The African Business Journal: BioTherm Energy

BioTherm Energy
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admin on 03 November, 2009 03:38:00
 
Charles Liebenberg, co-founder and CEO of BioTherm Energy (Pty) hails from a
strong international finance background, with an equally impressive history of
start-up energy project experience.
“I started in investment banking with Standard Bank Group in South Africa.
I started their Project Finance business then relocated to London and spent a
further four years with them there. Then I left and joined Investec bank which
is also a South African bank listed in the U.K and started an Energy Project
Finance team for them too” he recalls.
Liebenberg officially began BioTherm in 2003.
“Essentially the basis of the business was the C.D.M (Clean Development
Mechanism) market on the one hand and the anticipated electricity deficiency in
South Africa. I really thought that was going to hit the market and it did, last
year in particular” he says.
“Kyoto Protocol was about to be ratified by Russia at that time which
would have brought it into effect and I started the business a bit before that
in anticipation that Kyoto would become effective.”
However Liebenberg’s predictions of electricity deficiency were just the
beginning of BioTherm’s work towards capturing “intelligent
energy.”
The Petrosa Biogas to energy plant
n 28th September 2007 the South African Minister of Minerals and Energy, Buyelwa
Sonjica , opened the Biotherm-developed, owned and operated PetroSA Biogas to
Energy Project in PetroSA, Mossel Bay.
That same year the plant received the Construction World’s Best Projects
prize for Best Public Private Partnership.
But the road to this time of achievement and recognition was not without its
challenges.
“When we initiated that project the energy supply in South Africa was
fairly secure. However the Additionality Concept under the C.D.M was a very
strong driver for us as it is in all of our projects because the electricity
tariffs here in South Africa remain low even today. Economically low not only
for us but also for Eskom the national utility” Liebenberg says.
“At the time it was quite difficult. There was never a thought in most
corporate minds that electricity could become a scarce commodity in South
Africa. But we managed to overcome the challenges and reached commercial
operation in October 2007. We’ve been operational for almost two years now
and with a high degree of success.”
It is Liebenberg’s keen eye for wasted energy potential which really set
the ball rolling.
“To cut a long story short we were told we could get access to the flared
gas – a methane rich gas which is really just a by product of the cleaning
up process after the liquefaction of the natural gas at the PetroSA
gas-to-liquids plant. We negotiated a commercial arrangement with them for how
we might obtain the gas then sell electricity back to them at their prevailing
electricity tariffs.”
The search for “intelligent energy”
In October last year BioTherm hit industry headlines with an extraordinary
investment agreement.
“We raised $150 million U.S dollars (1.5 billion ZAR) in investment from
an American private equity fund called Denham Capital and they’re
specialised in the resource and energy sector” Liebenberg says.
“They committed to invest this money into BioTherm for our future
progress. That changed the landscape of BioTherm quite significantly because now
I have a very well capitalized business with access to equity. Being where we
are with the prevailing global market conditions is very advantageous because
we’re currently in a market where having access to capital is quite a
scarce commodity. After we built our project at PetroSA which we will be
operating for the next 15 years we managed to become the lead developer on a
number of projects. We have 85 mega watts currently under development of which
two projects have received environmental approval and we hope to financially
close four projects this year.”
BioTherm’s various projects in development may vary, but they are all in
pursuit of “capturing wasted process energy, and converting it into
useable energy.”
“More importantly for me it’s intelligent energy because it is
really capturing the waste which is significant in industry in South Africa
because there are a lot of energy intensive users” Liebenberg explains.
“There is an incredible amount of wasted energy from processors and
that’s our niche market. We’re generally below the 100 mega watt
threshold on a single project. There is massive potential for us and we are
negotiating a couple of 100 mega watt projects in the cogeneration sector in
addition to the 85 mega watt project we have under development currently.”
BioTherm are set to work on a number of exciting projects.
“We are involved with two ferrochrome smelters. The one which is in the
public domain is a company called Hernic. They are the fourth largest
ferrochrome smelter in the world and of course have been affected by global
recession as has everyone else but as was reported in the press recently they
have started up their furnaces again. We’re doing a 25 mega watt project
where we’re using the carbon monoxide which has been flared since they
built the furnaces and we’re putting that through a boiler, running a
steam turbine out of the back of it and generating electricity onsite”
Liebenberg reveals.
