GIANT KING GRASS

Biomass Project

 

“The Philippines should now move towards a low-carbon economy. That another delay in the implementation of the Renewable Energy Law, is a backward trend in the battle against Climate Change. There is a need to speed up green technological change towards clean energy”

Ruth P. Brioneswww.environmentalexpert.com

September 2011

Greenergy Solutions Inc.

www.greenergyph.com ALL RIGHTS RESERVED

Greenergy Solutions Inc (GSI) had entered into with partnerships with leading technology and engineering companies worldwide which enable it to engage its customers requirements and needs in tune with industry trends and market needs.

overview

Giant King GrassHighest Yield=Lowest Cost

• Very high yield

– 100 dry mt/ha/year (44 US t/acre)

• Sustainably grown, not a food crop, grows on marginal land

• Perennial grass, harvest 2x/year

• Not genetically modified

• Not an invasive species

• Needs sunshine, warm weather & rain or irrigation-no freezing

• Fertilizer use is modest

• No pesticide

• Extensive bioenergy test data

5

Giant KingGrass

Test plot6 ½ months

after plantingCutting,

measuring &propagating

6

Giant King Grass Has Been Extensively Tested With Consistent Results

Proximate Analysis UnitSun Dried

As Received

Giant King Grass

Bone Dry

Total Moisture % 14 0

Volatile Matter % 65.68 76.37

Ash % 3.59 4.17

Fixed Carbon % 16.74 19.46

Total Sulfur % 0.11 0.13

HHV MJ/Kg 15.85 18.43

LHV MJ/Kg 14.52 -

7

Giant King Grass & Waste Straws Have Same Properties

8

GREENERGY SOLUTIONS’POWER AND BIOMASS BUSINESSMODEL

VERTICALLY

INTEGRATED PLATFORM

Strategies for land tenurial security as

sites for the napier grass plantation

Entering into collaborative arrangements involving peoples’ organization who were awarded tenurial instruments by the Philippine Government the terms would include benefit-sharing arrangements, and aim to engage these local communities in productive activities that generate positive social, economic and environmental outcomes for local communities.

This scheme strengthens private sector investment in peoples’ forest initiatives at same time provide opportunity to manage carbon and energy strategies. The proposed project - the establishment of energy grass plantation for Biomass power plant establishment and pellet mills will spur development in the uplands.

Napier Grass

Napier grass (Pennisetum purpureum) is a very tall grass similar to sugar cane and energy cane

Well suited to tropical environments. Grown in fertile soils and adequately fertilized, it can produce a

large amount of biomass Easily planted from stem cuttings. Like sugarcane, it can be

ratooned after harvesting. Adapted cultivars can be maintained for 5-10 year production

cycles. High productivity Good water use efficiency, low P and K requirements, potential for

use of Biological Nitrogen Fixing (BNF) varieties, Stand longevity and better adaptation to marginal and erodible

soils than sugar cane.

Sites

Greenergy Solutions’Biomass Project

PROJECT DETAILS

Locations : Pangasinan, and Zambales, Philippines

GREENERGY SOLUTIONS’ POWER AND BIOMASS

NAPIER GRASS PLANTATION PELLET MILL BIOPELLETS

GREENERGY’ Power and Biomass is developing napier grass plantations in the Philippines;

Objective to be the low cost producer of sustainable biomass for sale into international markets

Giant napier grass to be supplied directly to power plants under development Pellet mills will also process napier grass into bio-pellets

Bio-pellets will be sold to European and Asia customers for co-firing in coal-fired power plants

Strong sustainability; no displacement of food crops; job creation/electricity for local community

Markets---Customers

DEMAND/SUPPLY IN EUROPE

Well established, rapidly growing market

Market is currently 12 million tons/year

Additional 40 million tons per year projected to be required for electricity generation by 2020,

Another 50 million tons per year required for heating and cooling by 2020, in order to meet national targets

Pellets used for co-firing in coal plants and as fuel in biomass power projects

Demand projected to grow 15-25%/year thru at least

50 to 100 million tons/year of projected demand,.Why ?

