Acquisitions Atmosphere

Despite a number of energy companies purchasing biomass power plants, a consolidation trend is likely not on the horizon.
By Lisa Gibson | February 22, 2011

Greenleaf Power LLC has accumulated a biomass power portfolio of just more than 100 megawatts through the purchase of three operating plants in California. Although it is one of a few companies with a business plan that focuses on acquiring existing plants in lieu of building, Greenleaf President Hugh Smith says he doesn’t see an industry-wide trend of consolidation. 

It’s opportunistic, he says, and John Eustermann, partner with firm Stoel Rives LLP, agrees. “They’re doing it because I think they have the ability to balance-sheet finance it and the ability to either take over good PPAs (power purchase agreements) or acquire good PPAs from those entities that want to make sure they’re in compliance with the RPS (renewable portfolio standard),” Eustermann says of the numerous companies pursuing the acquisition strategy.

He adds that he hesitates to think a consolidation is brewing, but it wouldn’t be bad to create a portfolio of assets in a state subject to an RPS. Smith echoes that opinion, saying a state RPS, like California’s of 33 percent by 2020, undoubtedly plays a crucial role in deciding which plants to purchase. Greenleaf is open to purchasing plants all across North America but has remained in California because opportunities so far have been there, Smith explains.

Smith has seen no apparent trend in the reasons why companies choose to sell their plants, simply revealing that plants often don’t fit the core interests of the company. That’s not to say Greenleaf hasn’t had to work to improve aspects of its acquired plants such as operations, feedstock contracts or PPAs, but each has been capable of continued operation at the time of purchase.

“We’re very pleased with the progress we’ve made to date,” he says. “We haven’t accomplished everything we’re hoping to accomplish at those three, but we’re working both on improving the operations of those facilities while continuing to look for additional opportunities in the market as well.”

—Lisa Gibson