UGI Commits Funding for Largest Renewable Natural Gas Project to Date

 UGI Energy Services, LLC (“UGIES”), a subsidiary of UGI Corporation (NYSE: UGI), today announced an agreement with MBL Bioenergy to fully fund the first set of renewable natural gas (“RNG”) projects currently under development in South Dakota. In total, the project will represent over $70 million of investment by MBL Bioenergy, of which 100% of the funds will be provided by UGIES. MBL Bioenergy is a joint venture partnership between UGIES, Sevana Bioenergy and a subsidiary of California Bioenergy (“CalBio”) with the sole purpose of developing RNG projects in South Dakota.

The first set of projects, known as a cluster, will be built at three farms located north of Sioux Falls, SD, and is expected to generate approximately 300 million cubic feet of RNG annually once completed in calendar year 2024. Dairy waste from the farms will be anaerobically digested and then piped to a central upgrading facility before it is delivered into the interstate natural gas system near Dell Rapids, SD. UGIES, through its wholly-owned subsidiary, GHI Energy, will be the exclusive marketer for MBL Bioenergy.

“This project sets a new standard for UGI in terms of scope and size and represents a huge milestone in UGI’s investments in, and expected earnings contribution from, RNG projects,” said Robert F. Beard, Executive Vice President - Natural Gas, Global Engineering, Construction & Procurement, UGI. “We are pleased to be partnering with industry-leading developers on this project that will substantially reduce greenhouse gas emissions, using dairy RNG as a vehicle fuel. We look forward to making additional investments in our MBL partnership as we advance the use of RNG as an environmentally responsible and clean energy solution.”

“This partnership with UGI is another positive step forward in expanding our carbon negative renewable natural gas business,” said N. Ross Buckenham, CEO of CalBio. “Our dairy methane capture and refining projects are delivering significant environmental benefits, improving economics for dairy farm partners and supplying a clean burning diesel replacement fuel. Through our subsidiary, Midwest Bioenergy LLC, this joint venture with UGIES, a new, powerful and committed strategic partner, anchors our dairy RNG expansion into the Midwest and will significantly expand our fuel production.”

“Sevana brought together exceptional partners to build this industry-leading RNG project. We are excited to strengthen our existing relationship with UGI to decarbonize transportation fuels through this and other projects. Sevana’s team of biogas experts is deploying state-of-the-art renewable energy technology in multiple RNG projects to form value-adding partnerships in agricultural communities,” said Steve Compton, President of Sevana. “We appreciate the opportunity to work closely with our partners and South Dakota farmers and communities to benefit the local economy and environment.”

Bank OZK Breaks Ground on Solar Power Plant in Arkansas

As part of its sustainable energy initiative, Bank OZK broke ground recently on its Arkansas-based $6-million solar power plant. Once complete, the 4.8-megawatt array will produce enough electricity to power the Bank’s new corporate headquarters in Little Rock and up to 40 Bank OZK locations throughout the state. Currently, it is the largest renewable energy investment by a financial services company in the state of Arkansas. 

 “An industry innovator, Bank OZK has a bold vision for the future, which includes a strong commitment to sustainable and clean energy,” said Tim Hicks, Chief Credit and Administrative Officer at Bank OZK. “This solar power plant will allow us to reduce our carbon footprint by 160,000 tons over the next 30 years.” 

 The Arkansas Public Service Commission and Federal Deposit Insurance Corporation approved the Bank’s plans for the solar power plant in March 2021. Scenic Hill Solar, LLC, of North Little Rock, Arkansas, will oversee construction of the 11,000-panel, single-axis array. The facility is expected to generate more than 8.1 million kilowatt-hours annually. Located in Stuttgart, Arkansas, it will be the state’s third-largest commercial solar facility dedicated to a private sector customer.

Green Plains Enters into Agreement to Sell Ord, Nebraska Ethanol Plant

Green Plains Inc. announced recently that its subsidiary, Green Plains Ord LLC, has entered into an asset purchase agreement with GreenAmerica Biofuels Ord LLC to sell its 65 million gallon ethanol plant located in Ord, Neb. for $64 million, plus working capital.

“The sale of our Ord, Nebraska plant is another step in our overall “fully funded” strategy to rapidly construct and implement our Ultra-High Protein production technology across our biorefining platform,” said Todd Becker, president and chief executive officer. “We believe this sale enables us to create additional value for our shareholders by efficiently deploying capital to support our transformation through technological advancements in proteins, sustainable corn oils and clean sugars acquired in the recently announced Fluid Quip Technologies transaction.”

Green Plains Ord LLC has also entered into an asset purchase agreement with Green Plains Partners LP and its affiliates (Partnership) to acquire the storage and transportation assets and the assignment of railcar leases associated with the Ord ethanol plant for $27 million, which will be utilized to pay down the Partnership’s debt. In addition, the storage and throughput services agreement will be amended to adjust the minimum volume commitment to 217.7 million gallons per quarter and to extend the maturity date by one year to June 30, 2029.

