Renewable energy

by | Oct 26, 2012 | Business Law, Fresh Business Thinking

We have for some time had a policy of contributing to selected start-up projects that have the potential to benefit New Zealand or humanity in the wider context.  This is a contribution in the form of legal and business services made available either at no cost or at a significant discount.

Renewable energy is a sector that we think is worthy of support and have been working for a few years on a couple of projects, one involving wood fibre and a process called torrefaction, waste to energy making power from municipal waste, and a horizontal wind turbine.

The common theme around these projects has been the expression of lots of interest, particularly as to the benefits for the planet if such energy systems were implemented on a large scale, but when it comes to footing the cost to build renewable energy plants and to the price that has to be paid per kilowatt of power produced for the plant to be viable, that’s where difficulties arise.

Coal might be dirty, but it is cheap comparatively.

End result, is a lot of existing large scale renewable energy plants, like wind farms, depend on Government subsidies.  Subsidies are not a good base on which to build a business as Governments change, as does the state of economies, and there goes your subsidy and your business.

A better option in our view is regulated compulsory use of renewable energy for a percentage of power use. Which brings me to the torrefaction project.  This started life as an NZ based potential project, as a partnership with a Swiss-based company who were to provide the technology and capital, using radiata pine as the fuel resource for export to Japan of torrefied wood pellets for use in coal-fired power stations.

Heads of agreements and memorandums of understanding were implemented with the Swiss, resource suppliers for wood supply and a Japanese based buyer to take the output, and the project was looking promising.  Japan was moving to a compulsory regime for use of renewable energy as a portion of power production.

Then came along 2007/2008 and the financial crisis and survival became more the focus than doing great things for the planet and the Japanese buyer pulled back. At the same time, China was booming despite the financial crisis and up went the price of export radiata logs from NZ, dragging up the wood resource cost for the project.

So the project moved offshore to North Carolina. This State also has moved to require a certain level of power production from renewable energy sources, so there is the potential for buyers of the pellets, and also has plentiful forest resource, which also is much cheaper than in NZ.

Our client group has a US-based partner and the role for AlexanderDorrington has continued in advising on commercial matters, trade contracts, funding structures and so on, with assistance from local Attorneys.  The project currently awaits finalisation of funding.

By Craig Alexander