GREEN ENERGY WORKSHOP Prince George, B.C. April 25, 2003

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GREEN ENERGY WORKSHOPPrince George, B.C.April
25, 2003

• Prepared by
• Geoffrey S. Battersby

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Map
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Aerial View of Mill
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Modern CHP Plant
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District Energy Layout
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History of Project

• 1997 Sheltair Study Kemerer/Rowe
• November 2002 Pre-Feasibility Study
• Project Specifics
• Recommendations for project
• - A CHP Plant generating electricity (45 MW)
  and providing heat for dry kilns and district
  energy systems

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Project Benefits

• Clean air with 90? in particulate emissions
• Capture of wasted energy from a renewable
  resource
• Displacement of 18,000 tonnes of GHG/yr
• Common disposal facility for all Revelstoke area
  wood residue generators

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Project Benefits (contd)

• Stable long term energy pricing
• Import replacement of propane
• Economic development opportunities
• Enhanced tourism
• Prototype for other forest resource based
  communities

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Next Steps

• May 2001 Call for Expressions of Interest
• December 2001 EPA acquired from BC Hydro
• January 2002 FVB Energy Inc. recommendations
• May 2002 Full Feasibility Study

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Financial Summary

• Capital Cost - 12,255,000
• Simple Payback 10 years
• Return on Investment 11.5
• NPV of 3.634 m (7.30)
• Assumed No equity loans 15 GMIF
• 85 Other

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Pursuing Financing

• Needed 20 year term and 20 year amortization
• Chartered Banks
• Brokers for Pension Plans and Insurance Companies
• Settled on financing source September 2003

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Request for Proposals

• For supply of major equipment items wood fired
  steam generator and steam turbine generator
• Invitational to three suppliers of each
• Issued mid-November 2002 and closed late December
  2002
• Evaluated by mid-January 2003

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Revised Financial Summary

• Capital Cost - 18.255 M
• Simple pay-back 13 years
• ROI 7.7
• ROE 25.6
• NPV 1.84 M (7.12)
• DCR (all debt) 1.4
• All based on 2 M equity, 4.7 M grant/equity,
  6.0 M bank loan, 4.6 M GMIF loan and 1.0 M
  non-equity

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Further Pursuit of Financing

• Need for more equity and/or grants
• Debt coverage ratio demands
• GMIF concessions

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The Collapse of the Project and the Reasons

• Uncertainty over future of industry
• SLA/Countervail
• Questions about fuel, fuel handling and
  operational costs
• Higher than expected capital costs

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Where Now Heat Only Plant

• Fuel consumption matched to heat load
• Run dry kilns and district energy system

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The Impediments

• Scale of plant
• Lack of appropriate tariffs for green energy
• Fuel transportation costs
• Lack of project funding sources
• ?Lack of government commitment to Kyoto
• Low grade thermal energy excess to market
• Staffing requirements boiler act regs
• Failure to appreciate cumulative impact of
  biomass plants

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Some Recommended Solutions

• Allocate 50 M of February budget 2 B for small
  biomass pilot projects
• Amend and standardize boiler act regs nationally
• Tariff subsidy for small scale biomass equal to
  that for wind
• Consider federal loan guarantees
• Broaden SDTC Mandate

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THE END