management presentation - envirepel energy inc. · management presentation. 2 envirepel ˇs vision...
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Envirepel Energy, Inc. 1390 Engineer Street Vista, California 92081 www.envirepel.com
MANAGEMENT PRESENTATION
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Envirepel’s Vision
Mitigate local environmental and energy challengesby converting organic waste streams into clean energy
Kittyhawk Biomass Power Plant Facility, 2.5 MW – Vista, California
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Envirepel Energy, Inc. (“Envirepel” or the “Company”) was founded in 2004 to design, develop,own and operate waste-to-energy (“WTE”) renewable energy facilities for the production ofelectricity and renewable fuels
The Company’s proprietary combustion and emission control systems are designed andengineered in a manner that has enabled it to obtain the required construction and operatingpermits to build new biofuel waste to energy facilities under the State of California’s stringent airquality regulations
• First company in the State of California to obtain air permits for the construction of a new WTE facilityin 20 years
In the Spring of 2007, the Company constructed a full-scale research combustion system that hasoperated for over two years on feedstock, including biomass, tires and plastics
• Discharge Air emissions from testing show emission levels less than 10% of competing technologies
Construction and commissioning of the first commercial facility, Kittyhawk, is nearly complete• Air Permit authorizing construction and commissioning has been obtained
• Final Operating Air permit testing to start within six months of facility commissioning
• Signed PPA with San Diego Gas & Electric (“SDG&E”), a Sempra Energy company
• Biomass supply secured
• Approximately 120 days to fully commission
Executive Summary
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Electricity produced by the Company, satisfies SDG&E’s requirement to source or produceelectricity that meets the Renewable Portfolio Standard (“RPS”) green energy purchase standardset by the California Public Utilities Commission (“PUC”).
Natural Gas Biofuels produced by the Company also qualify under RPS green standards whenpurchased by SGD&E to fire existing natural gas plants; the CO2 produced does not count asincremental CO2
Executive Summary (Cont’d)
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Company Overview
Founded to solve local environmental and energy problems by converting waste streams intoclean forms of energy
Facility concept was engineered and designed in a manner that affords the Company the ability toobtain required building and air permits, while also complying with stringent environmentalregulations
Strategic relationships across the value chain• SDG&E – PPAs• Allied Waste – biomass supply• Milbank, Tweed, Hadley McCloy LLP – retained transaction counsel• HDR Engineering – civil engineers• RQ Construction – construction
Strong pipeline with 407 MWs of projects at various stages of development in Southern California
Experienced management team and Board of Directors
Headquartered in Vista, California
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Strategy and Value Creation
Following completion of Kittyhawk, the Company’s primary goal is to deliver electricity at a highconversion efficiency to SDG&E and comply with or exceed all air emission and environmentalstandards at the local and state level
• CO2 emissions (exempt for biomass in cap & trade) capture for conversion into fuel by-products willbe added thereafter
The Company plans to develop, own and operate a portfolio of WTE facilities in SouthernCalifornia
• Capable of obtaining additional air and building permits and PPAs• Strong development pipeline of both Company-owned and co-owned projects with strategic partners• Project sites include metropolitan landfills, business parks and agricultural locations
- Facility size is designed to accommodate accessible waste tonnage- Avoided cost of energy is approximately 80% of alternatives creating an incentive for SDG&E
Following this financing and completion of Kittyhawk, the Company will be required to raiseadditional equity and debt to fund Vista II and additional projects in the pipeline. Sources wouldinclude project equity and debt and potentially revenue bonds issued pursuant to California’sPollution Control Tax-Exempt Bond Financing Program (allocation from State is approved)
The Company will seek to broaden its geographic presence by licensing its WTE facility conceptto partners with national and global presence
