Forest fires delay California biomass project
In July, NFCP was granted final approval by the state to issue tax-exempt bonds totalling $9.3 million and non-exempt tax bonds of $5.5 million to help the project reach financial close. In a statement, EQTEC said: “Due diligence being conducted by potential subscribers for the Bonds and the finalisation of legal documentation has been ongoing for several weeks.
“The company initially expected the process for the issue of the Bonds, which includes the sale of tax credits awarded by the State of California attaching to the Bonds, would complete towards the end of October 2019. However, the situation in California, where forest fires have continued to cause disruption, has unfortunately meant that it has taken longer than expected to complete the process.”
In order to accelerate the closing of financing, Phoenix Biomass Energy, a major stakeholder in the project, has agreed on a path to financial close with EQTEC with the potential investors in the Bonds, which does not require the sale of tax credits. EQTEC added: “The legal documentation to finalise the subscription for the Bonds is currently being viewed by all relevant parties and the company expects financial close to now take place before the end of 2019.”
David Palumbo, CEO of EQTEC, said: “It has been a busy number of months with numerous work streams being progressed, with a particular focus on introducing project funding options to our partner, Phoenix Energy.
“We are encouraged by the strong local support for the project and the growing realisation that the project will have such an important positive environmental impact, improving California’s current critical situation with forestry wood waste.
“We are confident that this would be the first of many more projects in California with Phoenix Energy. California Senate Bill 901 authorises $200 million per year for five years from the state’s Greenhouse Gas Reduction Fund for wildfire prevention, primarily in the form of hazardous fuel reduction projects. We continue to progress conversations with Phoenix Energy to further our collaboration to address this crucial social and environmental appeal in the state.”
“Senate Bill 1122 was designed to combat the tree mortality crisis in the Sierra,” added Greg Stangl, CEO of Phoenix Energy. “The bill dictates that 20% of the additional 250MW capacity outlined in the bill must come from projects that rely on forestry sources.
“There’s a reason the state passed a law forcing PG&E companies to buy power from projects like ours. Our proposed plant in North Fork will help promote environmental sustainability and reduce forest waste – and the chances of future fires. This is a crucial mission that cannot wait. It is very encouraging for us to have a technology partner such as EQTEC which has not only addressed any engineering challenge that we have thrown at them, but also now are heavily involved assisting with the financial close of the project.”