“We believe the value achieved from the sale of the Ord facility begins to demonstrate that we remain undervalued relative to the potential of our portfolio. As we execute on our total transformation strategy, adding additional innovative, sustainable and clean products produced at our biorefineries through the application of these technologies, we believe our value will continue to increase,” concluded Becker.

Green Plains will record a pre-tax gain of approximately $37 million related to the transaction. Both transactions are anticipated to close within the next 45 days. The purchase agreements are subject to customary closing conditions and contain ordinary and customary representations, warranties and indemnification obligations.

Ocean Park acted as the exclusive financial advisor to Green Plains and Sidley Austin LLP served as legal advisor to GreenAmerica Biofuels Ord LLC in connection with the transaction.

U.S. wind energy production tax credit extended through 2021

The timing and magnitude of wind turbine installations in the United States are often driven by tax incentives. The U.S. production tax credit (PTC), a per-kilowatthour (kWh) credit for electricity generated by eligible renewable sources, was first enacted in 1992 and has been extended and modified in the years since. At the end of December 2020, Congress extended the PTC at 60% of the full credit amount, or $0.018 per kWh ($18 per megawatthour), for another year through December 31, 2021. In 2020, the credit was 60% of the full credit amount. Under the new PTC legislation, qualifying wind projects must begin construction by December 31, 2021.

Based on previous PTC legislation, wind projects that started construction in 2016 qualify for 100% of the full credit amount. After 2016, the percentage decreases by 20% per year from 2017 through 2019; facilities starting construction in 2019 qualify for 40% of the full credit amount.

Wind projects can receive the tax credit based on either the year the project begins operation or the year in which 5% of the total capital cost for the project has been spent and construction has begun. This 5% down method, known as safe harboring, allows wind developers to receive the PTC at a given year’s level, provided they complete construction no more than four calendar years after the calendar year that construction began.

To help address construction delays related to COVID-19, the Internal Revenue Service (IRS) issued guidance in May 2020 allowing projects that began construction in 2016 or 2017 an additional year for construction, giving them five years to come online instead of four.

U.S. wind capacity totaled 112 gigawatts (GW) as of November 2020, the latest data available in the U.S. Energy Information Administration’s (EIA) Electric Power Monthly. According to plans announced by project developers and grid operators and compiled in EIA’s Preliminary Monthly Electric Generator Inventory, another 10 GW was expected to be added in December, bringing the annual 2020 total to 21 GW. December’s planned additions will be confirmed as operational in EIA’s survey results released in late February.

If all planned additions are confirmed, 2020 will be a record year for wind installations, far surpassing the previous record of 13.2 GW added in 2012. The record level of annual capacity additions in 2020 was driven by developers scheduling project completion in time to qualify for the full-valued PTC from 2016. Wind capacity additions tend to be relatively high in years when the PTC is set to expire, such as in 2012 and 2020.

In 2021, project developers expect 12.2 GW of wind capacity to come online, of which they expect 7.2 GW (59%) to come online in December. December has historically been the month with the most wind capacity additions.

Source: EIA

New Research Shows That Corn Ethanol Emits 46% Less Greenhouse Gases Than Gasoline

Research from Environmental Health & Engineering, Inc. (EH&E) shows that greenhouse gas (GHG) emissions for ethanol, a biofuel made from corn, are 46% lower than gasoline. Conventional wisdom based on a prior analysis done by EPA had pegged the difference to only 20%. EH&E's topical review of the latest science shows that this renewable biofuel is less carbon intensive and more climate-favorable than previously thought. "This research provides an up-to-date accounting of corn starch ethanol's GHG profile in comparison to that of gasoline refined from crude oil," says EH&E Chief Science Officer David MacIntosh. "The results of this research are timely for the scientific, public health, legislative, and business communities seeking to establish a net zero carbon economy while addressing related technological, political and economic challenges."

The research delivers a transparent, state-of-the-science assessment on life cycle analyses of corn starch ethanol in the U.S. EH&E researchers reached their conclusions after critically reviewing earlier life cycle analysis modeling and data, and consulting with more than two dozen experts from government, academia, and nonprofits. Their findings uncovered significant reductions in carbon intensity made possible by advances in farming technology, soil conservation practices, and production of animal feed as a by-product of making ethanol.

EH&E's assessment also shows that carbon emissions from converting prior land uses to corn farming make up only 3.9% of the biofuel's total GHG emissions--a much smaller amount than generally recognized. This finding stems directly from the latest models and data that consider both the economic value and productivity of land to estimate release of carbon when land is put into corn production. The research's findings suggest that substitution of conventional gas with corn ethanol could deliver a net carbon sink over a much shorter period than previously estimated.

Today, corn ethanol accounts for about 10% of liquid fuel sold at gasoline stations in the U.S. and has the potential to account for a greater share of liquid fuel for transportation. The findings provide much-needed data for decisions and policies on the future role of biofuels to address climate change as well as opportunities for continued reduction of carbon emissions across the life cycle of corn ethanol.