DG Power Systems' on-site induction generators can dramatically reduce energy costs for small commercial and institutional facilities. The company is developing a novel new technology for the restaurant industry that will convert waste cooking oil to electricity and heat.

One of the marks of a successful entrepreneur is the ability to see profit where others see only waste. When Reed Hayes sold his commercial-grade silverware manufacturing company in 1995, he had 26 years of restaurant industry experience under his belt. During that time, energy costs rose exponentially, and waste cooking oil became an increasing problem.

Hayes saw a connection between the two issues, and in 2001 he decided to do something about it. Now his company, DG Power Systems, is poised to address both problems for fast-food restaurants all over the country.

DG Power Systems manufactures induction generators, or "gensets," which produce heat and electricity at the point of consumption rather than at a power plant somewhere. "Because you don't have to pay transmission charges, taxes and other surcharges for your electricity, there's a real cost savings," Hayes says. "As a by-product, you produce hot water with thermal energy, and that energy can be harnessed and turned into free heat.

"Restaurants are paying to have their waste oil hauled away," he says. "They are, in a real sense, throwing away potential energy and money."

Industrial facilities, hospitals and medical complexes use gensets in the 250 to 500 kilowatt (kw) range. "But smaller facilities needing 250kw or less have historically been underserved," Hayes says. "The commercial and small institutional segment -- restaurants, small hotels, small apartment buildings, schools -- require 50kw to 200kw. We're focused on the 50kw market."

DG Power Systems' technology will contain a reservoir with a straining device. Restaurant employees will clean out the fryers and simply dump used oil down a chute where it is strained, funneled into a tank and used as fuel for the generator. If the system runs out of oil, it automatically switches to natural gas.

BFTP has invested $340,000 in Lewistown-based DG Power -- nearly 25 percent of the funding DG Power has raised to date. "Ben Franklin has been instrumental in helping us develop our genset," Hayes says. "They connected us with Penn State's Energy Institute, which really helped with some technological hurdles." Hayes says BFTP also was key in the development of DG's proprietary control system.

"The technology could cut fuel costs for restaurants in half," Hayes says. "With the right funding, the vegetable oil system could be in beta testing mode within six months."

DG Power has installed a more traditional system at a Wendy's restaurant in the Bronx. "This natural gas system is providing 80 percent of the facility's electricity and, as a bonus, is heating the building. Our system will save them $30,000 -- about 35 percent of their energy costs. Now, imagine the savings once it's running on vegetable oil!"

DG Power has shipped five standard systems to date and with the technology buttoned up, is ramping up its marketing efforts with a familiar helping hand. "BFTP's Transformation Group has been great helping us with logo ideas, booths for trade shows, ideas for going to market, an accounting system, you name it," Hayes says. "We wouldn't have gotten this far without them."  

 From the May/June 2006 issue