Bluesphere announces closing of joint venture for biogas project

By Katie Fletcher | February 11, 2015

On Feb. 9, Bluesphere Corp. announced the closing of a joint venture with affiliates of York Capital Management who will provide the financing for a 5.2 MW biogas project in Charlotte, North Carolina. The capex of the project is $27 million. Bluesphere will own 25 percent of the project under the joint venture, and has received an initial payment of $1.25 million in cash at the closing, with a second payment to be distributed in two equal installments of $587,500 later in 2015 upon the project’s construction completion and commercial operation.

Subsequent to this recent closing, a formal groundbreaking event is expected to be held within the next couple of weeks. Bluesphere anticipates completion of the project in November, with the production and sale of electricity to Duke Energy during the fourth quarter of this year.

This announcement follows news Biomass Magazine reported in June when the company obtained the necessary air permit for the project. At that time Bluesphere also signed a memorandum of understanding (MOU) with a local developer operating in the recycling and compost business to co-develop a waste-to-energy project in the Boston metropolitan area, and additionally began developing a 3.2 MW biogas power project in Johnston, Rhode Island.

Bluesphere CEO Shlomi Palas said that the facility in Rhode Island is now also near financial closing using the same fund that closed in Charlotte. “I estimate we will close this one between 3 to 5 weeks,” Palas said.

As for the Boston, Massachusetts, facility, Palas said the company is still working towards obtaining a power purchase agreement (PPA). “After we have the PPA, I think in much less than a year we can break ground,” Palas said.

Bluesphere has been developing these ventures and the Charlotte project over the past few years. In Charlotte, Bluesphere has obtained a PPA with utility provider Duke Energy, obtained all other purchase agreements, permits and feedstock agreements, as well as an agreement with an engineering, procurement and construction (EPC) contractor Austep, which will build and provide maintenance to the facility under a 10-year contract with Bluesphere.

Once completed, the biogas facility will take in about 123,000 tons of municipal solid waste (MSW) per year, or about 420 tons per day, from various local suppliers of post-consumer waste. Austep’s biogas technology includes a machine called the tornado for the pretreatment of organics in MSW, according to Palas. “The machine can do fine tuning,” he said. “We can accept some level of contamination, and this is a very important point in our industry.”

The facility will also produce a compost byproduct, which will be sold.

These three facilities are all located in the Northeast, where Bluesphere first identified biogas project opportunity due to supportive legislation. One example is a ban in Rhode Island that prohibits entities who produce more than 1 ton of food waste per week from bringing the waste to a landfill. Instead, they must find an alternative, and an anaerobic digestion facility is one option. “We see how the regulation is starting to support us more and more,” Palas said. “We feel that currently regulation is very strong in the northeast, but that it will spread from the east to the west to the middle of the country.”

Bluesphere believes with supportive legislation its biogas project activity in the U.S. will increase. Palas still stands by his statement made last June when he said that Bluesphere expects to have 11 more facilities in the U.S., with six more under construction by 2018. “The American market is our main target, it’s a huge market, and I can say it’s an untapped market,” Palas said. “The demand is huge if you look at the bans and regulations. It’s a good solution, so we are investing a lot of efforts to get more projects.”