Blue streak

Blue Sphere is an international project integrator and producer of clean energy that provides overall supervision and control over our projects’ activities. Blue Sphere’s main business model is build-own-operate (BOO), in which long-term energy agreements are executed with electric companies in advance of projects, thereby solving endless waste and ecological problems and meeting the endless demand for electricity. Blue Sphere was incorporated in Nevada in March 2010 and is working with global engineering procurement construction (EPC) companies and equipment suppliers. Its CEO Shlomi Palas explains more about the company’s focus.
 

Q: What energy sectors or processes do you specialize in? Why did you choose those?

A: Waste to energy via anaerobic digestion (AD) technology. There are almost 9,000 facilities in Europe and only few hundred in the USA. The need in the USA market for green energy and waste management solutions is no less than in Europe, therefore, the potential in the U.S. market is huge. According to new analysis released in January by Frost & Sullivan, the global waste-to-energy (WTE) market earned revenues of $17.98 billion in 2012 and will rocket up to $28.57 billion in 2016. More waste-to-energy plants are likely to be created in China, the United Kingdom, Central and Eastern Europe (especially Poland), and India, due in part to higher population densities.

The global shift from coal and nuclear power to renewable energy in order to lower carbon dioxide emission and ensure energy security is also giving a boost to the WTE plant market. While WTE plants in some geographies are already well-developed and in the process of being modernized to comply with local emission standards, other regions have only just begun installing WTE plants and gaining investor interest.
 

Q: What new projects or systems have you been focusing on this year?

A: Our focus is in the organic waste (food processors, institutional waste and livestock manure). After a busy 2013 and first several weeks of 2014, we expect to start construction on our first two biogas plants in the United States in Q2 or Q3 of 2014 and are making significant progress on our non-U.S. projects and business development. We started 2013 with a few signed projects in very early development stages and leads on a number of other projects.

We now have signed projects in the final development stage and are entertaining offers from some of the biggest players in the organics to energy market for strategic partnerships.

With respect to our North Carolina project, we have gone from a signed project agreement to having full financing in place, a site, an EPC contractor and plant components under construction:

• 5.2 megawatt (MW) organics-to-energy project in Charlotte, North Carolina, in October 2013 - signed equity and debt financing agreements May 2013 - signed site purchase agreement June 2013 – Jan 2014 - four signed feedstock supply letters of intent and one feedstock supply agreement May 2013 - signed compost off-take agreement February 2014 - a finalized EPC agreement January 2014 - applications in place for major permits December 2013 - plant components already under construction October 2012 - signed power purchase agreement January 2014 - signed grid interconnection agreement December 2013 - $6.5 million renewable energy tax credit safe-harbored.
   

In respect of our Rhode Island and other projects, we have gone from signed project agreements to the final stages of development:

• 3.2 MW organics to energy project in Johnston, Rhode Island. June 2013 - signed equity and debt term sheets September 2013 - signed 15-year lease agreement with an option to extend for six years April 2013 - one signed feedstock supply agreement and one feedstock supply letter of intent May 2013 - signed compost off-take agreement February 2014 - permit applications under preparation December 2013 - plant components already under construction, February 2014 - EPC contractor in place February 2014 - signed revised and amended power purchase agreement December 2013 - $4.5 million renewable energy tax credit safe-harbored.
   

Q: What makes you different from your competitors?

A: We are coming with total solution end to end: we know how to develop the project: gets the PPA, Site, Permits, Fund, feed stock, technology, EPC and insure the all process. We are the only company that coming with Performance guaranty for the output production of electricity.
 

Q: Where do you see your company five years from now?

A: We would like to produce 60 MW annually in 5 years. We plan to have 11 operational projects, 3 under construction, and 3 under development. We are working now and will continue to work toward ground-breaking and construction commencement for both of our US projects for as early as possible in 2014. The actual dates will depend on receipt of permits. We are also working toward closing financing for our RI project, which will occur when definitive agreements are finalized, which is underway. We expect to receive our first revenue prior to commissioning these projects when we test-run the U.S. projects to refine the interconnection and power delivery to the utility-buyers. Implementation of the U.S. projects is our first priority.

In parallel, we are devoting significant resources toward business development activities in the United States, Europe, Africa and Israel and elsewhere to implement similar organics-to-energy projects. We have already received offers for sites in the United States, Europe and elsewhere, which are in advanced stages of development.

We believe the U.S. is poised to follow suit in this global waste to energy boom. It is a slow adopter to date, since the U.S. is not suffering from shortage in energy and the energy prices in the U.S. are low. Certain parts of the U.S. also have ample land for landfills, and historically has had fewer restrictions on land use than regions like Europe. The W2E market in the U.S. is driven by the need to change the waste management practices and consequently the related regulation. The new growth for WTE will occur as different states in the U.S. are moving very quickly in the direction of setting up new legislations for the following issues:

• Shutting off landfills,
• Limitation on the organic waste which is allowed to be discharged to landfills (all the North East States);
• Separation of organic waste (either at source or separation systems);
• New requirement for animal manure treatment;
• The Frost & Sullivan report is relying on studies which were written in earlier years, before this new management approach and legislation has been adopted in the U.S.; and
• It is already proven that this new approach and legislation implemented by the Federal and State governments is leading to dramatic increase in organic waste discharge cost and making the W2E industry highly viable.

These developments would lead for a quick and long term growth of the W2E industry in the U.S. In fact, our own project is scheduled to break ground in the U.S. in 2014. We are proud to be in the best position to help the US become the key player in waste-to-energy.