1. Description of the Company and Environment
Paul Sellew and Nathan Gillil and founded Harvestas a waste management and recycling company in 2008. Both Paul and Gillil and have plenty of experience in the organic industry and in power generation industry. Harvest aims to add unexploited potential of organic waste into the waste stream.
The company identifies the markets and is placed where organic waste is available abundant. It is expected that climate change legislation will set the carbon price because its recycling will reduce the landfill and gas emissions in waste management processes. Therefore, Harvest expands its operations and it is now dealing in providing the large yard and food waste composting services in America.
Due to the increase in the US gross domestic product, generation of solid waste has been increased to 250 million tons. The waste includes commercial establishments, grocery,household trash, packing waste, food scraps and other inorganic wastes are managed through disposal and recycling.
In order to dispose waste, landfill method is used. This is the most easy and cheap method of disposal.However,it causes pollution and smell because of the decomposition of organic waste in the landfill emits gases such as greenhouse gas into the air.Some of these gases are captured and are used to generate electricity.
Therefore, the US Environmental Protection Agency implements laws to minimize the disposal of waste through landfill. Incineration of inorganic and organic waste is another option of waste disposal.This process is performed into the furnace. This process has reduced the level of waste to 95 %. How ever still 5% waste remains, which contains ash and toxic material disposed through landfills.
This process also produces heat, which is used to generate electricity and power steam generators.However,the amount of energy generated by this process depends upon the composition or combination of waste such as the composition of organic and inorganic waste.
Waste management industry is a very profitable industry.This industry generated revenue of 56 billion in 2008.Therefore, many big and small companies are present in the market to provide waste management services. Due to the intense competition and expensive nature of the business, many companies were consolidated to attract more number of customers.
2. Problems and issues
Due to the increase in population, the amount of garbage and waste is increasing day by day. In large cities,many commercial buildings, grocery stores, hospitals, schools and industries are present. In these cities, the amount of waste is much greater in size as compared to small cities.
Residents of metropolitan cities like New York are very concerned about the increasing cost of the waste disposal through landfills. It has increased to 80 dollars per ton and is expected to increase further in future. Therefore,the residents of these cities are pursuing alternative waste management procedures than landfill.
The director of business development of Harvest is considering an opportunity of developing an organic waste management facility. Currently, they have one site available, which is suitable for their required 50 ton facility. It is expected that they have to face many challenges in operating this plant.
Revenue Streams and Costs
It is expected that by operating a waste management plant, Harvest can generate revenues by many ways. Major revenue will be generated through tipping fees that Harvest is expected to generate from waste generators against each ton of the waste managed by the harvest or disposed by the harvest.
Additional revenue could also generate through electricity by utilizing waste into the recycling and energy creating process.The price of electricity, which is generated from waste, is $0.06 to $0.11 per Kilowatt hour. It is expected that each ton of organic waste or biomass from the organic waste will generate 250 kWh electrical energy. Hence, Harvest can produce a significant amount of electrical energy and by selling this, it can produce a huge amount of revenue as well.
In addition to this, the revenue that Harvest is expecting to generate is$0.02 per kWh premium on each order because of the Renewable Energy Credit premium facility. It is also expected that high quality of compost will also be generated during recycling process. This compost helps in the fertilization of plants and soil. At least 20 or 22 dollars per ton could be earned due to the selling of this high quality compost.
However,there are also significant costs associated with the project. It needs a processing equipment of cost $10 million and a generator cost of $ 2 million. The expected life of thisis20 years and 10 years. It means long term benefits could be achieved by investing in this project.
In addition to this, the staff is also required in order to operate the machine and managing the waste process. It is expected that the salary of supervisor and 2 operators will be 50,000 dollars and 80,000. The salary of each operator will be 40,000 in order to manage the waste processes. In addition to this, cost maintenance,administration and utilities cost will also incur, which is expected to be 670,000 dollars per year.....................
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