Bio-SNG - CNG Services

BIO-SNG FEASIBILITY STUDY – ESTABLISHMENT OF A REGIONAL PROJECTAlthough the process elements utilised in the development would be proven in their own right, there aresignificant technical interfaces between them that need to be managed as part of overall systemsintegration. This may require an innovative engineering and contracting approach, but it will be arequirement to assure project funders that there is no significant residual technical risk inherent in such adevelopment.The technical uncertainties implicit in the process integration will inevitably make project finance moredifficult and early development of a project financing strategy will be required in order to assure there willnot be a late in the day terminal event on this front.Government incentive schemes offer the prospect of commercial viability with a plant that would not inother circumstances be commercially viable; to that extent they are beneficial to non-fossil energydevelopments including Bio-SNG. The economic analysis shows that they do not constitute anexceptional upside return on investment. What influences the attitude of investors however is that currentsupport mechanisms offer no protection on the downside of the project risk profile. It follows that afinancing strategy needs to make provision for managing the downside risk that will be perceived byinvestors.An incremental approach to the management of technical risk would be the development of ademonstration facility, although even a reasonable scale demonstration facility might not necessarily openthe door to project finance on the first full scale plant. The demonstration plant would be required tooperate for a long time to assure process integrity, and further scale-up uncertainties associated with thefull sized plant would need to be managed Moreover this analysis suggests that a standalonedemonstration facility might itself cost in the order of £70M, a sum which would in any case represent afinancing challenge. The timeline for a demonstration facility also needs to be taken into accountespecially in consideration of the competitive uses of the biomass resources and the timing of commercialscale market penetration for BIO-SNG. Some of the investment risks could be mitigated by configuring aBio-SNG demonstration project on a syngas platform which is valorised mainly by another output productsuch as electricity, with demonstration of Bio-SNG production via a slipstream. The financing of a Bio-SNG project is a challenging prospect, however, it is important to start work on a financing strategy at theoutset of any prospective development, recognising the hurdles that do exist and devising methods toovercome them.Preliminary scoping of a demonstration platform in the North EastIn light of the financial analysis, a project at 300MWth fuelled by SRF (or even a mixture of SRF andvirgin biomass) is economically viable. However, the quantum of investment for a first of a kind project issubstantial and would not be financeable without an intermediary pathway.11