2011-12-15
December 5, 2011
Canadian biomass developer plans return to project finance markets next autumn, acquisitions considered
Innovente Inc., a Quebec, Canada-based developer of integrated organic waste drying and combined heat and power (CHP) facilities, plans to raise further project financing next year following the close of $13 million debt and equity funding last week. It will use the capital to further develop its Canadian project pipeline.
“We could get to 100 MW of biomass power capacity by 2020,” Richard Painchaud, CEO of Innovente, told Clean Energy pipeline. “We plan to build three to four new facilities in the next few years across Canada, which will replicate the model of the St. Patrice de Beaurivage facility, our first plant.”
Innovente closed financing for its St. Patrice facility last week, which comprised $4.9 million brokered private placement of common shares and $8.1 million debt financing. A share of this capital will be allocated towards the development of further projects.
The first project, which is due to be operational in September 2012, will convert 50,000 tonnes of biopellets and residual biomass into 4.6 MW of electricity and 10 MW of heat per year, enough to meet the energy requirements of 2,000 households. Innovente will sell the electricity to Hydro-Quebec through a 25-year power purchase agreement and the heat to nearby greenhouses, wood and grain drying facilities.
Innovente’s unique proposition is that its facilities will deploy proprietary biodrying technology, a superheating microbial process that extracts water from wet residual biomass to form a highly combustible CHP feedstock. This is then blended with untreated dry biomass and used as a feedstock for an onsite conventional CHP facility. The biodrying technology is patented in Canada and has a patent pending in the USA.
Innovente hopes to secure its second power purchase agreement for a facility at an undisclosed location next spring and will correspondingly seek to raise project financing for that plant in the Fall of 2012. It hopes to finance further plants at an approximate 75:25 ratio of debt to equity.
“It takes roughly $4 million per MW to develop one of our facilities,” explained Painchaud. “Some $3 million of that is the investment required for the CHP plant, while $1 million is needed to finance the biodryers. This is based on projects of 8-10 MW in size.”
“The first project at 4.6 MW is a little on the small side so was slightly more costly per MW in terms of capex. Our next project could cost up to $40 million, so we will need $8-$10 million in equity and the rest in debt.”
Painchaud did not divulge terms on the recently secured debt financing, but did say that he was pleasantly surprised by the rates, which he expects to improve for the second and third facilities.
In addition to building its portfolio organically, the company is considering acquiring defunct CHP plants which it can regenerate and operate alongside its biodryers. “We are looking at acquiring existing CHP plants left behind by biomass firms that couldn’t find adequate feedstock supplies,” said Painchaud.
“There are lots of these in Quebec and the northeast USA and we will also start to look at Europe soon. We are currently working out the best strategy to expand internationally and are evaluating joint venture partnerships with the likes of co-generation plant manufacturers and utilities.”
Please contact Richard Painchaud, CEO, at rpainchaud@innovente.ca for more information on Innovente Inc.
Contact the reporter on this story: Thomas Sturge at thomas.sturge@vbresearch.com.
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