Rentech halts development on Fla. biomass power plant
Biomass power in Port St. Joe, Fla., will have to wait, since Rentech Inc. announced its plans to halt development of the proposed 55 MW facility the company purchased for $225 million in early 2011.
Although the proposed Northwest Florida Renewable Energy Center was approved by Port St. Joe’s City Commission in October, Rentech’s December report on 2011 financial activities and results revealed that Rentech was dropping the Florida biomass project from its plans. “(Rentech) does not intend on its own to fund expensive development activities… but may co-invest alongside partners,” the financial report states. For example, the report also noted, the company may seek to invest in projects that would combine Rentech’s biomass gasification technologies with third-party technology for the production of renewable fuels or power.
The Northwest Florida Renewable Energy Center would have utilized a Rentech-SilvaGas gasifer, running on 930 dry tons per day of forest residue and employ 300 people during construction, leaving 85 permanent jobs once the facility was complete in 2013. The proposed facility was first proposed by Biomass Energy Holdings in conjunction with Biomass Gas and Electric. “We are significantly reducing our operating and project costs as we evaluate opportunities to grow our businesses through conservative capital deployment,” said Hunt Ramsbottom, president of Rentech.
Consistent with that strategy, the financial report explained, the company’s expenses for project development before financing is in place are expected to be no more than a few million dollars per year, and the number of development projects will be limited. “Rentech abandoned its large-scale projects that relied on DOE funding, and impaired the assets that had been capitalized in connection with those projects,” the report said.
In the summer of 2011, Rentech formed a term sheet with the U.S. DOE for a loan guarantee that would finance the Port St. Joe facility, but after announcing budget constraints, the DOE pulled back the funding opportunity. During the fourth quarter of fiscal year 2011, Rentech reported a loss of $58.7 million in relation to three projects, including the Port St. Joe facility.
The project did appear to be on a positive path throughout 2011. Rentech secured a power purchase agreement with Progress Energy Florida for use of the electricity generated at the facility. The company also formed a term sheet with White Construction to act as the EPC (engineering, procurement and construction) contractor for the project. The air permits were also granted to the company, along with the approval of the city commission.
According to Port St. Joe Mayor Mel Magidson, Rentech announced plans to stop the project because they are a publically traded company. Magidson also noted in a Dec. 20 city council meeting that the company has a valid development order with the city for 36 months. The air and water permits are good for five years.
“Opportunities exist to create shareholder value through disciplined investment in assets that may be undervalued,” Rentech’s financial report stated, adding that the company believes alternative energy is currently challenging.