EU commitment to reduce greenhouse gas, expand green power options

German commitment to take offline nuclear generation

As well, with coal prices at near record highs, alternatives become more attractive

Unlike wind and solar, biomass power is continuously available

RESULT: Biomass plants in construction/planning and increase in co-firing

Additional supply must be provided by North American/Asian producers Europe does not produce enough wood biomass to meet demand Pellet Mills being built in SE USA; British Columbia, Canada Relatively high cost base; little vertical integration Controversy over whether sustainable forestry practices followed Recent price quotes of approximately $180/MT (CIF Rotterdam

Markets--- Customers

DEMAND IN ASIA

• Just beginning, but huge potential

PRIMARY REASONS FOR POTENTIAL GROWTH: Competitive with coal Access/availability of biomass Biomass is easier and sometimes cheaper option than gas-fired generation Regional focus on reducing carbon/green energy part of generation mix

China Co-firing coal power plants located along coast/rivers 10GW coal power plants along coast in Shandong Province alone 10% co-firing would require approximately 6 million tons of biopellets Potential for large-scale coastal biomass power plants (300 MW each)

Japano 60GW coal plants; Co-firing; Nuclear becoming less of an option; ability to meeto Kyoto commitments relies on non-nuclear solution to generation optionso Potential for large-scale coastal biomass power projects (300 MW each)

DEMAND IN ASIA (CONTINUED)

Korea

14GW coal plants. Committed to biomass. Co-firing and stand-alone biomass plants

South Korean governments estimates that demand for biomass pellets will increase from 20,000 tons/year in 2010 to 5 million tons/year in 2020

Potential for large-scale coastal biomass power plants (300 MW each)

India

Inability to set up domestic energy crop plantations due to land use constraints

Need for 100,000 MW of new capacity to meet demand over next few years

Constraints on developing coal and gas-fired power No security of supply for agricultural waste biomass Significant potential for coastal biomass power projects (300 MW)

Markets---Customers

SUPPLY IN ASIA

Biomass supply has been limited to agricultural waste

Rice husks; palm kernel shells; empty fruit bunches

No security of supply – farmers raise prices on agricultural waste, causing financial loss for power plants

Limited supply of pellets; larger-scale biomass power plants have not been possible because of limited biomass supply

NO COMPANY IS FOCUSED SOLELY ON SUPPLYING THIS MARKET

OPPORTUNITY EXISTS TO ESTABLISH A DOMINANT MARKET

POSITION THROUGH COMBINING ENERGY CROP

SUSTAINABLE FORESTRY OPERATIONS IN SIBERIA AND SE ASIA

The Philippine Government Requirements

for Biomass

In the Philippines, renewable energy sources contribute 43 percent to the country’s primary energy mix, one of the highest in Southeast Asia.

The Philippines has an existing capacity of 5,500 MW of renewable energy power. Out of which, 61 percent is hydropower while 37 percent is geothermal power.

Biomass energy application accounts for around 15 percent of the primary energy use in the country.

The resources available in the Philippines can generate biomass projects with a potential capacity of around 200 MW.

ONE BIOMASS POWER PLANT- 30 MW BIOMASS POWERPROJECT AND ENERGY CROP PLANTATION (1500 ha)

TOTAL PROJECT COST FOR ONE PLANT: $ 55.0 MFUNDING ARRANGEMENT: 30% Equity 70% Debt

PROJECT OVERVIEW

90 MW biomass power project Co-located with 26,000 has king grass plantation in

Pangasinan and Zambales For each site 1500 ha dedicated to power project; the

remaining area will be dedicated to a pellet mill (separate special purpose project companies)

Biomass pellets to be exported to utility customers in China, Korea and Japan

Europe and Japan (used for co-firing in coal-fired power plants)

Feedstock - giant napier grass 2-3 harvests/year 18 kj/kg energy yield approx. equivalent to Grade “C¨ coal Build-Own-Operate basis Power Purchase Agreement with Rural Electric

Cooperatives

PROJECT ADVANTAGES

• Secure biomass fuel supply and pricing – solves key risk factor for biomass power plants.

