A three-year battle has finally paid off for Delta Thermo
Energy and its supporters as the Allentown City Council voted to approve a $35
million, 38,000 square-foot facility on the Little Lehigh Creek.
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| More than 450 people showed up to hear the city council's decision on Mar. 8. Courtesy: Lehigh Valley Live. |
Allentown will sign a 35-year contract with Delta Thermo
Energy, which will build and operate a facility adjacent to the wastewater
treatment center. The city will pay $5.88 million per year, with annual
increases, to Delta Thermo, a New Jersey-based developer that utilizes a
combination of technologies presently in Germany and Japan. The technology
converts trash and sewage sludge into a clean, coal-like substance that can be
burned to create electricity. The end product is what distinguishes this process
from gasification, which creates a syngas.
In return, the city will get electricity, an energy credit,
and most importantly stability in price increases. This prevents Allentown from
being at the mercy of landfill owners who can choose to raise prices. The
facility will be cheaper than continuing to truck garbage to landfills. A last
minute request gives the city an opportunity to opt out of the contract after
10 years. The plant should be operational by 2015.
The project is largely a result of the labors of Marcel
Groen, a partner at Fox Rothschild LLP, and Delta Thermo Energy’s lawyer. The
former chairman of the Montgomery County Democratic Party contacted his friend,
Allentown Mayor Ed Pawlowski in 2009 and the two have spent the last two years
trying to make the proposed plant a reality.
An earlier deal was close to being signed before the city
decided to invite other companies to submit bids on the project in February
2011. The delay cost Delta Thermo $31 million in tax-exempt bonds from the
Pennsylvania Economic Development Finance Agency, but the company insists it is
back on track to financing the project.
Better BTU Take: We’re
really interested in this project and hope it comes to fruition. Torrefaction
is an interesting process and Delta Thermo’s plant would be unique in combining
three technologies. It would be good for the industry to see one of these up
and running and then compare to gasification facilities.
One note we’ll make is that we haven’t seen a single mention
of permits. We’ve seen plenty of projects get tangled up in the permitting
stage so we’ll be interested to see what happens.
More Information:
Allentown,
Pa. Breaks Deadlock, Approves WTE Plant (Mar. 8, 2012) – Waste & Recycling News
Allentown
Council Rejects Waste-to-Energy Plant (Feb. 15, 2012) – The Morning Call
Do you know where we could get a copy of the Official Statement that is issued prior to the sale of the tax exempt bonds?
ReplyDeleteDoug,
ReplyDeleteI'm sorry we don't have an answer to that one. We know that the original plan for financing involved tax-exempt bonds before the delay, but the clock ran out on that funding. We don't know if Delta Thermo is using tax-exempt bonds, nor where you could get a copy of the official statement.
Best of luck!
I am curious as to the permitting process for such a facility. I know of many gasification plants operated in other countries but this is a first for a US city to be involved in such a venture. Was the DEP involved as this unfolded? Ar they in agreement and on board with the city as to the special benefits such a facility can offer? What permits are required and what timeline can we expect for DEP approval on this?
ReplyDeleteVan Stewart
Van,
ReplyDeleteWe don't have any specific information on that but we do have a view that the developers understand the air permitting requirements and they won't get through the funding cycle without clarity on the emissions issue. From what we understand, they have provisional financial approval. We infer from that there has been significant due diligence on emissions.