Xconomy has been around for 27 months now, long enough to watch quite a few of our fellow Boston-area startups expand, deal with serious challenges, and start to get their technologies out into the world. One of them is Ze-gen, a waste gasification company that I first visited in August 2007. This week I got a chance to take a second tour of the company’s demonstration plant in New Bedford, MA, an hour south of Boston, and to get an update from president and CEO Bill Davis, who founded Ze-gen in 2004.

The tour and the interview turned into a mini-education in the hurdles facing startups in the bustling, bruising cleantech sector. So far Ze-gen has been clearing those hurdles, and if all goes according to plan, the company will have its first commercial gasification plant up and running by the second quarter of 2011. That’s about a year behind the schedule the company originally laid out back in 2004. But considering the state of the economy lately, a year’s slippage isn’t all that bad.

I thought I would try to sum up some of the insights from Ze-gen’s experience in digest form, which I’ve done below. But first, a quick refresher on Ze-gen’s business and technology. The company is developing an industrial-scale system in which organic waste material such as construction and demolition debris (called “C&D,” and composed mostly of wood) is dropped into a vat of molten metal. Under tremendous heat, the waste instantly breaks down into elemental gases—mainly a mix of hydrogen and carbon monoxide that’s known as “syngas.” The syngas can in turn be combusted to run electrical turbines or boilers, or turned into liquid biodiesel fuel. (Unlike incineration, the gasification process produces no carbon dioxide emissions; the name Ze-gen stands for zero-emissions generation.)

The feed hopper in Ze-gen's demonstration plant deposits feedstock (shredded wood waste) onto a conveyor.

Ze-gen’s prototype system takes up a building the size of a large barn—and the commercial version will be even larger. The system was in full, hot, noisy swing during my visit. As the photos scattered through this article illustrate, the process is fairly simple, with shredded C&D waste falling from a hopper onto a conveyor and up an elevator, then falling back down into a furnace half-filled with a molten copper bath that’s maintained at about 2,400 to 2,700 degrees Fahrenheit. Syngas from the furnace flows out into a combustor—where the boiler or turbine would go, in a commercial plant—and leftover gases are scrubbed and vented.

Feedstock eventually drops into the gasification furnace, which is half-filled with molten copper.

Lately, Ze-gen has been running the plant for about 12 hours a day, gathering data on its syngas production efficiency using various types of feedstock, and at various bath temperatures. Getting to this point has been a five-year slog. “Any pre-revenue company, in my view, is frustrating, or should be frustrating, because it takes other people’s money in order to get a technology to the point where it’s producing,” says Davis. “For the first few years, at our demonstration plant, it was a lot of episodic testing. You’re not really ready for commercial deployment until you can prove that you can run continuously.” But Ze-gen now has the permits it needs to run 24/7, and as soon as the company can hire enough qualified staff, the gasifier will be running around the clock. “It’s actually quite satisfying, because I can come down here on any given day without making any special plans, and the plant is running,” Davis says.

The company has more than doubled in size since my last visit: it now has 27 staffers, 11 of them in an adminstrative and engineering office in Boston and the rest at the plant, which is conveniently located on the grounds of a solid waste sorting facility in New Bedford. All of that growth takes money, of course, and earlier this year, the company augmented a $4.5 million Series A round from 2007 with a much larger, $25 million round. The main funders include …Next Page »

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For most of the “clean energy” startups Xconomy covers, the big question is whether the company’s prototype—be it a wind turbine, a wood-chips-to-ethanol reactor, or an anaerobic cow-manure digester—will still work efficiently when scaled up to industrial proportions. But for IST Energy in Waltham, MA, the question was how to scale down a waste gasification plant until it fit inside a standard cargo container, a space roughly 30 feet by 8 feet by 8.5 feet.

That’s exactly what the startup, a new subsidiary of engineering and defense contractor InfoSciTex, has now accomplished. Tomorrow the company is expected to launch its “Green Energy Machine” or GEM waste-to-energy conversion system, a unit that fits on the back of a truck and can shred three tons of trash per day—including paper, plastic, wood, food, and agricultural waste—and turn it into a synthetic gas mixture which can then be used to fuel electric generators or building heating systems.

In essence, it’s a mobile version of the factory-sized gasification pilot plant that Boston cleantech startup Ze-gen has built in New Bedford, MA (see my August 2007 story)—except that IST Energy uses a different kind of vessel to gasify waste, a “stratified downdraft gasifier,” in place of Ze-gen’s giant vat of molten iron. The unit takes up as much space as about three cars, and can be backed up to a building’s loading dock, or wherever its dumpsters are stowed.

The company built the Green Energy Machine in response to a request from the U.S. Army, which wants to cut down on the volume of trash, mostly from field kitchens, that it has to convoy across Iraq and Afghanistan. And IST Energy CEO and president Stu Haber says he expects the military to become one the prime customers for the machines, which will be ready for delivery this summer. But he says the GEM is also ideal for commercial and municipal facilities such as industrial plants, hospitals, universities, prisons, sports stadiums, and city waste transfer stations—”really, anybody who generates at least two tons of waste a day, which covers a huge market.” (For comparison, the town of Lincoln, MA, generates 6 tons of solid waste per day, and the Prudential Center development in downtown Boston generates 11 tons, according to Haber.)

