16 December 2009 in The Business Mirror

UK firm to spend $1B for biomass projects

UK-based renewable energy company Global Green Power Plc. is (GGPPC) looking at spending $1.035 billion to put up biomass power plants in 12 sites in the country, David de Montaigne, GGPPC president, said on Wednesday.

“We plan to put up a total of 420 megawatts [MW] of biomass power plants in 12 sites in the country,” the GGPPC top honcho said at the sidelines of the groundbreaking ceremony for a 17.5-MW biomass power in Nueva Ecija.

The sites, said De Montaigne, are located in Panay, Nueva Ecija, Pangasinan, Cagayan Valley, Bicol, Samar, Bukidnon, Negros, Agusan, Ilocos, Mindoro and Davao.

To meet the target, De Montaigne said his company will initially put up a 17.5-MW plant in each site, which can be expanded to produce 35 MW.

The GGPPC executive said all the feasibility studies for the entire project have been completed. Three of the first-phase projects, De Montaigne said, have already secured the needed endorsements from the Department of Energy, the environmental compliance certificate from the Department of Environment and Natural Resources, and even an incentives package from the Board of Investments.

De Montaigne added that the first phase covers sites in Panay, Nueva Ecija, Pangasinan and Cagayan Valley are expected to be completed within three to three-and-a-half years.

“What we do is we build 17.5 MW in each site, and at the appropriate time, we will expand the plants by another 17.5 MW,” he said.

The GGPPC official expressed confidence targets will be met as the company is already operating 400 MW of biomass power plant in China and is to be expanded to about 800 MW by the end of next year or in middle of 2010.

De Montaigne also revealed that they will also decide on whether they will go beyond the 420-MW total target once the implementing rules and regulations of the Renewable Energy Act become clearer and the feed-in tariffs are in place. “We need to see the feed-in tariff in place before we make our financial planning on the other technologies,” he said.

For the Nueva Ecija facility, De Montaigne said, they expect to the plant to be completed 18 months after financial closing. “And we’vedone all the preliminary bidding for all of the equipment,” he added.

De Montaigne said several local lenders have offered funding and they are just negotiating the best terms. “We’re very close to financial closing. We’re just negotiating the final terms,” he revealed.

In June, GGPPC earlier said it signed three 25-year biomass supply contracts that will generate P9 billion in direct and indirect economic benefits to the host communities.

GGPPC said it signed supply contracts with Green Power Panay Philippines Inc., Green Power Nueva Ecija Philippines Inc. and Green Power Pangasinan Philippine Inc.

Each of the companies who have signed with GGPPC is developing a 15-MW biomass power plant in their respective locations.

The supply contracts will provide biomass derived from farm wastes such as corn and rice straw, sugar cane waste and other agricultural residue.

“The injection of cash into the local community over the 25-year life of each biomass supply contract can be as much as or even exceed P9 billion through biomass and ancillary services supply such as transport, storage and biomass fuel preparation,” Gordon Thomson, GGPPC chief financial officer, said.

He added that the injection of cash is what will exactly happen at the Municipality of Mina in Iloilo, Panay where Green Power Panay Philippines Inc., have based their 15-megawatt biomass power plant.

The biomass plant has signed 25-year electricity supply contracts with two electric cooperatives owned by Iloilo Electric Cooperative.

Thomson said the local communities will benefit from this project as it will receive income from GGPC’s purchase of biomass fuel while receiving clean, renewable, cost-efficient energy from the power plant’s operation.

“It is very encouraging that the Philippine government, and especially the Department of Energy and Department of Agriculture are reacting quickly and positively to support renewable energy projects that address climate change whilst helping our farming communities,” Maribeth de Montaigne, GGPC director for social programs and poverty alleviation, said.