startup spotlight
7:01 am
Sun September 1, 2013

Startup with New Business Model Pitches Cheaper Sewage Treatment

A startup company based in Vancouver, Washington is looking to upend the sewage treatment business.

There are literally dozens of small Northwest cities wringing their hands, trying to figure out how to add treatment capacity for growth, or simply update aging and failing infrastructure. This startup, named Blue Array, proposes to give interested cities and their ratepayers a treatment system for free with a service contract.

You probably don't think much about what happens after you brush or flush until you're staring a huge sewer bill increase in the face. This happened to the small southwest Washington town of Vader. City council member Kevin Flynn says Vader, a small city looking to grow, had to meet a toughened discharge standard.

"We were looking at a $10 million sewer treatment plant. That's what all the cities around here are looking at. We only have 250 residences and would have to absorb $10 million over 30 years, which would mean it would quadruple our sewer bills,” Flynn said.

Flynn says that kind of rate shock could sap the vitality right out of a small, rural town like his. Vader's leaders looked for an escape, and found it in a fledgling startup.

“Blue Array came up. We took the chance to give them a chance to prove themselves,” Flynn said. “So far, the city of Vader, for the first time in its history, meets permit.”

Vader became the first customer for the modular sewage treatment system sold by Blue Array. Company co-founder and CEO James Reilly says the treatment technology he is deploying is not new, but the arrangement of the pieces and affordability is.

"It doesn't look like a treatment plant,” Reilly said.

So what is the look that's missing here? Reilly and company co-founder Victoria Jelderks make a list.

"Huge basins with things going around and some odor coming out, the palatial buildings everywhere," Reilly said.

"Monolithic concrete structures built for 20 years out of growth that may or may not happen,” Jelderks said.

"We call it a post-Roman architecture. We have no concrete,” said Reilly.

Instead, the system in the town of Vader is a relatively small row of metal shipping containers 8 feet tall and 40 feet long bristling with pipes and pumps. The modules pre-treat incoming wastewater before sending it to existing lagoons. 

Reilly says the startup tried to radically cut the upfront capital costs of upgrading a sewage treatment plant.

"The elevator pitch was we can save 95 percent of the (capital) cost of wastewater treatment plants by changing the way you do it into a modular system. In fact, it's so cheap we can give them away for free. Free clean water was the original pitch," he said.

This is a for-profit company, though, so you know someone has to pay eventually. Blue Array plans to make money by charging for the monthly operation and maintenance.

"Well, it's free in the same way an iPhone is free at AT&T. But the difference is that you only have to have that free system once and it goes on forever, whereas the AT&T thing is you have the next version of the iPhone…” Reilly said.

Reilly and Jelderks say their goal is to come in at half the cost of any competitor. But first, they have to overcome a certain amount of skepticism.

Jerry Spratt, mayor of Toledo, Washington, says his small town is within a few months of going out to bid to increase its sewage treatment capacity.

"They're offering us a free system versus us building one for $8-, $8.5 million,” Spratt said. “Free is pretty good if it works. I'll take 'free' all day long. But before you give me something free, prove to me it's not going to bite us back.”

Washington's Department of Ecology is also circumspect about whether Blue Array's business is the next big thing. The agency and its Oregon counterpart say state regulations do allow cities and districts to contract out the operation of their wastewater treatment to private entities.