How to Make Biomass Project Aggregation Work
Marcus Kauffman, biomass resource specialist for the Oregon Department of Forestry, is using leftover American Recovery and Reinvestment Act dollars to attract investors to the biomass industry. With the help of the Oregon DOE (and its leftover ARRA money), Kauffman is spearheading a project that will package roughly 10 biomass-based energy projects into a $25 million (give or take a few million) bond investment offering.
After performing a series of case studies on five separate biomass boiler installations throughout the state, Kauffman realized that the financial community not only can, but wants, to use similar biomass projects as low risk, low return investments. Those investors, Kauffman told me, “view it as a viable, low risk proposition with a reasonable rate of returns.”
To make the project aggregation model possible, the Oregon DOE has hired a consultant to research 170 various public buildings in the state that might be good candidates for a package deal that would group together those biomass projects and the funding needed to make them happen. The research will focus on a number of factors including: square footage, fuel currently in use, boiler size, boiler age, and others. The research will allow Kauffman and others to perform a screening analysis, pinpointing the best candidates for the aggregation model, candidates that will receive the most benefit from biomass and at the same time, make the most financial sense. The model, he added, will allow the investors to cut down on their processing fees associated with the investment process.
“I think the success of the aggregation model is going to be dependent on the ability to put together a viable package,” he said. Kauffman compares the aggregation approach to other renewable energy models. Think of a project aimed at performing a series of energy efficiency upgrades, he said. “You have to know that you are going to get a return on each house that you do, and it is the same logic with biomass.” To make the investment low risk, the investors need to have good information about each individual part of the overall package.
Kauffman and members from the Oregon DOE are currently performing the analysis and screening efforts on the potential biomass sites. In the coming weeks, I will relay the information Kauffman and his team have gathered, and hopefully, we will all learn what it takes to make a biomass project aggregation approach work.