Exemplifying the trend, in Virginia Enviva announced the signing of a long-term wood pellet supply contract with Electrabel, a subsidiary of GDF SUEZ Group, one of the largest utilities in the world.

Under the contract, Enviva, a subsidiary of Intrinergy Holdings LP, will supply 480,000 metric tons of wood pellets annually to Electrabel’s biomass power generating facilities in Belgium. Intrinergy is a portfolio company of Riverstone Holdings LLC’s most recent renewable and alternative energy fund. That’s enough to supply more than 150,000 homes with biomass-based power.

The economics on biomass are interesting. At 4000 KWh per tonne and $105 per ton for oven-dry wood chips, the raw cost for power (excluding capital costs, overhead and profit) are in the 3-cent range per KWh, far worse than coal but far better than most solar and wind options for the Europeans. Of course, biofuels processors who can realize up to 135 gallons per ton from selected woods can generate even higher yields, but the capital costs for biofuels can be daunting compared to the relatively well-understood art of co-firing biomass with coal. Outlook for biomass: bullish.

“With demand for renewable fuel increasing worldwide, the U.S. biomass market is poised for tremendous growth.  Enviva is excited to be at the nexus of this growth by matching U.S.-based resources with major power producers around the world,” said Enviva Chairman and Chief Executive Officer John Keppler.  “We are pleased that Electrabel has joined Enviva’s growing base of utility customers committed to reducing CO2 emissions over the coming years.”
Enviva will supply the wood pellets from its expanding manufacturing base of production facilities in the Southeastern U.S., home to some of the world’s most abundant and most sustainably managed wood baskets. Enviva’s environmental, safety, and forestry staff are at the forefront of best practices in sustainable harvesting, and they ensure that all of the company’s biomass resources are procured according to internationally recognized third party certification standards. http://www.envivapellets.com

The renewable energy M&A market increased 145% during Q1 2010 against 2009 as small start-ups who managed to weather the economic crisis but don’t have cash for expansion get swallowed up.

The US, China and the UK are the largest markets for renewable energy M&A.

]]> http://biomassdigest.net/blog/2010/06/10/investors-prefer-biomass-to-solar-and-wind-kpmg-report/feed/ 0 http://biomassdigest.net/blog/2010/06/10/epa-to-hold-hearings-to-define-fuel-vs-solid-waste/ http://biomassdigest.net/blog/2010/06/10/epa-to-hold-hearings-to-define-fuel-vs-solid-waste/#comments Thu, 10 Jun 2010 16:06:16 +0000 admin http://biomassdigest.net/blog/2010/06/10/epa-to-hold-hearings-to-define-fuel-vs-solid-waste/ In Virginia, the EPA will hold three public hearings in June to determine rules on which secondary non-hazardous materials should be considered ‘fuel’ and which should be considered ‘solid waste’ as part of their hearings on air pollutants from waste-based energy processes.

Secondary materials are those that are not the primary product of a manufacturing or commercial process and include consumer and industrial materials that are no longer used for their original purpose, such as scrap tires, used oil, wood, coal refuse, and construction and demolition debris.

The hearings will be held in Arlington, VA on June 15 and in Houston and Los Angeles on June 22. Written comments will be accepted until August 3.

]]> http://biomassdigest.net/blog/2010/06/10/epa-to-hold-hearings-to-define-fuel-vs-solid-waste/feed/ 0 http://biomassdigest.net/blog/2010/06/10/northeast-biomass-conference-expo-to-convene-in-boston-august-4-6/ http://biomassdigest.net/blog/2010/06/10/northeast-biomass-conference-expo-to-convene-in-boston-august-4-6/#comments Thu, 10 Jun 2010 15:58:30 +0000 admin http://biomassdigest.net/blog/2010/06/10/northeast-biomass-conference-expo-to-convene-in-boston-august-4-6/ In Massachusetts, the The Northeast BIOMASS Conference & Expo will be held August 4-6, 2010 at the Westin Copley Place in Boston.

The goal? To connect the area’s current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utility executives, technology providers, equipment manufacturers, investors and policy makers. The Northeast U.S. has vast forestry, agricultural and municipal biomass resources, and is home to hundreds of technologically progressive biomass power, biofuels and biomass thermal energy projects.

According to the organizers, “The sustainable utilization of forestry and wood processing residues — from manufacturing wood pellets in Maine and New York to converting pulp and paper mills to next-generation biorefineries in New Hampshire and Vermont  — is only the beginning.”

More on the event.

“Among those remaining, some of them aren’t willing to take the risks associated with renewable energy projects,” he adds. “Others don’t want to loan to renewable energy projects because it’s not their typical portfolio. Instead of reaching into their pockets and making a direct loan of their money, they’re standing in a position of being a trustee in the bonds. The project company will issue its corporate bonds to an accredited investor, somebody with at least $1 million net worth. The bonds themselves, but for the loan guarantee, would likely be not investment grade. With the loan guarantee on top of them, they become triple A.”

Reidy, along with colleagues at Stern Brothers, Mintz Levin, and Kreig DeVault, developed the following solution.

