Plasco raises cash for waste to energy

Ottawa, Ontario-based Plasco Energy Group pulled in Cdn$54 million in a third round of funding for its plasma torch waste to energy system, with an additional Cdn$115 million expected in 2008.

First Reserve, a Greenwich, Conn., private equity firm, led the round with Cdn$35 million in funding, joined by existing investors who upped their shares and exercised warrants triggered by First Reserve's investment.

Plasco already has a demonstration plant in operation in Ottawa that's designed to handle 100 tonnes per day (see Garbage in, clean energy out), and a five tonne per day research facility in Castellgali, Spain.

Now the company is looking at construction of its first round of commercial scale plants in Canada, Spain, and other spots around the world.

Plasco should have plenty of cash for the buildout, as it said First Reserve also plans to invest another Cdn$115 million in the company in 2008 to cover the construction of new plants that will owned and operated by Plasco.

The PE group, which focuses on the energy industry, said it has allocated up to 10 percent of its current $7.8 billion fund for renewable energy.

Project development on the new facilities will start right away, but with a foot of snow in Ottawa, it may be a while before building can start there.

"I would expect to be in the ground as soon as the frost is out, so it's probably April or May," Rod Bryden, president and CEO of Plasco Energy, told the Cleantech Group.

The company's plasma torch process applies intense heat to waste materials in a closed, oxygen-starved environment, which outputs synthetic gas that can be used to generate electricity with an internal combustion engine.

The system also produces aggregate, which can be sold and used in asphalt, and potable water.

The Ottawa plant, which takes up only three acres, is currently permitted to convert 85 tonnes of solid waste per day. At that rate, it has the capacity to produce 4 megawatts of electricity, enough to power 3,600 homes. The plant started delivering power to Hydro Ottawa in October.

Take a look at the Ottawa plant here >>

The research facility in Castellgali is run in partnership with Barcelona's Hera Holdings, Spain's second largest waste management company.

The new plants will be going much bigger, but they'll all be based on the 100 tonne per day Ottawa plant.

"The modules are identical, but you add them together," said Bryden. "We don't have a scale-up issue."

Canada will be getting at least two more plants, with Alberta getting a 300 tonne per day plant, and a 400 tonne per day facility going up in Ontario.

Plasco, which plans to own and operate most of its plants, charges a Cdn$65 per tonne tipping fee for the waste it takes in, and also expects to sell the electricity, as well as the aggregate and other byproducts that come out of its plants.

But the company won't be getting premium pricing for its renewable energy in Canada. While most provinces have incentives for energy made from landfill gas, they have yet to apply the incentive to energy made directly from processing waste, as they don't want to encourage incinerators.

Unlike incinerators, there's no oxygen in Plasco's process and no hazardous emissions are released into the atmosphere.

A third plant is scheduled to be built in Barcelona, with that 200 tonne per day facility to be owned and operated by Hera.

The company is also actively pursuing a bid in Los Angeles, and is in discussions with other communities in California. Bryden said several other provinces in Canada are also interested, as are areas in the U.K., Italy, Greece, and Latin America.

Minnesota's Black River Asset Management, a subsidiary of Cargill, and Hera Holdings both boosted their stakes in Plasco in this round by buying $4.5 million in shares, as well as by the exercise of warrants. RAB Capital of London, and Firebird Management and Galtere International Fund, both of New York, increased their investments through warrants.

This brings equity investments in Plasco to over Cdn$90 million since August 2005. The company also received $9.5 million in funding from government-backed Sustainable Development Technologies Canada, and a $4 million loan from the Ontario Ministry of Research and Innovation.