Financial AchievabilityOf

Anaerobic Digestion Projects

Lisa Lee Morgan, AIA, LEED-AP President + CEOCalor Energy

The AD Process – “Basic” Feedstocks Digestion Outputs

CO2

CH4

Liquids

Solids

Gaso o o o o o o o o o o o o o o o o o o o o

o o o o o o o o o o o o o o o o o o o o o

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Digestate- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Key Revenues + Costs Feedstocks Digestion Outputs

CO2

CH4

Liquids

Solids

Gaso o o o o o o o o o o o o o o o o o o o o

o o o o o o o o o o o o o o o o o o o o o

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Digestate- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

$ Disposal $ $ Land $

$ Technology $ $ Offtake $

First Cut Rule of Thumb

Rule of $140

Revenue of$ / Ton of Waste

Revenue of$ / Megawatt-hr

Revenue of$ / Ton Fertilizer

$140

Feedstock $$$

Feedstocks

L T Contract with Organic Waste Producer

Payment from Waste Producer

Savings by Waste Producer

Community Viability

Charlotte San Francisco

Feedstocks BTU Spectrum

Food Waste Ag Waste Animal Waste WW Waste

BTU ContentLOW HIGHRaw, unprocessed, undigestedProcessed, digested, excreted

Feedstocks Disposal FeesEntity Type Feedstock Disposal

Costs/TEnergy Needs

Dairy/Hay Farm Dairy Waste, Crop Waste, Manure

$30-40 On site power;Truck fuel

Municipal Household food waste; household garbage

$26-50 Utility PPA

Animal Processing Animal FOG, parts, fluids $60-75 On site power;Hot water

Waste Water Treatment

Biosolids 2% $30-50 Bio-Dryer;On site power

Food Processing Pre-consumer food waste

$45-60 On site power;Hot water

Feedstocks Project Models

PURISTS : Harvest Power – Investor-owned AD Facilities

MIXED BAGGERS : Columbia Biogas – Community-owned AD Facilities

Designed to maximize gas quality and financial yield Pre-consumer food waste only No contaminants, paper, body wastes Formula: 2/3 hi-cal food waste + 1/3 green waste Vancouver: $65/Ton + $150/MWh + $20/Ton = $235

Designed to maximize community participation Pre- and Post-consumer food waste Formula: 1/3 food + 1/3 FOG, beer, milk + 1/3 green, grocery Expensive pre- and post-treatment Portland: $55/WTon + $70/MWh + $20/Fton = $145

Heat Exchanger

Digestion Process - “Basic”

Fluids

Mixing Rods

Digestion Reactor

Biogas

Solids

Feedstock In

Pretreat to Pulp

Heated Pulp

Gas Storage

Digestate

Digestion $$$Digestion

Land Purchase or Option to Purchase

Reliable Technology + EPC Selection

Preliminary Engineering+ Financial Analysis

Tax Incentive CPA Opinion

Regulatory Approvals + Permits

Model Example

Tax EquityInvestor50% Cash100% Tax Incentives90% / 5% OwnerBal Sheet = Insurance

Developer5% OwnerProject ManagerTeam Lead

MunicipalWWTF5% / 95% OwnerElectricity userOperations

“NC Digester Group, LLC”

Lender50% Cash15 yr @ 5%secured

EPCEngineering/Procurement/Contractor

Utility: MWh

Heat: MMbtu

Fertilizer: Ton

Waste: Fees

Production ExampleFeedstock In:FOG in per hour 5.72tons/hr

Wet Biosolids in per hour 4.71tons/hrResidue for disposal 7.63tons/hr

Thermal Energy:AD-DRANCOs (2) Waste Heat 0.0MMBtu/hr

Gensets (2) Waste Heat 25.0MMBtu/hr

Total Waste Heat 25.0MMBtu/hr

Dryer operation 17.7MMBtu/hr

Heat losses 1.0MMBtu/hr

Excess thermal energy 6.3MMBtu/hr

Electric Energy:Energy input to each Genset 42.1MMBtu/hrHeat Rate of Gensets 8,530Btu/kWh

Number of Gensets 1GenskWh operation - gross 4,932kWhkWh Belt dryer 575KWhkWh operation - net 4,357kWhMWh produced - net 4.357MWhWWTF Baseload 1.357MWhExcess power to grid 2.0MWh

Alternative Energy:Compressed NG Potential 9000GGE/day

Tax IncentivesProject Cost Basis 12,350,000Federal Tax Credit 1,235,000NC Tax Credit Yr. 1 864,500MACRS Dep'n Yr 1 After Tax Value 821,275

(a) 2,920,775Year 1 Capital Outlay to 2015 Tax Incentives Return 24%

Year 2-6 Tax IncentivesNC Tax Credit Yrs 2-5 3,458,000Tax Dep'n Yrs 2-6 After Tax Value 3,285,100

6,743,100Total Return Years 1-6 Σ(a) 9,663,875Capitay Outlay to 2015 Tax Incentives Return 78%

Output $$$Outputs

Gas>Electricity: Utility or On Site PPA

Gas>CNG: Utility or Local Transport PPA

RECs or RINs Contract

Fertilizer/CompostContract

Outputs 101

Biogas -> Electricity/CHP

Gas Clean Up

BiogasStorage

Digester

Electric Generator

PowerGrid

Gas Fueled

750-1000

BTU/FT3Boiler

Gas Fueled Industrial

Steam Users

Outputs 201

Biogas -> Transportation Fuels

Gas Clean Up

BiogasStorage

Digester

Natural GasPipeline

900-1000

BTU/FT3

BottledCompressed

NG (RNG)

Compressor

CNG Vehicles

Outputs 301

Digestate -> Fertilizers

Nutrient-Rich Liquid Fertilizer

Liquids

Compost Rows

Highly Enriched Organic Fertilizer

SolidDewaterDigester Digestate

Storage- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Annual Cash FlowINCOMEDisposal Fees for FOG 50,000 Tons/yr $ 60.00 $ 3,000,000 Disposal Fees for Biosolids 41,245 Tons/yr $ 10.00 $ 412,450 Heat to Dryer 155,052 MMBtu/yr $ 3.50 $ 542,682 Electricity to WWT User 11887.32 MWh/yr $ 70.00 $ 832,112 Electricity to Utility - avoided cost 26280 MWh/yr $ 55.00 $ 1,445,400 Fertilizer/Compost 6683.88 Tons/yr 15 $ 100,258 Annual Income $ 6,332,903

EXPENSE15-year loan @ 5% 15 5% loan $ 6,175,000 $ 586,000 Operation - Maint contract 12 mon $ 150,000 $ 1,800,000 Waste collection, transport 12 mon $ 150,000 $ 1,800,000 Insurance LS $ 500,000 Taxes 0.006 rate $ 6,175,000 37,050

$ 4,723,050

PROFIT $ 1,609,853 RETURN - ANNUAL 13%

Investor/Lender Expectations Feedstocks Digestion Outputs

L T Contract with Organic Waste Producer

Land Purchase or Option to Purchase

Gas>Electricity: Utility or On Site PPA

Payment from Waste Producer

Reliable Technology + EPC Selection

Gas>CNG: Utility or Local Transport PPA

Savings by Waste Producer

Preliminary Engineering+ Financial Analysis

RECs or RINs Contract

Tax Incentive CPA Opinion

Fertilizer/CompostContract

Regulatory Approvals + Permits

Community Analysis

Rule of $140 ?

Maximize what ?

Feedstocks?

Technology ?

Outputs ?

Questions?