Marianne Naess is the co-owner – along with her husband, Erik Heim – of Xcelerate Aqua, a Portland, Maine, U.S.A.-based consultancy with the mission of creating and investing in new companies that “achieve smart and efficient aquaculture growth … [and] push environmental and social stewardship forward.”
Naess was formerly the executive vice president commercial and Heim was previously the president and co-founder of Nordic Aquafarms, and were leading the company’s effort to build land-based salmon recirculating aquaculture systems (RAS) farm in Belfast, Maine, U.S.A. and Humboldt County, California, U.S.A. They left Nordic Aquafarms in July 2022.
In a September 2022 press release, Naess and Heim announced they would use “their deep industry experience and decades of top executive management experience to create companies that reduce time-to-market, risk, and investment thresholds for investors in aquaculture.”
Their initial ventures include a recirculating aquaculture system (RAS) company based in the United States “carefully configured to move swiftly forward at lower risk and investment levels in the segment.”
“Smaller, leaner, and faster is the motto here. Small enough to significantly reduce complexity and local impacts, but with key advantages that match larger scale benefits. This is what the RAS sector needs to deliver financial proof of concept on acceptable timelines and to open up more site development opportunities in the US in the coming years,” they said in their initial press release.
In an interview with SeafoodSource, Naess confirmed Xcelerate Aqua is in the final stages of due diligence for a first site in eastern U.S. capable of producing 10,000 metric tons of salmon annually. Xcelerate Aqua is also spinning out a new aquaculture technology company in a different segment of the industry, she said.
SeafoodSource: You recently left Nordic Aquaculture rather suddenly. Was your plan to eventually strike out on your own and become your own bosses? And was that plan accelerated by your departure from Nordic?
Naess: When we first came to the United States, we had three-and-a-half year contracts that we extended because the project took a little longer than we anticipated. It has always been our plan to do something else eventually. When we came to the U.S. and all the projects that came to the U.S. from Europe, I think they have a lot of industry knowledge and a lot of good intentions. Establishing and permitting and going into the U.S. – I think [the difficulty] of that process was underestimated for a lot of these projects. But we had a contract that had an end to it and it was the right time for us [to leave]. Having said that, sometimes you have different ideas about how you want to proceed.
SeafoodSource: What were some of those ideas or areas where you had disagreement?
Naess: I can't speak on behalf of Nordic at this point. But for Eric and myself, I can speak about how we see the future. And I think it's no question that permitting anything is challenging. For us, we're not going small but we're going smaller-scale, which opens up a lot more opportunities for finding sites along the coast, both on the U.S. East Coast and the U.S. West Coast. It's difficult to find a good site for a larger facility and that's why [Nordic] kept fighting in Belfast for four years. Going smaller, I think you can have the ability to go find more sites, and if you go greener, you can maybe find something that's appropriate for more communities. And our goal right now is also to take down a lot of the investment thresholds. The RAS world has developed quite significantly over the last five years, with some early movers struggling and the COVID-19 pandemic and the war in Europe causing some financial difficulties. It's hard to finance these large projects at this point. So I think the path now is to take down the risk and the capital investment in initial phase, and that's what we're working on.
SeafoodSource: Is there any kind of sadness or frustration not being able to see the Nordic project through to completion?
Naess: No. I think we worked really hard for them to be permitted. And I think it's up to the team there to take it further and we hope they succeed. They are two good projects for in the U.S. and the industry. We’re proud of what we did. Nordic Aquafarms started in our living room. But these projects grow and, in a sense, you lose control of them. Everything has to come to an end and we're looking forward. We're taking all the lessons learned and going a step further. Our focus is on the future and we have a good project that will make a difference here in the U.S.
SeafoodSource: What were some of the key lessons you took out of your experience working for Nordic on the Maine and California projects?
