The July 4, 2013 press release issued by ZooShare carried a message that I felt smelled a little. The words from ZooShare in the release indicated that the Ontario Power Authority (OPA) had signed off on a biomass contract with ZooShare Biogas Co-operative Inc. for a 500 kilowatt (kW) plant to be constructed at the Toronto Zoo. The release went on to say that the plant would convert the Zoo's manure output to “clean renewable electricity for 250 homes”. The latter would require 2,400 megawatt hours (MWh) at an average of 9.6 MWh per household.
The foregoing indicates that the plant will operate at 55% of its capacity. Impressive but not believable! To start with biogas electricity production is normally used as peaking power meaning it would be called on only to supplement high demand days which are few and far between due to the excessive amount of available generation Ontario currently has. The OPA's feed-in tariff (FIT) price for biogas is 14.7 cents per kilowatt (kWh) or $147 per MWh meaning gross revenue of $352,800 per annum (at 55% of capacity) for a plant estimated to cost $5.4 million as noted in an earlier article. That means, if the full cost of the project was injected as equity it would take over 15 years to simply recover the capital costs (assuming no mechanical shutdowns occurred during that time).
The project's plan appears (from the tone of the release) to assume some funding from grants ($172,000 so far) and via bonds sold to co-op members. Those bonds will reportedly carry an interest coupon of 7% meaning, interest alone (if they obtain grants of say $400,000) would consume the annual income required to simply pay the bondholders ($5 million at 7% would require $350,000). If the intention is to never pay the bondholders their money back ZooShare are on the right track. Read more »
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