Solena jet biofuel project with British Airways on track, says CEO, as the airline seeks further supplies for engine testing
(photo: London City Airport)
Wed 28 July 2010 – Solena Group CEO Dr Robert Do says the search for a potential site for its waste biomass-to-jet fuel plant in East London has been narrowed down to two or three locations, with an announcement due shortly. Speaking at last week’s Farnborough Air Show, Do expressed confidence that the company will be successful in attracting major international investors for the proposed $280 million project that was launched in February (see story). Now dubbed the GreenSky project, Solena and its partner and customer British Airways are bullish that 16 million gallons of jet biofuel will be in annual production once the plant opens in 2014.
Expected to become Europe’s first sustainable jet fuel plant, 500,000 tonnes of municipal waste destined for landfill sites will be processed using Solena’s plasma gasification technology, which converts biomass and organic products into clean synthesis gas and then into jet fuel through Fischer-Tropsch technology.
Given that there is no involvement in the growing of crops, that the plant will run on renewable energy and there is only local transportation of feedstock and fuel involved, Solena is able to claim lifecycle greenhouse gas savings of up to 95% from the process compared to fossil-fuel derived jet kerosene. Additional environmental savings include reductions in methane – a greenhouse gas 21 times more potent than CO2 – that would potentially be emitted by the waste if sent to landfill and the lack of sulphur in the fuel’s content, a contributor to poor air quality around airports.
In addition to the jet fuel, which will cover more than twice BA’s needs at London City Airport – also to the east of the capital – the plant will produce 8 million gallons of bio-naphtha and 40MW of clean power, half of which will be exported to the national grid. The amount of biomass the plant is planning to use each year represents a saving of £36 million ($56m) in landfill costs for local authorities, and the plant is expected to create up to 1,200 jobs.
“The beauty of this is that it’s a win-win for the city and the municipalities, the airlines and the environment,” Do told GreenAir Online.
Do said there were considerable difficulties in funding biofuel projects, particularly in the present financial climate.
“Biofuel projects are having a huge problem raising finance today because their product, particularly first-generation fuels such as bioethanol, are indexed according to the price of conventional oil and long-term prices cannot be guaranteed,” he explained. “And then the commodity pricing is also very challenging because you are growing a crop, so you are hedging the commodity cost at the front end and the biofuel cost at the back end.
“Because of this, our partners like Deutsche Bank and other major financial institutions, as soon as they see a biofuel project they don’t want to touch it.
“What we are doing here in London is very different. We are mitigating the risk – or ‘de-risking’ – by bringing in a partner, British Airways, who is not just an off-take player but who is playing a part in the whole project. They have been with us from day one in developing the project: meeting with us, preparing the site, helping with the planning and working with us on coming up with a contract that will give us a fixed off-take. Because it’s a fixed price, it’s not linked to the oil price.”
Do won’t reveal what price British Airways will be paying but says it is “market competitive”. He concedes that the airline is taking “a huge risk” in fixing a price four years ahead of taking first deliveries of the biofuel for a contracted 10-year period. “Just like ourselves, they are putting a very large, long-term financial commitment into the project. However, this gives an assurance to our investors of a guaranteed revenue deal.”
He sees advantages though for BA in fixing a price in a market noted for its volatility. “None of us believe the price of oil is going to drop to, say, $20 a barrel ten years from now.
“We also have the capacity to fix the cost of the feedstock that we will be using as it is waste material that would be destined for landfill rather than crops, so we are de-risking both the front end and the back end. This is how we are able to structure a financing deal for the project.”
Do explained that financial backing is required at different stages of the project, from development funding that covers conceptual and planning work to construction funding and then operational funding, each group having a different risk profile. Another facet is to hedge the financial risk at the various phases of the project so Solena is also currently dealing with major insurers.
Do remains confident that the funding will be forthcoming. “We have a huge amount of interest in this project from the international investment community.”
Another key aspect of the project, said Do, is that the Fischer-Tropsch process to be employed is a tried and tested technology that has been in use for many years. “This is not science fiction – it is a well-known industrial process. What we do is to integrate and optimize it.
“So the challenge now is beyond technology. It’s about site selection, planning, dealing with local government, investor profiling, financing and managing risk.”
Solena has brought in leading environmental engineering consultants Arcadis to manage the project and Next Energy Capital to manage the financial structuring.
The number of potential sites for the plant was narrowed down from 12 to six locations, said Do. “I, along with officials from BA and the Greater London Authority, have walked all six sites to gain a perspective of how critical the planning process is.”
He revealed that up to three possible sites, with a preferred and a back-up location, have now been chosen and the final choice will be announced soon. A planning application will then be submitted after an environmental impact assessment has been undertaken of the preferred site. Planning approval is then hopefully anticipated by the end of 2011, with construction beginning in 2012.
Do believes the London jet biofuel plant will be the forerunner for similar ventures elsewhere. “We think the jet biofuel market is unique as it is both a very large one and the airline industry is in severe need of this product.”
Meanwhile, British Airways and Rolls-Royce have initiated a joint request for information (RFI) process, inviting suppliers to offer alternative fuel samples for a series of laboratory, rig and full engine tests. Fuels will be considered that can be used neat or require blending to meet engine requirements.
Considerations for the alternative fuels are that they must have a better overall environmental footprint than existing Jet A-1 fuel, potential long term viability and future scalability and they must not unduly compete with food production, cause land or water stress, nor have potential adverse effects on ecosystems. Products that may lead to deforestation will not be considered.
The scientific programme will include laboratory and rig testing if sufficient volumes of candidate fuels become available. The aim is to eventually test up to two successful fuels on an RB211-524GT engine from a British Airways 747-400 at the Rolls-Royce test bed in Derby, UK. According to the engine manufacturer, this will enable more accurate data to be gathered in a controlled and consistent environment.
“This is the first benchmark test of its kind and we would encourage suppliers to put forward a broad spectrum of fuel options,” commented Rolls-Royce Fuel Specialist Chris Lewis. “This programme will significantly expand our knowledge and understanding of the potential for alternative fuels and any positive benefits or potential they have for our industry.”
Extensive lab, rig and ground engine testing of selected fuels is expected to be completed by the fourth quarter of 2011, after which the results will be analyzed and reported. An industry report will be issued by March 2012.
Jonathon Counsell, British Airways’ Head of Environment, said: “We are teaming up with Rolls-Royce to gain practical information on the performance and environmental credentials of alternative fuels. The results of the study will be made public so the whole industry, its customers and, most importantly, the environment can benefit.”
The test programme is to be funded through the FAA’s Continuous Lower Energy, Emissions and Noise (CLEEN) programme, announced earlier this month, which aims to help develop and demonstrate technologies to reduce commercial aircraft jet fuel consumption, emissions and noise (see story).
British Airways and Rolls-Royce tried a similar initiative two years ago (see story) but failed due to the unavailability of sufficient supplies of alternative fuels. The partners were then looking for 60,000 litres of fuel to undertake testing but have not specified an amount this time.
A BA spokesperson told GreenAir Online: “We believe that there are more biofuel suppliers in the marketplace with sufficient quantities of fuel to take part in these new tests and we do not require the same volume of biofuel as the proposal we put out in 2008. We have already received interest from several parties.”
Potential suppliers will have to move quickly to register their interest. A RFI response is expected from alternative fuel suppliers before the end of August, with the submission of proposals during September. Quantities of lab and rig test fuels will be required by Rolls-Royce in March 2011, with selected fuels for engine testing to be delivered in September 2011.