In the following VerdeXchange News interview, Barry Berman,CEO of AgriPower, describes his company's waste-conversion technology, which manufactures energy from forms of waste produced by world's appetite for consumption. With multiple markets across the globe—including carbon offset applications and the ability to bring portable electricity to remote, undeveloped areas of the world—AgriPower, with a plant in Sacramento, willbe ready to go into full production, he asserts, next year.
Describe AgriPower. What is its technology and market niche?
AgriPower can best be defined as an energy technology company, meaning that it develops electric power plants withseveral unique attributes, one of which is that the equipment was designed to be built in modules and then connected when the unit is finally brought to a remote location.That transportability feature is veryimportant, especiallyin light of the fact that approximately one-fourth of the people in the world have never seen a light bulb. They live in areas where there is no electricity, there has never been electricity, and because of the remote nature of where they live, probably for many, many years, there won't be electricity. The original founders of the company intended the units to include that important transportability feature.The second significant benefit is that it was not designed to be a diesel unit. In fact, it was designed with technology that would enable it to employ virtually whatever the local vegetation is. That includes wood, wood chips, sawdust, and,very critically, the residual waste part of virtually every crop that is being grown.That means that when you bring the equipment to the remote area, they could utilize the waste material as fuel instead of having to either go without electricity a good part of the day or to pay a budget-breaking monthly diesel bill, which many remote communities simply cannot afford.
Elaborate on the market need AgriPoweris fulfilling. Who are the potential buyers of AgriPower's transportable power plants?
We have a macro view of our markets that includes governmental and privatesegments. The governmental are typically those governmental agencies or actual governments themselves that have a need to bring power to remote locations,where frequently there is civil unrest in a country. Any part of the population that lives without electricity is typically living in abject poverty. It's a breeding ground for all sorts of problems. So, governments have come to learn that the biggest bang they can get for a buck of investment is bringing electricity to their remote locations, not necessarily building a highway, for example.Electricity radically improves the life of the recipient.
The AgriPower unit was originally designed for that market. At the time, nobody could have envisioned that oil would sell for $84 andthat $50 or $70 oil would be considered inexpensive. That's what caused the second big market to open for us. There are several motivators on the private sector. In no particular order of importance, there are now environmental pressures being placed on a lot of companies, which nowmakes it very difficult, if not impossible,for them to continue to do business today the way they did business yesterday. One example would be farmers and nut growers in California that have previously taken their clippings or their shells from their nuts and allowed them to pile up in theopen air. That material decomposes, and as a result, turns into methane gas, which is more than 21 times more harmful to the environment than carbon dioxide. So, the state of California has made it clear to the nut growers that they're going to have to do something different with that material, and "do something different" doesn'tmean taking it to a landfill. Well, our unit can, in an environmentally friendly way, burn that waste material and produceelectricity. So that's one example of where environmental pressures are causing new customers to come forth.
Another significant, very broad market is companies that produce a usable wastestream, are currently paying a lot of money to have it brought to a landfill, and have come to realize they are paying to dispose of a valuable asset. For example, last night we met with representatives from some large supermarket chains that, in a couple of years, are no longer going to be able to have their wood, cardboard, paper, and their discarded fruits and vegetables brought to a landfill. The AgriPower unit can burn that material and save them the cost of bringing it to the landfill. In addition to generating electricity,we also produce something called co-generation, which could be used for heating, cooling, or refrigeration applications. We also generate thermal energy (i.e., clean, very hot air), which can be used to heat things or to pre-dry very wet fuel in our unit. It really becomes a completely self-contained cycle. Having the usable waste stream perceived as an asset is a complete change of people's mindsets.
Another very broad category is the people that are producing a usable wastestream and paying to dispose of it, while using diesel fuel in their operations. Several companies have approached us to buy our distribution rights to this market segment. Canada has well in excess of 1,000 lumber mills. They're all in remote areas; they all produce, on a daily basis, large quantities of woodchips and sawdust that are a perfect fuel source for us, and at the same time, they're bringing into remote areas diesel fuels at great expense. By bringing an AgriPower unit in, they can unplug the diesel unit, utilize the waste wood, produce electricity that they'll use in their business, utilize our co-generation,and take our heat and pre-dry the fuelbefore it goes to market, which gets them a premium price.One of the reasons that we came toLondon is because, as a result of the U.S. not signing the Kyoto Protocol, London is the epicenter when you want to talk about carbon credits. When you do the calculation of our technology, and when it's used to burn material that otherwise would have been left to decompose in the fields that would have converted into methane gas, you get 21 credits instead of one credit for solar or wind. The carbon credit companies want to utilize our units for some oftheir projects.