1. The lender steps outside of its traditional role of lending its funds to an eligible borrower.

2. Instead, the lender (the team confirmed that it expects to use a commercial/investment bank and have “a top 5 major commercial bank working with us”) acts as a trustee.

3. In this role, the project company issues taxable corporate bonds (placed by Stern Brothers) to accredited investors (but $1 million net worth investors–under SEC rules– would represent the floor, while generally the bonds will be placed/sold to institutional investors).

4. The investors place the purchase/sales proceeds into an account with the trustee bank. The trustee bank then on-lends the bond proceeds into the project.

5. The USDA and/or DOE, as part of the financing, places the loan guarantee(s) over the bonds.

6. Thus, the generally low-rated bonds essentially would become AAA-rated under the full faith and credit of the US government.

7. The trustee bank would hold legal title to each of the bonds, mortgages and other required project security during the entire term of the bonds and loan guarantee(s).

8. The bond holders similarly would hold beneficial title to the bonds during the same periods.

9. The bonds approximately would have up to a 2% lower interest rate than the 7% plus currently available as commercial lending rates.

10. They would have maturities of 15-25 years, instead of the 1-7 year tenures which banks currently are forcing renewable energy projects generally to accept (and which shorter tenures will not permit the proper amortization of such projects).

11. Only the Treasury’s Federal Finance Bank offers better terms, at interest rates of 22-75 basis points over Treasuries (or approximately 4%) and tenures of 20-30 years, available solely for the DOE Section 1703 Loan Guarantee Program (for certain new and unique technologies) and only when DOE agrees to 100% coverage of up to 80% of total project costs.

12. The program is designed to work under the USDA’s section 9003 program, or the DOE’s 1703 program under many circumstances, the DOE’s 1705 program, or the USDA’s B&I or REAP programs. A good comparative for all these programs is this comprehensive presentation from Mark Riedy of Mintz Levin.

These projects will promote investment in clean energy infrastructure that will create jobs, help communities provide long-term renewable energy and save consumers money. They will also serve as models for other local governments, campuses or small utilities to replicate, allowing other communities to design projects that fit their individual size and energy demands.

“Smaller, more localized renewable energy systems need to play a role in our comprehensive energy portfolio,” said Secretary Chu. “These projects will help create jobs, expand our clean energy economy, and help us cut carbon pollution at the local level.”

The selected projects will be leveraged with approximately $167 million in local government and private industry funding.  DOE estimates that these projects will provide enough clean, renewable energy to displace the emissions of approximately 10,700 homes.

Projects selected for awards include:

City of Montpelier (Montpelier, VT)

This project will further Montpelier’s energy goals by supporting installation of a 41 MMBtu combined heat and power district energy system fueled with locally-sourced renewable and sustainably-harvested wood chips. The CHP system will be sized to provide heating to the Vermont Capitol Complex, city owned schools, the City Hall Complex, and up to 156 buildings in the community’s designated downtown district for a total of 176 buildings and 1.8 million square feet served. By providing 1.8 million KWh of power to the grid, the system will maximize its operating efficiency and reduce thermal costs for users in the community. Montpelier will conduct outreach to encourage replication regionally and nationally through its project partners, the Biomass Energy Resource Center, the Vermont Energy Investment Corporation, and Veolia Energy North America.  DOE share: $8,000,000

Forest County Potawatomi Tribe (Forest County, WI)

The Forest County Potowatomi Tribe proposes to implement an integrated renewable energy deployment plan that will provide heating, cooling and electricity for the Tribe’s governmental buildings, displacing natural gas and propane. The renewable energy installations will include: a 1.25 MW biomass combined heat and power facility that will provide heating, cooling and electricity; a biogas digester and 150 kW generation facility; three 100 kW wind turbines (788,400 kWh/year); and three dual-axis 2.88 kW solar PV panels (14,000 kWh/yr) located at the Tribe’s Governmental Center. DOE share: $2,500,000

University of California at Davis (Davis, CA)

UC Davis’ proposed Waste-to-Renewable Energy (WTRE) system is one component of a campus oriented mixed housing and commercial development venture. The system would generate power from a renewable biogas fed fuel cell.  The organic waste will enter a receiving station in which it can be collected and prepared for digestion.  Once the appropriate mix has been created in buffer tanks, the waste will flow to the reactor where methanogenic bacteria will generate methane and carbon dioxide, hydrogen sulfide, etc. These gases will flow to the Bio-methane Upgrade System for hydrogen sulfide and carbon dioxide removal, so that cleanup is to a level appropriate for use in a fuel cell system, and the cleaned gas is stored. Housed alongside the WTRE system within the Community Energy Park will be an advanced storage battery and a 300kW fuel cell that will be fueled by the on-site biogas and provides electric power to West Village end-users.  DOE share: $2,500,000

Controversy is also swirling over rising cost projections, infrastructure for transporting and storing biomass and the potential usefulness of excess power with a regional grid overloaded with power. Biomass is projected to supply 60 percent of the plant’s power. l

Biofuels Digest special correspondent Ernest Lowe filed this report from the conference.