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Leadership Team
Michael Brown, P.E. – Advisor to the Board• Over 30 years of experience with climate change, energy efficiency and
renewable energy projects• Founder & President of Brown, Vence & Associates, Energy and
Environmental Engineers• National Director of Energy and Waste Management at HDR Engineers• MBA from Golden Gate University; B.S. in Environmental Engineering
from California Polytechnic State University at San Luis Obispo• Joined the Team in 2008
William David Gamble, P.E. – Director• Over 30 years of experience with solid fueled biomass energy systems
ranging from 20-250 MMBTU/Hr and 100 KW to 15 MW• Areas of expertise include preliminary and design engineering,
equipment specifications, control systems design, facilities layout,construction monitoring, start-up support, operator training and systemcommissioning
• B.S. in Electrical Engineering from University of Alabama• Joined the Team in 2003
Peter Ullrich – Director• Owner and Chairman of Esmeralda Farms, a floral company with
approximately 5,000 employees• Recipient of the 2006 SAF Gold Medal Achievement Award• Joined the Team in 2005
Dr. Sylvia Tucker – Director• Dean Emeritus and Professor Emeritus, Oregon State University• Board of Trustees, Bonsall Union School District• Doctorate from UCLA; B.A. from University of Northern Iowa• Joined the Team in 2003
Anthony Arand – Founder, Chairman and CEO• Vast experience in engineering, chemical manufacturing, production,
sales, field applications, University and private contractor research andregulatory actions
• Holds patents in selective organic chemistry extraction and petroleumreformulation using low temperature catalytic process
• Engineering employment: Hughes Aircraft, Lockheed-Martin• B.S. in Mechanical Engineering from California Polytechnic State
University at San Luis Obispo• Founded the Team in 2003
Teri Mathes – CFO• Over 16 years of accounting experience• Formerly served as Assistant Controller at Mimi’s Café• Degree from California State Polytechnic University, Pomona• Joined the Team in 2004
Jim Farooquee – Director• Founder and President of CMS Entertainment• CEO of Mountain Computer, Print Works and has held senior positions at
Ecal Realty and Nationwide Mortgage Company• Degree in Civil Engineering from Karachi Technical College• Joined the Team in 2008
Bruce Shuman, CPA – Advisor to the Board• CEO and Co-President of Rainbow Disposal Company• Formerly held positions at accounting firms Grant Thornton and Alder,
Green and Hasson• Degree from the University of Southern California• Joined the Team in 2009
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UTILITY INTERCONNECTION
HIGH VOLTAGESWITCHGEAR
TRANSFORMER
GENERATORSWITCHGEAR
STEAMTURBINE
STEAMCONDENSER
AIR COOLEDWATER COOLERFINNED COILS& FANS
PUMP
WATER CLEANUPSYSTEM (ZERO DISCHARGE)
PUMP
GENERATOR
CITY (WELL) MAKEUP WATER& INITIAL FILLS
WATERDEMINERALIZATION& STORAGE TANK
GASIFICATION/COMBUSTIONWITH EXTENDED COMBUSTION
CHAMBER
FUELSPREPAREDBIOMASS
UREA
INJECTION
NOX BOX(SCR)
700oF
1800oF
400oF
180oF
130oF
CONTINUOUSEMISSIONS
MONITORINGSYSTEM
OPACITYOXYGEN
CARBON DIOXIDECARBON MONOXIDENITROGEN OXIDES
SULFUR OXIDES
UREAINJECTION
HIGH PRESSURE WATER
HIGHPRESSURE
STEAM
ASH COLLECTIONBUNKER ASH TO FERTILIZER
OPERATIONS
CYCLONEDUST
COLLECTOR
INDUCEDDRAFT
FAN
WETSCRUBBER
WITHPACKEDTOWER
WETELECTROSTATICPRECIPITATOR
WASTE WATER COLLECTION
HRSG
ECONOMIZER
DWG: EE-BEP-SSD1 06/02/2006
120oF
Make a Gas,Burn a Gas
PowerGen
Scrubbers
Catalytic Converter
Envirepel System Process Diagram
Envirepel’sBiomass to Energy Process
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Why is “Make a Gas, Burn a Gas Important?
Combustion
Infra-red radiation from the superheated ceramics releases water from the fuel along with othergases from fuel feedstock. IR radiation from ceramics also will separate hydrogen from oxygenfrom the water in the fuel. The hydrogen gas in the combustion process prevents the majorbuilding blocks of traditional regulated pollution compounds such as NOx, SOx, and HC fromforming, resulting in a clean exhaust which can be permitted under today’s air permitting rules
Gasification
Wet FUEL
Post Combustion Dwell ChamberAllows for complete combustion
Ultra low EmissionHigh TemperatureExhaust to HSRG
Gas Flow
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Low emissions result from the conversion of solid biomass to a gas,then burning the gas and not the solid
Fuel
Steam
Burn
Make a Gas, Burn a Gas – Gasification / Combustion Hybrid
Whyis it
Clean?
