Long Island Compost and its American Organic Energy affiliate say they are taking the next step to modernizing a Yaphank facility with a $40 million system designed to turn food waste into natural gas.

After delays, American Organic Energy plans to begin construction of an anaerobic digester late this year or early next so it can start accepting and separating 180,000 tons of food waste from supermarkets, restaurants, hospitals and schools by next summer. The food waste-turned-natural gas will fuel electric power generators, which will sell any excess gas. Newsday first reported on the plan in 2013.

The effort will be helped by the awarding of a $1.35 million grant from the New York State Energy Research and Development Authority, said Charles Vigliotti, chief executive of Westbury-based Long Island Compost and AOE.

Yaphank residents and state officials negotiated a settlement over odor and particulate complaints with Long Island Compost in 2013, with the anaerobic digester and other upgrades designed to enclose and modernize the plant. Vigliotti said the company has been working to apply for permits, local support, financing and approvals for the plant, which will have three on-site, 1-megawatt power generators capable of producing up to 6 megawatts of power.

AOE had been negotiating with PSEG Long Island and LIPA to sell power back to the grid from those generators, but couldn't settle on an acceptable price, Vigliotti said. It will sell excess natural gas back through the National Grid gas distribution system to an outside buyer.

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The plant will accept food waste in packaging and separate out an estimated 60,000 tons of paper, metal and other packing to get to the food. The waste will be moved to the digester, which will produce the equivalent of 2.1 million gallons of diesel fuel a year, Vigliotti said.

"This anaerobic digester project is a significant step forward for the Long Island region in minimizing greenhouse gas emissions and reducing material going into landfills, providing economic and environmental benefits to its residents," said NYSERDA president and chief executive John B. Rhodes. The plant will cut greenhouse gas emissions by 40,000 tons a year, equivalent to removing 8,125 cars, NYSERDA said.

Machinery at the plant, including trucks, will be powered by the gas, and sales of the excess will be enough to sustain a profit, he said. The company will also make a profit by accepting and separating the food waste.

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It will sell digester waste to partner Scotts Miracle-Gro Co., including solid waste and wastewater for fertilizer. Scotts this year acquired the packaging business of Long Island Compost for an undisclosed sum.

"We are committed to build the world's finest facility for processing food waste and pulling out renewable energy," Vigliotti said. "There's nothing on this scale anywhere in the country."