The site of Laidlaw's Berlin, NH biomass project is located along the banks of the Androscoggin River in Northern, NH
Laidlaw Berlin, LLC, an affiliate of Laidlaw Energy group, Inc., has agreed to acquire the former Fraser Paper Mill located in Berlin, NH (“the “Facility”), with the objective of converting and upgrading the existing facility infrastructure in order to construct an approximately 65 megawatt biomass-energy power plant.
The Facility is currently owned by North American Dismantling Corporation (“NAD”), which purchased the Facility from the Fraser Paper Company in May 2006.NAD has demolished all of the buildings and assets not associated with the biomass conversion and sold any scrap steel.NAD and Laidlaw are in the process of finalizing a transaction whereby Laidlaw will purchase the remaining assets and approximately 50% of the land. The Northern region of New Hampshire where the facility is situated has experiencedsignificant economic hardship over the last few years, due to the closure of several pulp and paper mills resulting in the loss of approximately 1,000 jobs.
The Berlin biomass-energy project (the “Berlin Project”) will be one of the largest and most environmentally sound biomass-energy facilities in the United States.The Berlin Project is expected to utilize in excess of 700,000 tons of clean whole tree wood chips per year in order to generate approximately 65 megawatts of electricity, thus generating substantial local economic activity for loggers, truckers and other local businesses.
The fuel source for the Berlin Project will be whole tree wood chips and other low-grade wood, often referred to as “biomass materials”, which are the byproducts of the local forest products industry and land management practices.Generally, whole tree chips are produced from trees unsuitable for use in lumber or paper mills, or from the tops and branches of trees harvested for lumber.Other clean wood products, such as wood residue from sawmills, is also suitable for fuel.Biomass fuel will be trucked to the facility in 20 ton live bottom trailers.The Facility also has rail access which may offer opportunities for cheap fuel from other regions (e.g., storm debris from the Southern U.S.).As discussed above, the substantial number of pulp and paper mill closures in the region has resulted in the loss of substantial jobs and a substantial reduction of biomass consumption, thus having a significant adverse effect on the regional economy.The Berlin Project will help to reverse this trend by investing over $20 million dollars per annum into the regional economy for biomass fuel purchases.
Among the key assets to be acquired by Laidlaw is the facility’s Babcock & Wilcox boiler, which was installed in 1993 at a cost of nearly $100 million.The B&W boiler, with a steam capacity of about 600,000 lbs per hour after biomass conversion, will be converted for Laidlaw by B&W pursuant to a fixed price contact with standard and customary completion and performance guarantees.B&W intends to install a “bubbling fluidized bed” in the boiler, which represents the current state-of-the-art in low admission, advanced biomass combustion.B&W has completed a feasibility study confirming this approach.B&W is also expected to provide and guarantee the back-end emissions controls for the boiler to ensure compliance with New Hampshire Renewable Portfolio Standards, thus ensuring the Berlin Project’s ability to sell its renewable attributes, known as “RECs”.
In 2007, New Hampshire signed into law a state Renewable Portfolio Standard (“RPS”), which requires that utilities obtain 25% of their energy supply from renewable resources by 2025, with an annually increasing minimum requirements starting in 2008 until the 25% requirement is met in 2025.Utilities meet their legislative mandate by purchasing RECs from renewable generators or by paying into the state-established Renewable Energy Fund at a default rate per megawatt hour known as the “Alternative Compliance Payment”. Laidlaw is currently at an advanced stage of negotiations with a local utility concerning a 15 – 20 year power purchase agreement for 100% of the Berlin project’s power output, RECs and capacity. Commencement of the construction of the project requires approval from the New Hampshire Site Evaluation Committee. Pursuant to recently passed legislation in New Hampshire (see NH Senate Bill 140), a final decision must be rendered on permit applications for renewable energy facilities with a capacity greater than 5 mW within 270 days. Laidlaw Berlin is currently in the process of assembling the requisite information for its application to the NHSEC.
The existing infrastructure at the Facility provides a significant advantage in terms of the work involved in the construction of the the Berlin project as compared with a “Greenfield” project - a new power plant built from scratch .The key elements of the upgrades required to be made to the Facility are (i) the installation of the bubbling fluidized bed in the existing B&W boiler, (ii) the installation of the back-end emissions equipment for RPS compliance, (iii) the construction of a turbine building and installation of the steam turbine generator, and (iv) the construction of the fuel yard and installation of wood handling equipment (some of which already exists at the facility).The key elements of the project can all be accomplished pursuant to fixed price contracts with standard and customary completion guarantees.
The principals of Laidlaw Berlin, LLC have substantial experience in power development and operations, including biomass plant operations, and have prior experience with retooling projects of this nature. The management team is lead by CEO, Michael Bartoszek. Prior to founding Laidlaw Energy, Mr. Bartoszek spent over 10 years in the securities industry with a number of top investment banks. Later in his career on Wall Street, Mr. Bartoszek was engaged in advising energy and independent power companies in connection with acquisitions and financing. He was also a key player in connection with a number of project financings and restructurings for major capital projects in other industries. In 1999, Mr. Bartoszek founded a successful business engaged in acquiring and operating natural gas fired power assets and related businesses. In 2003, Mr. Bartoszek changed his focus to renewable energy and founded Laidlaw Energy Group, Inc. to focus on the development of biomass energy projects.
The other operating principals of Laidlaw Berlin, LLC are Lou Bravakis and Ray Kusche, both biomass industry veterans, each with more than 20 years experience in the sector. Mr. Bravakis has been involved as an advisor, project and construction manager, for numerous successful biomass energy projects. He founded and operated a successful manufacturer of biomass gasification systems and started his career in this industry by operating a business engaged in wood chipping. Mr. Kusche has substantial industry experience, having developed and operated successful biomass and hydroelectric projects in New England. He currently operates a 16 megawatt biomass project in Maine. Mr. Kusche has direct experience overseeing the types of boiler upgrade to a bubbling fluidized bed and balance of plant upgrades contemplated as part of the Berlin Project.
In addition to Mr. Bartoszek, the other members of the board of directors of Laidlaw Berlin, LLC are Mr. Lester Petracca and Mr. Richard Buhr. Mr. Petracca is a successful real estate developer in New York, having developed major commercial, residential and commercial projects (see www.triangleequities.com). Mr. Buhr is a Managing Director with the investment banking firm Chatsworth Securities of Greenwich, CT (see www.chatsworthgroup.com). The financing of the Berlin Project will involve an investment of approximately $68 million on the part of Laidlaw, its partners, investors and lenders. The financing is expected to be accomplished in two stages.The first stage will be approximately $7 million and, coupled with Laidlaw's equity investment in the Berlin Project, will be used for asset acquisition and initial development of the project through the receipt of all permits and material contracts and the closing of the construction/permanent financing. The larger $60+ million permanent financing is expected to occur approximately one year after the closing of the initial financing and will be used for the construction of the Berlin Project.
The timeline for Berlin Project from the closing of the first stage financing to the commencement of commercial operations is approximately 24 months.Laidlaw has allocated the first 12 months to obtaining the requisite approvals, permits and material contracts for the project and closing the permanent financing and the remaining 12 months for the construction of the project.