The indirect conversion of solid fuel to a gas prior to the combustion of thegas using infrared radiant energy allows for specific chemical reactions totake place in a controlled environment that minimizes pollutant formation
Note: A demonstration can be viewed online at http://www.youtube.com/watch?v=xBSBDNsxK0U
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Envirepel has demonstrated that it can obtainpermits to build and operate WTE facilitiesin Southern California
• Building and operating permits obtained for Kittyhawk
Facilities designed to be permitted and operated inurban locations and adjacent to landfillswithout grid inter-connection issues
Facilities designed using a common 7.5 MWfacility module that can be replicated in multipleidentical units
• Scale achieved through the addition of a standard7.5 MW facility module (e.g., building a train)
- 60 MW facility represents eight 7.5 MW facilities- Minimizes commercialization risk
• Standardization of equipment and O&M across all facilities
3-D CAD modeling of each facility completed and thoroughlyexamined prior to start of construction
Major facility components supplied from a variety of vendorsand assembled on site by general contractors or EPCs
Engineering and Design Advantage
Common Module Methodology
30 MWFacility
7.5 MWFacility
2.5 MWFacility
Note: Each colored circle represents a combustion cylinder
60 MW Facility
StandardModule
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What Can Be Produced?
Electricity
Co-gen heat supply
Reclaimed water from fuel
CO2 capture and on-site conversion intopetroleum products
• Natural gas• Methane gas• Gasoline• Diesel• Jet fuel
Ash for concrete filler or “eco-blocks”
On-site capacity to sterilize oil contaminatedsoils
Green jobs
CO2 Fuel By-Products Overview
Following a facility’s completion,equipment will be added in order to captureCO2 that is produced in the combustionprocess and convert it into petroleumproducts
High revenue and margin opportunity
Requires off-the-shelf technology that isused in refineries globally
Plan is to sell fuel by-products to a 3rd
party on a contractual basis
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Test Cell Unit – Emission Testing
Envirepel has operated a full-scale research combustion system for over two years to evaluate variousfeedstock and associated emissions performance
• Built on common module methodology- Test cell unit runs one production size combustion cylinder; Kittyhawk has three combustion cylinders
• Feedstock include municipal solid waste, plastics, tires, compost and green waste
The Combustion system demonstrated that indirect combustion (make a gas, then burn the gas) design of thesystem delivered consistent and significantly lower emissions than comparable incineration, plasma arc, orother gasification systems for multiple feed stocks
Complies with the Federal Standard, AP42 calculations needed to obtain air permits• AR42 is the primary national and regional standard
Test Cell –Typical Emission Levels
Pollutant Emission Level
NOx ≤ 27 ppmCarbon Monoxide ≤ 2 ppmVolatile Organic Compounds ≤ 2 ppmParticulate Matter 10 ≤ 2 ppmSOx ≤ 1 ppm
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Kittyhawk Facility
All permits to build and operate facility have been obtained
Certified under the State of California’s Renewable Portfolio Standard
PPA with SDG&E(3); corporate parent is investment grade
Feedstock includes tree trimmings and clean wood sources; approximately 100,000 tons per yearavailable within 20 mile radius; supply agreements will be signed upon facility completion
Located in Vista, California
Capacity: 2.2MW
PPA: SDG&E (3-yr w/ renewal - $96/MWH)
Project Development Cost(1): $10.5 million
Est. Completion: 120 days and $4 million
Process Capacity: 630 tons of biomass per week
Mineral Ash(2): 20 tons per week
Financial Summary:
(1) Includes all research, design, development, construction and equipment costs per company filings(2) Comprised primarily of calcium, silicon, magnesium, phosphorus and potassium oxides(3) A Sempra Energy company. Sempra’s corporate rating by Moody’s and Standard & Poor’s is Baa1 and BBB+, respectively, as of June 30, 2009
($ in thousands) Power Power & Fuel
Revenue $2,504 $5,630
EBITDA $723 $3,948
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Market Overview
Federal and numerous state laws considerWTE a renewable energy source
Currently around 90 WTE facilities exist inthe U.S., which produce approximately2,500 MW, or 0.3%, of national powergeneration