Naess: You know, Nordic was invited into Maine by all the politicians at the state level from the governor's office to the congressional delegations to the local city council. We had really strong support in the community, which all the local elections, the city council elections, and referendums showed. But there was a very vocal, small group of opponents and they got very resourceful, and had access to funding. A lot of people have their second homes along the coast and they want to keep the area untouched. And that was challenging in retrospect. It's hard to say what we could have done differently in that context. Nordic obtain the permits this summer but that was the result of a lot of hard work over the last three-and-a-half years to get to that point. I had more than 500 stakeholder meetings over those years, creating an understanding of the project and building support so local residents want the project and they speak up for you so you don't have to constantly defend yourself.
But I think each case is unique. You can go into communities that welcome this and communities where you will have a problem. I have heard that RAS is not compatible with small towns. I don’t think you can say that. You can't use that as a blanket statement – I think that depends on where you go. But I think some level of opposition is going to happen in most places. Jonesport [where The Kingfish Company is building a yellowtail RAS] and Belfast are two very distinct communities. But they have the same opponents.
SeafoodSource: How would you describe this moment for RAS in the U.S.?
Naess: There is a lot of RAS-related knowledge in the U.S. – a lot of research, a lot of expertise, especially in academia. But you don't really see an industry that matches that and it's very fragmented. There are a lot of small, really good projects here, but there aren't any of the larger, more industrial scale. I think it’s important to get some of those bigger projects up and running and get a proof of concept, especially of a certain size.
What we've seen in the media, all of these projects failing. I think also multiple reasons why projects stall – it can be permits, financing, or a lot of other reasons – but I don't think they are all failing. I think there's still great room for RAS in the U.S. and room for our company to grow. I don’t think you can say there's no path forward for RAS in the U.S. We do need a proof of concept for a larger-scale or moderate-scale facility here in the U.S. that takes down the risk investors are currently seeing.
Projects can promise too much. Some [other RAS] projects propose 100 percent recirculation. That's a huge risk because something [bad] can happen and you always need a fallback solution. A lot of these bigger projects haven't reached their biomass targets. There can be many reasons for that, such as operational issues or water-quality issues, and a 10,000-metric-ton capacity does not necessarily mean you’re going to be producing 10,000 metric tons. And nearly all the projects have underestimated the complexities of permitting and stakeholder work.
I think moving forward we need to focus on under-promising and over-delivering. There needs to be a strong focus on building up biomass and delivering on the project targets and calibrating the systems.
SeafoodSource: The example that a lot of the financial funding folks and analysts look at as the archetype of RAS development in the U.S. is Atlantic Sapphire, which has struggled. How is that project still shaping the market?
Naess: Well, it's hard to speak on behalf of the investment community and know how they're thinking. I think a lot of these projects were initially financed out of Norway. I think [Atlantic Sapphire] has influenced the market in Norway more than maybe the U.S. at this point. But on the other hand, the market in the U.S. is more immature when it comes to RAS investments. It's strong on ESG investments. So I think finding the right case, getting them the proof of concept at a certain scale, is important to show that RAS has a viable future in the U.S. And I think it will come. There are endless possibilities here in the U.S., but there's a correction in the market that we’re seeing right now. I think that's healthy. Going forward, you might see more modest-scale facilities being proposed because the threshold of financing something that's huge without proof of concept at a certain stage, especially when some cases that have struggled, is now very difficult.
SeafoodSource: What do you think is the ideal size for RAS facilities? If you could create an archetype for the ideal RAS project in the U.S, what would it look like?
Naess: We’re taking all the lessons learned over the past few years in the United States and doing what we think is the right size for the market right now. Taking into account the stakeholder engagement, the concerns we’ve heard from communities, along with the financial side of things, we are proposing 5,000 metric tons plus a later 5,000 metric tons of capacity added on once the project has proven itself. Everyone we have spoken to – RAS vendors, civil and environmental engineers, academia, the market in general – agrees that this is the right approach going forward. What's most important is to look at the specific features of the site itself and how much it can accommodate. And going smaller could probably eliminate some of the ancillary costs to the infrastructure cost that larger sites would entail.
