San Luis Obispo AD Project. Planning a 33,000 TPY Food And Green Waste AD Facility in California

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1 San Luis Obispo AD Project Planning a 33,000 TPY Food And Green Waste AD Facility in California 1

2 Project Background SLO county needs to achieve 75% diversion goal (state goals by 2025) Alternative is composting in neighboring counties (with rising compliance requirements in California for open composting) HZI was selected by WC to develop a FDBOO project 2

3 Strategic Partners 3

4 Project Setup SLO has 27,000 t/a of yard waste (currently composted/ disposed) and want to include 6,000 t/a food waste in the future Waste Connections (WC) provides disposal services for SLO WC owns a site with office, workshops and truck parking, ideal location for Anaerobic Digestion facility SLO waste disposal agreement with WC is extended (min. 20 years) based on AD investment (Plant) required to fulfill new CA 75% diversion rate requirements by 2020 (actual 68%) WC not interested in technology projects look for third party to financedesign-build-own-operate the Plant 4

5 Key Data Technology Project Type Project Cost Subsidy EPC O&M Customer Feedstock Property Compost & Liquid Digestate Sales Kompogas HSAD System with CHP for power production FDBOO (Finance, Design, Build, Own, Operate) First Kompogas Reference Plant in US ~25 M$ (incl. Project Development) with Power only concept Financing through HZI and federal/state grants Grants: CalRecycle, CEC EPIC, CAEATFA) ITC program (Investment Tax Credit) HZIU (expected project duration 15 months) Kompogas SLO LLC (duration 20 years) Waste Connection with its Subsidiaries 33,000 t/a (~30,000 t/a metric) Owned by WC Subsidiary leased by Kompogas SLO LLC Existing Building modified to fit overall plant concept Compost to be sold into local agricultural market Usage of liquid digestate as soil amendment for local farming 5

6 Kompogas HSAD First class technology combined with HZI turn-key capability Proprietary Technology from HZI Engineered by HZI Feeding System Project, Site and Construction Management Digester Discharge System Electrical, Instrumentation and Controls Balance of Plant and Energy Utilization Site and Building Services Dewatering Gas Utilization Integrated Solution Maximized Efficiency Reliable Execution Managed by HZI Civil 6

7 Avenues for organics recycling Source segregated collection vs. mechanical separation of MSW Avenue 1: SSO Collection of source segregated organic waste and processing in a bio-waste Anaerobic Digestion plant Avenue 2: OF MSW Collection of MSW and separation of organics in a Mechanical-Biological Treatment (MBT) plant, incl. AD system MSW mechanical separation Mechanical part recyclables organic fraction landfill Biological part tunnel composting Anaerobic Digestion ADC maturation/ composting 7

8 Kompogas Dry AD The plug-flow advantage Internal inoculation Patented Kompogas Input DM: 20-50% Biogas DM: ~30% Digestate Discharge DM: 25-30% Horizontal plug flow - Optimal digestion - Thermophile temperature 131 F - Biological activity - Longitudinal agitator - Energy saving & tight - Internal inoculation -Stable & quick process - Retention time F sanitized fertilizer products Inoculation allows fastest process start, defined & specialized process conditions allow highest conversion efficiency highest biogas production and quality 8

9 Kompogas steel digester Robust and reliable, available in various sizes Digester sizes: PF1200, PF1500, PF1800, PF2100, further sizes on request Modular design for fast installation High and constant biogas yield from anaerobic degradable inputs Continuous process and stable biology Safe and emissions-free 9

10 Financing Fixed rate at 4%, 15 years maturity, 20% equity CEC EPIC Grant Successful application and awarded $4Mil. Project received highest scoring of all applicants. $5.1Mil in matching funds CalRecycle GHG Grant Successful Application and awarded $4Mil. $4.2 Mil in matching funds CAEFTA Program -- Successful award for the exemption of applicable sales taxes, value approximately $800k. Investment Tax Credit Program (ITC) initiated max 30 % of eligible project cost. Currently working with two potential investors. 10

11 BioGas Conversion RNG or Electricity Renewable CNG originally planned for the facility Waste Connections trucks run on CNG Weekend storage to the gas pipeline Opportunity for stable pricing for hauler and benefits to local residents Electricity generation Relatively low costs to interconnect Participation in the BioMAT Feed-in Tariff program Renewable source of electricity for the local community Participation in the Investment Tax Credit Program, max 30% of eligible project cost (ITC program expired in 2016) 11

12 BioGas Conversion Electricty PPA Signed PPA with PG&E and participating in the BioMAT program, $127.72/MWh Biogas Utilization Concept for project changed from CNG to Power production Total Project cost approx. 25M$ O&M cost for Power concept approx. 1M$/year HZI took advantage of the Investment Tax Credit, power generation required HZI choose the electricity over NG due to the ITC options, however economically, CNG is the best option when RIN s and LCFS Credits are included 12

13 Permitting Conditional Use Permit with Mitigated Negative Dec. was approved. CEQA also approved by Planning Commission, MND tiered off statewide Programmatic EIR. Project encountered some opposition to the facility, HZI actively engaged with residents to educate. No further challenges. Building Permits all issued. Took longer than normal to educate local staff and California Code Check on this type of facility. CalFire visited plants in Europe to better understand safety aspect and fire suppression systems, now fully supports the technology. APCD Authority to Construct permit received by local APCD 13

14 Projected Milestones Construction Completion -- Construction is estimated to be completed April- May, Cold Commissioning -- Cold Commissioning will start after construction is completed and will last for approximately 30 days. Hot Commissioning Hot commissioning will start immediately thereafter, expected to be completed by July 31, and the facility fully on line by Aug 1,

15 Waste is our Energy Waste is our Energy. Engineering is our Business. Sustainable Solutions are our Mission.