While the machine isn’t cheap—IST will charge $850,000 per unit—its major selling point is that it can greatly reduce customers’ waste disposal and energy costs. About 95 percent of the material fed into the GEM is converted into gas, leaving an ash residue that is much cheaper to transport and takes up much less landfill space. (It also won’t emit methane and other greenhouse gases, as most landfilled materials do.) And not only does the machine power itself, but the extra gas produced can run a 120-kilowatt electrical generator or a 240-kilowatt-equivalent gas furnace. (For comparison, a typical standby home generator produces 12 kilowatts, while commercial emergency generators have outputs of 20 to 150 kilowatts.)

InfoSciTex didn’t start out in the clean energy or waste-disposal business. The company is working on an eclectic range of engineering and R&D projects in health, aerospace, software, energy, and defense, including an advanced insect repellent, a feeding bottle for pre-term infants, and an air-activated blanket for hypothermia victims. Many of its projects are a legacy of its 2005 acquisition of engineering staff and federally funded Small Business Innovation Research programs from Waltham’s Foster-Miller (which retained its robotics, advanced materials, and some other divisions and became a subsidiary of defense contractor QinetiQ).

Foster-Miller had been working on a small-scale gasification scheme, and in early 2005 it responded to an Army request for proposals for waste-management solutions for its overseas operations. “We not only outlined a solution but told them we could also provide electricity and gas heat,” says Haber. The Army accepted that proposal and several others, and the project—which became the core of IST Energy—won DoD funding to the tune of $2.5 million.

The company used the money to develop a lab prototype, then raised another $2 million in angel funding to build the first production unit, which is now parked outside the InfoSciTex building on Waltham’s Bear Hill Road (see photo).

I got a look at the unit last week. From watching a technician wriggle around the equipment inside the container, it seemed clear that one the biggest challenges for the company was …Next Page »

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Ze-gen has tapped a new investor in the Middle East to help raise $20 million in a Series B round of financing, looking to use the capital to commercialize its method of converting solid waste into gas for power plants.

The Boston-based company’s new investor, Waroz Holding Company (a unit of Oman-based industrial conglomerate Omar Zawawi Establishment, or the Omzest Group), led the financing, joined by return backers Flagship Ventures, VantagePoint Venture Partners, and Massachusetts Technology Development Corporation, according to a company press release. Waroz Holding has secured a seat on Ze-gen’s board of directors as part of the financing.

Ze-gen—which has now raised more than $30 million in equity and debt financings—says it plans to begin operating commercial facilities in the U.S. by 2012. The company says that the U.S. sends about 300 million tons of solid waste to landfills every year, and much of that trash could be sent to its proposed regional facilities to be converted into a mixture of carbon monoxide and hydrogen gas to run turbines at electric power stations.

Wade has been following Ze-gen since he visited the firm’s pilot facility in New Bedford, MA, in summer 2007, and more recently he has been following the company’s heated patent dispute with Quantum Catalytics over whether Ze-gen’s waste-to-energy technology overlaps with patents originally obtained by MIT spinoff Molten Metal Technologies and now allegedly controlled by Fall River, MA-based Quantum.

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Boston-based Ze-gen has struck back at Quantum Catalytics. Ze-gen, in documents filed yesterday in federal District Court in Boston, says the patent infringement claims Quantum filed against it in August are “transparently fraudulent” and “so oblique as to be unfathomable.”

Many of the patents at stake in the lawsuit have expired, Ze-gen pointed out in a motion filed yesterday asking Massachusetts District Court Judge Judith Dein to dismiss Quantum’s lawsuit. Ze-gen also claims Quantum failed to specify how Ze-gen’s waste gasification technology–which turns ordinary municipal and construction waste into hydrogen- and carbon-monoxide-rich “syngas”—infringes on the remaining patents.

Quantum Catalytics, a Fall River, MA, company headed by John T. Preston, the former top technology licensing officer at MIT, alleges that Ze-gen wrongfully acquired trade secrets relating to a technology originally patented by MIT spinoff Molten Metal Technologies for vaporizing waste in a bath of molten iron. Quantum obtained the rights to those patents after Molten Metal went bankrupt in 1997, and it charged in its original complaint, filed August 22, that Ze-gen obtained confidential information about the patented technologies by hiring a series of former Molten Metal employees.

Ze-gen not only denies that its gasification technology is based on the Molten Metal patents, but argues that the case is moot, since many of the patents have expired and are now “irretrievably” in the public domain. Ze-gen filed documents with its motion showing that six of the 14 allegedly infringed patents lapsed between 2000 and 2004 after Quantum failed to pay required maintenance fees to the United States Patent and Trademark Office. Federal laws “preclude any claims based upon lapsed patents,” Ze-gen’s attorneys assert in the motion.