In California, the Pacific West Biomass Conference opened with the bright promise of the State’s enormous biomass resources. However, several speakers in the morning’s plenary sessions invoked major statuatory and regulatory barriers to fulfilling this promise. There are conflicting definitions of biomass and what qualifies as a legitimate source or conversion process. The conflicts run across the standards for earning carbon credits and renewable energy credits, attaining the Renewables Portfolio Standard (for utilities), meeting AB32 carbon reduction goals, and meeting California Integrated Waste Management Board landfill diversion goals. These issues reach beyond California since the State’s standards strongly affect those of many other States.

For instance, the California Renewables Portfolio standards do not accept organic municipal solid waste as a source for renewable energy (except for landfill methane capture and gasification of MSW). Green-e, the favored third party certifier for both RECs and carbon credits, denies greenhouse gas reduction credits to energy from solid and liquid biomass from nearly all sources.

Jim Stewart, Chairman of the California Bioenergy Producers Association described Assembly Bill 222, drafted five years ago to rationalize definitions, sources, and technologies. This bill has been approved in the Assembly but the Senate Environmental Committee is sitting on it, in response to strong pressure from environmental organizations. Several speakers emphasized the need to work with the environmentalists to help them understand the relative impacts and benefits of biomass energy compared with fossil energy. (No representative from the enviro organizations were on the agenda.)

Amplifying Feedstocks

Reliable access to biomass feedstocks was a recurring theme. Companies are researching new species, such as Sustainable Oils’ Camilina sativa and Viaspace’s Giant King Grass project in a tropical region of China.  <link to earlier Digest stories> Some companies are focusing on “waste” streams or residues, others on scanning for new strains and enhancing dedicated energy crops through traditional plant breeding or genetic engineering.

One of the most innovative approaches to feedstocks was Dallas Hank’s baseline assessment of idle public lands, such as freeway frontage, railroad and airport land, and military bases. This Utah State University Extension researcher estimates that over twenty million acres of US public land could be farmed for dedicated biomass crops. His economic analysis shows the overall costs of production would be a small fraction of growing bioenergy crops on private land.  (See www.freewaystofuel.org for Hank’s powerpoint and information on the Freeways to Fuel Alliance.)

Maintaining viability of algae companies

In the Biorefinery track algae companies had strong representation. Kent Bioenergy, Aurora Biofuels, Genifuel Corporation and Bioalgene presented their approaches. One manager responded to the question “When do you think your company will be producing cost competitive biodeisel.”  “I hope its within my lifetime,” was his modest response. Others projected three to five years to commercial application.

However, the algae developers emphasized business models based on revenues from sequestering carbon and processing other pollutants, on the input side. On the output side they are seeking to create multiple co-products to achieve ROI as biodiesel production evolves to cost competitive status.

For instance, Kent Bioenergy uses effluent from a waste water treatment plant on the Salton Sea and landfill leachate (SE California) as nutrient rich media for growing microalgae. Bioalgene has a demonstration site in Boardman OR that captures CO2 from a coal fired power plant to speed growth. Genifuel gasifies nuisance wet algae to produce methane, as well as plants like water hyacinth that clog waterways. This site’s coproducts include sterile water and organic fertilizer. <http://www.biofuelsdigest.com/blog2/2009/05/08/genifuel-licenses-new-method-for-converting-algae-to-natural-gas-for-power-gen> Other companies mentioned animal feed, fertilizer, biopolymers, and feedstock to anaerobic digesters as coproducts.

This systems business model of diversifying input and output revenue streams enables these algae companies to remain viable while evolving a commercially competitive biofuel. Cellulosic ethanol producers described similar strategies.

Bryan Yeh of SAIC presented the DARPA sponsored study of algae companies and recommendations for successful algae business development. He says the report will likely not be released for another 6 months.

Biomass Investment

One of the fully subscribed tracks was the late addition — Biomass Power Project Development & Finance. These four sessions offered very informed commentary by investors and a great deal of time for questions and discussion. The investors” case reports demonstrated the active role they play in supporting their companies’ project teams in evolving sustainable business models that mitigate risks for both equity and debt investors.

Learning from one another

Conference participants commented on the great value of cross-pollination between different technologies at an event like this. One company learns from another’s solutions to basic strategic issues of feedstock supply, sustainable business models, integration of technologies, or coproducts. The sharing from presentations was greatly amplified by discussions in the breaks, lunches and late-afternoon receptions. Although BBI tightly scheduled the formal presentations, it was generous in time for breaks, lunch, and late afternoon receptions.

Diversity of the biomass industry cluster

Participants also commented on how the diverse sponsors and exhibitors were a good cross section of the biomass cluster. These included service and product suppliers (law firms, bioengineering companies), manufacturers of equipment for processing feedstocks (grinders, shredders, pellet or briquette compressors), construction engineering firms, the firms harvesting ag and forest residues, and some of the biomass conversion companies. Many firms in the supply chain have expanded from their traditional product lines to embrace bioenergy and biomaterials. In some cases they become project partners rather than vendors.

Ernest Lowe is CEO of Indigo Development