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Lessons from Aspen

A biomass power plant is Texas that is up for public auction offers lessons to any project developer willing to investigate the reasons for the plant's struggles.
By Tim Portz | August 30, 2016

Yesterday I took a phone call that challenged my own notion of our role here at Biomass Magazine in the broader biomass industry. I was approached by William Haase and Troy Cornick from Certus Financial with a request to publish a press release about a Sherriff’s auction for the Aspen Power Plant in Lufkin, Texas. The plant is up for auction because it has failed to make payments on the funds borrowed to build the plant.  

It is not uncommon for trade publications to avoid stories like these. Trade publications rise and fall with the perceived strength of the industry and stories of failed projects don’t do much to buttress anyone’s notions of how the industry is faring. 

Still, I was convinced to run the story of this auction as an extended blog for a handful of reasons. They are as follows:

1. This plant is a bargain. Whether or not the plant is bought and brought back into production where it sits or it is pieced out, the bottom line is that there is a bargain here for the right buyer. As the guys from Certus helped me understand, buying the plant at a discount will make the financials of some other project look much, much better.

2. There are real lessons to be learned here. This plant was built without a power purchase agreement (PPA). I’ll admit, I didn’t know it was possible to get a plant built without a PPA, but this plant is proof that actually, there was a time when you could. From what I understand, power prices in Texas at the time the plant supported a PPA north of $75.00/MWh and no one conceived of the prices dropping below what was a breakeven price for the plant. They did. Power in Texas or “ERCOT” I’m told is now ranging from $20-30/MWh pending on the season. Those rates clearly aren’t getting it done for Aspen. 

3. I think this story highlights how renewables can sometimes find themselves competing with other renewables. One of the other revenue streams the developers were planning on for the Aspen Power Plant were Renewable Energy Credits (RECs). Everyone knows the story of the proliferation of wind power in Texas. This proliferation of wind power has resulted in a glut of RECs and the price has fallen dramatically. Taken together, lower prices for power without the protection of a PPA AND low REC prices doomed Aspen.

So, while our team would much rather be celebrating this plant’s 1000th day of operation without a lost time safety incident, I’ve been convinced that this story does offer some real value for our readers. 

The press release about the sale is included below as I received it:

Motion Filed to Sell 50MWH Power Plant at Sheriff Sale in Lufkin, TX

August 25, 2016 --- In the District Court of Angelina County, Texas 217th Judicial District, the trustee for holders of the Angelina and Neches River Authority Industrial Development Corporation Environmental Facilities Revenue Bonds Series 2007A and Taxable Series 2007B has filed a motion to conduct a sheriff sale relating to the Aspen Power plant, a 50 MWH bio renewable power plant located in Lufkin, Texas.  The approved motion would result in the sale of the plant and substantially all of Aspen Power LLC’s assets through a sheriff sale on Tuesday, November 1, 2016.  The sale will be held at the Angelina County Courthouse, 215 E Lufkin Ave, Lufkin, Texas.  The minimum starting bid will be $4.96 million and sold to the highest bidder.   

ABOUT THE PLANT

The plant was completed in 2011 on a merchant basis.  Costing approximately $140 million to construct, the plant was designed as one of cleanest biomass plants in the industry, delivering approximately 140,000 MWh of clean power before being idled down and preserved, most recently in April, 2015.   Today, the relatively new plant continues to be professionally managed and maintained in a long-term lay-up state by around-the-clock security and full-time engineers to assure the property, plant, and equipment remain in optimal condition.

Notable components of the plant include a Detroit RotoStoker vibrating grate furnace system, a GE steam turbine-generator set, fuel handling system, substation, and all equipment and parts required to operate the plant.  Also included in the sale is approximately 64 acres of land where the plant is located. The assets are being sold “as is, where is” and shall be sold free and clear of all pledges, liens, security interests, encumbrances, claims, charges, options, and interests.  

CONTACT

Certus Financial is serving as financial advisor to the trustee.  For additional information regarding the opportunity contact William Haase, Managing Director or Troy Cornick, Director at Certus Financial at 612-333-9000.

Finally, there is a very informative 27-minute video about the plant and the condition of all of its parts and pieces available on YouTube. Click on the following link if you’re interested.