ADAPTIVEARC INC.
President: Kris Skrinak.
Financial data: $5 million raised from angel investors; now raising $10 million in Series A financing.
Revenue: Not disclosed.
No. of local employees: 25.
Investors: Not disclosed.
Headquarters: Encinitas.
Year founded: 2007.
What makes the company innovative: Almost every employee can speak more than one language, from Portuguese to Russian, which helps in forging ties with the company’s predominantly foreign customer base.
Key factors for success: A growing global market for waste-to-energy systems and demand for lower-priced modular equipment that can be quickly shipped to waste sites.
In cities around the world — and especially in highly populated developing nations — two key problems persist: “An overabundance of garbage and an extraordinary need for energy,” said Kris Skrinak, president of AdaptiveARC Inc.
The Encinitas-based company is seeking to solve both of those problems in one swoop through a proprietary process known as “Cool Plasma Gasification,” which transforms nonrecyclable waste into clean energy.
The privately held company is selling its portable gasification equipment to industrial recycling companies and municipalities around the world that want to avoid burying their toxic junk or burning it, both of which result in toxic fumes and introduce other environmental problems.
In the U.S. alone, 250 million tons of municipal solid waste is generated every year, with 54 percent dumped into landfills and 13 percent burned at combustion facilities, according to AdaptiveARC’s data.
Fire Alarm
“Incineration is the worst possible thing,” Skrinak said. “It releases particulates into the air and leaves you with a solid waste that still has to be land-filled.”
The opposite of incineration is gasification, a process that uses extremely high temperatures in an oxygen-starved environment. That causes waste to break down on a molecular level and turn into a synthetic natural gas called syngas, which can be used to create electricity, Skrinak said. “It’s the safest, cleanest and most efficient way to produce energy,” he said.
While AdaptiveARC didn’t invent gasification, Vice President of Science Christian Juvan did put his own spin on it, creating the “Cool Plasma” technology for waste treatment. The Austrian-born physicist holds six U.S. patents, including one for pulsed plasma technology — commonly used as part of the irradiation process that keeps nonrefrigerated milk bacteria-free.
“Christian created one of the very first plasma arc torches,” Skrinak said. In experiments, Juvan discovered that his torch could detoxify sewage sludge. “He found that all of the biology in the sludge was dead,” Skrinak said. “He continued to develop his technology around toxic remediation.”
Skrinak, who had prior experience leading startups, teamed with Juvan in 2007 to capitalize on a growing worldwide market for eco-friendly waste treatment. According to a Pike Research April 2011 report, global revenues from waste-to-energy systems will more than triple to almost $13.6 billion by 2016.
To get the business going, AdaptiveARC raised $5 million from angel investors. It’s now in the midst of a $10 million round of Series A financing with participation from undisclosed institutional investors, Skrinak said.
R&D Comes to Town
The company is shifting its research and development operations from San Jose to a 10,000-square-foot building in Otay Mesa, which is convenient to its customers in Mexico. The center is expected to open in mid-2012, employing 20 scientists.
About 80 percent of AdaptiveARC’s customers are recycling companies, and most are in developing countries, Skrinak said. “No matter how much you can recycle, you’re always going to have leftover waste,” Skrinak said. “That’s the prime focus for us.”
The company sells its equipment just as a construction-equipment company like Caterpillar Inc. would sell its machinery, he said. AdaptiveARC’s two largest installations are in Mexico, with its showcase site located just outside of Mexico City.
There, the company’s gasification system has been up and running since July 2010, processing as much as 25 tons of waste per day — the equivalent of what 8,000 American homes produce daily.
Gasification equipment is expensive any way you look at it, but AdaptiveARC seeks to differentiate itself through its lower price point. An AdaptiveARC system that processes 100 tons per day costs about $30 million, compared with about $80 million for an equivalent system from Westinghouse Plasma Corp., one of the other major providers, Skrinak said. “Alternative energy can only be successful if it’s cost effective,” he said.
AdaptiveARC also markets itself as portable and scalable. Its systems are designed to conform to a modular semitruck trailer or shipping container, ensuring easy delivery after a natural disaster or for other special cleanup projects. Systems can be interconnected to increase production, or scaled back easily, the company said, and it’s simple to operate, reducing the overhead costs.
“There’s a lot of pent up demand for this type of waste management,” Christopher D. Maloney, chairman and CEO of Milwaukee-based Alliance Federated Energy, a developer of renewable energy projects that uses AdaptiveARC equipment in eight of its developments. “But at the end of the day, this is about economics. They have a lower capital cost and lower operating cost than anyone else.”
He said the simplicity of AdaptiveARC’s systems is also a major selling point. “There are really only five components on the entire system that move,” Maloney said. “I think they’re positioned to capture a sizable piece of this market.”
