D.C. clean energy investor calls biomass secure solution

By Luke Geiver | February 01, 2012

The Washington D.C.-based clean energy investment team at Leaf Clean Energy Company has been around since 2007, and according to Peter O’Keefe, director of the company, his team has seen the ups and downs of the market. For 2012, O’Keefe believes the woody biomass market is looking up. During a webinar hosted by the American Council on Renewable Energy (ACORE), O’Keefe provided perspective on the growth potential for the biomass sector in 2012, telling listeners that woody biomass “is an area that we think has tremendous promise in the U.S.” With investments in a biomass power facility in Georgia and another in Florida, Leaf Clean Energy is looking for more opportunities, he also said.

The reasoning behind the company’s search for new biomass investment is directly linked to the base load power supply and future changes in that market. “If you look at base load power and the attack that it is under, biomass is absolutely a secure solution for us.” O’Keefe pointed out the recent domestic and global issues with nuclear power and the push by European utilities to use renewable energy resources such as pellets. The wood pellet industry is an area he believes will drive growth in the biomass industry based on Europe’s demand for the product and from census data from 2000 to 2010 that shows wood pellets are the fastest growing home heating fuel over that span. “We are blessed with an abundant biomass resource in the U.S.,” he said.

The undeniable abundance of woody biomass, coupled with the sentiment that biomass project development makes sense even in a tough project financing environment was shared by Michael Zimmer of Thomson Hine LLP and it resonated throughout the entire webinar that included over 150 national attendees. Zimmer pointed out new biomass power transactions and development in Connecticut, Texas, Illinois and California as places that exemplify successful projects, and he outlined a number of factors that will affect the biomass industry in 2012, including EPA regulatory actions on greenhouse gas emissions and the Boiler MACT rules, and, a national carbon market possibility in California. Zimmer also pointed out that roughly 10 states comprise almost 70 percent of the biomass market potential in the U.S., and, that a 2012 farm bill could foster the demand and further growth for energy crops. As for the potential of waste heat recovery and combined heat and power facilities, Zimmer had his own analogy.

“We are the Saudi Arabia of capital innovation, we are the Saudi Arabia of innovative renewable energy development,” and he said, “we are also the Saudi Arabia of waste heat which provides a unique business opportunity.”

Aside from waste heat recovery, O’Keefe shared another opportunity in the biomass industry. For him, wastewater treatment and residual utilization is a “stranded opportunity.” There are over 16,000 wastewater treatment plants in the U.S., he explained, and those plants generate 7 million tons of residual matter. Most of the power plants located next to those wastewater facilities, he added, “are very very old,” some of which are over 100 years old. “They are absolutely in need of innovative solutions for dealing with wastewater (and wastewater residuals) for the next century.”

Bob Cleaves, president of the Biomass Power Association, also participated in the webinar, asking the other participants who included Jordan Collins, formerly with the U.S. DOE and now with ML Strategies, and the project development finance expert John May, managing director at Stern Brothers and Co., “Is the glass half full or half empty in the sector (biomass) at the moment?”

While Collins provided a semi-enthusiastic response pointing to the difficulty with biomass power pricing linked to the low prices of natural gas, May provided a different take. For his response, May said, “Oh, definitely half full.” For May, although the classic biomass power deal is tougher to get right now, his firm is busy working in the pellet market. “We’ve got five or six pellet deals we are working on in the South,” he said, “that is a very interesting area and a very financeable area.”

To view the presentation materials used during the webinar, click here