• Ability to increase scale as needed to meet baseload power demand.

• Lower cost than diesel and oil-fired power.• Fuel diversification for Luzon grid; baseload

capability helps balance intermittent hydroelectric power.

• Reliable power supply – no fuel delivery interruptions.

• Renewable energy source – clean energy eligible for carbon credits.

• Approx. 250 jobs created per 1000 ha at plantation.• Furnishes reliable power supply and creates major

export industry (biomass pellets)

Napier Grass Feedstock• 30 MW power plant requires 1500 ha co-located

napier grass plantation• Power plant utilizes 600 metric tons/day• King grass yield – 100-135 metric tons/ha• Energy yield – 18.4 Mj/Kg (equivalent to lowrank

coal)• Energy yield in Gj/ha – 1840-2484• (Foregoing figures provided by prospective Supplier.• Estimated total project cost is US $ 55.0 M• Development timeline : 24 months

Napier Grass Plantation

Napier Grass Feedstock

• Fast-growing; • Giant napier grass produces in first year• Other crops only produce 2-3 years after

harvest• Best suited for tropical/sub-tropical areas• Napier grass can be grown in acidic or

mildly saline soil (no displacement of food agriculture)

• Requires at least 100 days sunshine, at least 800 mm rain or irrigation

Napier Grass Feedstock

• 30 MW power plant requires 1500 ha co-located napier grass plantation .

• Power plant utilizes 600 metric tons/day

• King grass yield – 100-135 metric tons/ha

• Energy yield – 18.4 Mj/Kg (equivalent to lowrank coal)

• Energy yield in Gj/ha – 1840-2484

Napier Grass as Biomass Power Plant Feedstocks

• 30 MW grass-fired electricity generating plant needs 460 tonnes of grass every day

• Average household in Asia uses 1200 kWh/year or average power of 0.14 kWAverage household in US uses 11,200 kWh/year—1.3 kW

• 30 MW plant can supply 214,000 Asian households• 30 MW power plant requires 1000-2200 hectares of land

(using Giant King grass with yield of 350 tons/hectare wet and 75-175 dry)

• One hectare can provide electricity for 98-214 households

Cost Estimates for establishment, protection and maintenance of One-hectare Napier Grass Plantation

Activities Cost per hectare

A. Nursery Operations (seeds/seedlings procurement and handling, nursery site preparation, sowing of seeds, gathering & preparation of soils, bagging of soil, potting of seedlings, preparation of potbeds and arranging pots, maintenance of seedlings, cost of plastic bags, cost of fertilizer)

PHP 9,544.0

B. Plantation Establishment ( Detailed survey & mapping, site preparation, transport of seedlings, planting)

PHP 14,756.0

C. Maintenance & Operation ( Plantation Maintenance, green break construction, replanting, patrol work, fertilizer requirements)

PHP 9,074.0

D. Capital Outlay/Infrastructure ( variable road construction, bunkhouse, look-out tower)

PHP 8,000.00

E. Supervision & administration PHP 8,000.0

F. Infrastructure Maintenance PHP 8,600

Total Cost Per Hectare

Total cost per 100 Hectare

PHP 49,984USD 1,162.42 PHP 4,998,400.00USD 116,241.86

Napier Grass Feedstock

Fast-growing; giant napier grass produces in first

year Other crops only produce 2-3 years after

harvest Best suited for tropical/sub-tropical areas Napier grass can be grown in acidic or mildly

saline soil (no displacement of food agriculture) Requires at least 100 days sunshine, at least

800 mm rain or irrigation

Project Site – Social Enterprise

Initiative

26, 000 has sites has been awarded to local POs/NGOs from Philippine government

Leases will be assigned to JVs to be formed with Peoples Organization – under a contract farming scheme employment to be provided to local villagers together with lease income stream

Potential to develop a complementary export industry with hard currency earning potential