I attempted to contact Quantum Catalytics for comment on Ze-gen’s assertions, but the company didn’t immediately respond to phone messages.

I did talk briefly with Ze-gen CEO Bill Davis. The motion speaks for itself, he said, explaining that there was little else he could say publicly about the case while it is still being litigated. “Our position is that we have not done anything wrong or violated anybody’s intellectual property of any form, and we’re going to vigorously defend ourselves,” Davis said.

The Ze-gen motion (which we’ve posted here) asserts that the court should, on the basis of the expired patents alone, dismiss all counts in Quantum’s complaint. But the motion mainly argues that Quantum’s complaint should be thrown out because it is too vague.

Indeed, while the 21-page complaint filed by Quantum enumerates the 14 patents granted to Molten Metal between 1993 and 1998 for such things as a “method and system for injection of a vaporizable material into a molten bath,” it offers no details that I could find about how the technologies Ze-gen is testing at its pilot plant in New Bedford, MA, overlap with the technologies covered by those patents. It merely asserts that Ze-gen’s pilot facility and patent applications are based on Quantum’s intellectual property.

Ze-gen’s attorneys—a team at Boston-based law firm Hanify & King led by Christopher Morrison—write that the Quantum complaint involves “the same nebulous, undefined glob of alleged trade secrets” that were at stake in …Next Page »

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Boston clean-energy startup Ze-gen is building a pilot plant where waste materials are vaporized in a giant vat of molten iron, producing “syngas” that can then be burned to make electricity. When a federal judge in Texas dismissed a patent-infringement lawsuit against the company last month, Ze-gen had cause to hope that its recent legal hassles had also turned to vapor. But then, last month, its accusers filed a new complaint in federal district court in Boston. And with Ze-gen expected to file documents refuting the allegations soon, the case is likely to get a lot more complicated before it burns out.

Ze-gen’s plant, which I toured last year, is located adjacent to a waste-management facility in New Bedford, MA. Quantum Catalytics of nearby Fall River, MA—a company led by MIT’s former top technology-licensing officer, John T. Preston—says the design of the Ze-gen plant is based on patents and trade secrets owned by Quantum, intellectual property the company licenses exclusively to Texas Syngas, a Houston company that it co-owns. On August 22—the same day Ze-gen filed a motion to make Quantum pay its legal expenses in the dismissed Texas case—Quantum and Texas Syngas filed a complaint in the U.S. District Court of Massachusetts that repeated and expanded upon the Texas suit’s allegations of patent infringement and misappropriation of trade secrets.

Ze-gen, founded in 2004, hasn’t yet filed a response to the Massachusetts suit. But CEO Bill Davis calls the case “frivolous” and says that Ze-gen will “respond forcefully” in documents that could be submitted to the court as soon as this week.

It all adds up to an interesting case study in the tussles that can spring up between early stage technology companies as potential rivals seek to head one another off, even in industries such as clean energy that supposedly occupy a moral high ground. And a review of the available court records suggests that Ze-gen may have a tougher time fighting back against Quantum’s accusations in Massachusetts than it did in Texas. There, the courts didn’t rule on the substance of the patent-infringement allegations, but merely said that the dispute between the two Massachusetts companies was outside their jurisdiction.

Quantum’s side of the story—which stretches back to the late 1980s, when a Fall River company called Molten Metal Technology began developing methods for breaking down waste in a superheated metal bath—can be read in detail in the complaint it submitted to the Massachusetts court and in the welter of documents filed in the Texas case.

Davis, for his part, will only say that, “It’s a classic kitchen-sink case where people are trying to essentially extort money from other companies.” But parts of Ze-gen’s side of the story, too, can be extracted from the paperwork it filed in the Texas case.

Molten Metal Technology, where Quantum CEO Preston was a director and major shareholder, was formed in 1989 around technology developed at MIT that promised an environmentally friendly way to dispose of hazardous wastes. The company raised $80 million in a 1993 IPO, and at one point was called “a shining example of American ingenuity, hard work and business know-how” by Vice President Al Gore. But the company filed for bankruptcy in 1997 after anticipated commercial contracts and government grants failed to materialize. Allied Technology Group, a radioactive waste handling company, purchased the remains of the company in 1998 for $10.5 million. As part of the bankruptcy proceedings, Quantum Catalytics obtained the rights to 14 of Molten Metal’s patents, including methods for dissolving waste and controlling chemical reactions inside a molten metal bath.

In its complaint, assembled by prominent Boston intellectual-property law firm Brown Rudnick, Quantum alleges that Ze-gen gained access to the confidential information and trade secrets embodied in these patents by hiring a string of former Molten Metal employees, beginning with a man named Vick Gatto, who joined Ze-Gen in 2004. Quantum says Gatto advised Davis to approach Quantum and Texas Syngas about licensing the companies’ molten bath technology. Davis did meet with Preston, who refused to grant the license, according to Quantum’s complaint. But Ze-gen got the proprietary information it needed anyway, according to the complaint, both through Gatto and by …Next Page »

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