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Monday, 07 May 2012 08:35

Startup aims to spark biomass energy development model

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LOWELL — A startup in Lowell hopes to prove that one firm’s waste is another company’s power.

SPART Sustainable Partners LLC plans to develop a biomass-to-energy plant at a former manufacturing facility in Lowell. The new plant will use a proven technology to convert local feedstock, including manure from farms and waste from food-processing operations, into energy.

Headed by Greg Northrup, former president of the West Michigan Strategic Alliance, SPART plans to use anaerobic digester technology that uses microorganisms to break down waste and convert it to energy. The German technology is licensed in the U.S. by Grand Rapids-based enCO2 LLC.

“The technology is straightforward. There are 8,000 of these in Germany alone,” Northrup said. “While it’s a proven technology, it’s not been a critical piece in Michigan because our power prices have been low.”

While many pieces of SPART’s plans are still up in the air, Northrup said the company is making progress.

After requesting bids for a construction manager for the project, Spart received six proposals before eventually signing an agreement with Rockford Construction Company Inc. in April.

“We felt they would be confident in working with new developers. They would be someone who could hold our hands,” said Pam Landes, strategist at SPART.

“We know the biodigester business and the power business, but we didn’t know the construction business. It was critical to find that right partner,” Northrup said. “We’re happy with their project management control capability.”

The construction manager was also selected because of its commitment to alternative energy projects.

“Rockford Construction is very supportive of the role renewable energies play in our future economy and our individual choices,” CEO Mike VanGessel said in a statement to MiBiz. “We also are strategic about our investment and diversification of our business into this market. It is a strong complement to our clients’ needs moving forward.”

VanGessel said the company had a “great vision and technology” to bring to the market.

Securing a construction manager was a key step in working toward a deal with Lowell Light and Power, Northrup said.

Still, the project is far from wrapped up.

SPART continues to work with local farmers and companies to finalize feedstock agreements to supply the plant with material it can turn into energy. The feedstock could include food processing waste, manure and grease from restaurants.

Once those pieces are in place, Northrup said the company hopes to sign a power purchase agreement with the municipal utility. Under the best-case scenario, the goal is for the plant to be up and running by the end of the year.

He said the company has yet to secure financing, although he’s made presentations to five different investor groups and “no one has raised any red flags.” He expects to secure equity financing by the end of May. The Lowell project will be financed by a “50-50” mix of equity and debt, he said.

Convincing commercial banks to lend to the company has been a challenge, he said, because “banks are skittish” when dealing with alternative energy companies, especially given that natural gas prices have fallen to 10-year lows, as this report went to press.

Natural gas prices fell below $2 per million BTUs, less than half the cost of where natural gas was last June. The reason, experts say, is that hydraulic fracturing, or fracking, has opened up a large reserve of domestic natural gas, which is increasing supplies.

Northrup said Spart provides a cost-competitive way for municipal utilities to meet the required renewable portfolio standard, which mandates that 10 percent of electricity must come from renewable sources by 2015.

Compared to natural gas-fired power plants, the technology is more expensive, he said, but natural gas doesn’t count toward the RPS requirements.

“Biogas has less cost than wind turbines and solar, and it’s not weather dependent,” Landes said.

Northrup sees the potential for biogas plants as being even greater than just helping municipal utilities to meet RPS requirements.

“What this will allow us to do is tap into community assets that we wouldn’t have thought about ­— or that we think about as waste — and integrate them to create value,” he said. “We’re in the business of turning those assets into something positive as opposed to something negative. We’re not just building digesters. We’re building community assets.”

Northrup said Spart will also use local suppliers when possible. The company has already committed to using an ElectraTherm Green Machine from Pro Renewables, a Windquest Group-backed company in Portage. The system captures exhaust heat and turns it into up to 35 kilowatts of energy to put back into the plant’s operations.

The company has received support from Varnum LLP via the MiSpringboard program the law firm announced with Gov. Rick Snyder in 2011 to support small businesses with a set of free legal services, as well as from BDO, the company’s financial advisers.

“They’ve helped us with the replication model we’re trying to build,” Northrup said, citing the help Spart has received in developing all the contractual agreements. “We’re not a tech startup company that creates a widget. We’re creating an energy development process.”

Read 2475 times Last modified on Thursday, 30 August 2012 23:28