Market Potential
In the US, market and political forces are driving increased development of renewable energy sources. Currently 22 states, including New York, Texas and California, have enacted renewable portfolio standards (RPS) or other state mandates requiring electric utilities to increase their use of renewable energy resources such as wind, solar, and biomass creating a market for renewable energy credits (REC) and increasing the value of energy generated from renewable sources. On the federal level, the Energy Policy Act of 2005 provides a number of incentives designed to spur development of renewable energy facilities, including accelerated depreciation provisions and production tax credits.
American dairy and hog farms generate more than 500 million tons of manure each year. Food processors, restaurants, households and supermarkets generate about 50 million tons of organic waste annually. Only a small fraction of this biomass is producing energy today. Environmental concerns related to waste management along with a desire to be perceived as supporting “green” projects motivate livestock producers and food processors interest in renewable energy.
In the US market, a single large dairy farm produces enough manure to support a profitable renewable energy facility. There are more than 500 dairies in the US milking more than 2000 cows that are potential sites for mixed waste biogas plants. The Company’s first biogas plants will be located on dairies in the Northeastern and Northwestern US where there are clusters of livestock agriculture along with food processing facilities and relatively high energy prices.
Alternate siting opportunities are cattle or hog slaughter facilities and food processing facilities. There are more than 700 federally inspected meat processing plants in the US and in New York State alone more than 300 food processing facilities. The Company believes that several hundred mixed waste biogas plants will be built in the US over the next few years to tap the energy potential of livestock manure and food processing waste.