Significant demand for sustainable fish farms as a response to over-fishing in open ocean

Site is in an area which is prone to flooding Port access by road for export of biomass pellets

Project Impact in the Philippine

Market Important demonstration project for vertically integrated biomass

(follow-on projects in the Philippines and other Asia markets) involving

electricity cooperatives: - Social enterprise precedent through partnerships with local

NGOs - New precedent in Asia for large-scale biomass projects

Most biomass power projects in Asia do not exceed 20 MW due to limited

agricultural waste feedstock supply Biomass projects are being planned in Europe at a scale of up to 300

MW New renewable green energy source for the Philippines Scalable up to much larger capacity Reliable baseload electricity source Alternative to diesel and HFO for island markets outside Luzon

BIOMASS PELLET MILLSPROJECT AND ENERGY CROP PLANTATION

Pellet Mill Project Structure

Project to be undertaken in parallel with 30 MW biomass power project.

Pellet Mill and 4500 ha plantation to be owned by separate special purpose company for Giant Napier Grass pellets

Already tested by major European utilities for co-firing in coal-fired power plants

Discussions under way with potential customers

US$33 million indicative estimate for pellet mill/plantation capital costs

Biomass Pellet Mill

Pellet Mill Project Status

IMPLEMENTATION CROP:

Agreement reached with vendor to provide Giant Napier grass

TECHNOLOGY:Discussions ongoing with Chinese pellet mill

equipment vendorsEquipment selection based on technical

and financial analysis

CUSTOMERS:European utility customers identified with

preliminary discussionsChinese customers identified;

Huge demand noted with preliminary discussions

POTENTIAL PELLET MILL PROJECT

STRUCTURE

Special Purpose Company to be established to develop, own and manage plantation and pellet millCapital Cost Investment: $33,000,000Investment Funded in 2012 -2013Conservative Scenario Equity Finance followed by 5 year debt take-out on 70/30 debt-to-equity ratioCash Flow beginning in 2013Payback period----Approximately 2 yearsDevelopment Budget funded commencing in 2011/12

Financials (Pellet Mill/Plantation)

PROJECTED ECONOMICS/PELLET MILL AND PLANTATION Projected Plantation size 285,000 tons/year Sufficient size to allow for one “Handy Size” vessel every other month Approximately 50 tons/hour pellet mill and 5MW captive power plant Covering 4,500 hectares

Total Investment Plantation & Crop: $9,000,000 Pellet Mill: $6,500,000 Power Plant: $3,800,000 Port Facilities: $3,800,000 Trucks/Harvesters: $5,400,000 IDC & Working Capital: $4,500,000 TOTAL: $33,000,000

Anticipated Construction Period: Nine Months

Philippine Government Incentives and Supports

• A seven-year tax holiday;

• No tax on the sale of carbon credits generated from renewable energy sources ;

• A 10-percent corporate income tax thereafter;

• Custom duties are zero rated on equipment and facilities to be used in the Renewable Energy Projects;

• The law also prioritizes the purchase, grid connection and transmission of electricity generated by companies from renewable sources, and exempts power generated from these sources from value- added tax, and custom duties, these measures will ultimately ensure a market for renewable energy, and provide a system that will allow consumers to choose green sources of energy in the long term.

• The Philippine Renewable Energy Act of 2008 provides “Pioneer” and “Priority Investment” status to the proposed gasification projects of Greenergy as Renewable Energy projects and is designed to spur investments in the renewable energy sector with incentives.

The incentives include under the Renewable Energy law

Non-Fiscal Incentives of Biomass Power Plant Facilities Under the

Renewable Energy Law (R.A. 9513)

Please Contact us

RUTH P. BRIONES

Greenergy Solutions Inc.

Rms 401 &402 Verde Oro Bldg., Commonwealth Ave.

Diliman, Quezon City, Philippines

Phone No. +632 497 9452 ; Telefax No. +632 456 2293

Email Address: gsiwte@gmail.com Website: www.greenergy-solutions.com