AgriPower power plants use a burning technology to convert biomass to electricity. Will the emissions from your process meet federal and state (such as California's AB 32) clean air mandates?
We meet all the EPA requirements. The fact of the matter is, whenever you burn a product, you have to produce carbon dioxide. What we do is, we produce less carbon dioxide than if that material would have been burned in the open air. More importantly, almost invariably,that material would have been allowed to decompose someplace and turn into methane gas. By using our technology, you've eliminated the methane gas, and, therefore, the vast majority of the pollutants. We are an environmentally friendly technology, and instead of allowing more damaging gases, such as methane, to get to the atmosphere, we're capturing and using it. The technology that we use produces an incredibly clean burn; there's well under one percent ash content of what we burn. We're getting rid of materials. An example in California would be the people that produce wine and have vine clippings or the seeds and skins of the grapes or the shells produced from growing nuts. All of that material has historically been wasted—allowed to decompose somewhere.
Where exactly is AgriPower in the governmental approval process, and what are your next steps to achieve the goals and aspirations of your business plan?
We were fortunate enough to go through a certification of our technology this past week. We're waiting for the written report. When it comes in, we'reg oing to go through a modest change in our design. Our current unit is designed to operate with a 250-kilowatt turbine, which means that it produces 250 kilowatts per hour of electricity. By testing our unit, we determined that we could, in fact, produce more than 300 kilowatts, so we've gone to a 300-kilowatt structure. We're going to order three 100-kilowatt turbine generator sets. We believe we'll have them on site, modified and operating in January of 2008. We'll then have the units certified one last time in the configuration in which we're actually going to deliver them, and we'll start taking orders inJanuary or February. At the moment, itlooks like we will probably be able to deliver units by July of 2008.
As an experienced investor, if someone had come to you with this biomass-to-electricity venture idea ten yearsago, what would have been your first reaction?
I wouldn't have thought a lot of it other than thinking of the possibility of distributed power opportunities in third world countries. That's changed radically with the points previously discussed and with carbon credits,which now take what might not have been an economically viable alternative energy project, let's say, in Africa,but now, under the Kyoto Protocol,there is demand for polluters to buy carbon credits, and the carbon credits are generated by these remote power facilities. What was a marginal project now becomes quite profitable, which is why so many carbon credit companies are getting into the alternative energy business.
Our product happens to work well in that area, but I would not have envisioned the tremendous opportunities available to our product on the private sector side,nor would I have necessarily envisioned the changes in the environmental laws that are going to make it literally impossible for many companies that have been inadvertent polluters to continue to do so. They're just going to have to change the way they do business,and right now we have no competition in our sized sector. All the signals are green, but it's only a matter of time before other people come into our space. But, it will not surprise you to learn, we've done a little bit of the back-of-the-envelope doodling, and we believe that the market for our units is in the hundreds of thousands. At best, right now, we're talking about an output of 1,500 units a year, so there's a pretty broad market out there for this kind of technology.
If VerdeXchange News were to do another interview a year from now with AgriPower and yourself, what would be thes ubject matter of our conversation?
We'll be talking about the fact that alternative energy is in even greater demand than it is now—probably far greater than the number of units wec an produce, which is how it will be for years to come. We'll probably be talking about some of the unanticipated problems that we've encountered along the way—that always happens in the development of new technology. We'll be talking about the expansion of AgriPower from our current facility to a much, much larger facility, and we'll be talking about increasing the production capability that we currently have—about five to ten units a month—to something more than 120 a month, with an output capability of close to 1,500 a year. If we came and met a year after that, we'd probably be talking about which foreign countries AgriPower facilities were going to be built in and the scaling up of production and sale of our units within those countries and to adjoining countries.