FAME Board approves loan guarantee for torrefied pellet plant
The Finance Authority of Maine (FAME) Board recently approved a $25 million loan guarantee to support a proposed torrefied wood pellet project in Millinocket, Maine. The project is under development by Thermogen Industries, an entity of Cate Street Capital.
“This project will position Maine as a true pioneer in a promising new industry,” said Gov. Paul LePage, who has been deeply involved in helping get this project off the ground. Last month, LePage testified in support of the project during a board of director’s meeting and public hearing regarding the project. “This is yet another example of the state partnering with industry to create an opportunity for new private investment and job creation,” he continued.
Thermogen spokesman Scott Tranchemontagne said approval of the loan guarantee is the last piece of funding puzzle needed to move forward with the project. In addition to the $25 million loan guarantee, the project is also funded by $26 million in private equity investment and $19 million in financing from a federal program known as the New Market Tax Credit Program.
The FAME Board announced the loan guarantee approval on Oct. 17. According to Tranchemontagne, the approval is subject to a 30-day public comment period, which commenced on the day of the approval. “Following that 30-day period, we can move into closing,” he said, noting that Thermogen anticipates closing on all funding sources before the end of the year, with construction beginning as soon as possible thereafter. The initial stage of the project is expected to take 12 months to build out, with production scheduled to start before the end of 2014.
The Millinocket plant will initially have the capacity to produce 100,000 tons of torrefied wood pellet per year. Thermogen expects to expand that capacity to 500,000 tons soon after initial production begins.
Tranchemontagne explains, noting that the loan guarantee specifically supports the installation of one production machine at the site, which will allow for 100,000 tons per year of production. Thermogen will install four additional machines at a later date. “As soon as the first machine is up and producing torrefied wood pellets and generating some revenue, we’ll move forward with the additional machines.”
The plant will employ a unique torrefaction technology developed in by Scotland-based Rotawave. The process uses microwave technology coupled with traditional thermal technology to more effective “cook” the pellet from the inside out, resulting in a more uniform product. Thermogen holds the exclusive rights to produce and market the technology in North America.
According to Tranchemontagne, Thermogen expects sell torrefied pellets into domestic and overseas market. In the U.S., he said Thermogen has identified an opportunity to provide the product to institutional users, such as hospitals and universities that operate district heating or combined-heat-and-power (CHP) plants. The company also intends to export its product to Europe, where it can be used to replace coal in power plants.
In addition to the Millinocket plant, Thermogen also plans to construct a 300,000 ton-per-year facility in Eastport, Maine. Tranchemontagne said the company has identified a site for that plant and is currently engaged in due diligence activities.