“We are not excluding conventional renewable energy from our portfolio in
South Africa so wind and solar are technologies we may take interest in during
the short to medium term. We think that in countries like South Africa Solar
will make great sense in the not too distant future too.”
Investing in South Africa
Liebenberg’s understanding of the vast potential within South Africa
coupled with the exemplary agreement between BioTherm and Denham Capital
indicates a bright future for the regions’ industry.
“We’re very positive about the country. That’s why I started
BioTherm and moved back from the U.K. We recognise the opportunities which will
exist and because of the wealth of resources which still remain here it is an
energy intensive economy. That’s what we focus on – capturing wasted
energy – and that will continue for a very long time. Overall we’re
very positive about South Africa and the environment we operate in” he
says.
Liebenberg recalls the stringent measures with which Denham investigated every
nook and cranny of BioTherm prior to investment.
“It was an extremely thorough process and I think that the commitment they
made of $150 million dollars is not insignificant in a business like ourselves.
Clearly they have a strong belief in the future of the country and the resource
market here. As an objective endorsement we feel very positive about
Denham’s attitude towards South Africa and the opportunities that lie in
the country and in this sector in particular” he explains.
“South Africa is a very industrialized country. There is a lot of negative
press from time to time about the various issues in the country. I can draw
comparisons with Europe having lived there and South Africa is generally a very
benign business environment with a lot of entrepreneurial spirit in the country
with a very strong ‘can-do’ attitude.”
BioTherm people power
The wealth of natural resources is not the only strength Liebenberg recognizes
in South Africa. In both the country and BioTherm itself, he places great
emphasis on the people. In fact, when you are a part of BioTherm, the business
is your own.
“Everyone has ownership of our business. Every employee be it the cleaners
or myself has ownership of the business so it’s a very entrepreneurial,
very responsible organisation. We all have aligned objectives which is important
for success. We’re improving the status quo with regards to emissions,
energy waste and avoiding it” he says.
“That’s a key value because people really have to accept
responsibility for what they do. It’s not an enormous company where there
are 15 other people who can actually do your job. People have to put their hands
up which they do all the time for the benefit of the entire company. We’re
very unique in the utility-type of markets.”
This people power reaches right through the BioTherm ranks and along with their
current capital, bodes for a very bright future indeed.
“We’re probably the biggest team in the country and we’re
definitely the most experienced in the power sector, well capitalized and I
think few competitors really have that advantage. Our Chairman is a former CEO
of Eskom so he comes with a whole career of experience and understanding of the
electricity sector. He still serves on the board of Eskom today although
he’s also our Chairman. We have a very strong understanding and
appreciation but more importantly practical hands on experience of the power
sector” Liebenberg explains.
And with all of these minds on the job, it is no surprise that despite
Liebenberg’s’ agreement that “In South Africa in particular
the enabling environment is still not what it should be” BioTherm is clear
about how to tackle this.
“Being in the monopolized regulatory environment has been very challenging
for everyone. The real challenge now that the regulator comes to grips with the
enabling environment for private sector investment in the energy sector”
he says.
“On the positive side we have a few programmes on the cogen and renewable
side which have now been approved where Eskom under a single buyer model will be
buying the power. There are still issues which need to be ironed out but it has
progressed substantially in the last five years.”
Liebenberg looks forward to the changing potential for investment in South
African Independent Power Projects (I.P.P’s).
“I think that for the first time in 15 years there are real opportunities
for I.P.P developers to enter the country in the next three to five
years.”
True to form, BioTherm continue their quest for “intelligent energy”
with an eagle eye for future development.
“Our goal in the next five years is to have about 400 mega watts under
construction and about half of that to be operational. That’s our five
year goal because as you will appreciate we are building infrastructure, these
projects do take a bit of time” Liebenberg says.
With their crack team of experts, unique investment agreements and a
future-facing goal held by every company member, BioTherm and their quest for
South African energy efficiency look set to soar.