to work with waste management companies. Its competition, instead, would be the likes of landfill sites, incinerators and anaerobic digestion plants, where coffee waste would otherwise be disposed of.
According to Bio-bean, it can generate savings at the bottom end of 40-50% and at the top end of up to 75-80%. This would be savings to the customer for disposal of that tonnage.
Arthur Kay, chief executive of Bio-bean, says: “Not only is it a zero gate fee solution – so you can tip your waste for free – but also there is a lot of cross-contamination of coffee grounds with other waste streams, typically dry mixed recycling, so often there is a double saving.”
Hear Arthur Kay speak at RWM’s EfW Theatre on 16 September