U.S. WTE facilities generated approximately$440 million in revenue in 2008
Growth has been constrained due todifficulty in obtaining permits
• Environmental laws have become morestringent since WTE facilities were firstintroduced in the 1980s
• Legacy WTE facilities are not permittabletoday
Market participants include CovantaEnergy, Foster Wheeler and WheelabratorTechnologies
$220$260
$400$440
$0
$100
$200
$300
$400
$500
2005 2006 2007 2008
Tota
l Rev
enue
($ in
mill
ions
)
WTE Facilities Market Revenues – 2005-08
Source: Frost & Sullivan; May 20, 2009
WTE is a superior sustainable alternative to landfills
Reduces landfill usage and preserves capacity
Reduces greenhouse gas emissions from landfilldecomposition
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36.5
23.9
18.3
12.9
6.4
4.9
1.3
19.3
7.7
9.1
9.5
12.4
11.5
6.4
4.44.6
10.1
4.3
Map depicts air basins with significant air emission issues and where the permitting of projects requires the use of off-set credits
Nonattainment areas forboth 8-hour ozoneand fine particle pollution
Nonattainment areas forfine particle pollution only
Nonattainment areas for8-hour ozone pollution only
Nonattainment Air Basins in the U.S.Why and Where Air Permits Matter
Note: Numbers on map denote population estimates in millions
Envirepel has obtained permits for WTE facilities in Southern California
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The potential for 4,000 MW of power generation exists on active landfills
311 Active
2,505 Total
California EnergyCommission
PIER Renewablesas of July 2002
Allied Waste operates 23% of U.S. landfillsand is a major waste managementcompany in California
California Landfill Supply
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Ramona Landfill - 7.5 MW
Fallbrook - 90MW
Kittyhawk / Vista II2.2 MW / 7.5 MW
Sycamore Landfill - 90 MW
Miramar Landfill - 30 MW
Otay Landfill - 60 MW
32nd StreetNaval - 15 MW
Select Southern California Landfills Operated by Allied Waste
Envirepel has development plans for 407 MW of WTE facilities in Southern California, several ofwhich will be located adjacent to Allied Waste landfills
• MW production is designed to accommodate waste tonnage of nearby landfills
Total distributed generation to approximately 400,000 homes
El Centro - 15MW
Anaheim - 90MW
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Completion and commissioning of Kittyhawk will serve as proof of concept• Provides for the permitting of planned facilities and in attaining additional PPA contracts• Provides negotiating leverage in finalizing PPA and supply arrangements for planned facilities• Helps qualify Envirepel for municipal bond financings under California’s Pollution Control Tax-
Exempt Bond Financing Program• The electricity satisfies SDG&E renewable portfolio standard (green energy purchased natural gas
from process will qualify as renewable energy to drive plant)
Facility Development Pipeline
Facility Location InstalledCapacity
EstimatedEBITDA
Est.Development
CostCost / MW
EstimatedCompletion
Date
Kittyhawk (2) Vista, CA 2.2 MW $ 0.72 $10.5(1) $4.8 2010Vista II Vista, CA 7.5 MW $ 2.03 $20.0 $2.7 2011El Centro El Centro, CA 15 MW $ 10.70 $50.0 $3.3 2011Ramona Ramona, CA 7.5 MW $ 3.15 $22.0 $2.9 2012Fallbrook Fallbrook, CA 90 MW $ 77.30 $240.0 $2.7 2012Naval Station San Diego, CA 15 MW $ 10.70 $55.0 $3.7 2013Miramar San Diego, CA 30 MW $ 24.47 $96.0 $3.2 2013Anaheim Anaheim, CA 90 MW $ 77.30 $240.0 $2.7 2013Sycamore Santee, CA 90 MW $ 77.30 $240.0 $2.7 2014Otay Chula Vista, CA 60 MW $ 51.20 $192.0 $3.2 2014Total 407.2 MW $334.87 $1,165.5
(1) Includes all research, design, development, construction and equipment costs(2) All contracts are subject to Kittyhaw coming on line. Once online, California Public Utilities Commission (PUC) will grant final approval
($ in millions)
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Illustrative Revenue Model
WTE FacilityProjectFinance
Third-PartyTBD
UtilityCompany
SDG&E
Fuel SupplyAllied WasteWaste Mgmt.
CombustionBy-Products$
$
$
Electricity
$ Tipping Fees
Envirepel Energy, Inc. 1390 Engineer Street Vista, California 92081 www.envirepel.com
KITTYHAWK FACILITY
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Gasification Chamber
Combustion Chamber
Kittyhawk Facility
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Combustor
Turbine
Evap Cooler
Kittyhawk Facility
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Entire Facility is Under 7 Meters Tall
Evap Coolers
ScrubbersSteam TurbineSteam Boiler
Kittyhawk Facility