But more than anything, it needs to be profitable. It needs to meet the right KPI targets and metrics. Then you can look at whether the site can accommodate a full processing facility and some of the other supporting infrastructure on-site. A larger farm is not necessarily more financially viable because that adds a lot of complexity. And having said that, 5,000 metric tons is bigger than anything that's in the market today. So it's still a fairly sizable facility, but it's not a mega facility like 25,000 MT, 50,000 MT, 100,000 MT, or 200,000 MT, which you’ve seen floated out there – those are enormous. We're very comfortable with the size that we have chosen for these projects.
SeafoodSource: Can you give any details about the new projects you’re involved with?
Naess: I can't disclose where the site is, this is still under [a non-disclosure agreement] and subject to final due diligence, but it has existing permits in place that can be grandfathered in. It is a on a non-contaminated brownfield site that has been pre-excavated so we don't have to do the digging, excavating, and blasting. That brings down a lot of the risks that come when you face a lot of opposition doing a large project. And it has 100 percent renewable power on-site … and waste stream handling on-site. We're also working on closing up the facility even more in terms of recirculation, and that opens the possibility being building smaller modules and doing it gradually.
Our second project is also under [a non-disclosure agreement]. We know it will be announced but to investors and markets. It’s an interesting project and more of a technology project. We have more sites, and locations that we’re interested in but we are going to focus on our first primary location first and retain a strong focus on building up that to gain proof of concept in that facility. And then we see that there are possibilities for future expansion, but we're not promising anything at this point.
SeafoodSource: What is the capital investment required to build something like that? Is a 5,000-metric-ton facility an easier pitch to investors?
Naess: The project that we will be proposing, for the phase-one build-out, will be between USD 120 million and USD 150 million (EUR 120 million and EUR 150 million). We don't have the final estimates yet because we need to do the design for it, but it's significantly lower than the larger facilities, even with post-inflation estimates.
For the investors that are interested in RAS, you need to deliver on a strong ESG message and you need to make sure that it's real ESG, not just greenwashing – RAS in itself is not a good ESG message today. Investors are interested in the U.N. Sustainable Development Goals. They’re going to look at your water discharge and treatment of the effluent, and at closing up the facility as much as possible. Of course, with RAS, you don't have to import and don't have the carbon footprint you get from flying fish from South America or Europe. But I think today you need to take it further. You need to look at your energy use, using clean energy, and look at optimizing your energy usage as well. It doesn't matter if you use clean energy if you use a lot of it, because the alternative use of that energy can be to the benefit of society itself.
SeafoodSource: In planning on running your own farm, have you gotten to the point where you’re thinking about personnel and the experience you need to run the farms? How is the employee pool in the U.S. for people with RAS expertise?
Naess: I would say we've done the initial organization and have the design in place. We know the industry, we know the players, we have people that want to work with us, and we anticipate success. As soon as we launch the company and start building it up, more people will join on. I'm pretty confident that we'll find some good people that want to work with us. There are some excellent people out there. But local workforce development is important. A lot has been done in academia, but efforts have been fragmented.
SeafoodSource: Are you looking at projects exclusively focused on Atlantic salmon or are you looking at other species at all?
Naess: At this point, we’re looking at salmon, but we're keeping the door open for our species in the future too. There's a good, well-established market for Atlantic salmon. I think it's a good choice for the U.S., because there’s so much demand and the market has been growing. So if you’re trying to fill that gap or if you’re looking to replace imported product, that’s two sides of the same story in a sense.
SeafoodSource: Do you see any areas for opportunity that aren't really being exploited right now in the U.S. market?
Naess: We are currently focused on the East Coast. We’re not ruling out anything in the future, but we're going to stay focused on finding places that are as close as possible to salmon’s natural habitat. What's important for us now is to have access to plenty of clean water that is approximately the right temperature. Otherwise, you're going to spend a lot energy on cooling and heating the water. So there's some limitations for us in terms of site selection.
Photos courtesy of Xcelerate Aqua
