Laidlaw Berlin BioPower, LLC, acquired the former Fraser Paper Mill located in Berlin, NH (“the Facility”), with the objective of converting and upgrading the existing facility infrastructure in order to construct an approximately 75 megawatt biomass-energy power plant.
Laidlaw purchased the Facility from North American Dismantling Corporation (“NAD”) in December 2008. NAD purchased the Facility from the Fraser Paper Company in May 2006. In connection with the purchase by Laidlaw, NAD has demolished all of the buildings and assets not associated with the biomass conversion and sold any scrap steel. The Northern region of New Hampshire where the facility is situated has experienced significant economic hardship over the last few years, due to the closure of several pulp and paper mills resulting in the loss of approximately 1,000 jobs.
The Berlin biomass-energy project (the “Berlin Project”) is expected to be one of the largest biomass-energy facilities in the United States. The Berlin Project is expected to utilize in excess of 750,000 tons of clean whole tree wood chips per year in order to generate approximately 75 megawatts of electricity, thus creating substantial local economic activity for loggers, truckers and other local businesses.
The fuel source for the Berlin Project will be whole tree wood chips and other low-grade wood, often referred to as “biomass materials”, which are the byproducts of the local forest products industry and land management practices. Generally, whole tree chips are produced from trees unsuitable for use in lumber or paper mills, or from the tops and branches of trees harvested for lumber. Other clean wood products, such as wood residue from sawmills, is also suitable for fuel. Biomass fuel will be trucked to the facility in 20 ton live bottom trailers. The Facility also has rail access which may offer opportunities for cheap fuel from other regions (e.g., storm debris from the Southern U.S.). As discussed above, the significant number of pulp and paper mill closures in the region has resulted in the loss of substantial jobs and a reduction of biomass consumption, thus having an adverse effect on the regional economy. The Berlin Project will help to reverse this trend by investing over $25 million dollars per annum into the regional economy for biomass fuel purchases.
Among the key assets acquired by Laidlaw is the facility’s Babcock & Wilcox boiler, which was installed in 1993 at a cost of nearly $100 million. Babcock & Wilcox is the EPC contractor for the Berlin Project. The B&W boiler, with a steam capacity of about 600,000 lbs per hour after biomass conversion, will be converted for Laidlaw by B&W pursuant to a fixed price contact with standard and customary completion and performance guarantees. B&W intends to install a “bubbling fluidized bed” in the boiler, which represents the current state-of-the-art in low admission, advanced biomass combustion. B&W has completed a feasibility study and extensive engineering confirming this approach. Under the terms of the EPC Contract, B&W will also provide and guarantee the back-end emissions controls for the boiler to ensure compliance with New Hampshire Renewable Portfolio Standards, thus ensuring the Berlin Project’s ability to sell its renewable attributes, known as “RECs”.
In 2007, New Hampshire signed into law a state Renewable Portfolio Standard (“RPS”), which requires that utilities obtain 25% of their energy supply from renewable resources by 2025, with an annually increasing minimum requirements starting in 2008 until the 25% requirement is met in 2025. Utilities meet their legislative mandate by purchasing RECs from renewable generators or by paying into the state-established Renewable Energy Fund at a default rate per megawatt hour known as the “Alternative Compliance Payment”.
Laidlaw Berlin has also entered into a 20-year Power Purchase Agreement (the "PPA") with Public Service Company of New Hampshire ("PSNH"), an affiliate of Northeast Utilities, for all of the plant's output and environmental attributes. The PPA has an estimated value of approximately $1.3 billion over 20 years. PSNH has also received an option to purchase the Berlin Project at the end of the PPA term. The principals of Laidlaw Energy negotiated this contract with PSNH's executive management over the course of 2 years.
The Berlin project has received all material permits and approvals including unanimous approval from the state of New Hampshire sighting board to construct the facility.
After the successful development of the project which commenced as little more than an idea in 2006, Laidlaw reached an agreement to sell its equity stake in the project. This transaction was completed in October 2011 when Laidlaw received the final of a series of payments from the purchaser.
The Berlin Project is expected commence commercial operations in 2013.