NORTH FORK — Despite ongoing uncertainty surrounding PG&E’s bankruptcy and its potential impact on North Fork’s proposed new biomass plant, project proponents remain optimistic ground could still be broken as early as next year.
Plans and permits are in place and equipment is ready for shipment but financing the complicated deal has yet to be worked out. Adding to the sense of urgency, tax credits attached to the project are set to expire at the end of this month unless they are sold or are extended by the State — and the shadow PG&E’s bankruptcy has cast over the project has scared away many potential tax credit investors.
Meanwhile, the North Fork Community Development Council (CDC) has already spent about $2.5 million on the project, which has been in the planning stages for nearly a decade.
As the new year approaches, 2020 is clearly shaping up to be a crucial year for the proposed 2-MW biomass plant, which would provide power to North Fork and also serve as a catalyst — and economic engine — powering the redevelopment of North Fork’s Old Mill Site.
And as if the project’s halting progress wasn’t already complicated enough, earlier this year a new player joined the joint venture.
In a press release issued last month (Nov. 6) EQTEC’s CEO said that “in order to potentially accelerate the closing of financing, Phoenix Biomass Energy Inc. and [EQTEC] have agreed, in principle, on a path to financial close with the potential investors in the bonds which does not require the sale of the tax credits.”
San Francisco-based Phoenix Biomass Energy is the “private label power” company partnering with the CDC — and now EQTEC — on the project.
The announcement last month from new player EQTEC appears to signal the possibility that the more $5 million in tax credits connected to the project could still be sold beyond the end of this year — and that EQTEC is playing a more active role in trying to close the financing package.
In his most recent update at the Nov. 25 CDC meeting, CDC President Dan Rosenberg referred to the biomass project as “this continuing saga.” Rosenberg has been working on the project for more than seven years.
“There is a possible buyer for our tax credit,” he said last week. “December 10th is the deadline for the owners to agree.”
By or before the next regularly scheduled CDC meeting, which will take place Jan. 27, 2020, project organizers hope to be able to announce the closing of the financing package — and a timetable for the beginning of plant construction.
Earlier this year, on July 24, the project was granted final approval by the State to issue tax-exempt bonds totaling $9.3 million and non-tax-exempt bonds totaling $5.5 million to finance the plant’s construction.
Operating under the banner North Fork Community Power, the proposed, 5,000-square-foot plant should take about 18 months to build, according to Greg Stangl, CEO of Phoenix.
Stangl says the new plant, which will create at least a dozen new local jobs, will operate 24 hours a day using giant gas engines to convert dead trees into electricity — and biochar, a by-product Stangl believes could some day be as valuable as the electricity to be produced at the plant.
But PG&E’s ongoing bankruptcy remains a wild card in the project’s future — even as project proponents say they still expect the utility to honor a pre-bankruptcy power purchase agreement to buy electricity from North Fork Community Power for $0.199/Kwh.
PG&E is compelled by California law to work with projects like the North Fork biomass plant because of Senate Bill 1122, which passed in 2012. That law created an additional 250 mega-watts of grid capacity for investor-owned utilities whose operations help mitigate California’s “tree mortality” crisis.
In June, EQTEC signed an agreement with Phoenix and the CDC to acquire a 19.99 percent interest in the project. As part of its investment, EQTEC also has signed a so-called “Equipment Sale and Services Contract” to provide $2.5 million worth of equipment “in kind” for the new plant.
Traded on the London Stock Exchange, EQTEC bills itself as a “waste gasification to energy” technology specialist.
EQTEC CEO David Palumbo, who took over control of the company in September 2019, said he is “encouraged by the strong local support for the project.”
Stangl could not be reached for comment this week but in a quote included in EQTEC’s most recent update on the project, he said EQTEC’s expanded new role in the project is making an immediate impact. “It is very encouraging for us to have a technology partner such as EQTEC which has not only addressed any engineering challenge that we have thrown at them, but also now are heavily involved assisting with the financial close of the project.”