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Equipment sits idle last fall at the North Fork biomass plant site

Bond Sale Still Stalling North Fork Biomass Project

NORTH FORK — Construction of a long-awaited biomass plant remains on hold as project proponents continue to grapple with financing issues related to PG&E’s bankruptcy.

“We’re in no better or worse shape than we were several months ago,” said Greg Stangl, CEO of Phoenix Energy, one of the project’s developers along with the North Fork Community Development Council (CDC).

The $15 million project, in the planning stages for nearly a decade, is a joint venture involving Phoenix, the CDC and now a new, UK-based company called EQTEC, brought into the project this summer to provide equipment and services for the plant in exchange for a nearly 20 percent equity stake.

The joint venture continues to operate under the banner North Fork Community Power.

An update on the 2MW biomass plant will be presented next Monday (Oct. 28) when the CDC gathers for its monthly meeting, which starts at 5:30 p.m. in the CDC Conference Room at the Old Mill Site.

Project organizers plan to build the new biomass plant on 10.5 acres once classified as a federal Superfund site. (A 10MW biomass plant once operated in North Fork but that facility closed more than 25 years ago.)

The new, 5,000-square-foot biomass plant will take about 18 months to build and create at least a dozen new local jobs, operating 24 hours a day, using giant gas engines to convert dead trees into electricity — and biochar, a by-product that some say could some day be as lucrative as the energy produced at the plant.

A foundation for the new plant has already been poured and the earth work completed.

But project coordinator Stangl reported this week that the sale of bonds necessary to finance construction, in the works for months now, has yet to happen. (The bond sale involves tax credits awarded by the state to construct the biomass plant.)

“We have the tax credits and we have to sell them but the PG&E bankruptcy still looms large with the people who buy tax credits,” Stangl said. “We’re a little discouraged right now but we’re still trying to get this project across the finish line.”

Stangl said the joint venture has until “the end of the year” to sell the tax credits and explained the market is limited for that type of buyer to smaller, so-called “middle market” banks and wealthy individuals.

According to longtime CDC President Dan Rosenberg’s latest update, provided at the September CDC meeting, the organization is “currently in debt about $2.5 million” related to project costs so far.

North Fork Community Power, he added, still plans to sell the power generated by the plant to PG&E for $0.199/Kwh.

PG&E has to work with projects like the North Fork biomass plant because of 2012’s Senate Bill 1122, which creates an additional 250 mega-watts of grid capacity for investor-owned utilities addressing California’s tree mortality crisis.

“There’s a reason the state passed a law forcing PG&E to buy power from projects like ours,” Stangl told SNO earlier this year. “Our plant will help promote environmental sustainability and reduce forest waste — and the chances of future fires. This is the kind of project PG&E should be really supporting right now.”

But as PG&E continues to suffer setbacks in its efforts to emerge from bankruptcy, Stangl said most potential investors remain wary of deals involving the California-based utility.

The 2016 “ground breaking” for the North Fork biomass plant with District 5 Supervisor Tom Wheeler and CDC President Dan Rosenberg

Nevertheless, project entitlements for the plant are firmly in place — including a recent green light from the San Joaquin Valley Air District — and project proponents remain optimistic the plant will be generating energy for the North Fork community by 2022.

EQTEC’s entry into the joint venture was announced in June 2019. According to a press release issued by the company and confirmed by Stangl, the agreement includes a 19.9 equity stake for an “equipment sale and services contract.”

Based in Ireland, EQTEC is a publicly traded company listed on the London stock exchange. Stangl said the company will provide plant infrastructure equipment “for less than it would otherwise go for.”

At the September CDC meeting, Rosenberg also reported that under the terms of the joint venture’s current agreement — “during the first three years of operation, we (the North Fork CDC) will receive no income. All income during that time frame goes to the investor.”

Ultimately, Rosenberg said the CDC and Phoenix will each own “37 percent” of the project. (The CDC currently owns 47 percent of North Fork Community Power.)

A nonprofit whose primary mission, according to its website, is “to promote the social, economic and environmental welfare of North Fork,” the North Fork CDC was formed in 1994 to redevelop the old South Fork Sawmill property.

In 1997, the North Fork CDC negotiated the donation of the long-closed and abandoned 135-acre mill site property through the former Madera County Redevelopment Agency.

The CDC then renovated the old mill’s office and in 1999 moved onto the site along with several other civic organizations in town.

In 2006, Madera County transferred title to the property to the CDC with the understanding the nonprofit will continue the clean-up and redevelopment process.

A major demolition and remediation project was completed in 2008, with asbestos and lead paint removed from the kiln buildings and the buildings then demolished. That project cost approximately $800,000 and was funded by a combination of an EPA grant of $200,000 and a Brownfields loan totaling $600,000.

The biomass plant project has been in the planning stages since 2012 and really gained steam in 2015 after getting a $4.9 million grant from the California Energy Commission.

Proponents say California’s tree mortality crisis has only made the North Fork biomass plant, and others like it in the planning stages up and down the Sierra, more appealing as an efficient means of clearing out all of the dead trees — and reducing wildfire risks.

Hopes were high in late 2016 when an official “ground breaking” for the biomass plant was held at the Old Mill Site. But since then, the project has sputtered — and PG&E’s January 2019 bankruptcy filing has added formidable new hurdles to overcome.

In April of this year, Rosenberg told SNO: “I used to tell people the biomass plant would be operational by 2017. That used to sound like so far into the future. Nowadays, I’m not making any more projections.”

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