Tag Archives: nature
Blue Sphere Striving to Become Leader in U.S. Organics to Energy Sector
SOURCE: EquityBrief July 09, 2013 07:01 ET Blue Sphere Striving to Become Leader in U.S. Organics to Energy Sector LOS ANGELES, CA–(Marketwired – Jul 9, 2013) – Sometimes exciting developments come in small packages. That looks to be the case of Blue Sphere Corp. (OTCQB: BLSP ). Blue Sphere is positioning itself at the forefront of the developing organics to energy market in the United States. Blue Sphere currently is working on the implementation of two anaerobic digestion (organics to energy) projects scheduled to break ground in the second half of 2013. These two projects are slated to produce enough gas to power 8.4 MW of electricity generation capacity annually, with generation scheduled to begin in the second half of 2014. According to the EPA, there were over 202 anaerobic digestion facilities operating in the U.S. as of May 2013. In contrast Germany has over 4,000 of these plants in operation. The available market for this type of electricity production in the U. S. is enormous and Blue Sphere is now implementing its plans to develop, what it believes, are the best projects available. Anaerobic digestion power generation plants are facilities that generate electricity from organic material. Organic materials used to power these plants include food waste, animal manure, farm waste and certain municipal waste. Food waste is the second largest category of waste sent to landfills in the U.S. This is over 35 million tons of food waste equaling over 18% of the total landfill waste stream in the U.S. This food waste is a potential supply of power that can be developed into a viable alternative supply of electricity. The political environment in the U.S. is ripe for the growth of the organics to energy market. 31 states have passed laws mandating “renewable portfolio standards” requiring local utilities to purchase or generate a certain portion of their electricity from renewable sources. New York and California have implemented mandates that will require up to 30% of the power used in the states to be generated by renewable sources. Blue Sphere’s systems not only generate power, but they have the ability to reduce the amount of waste being added to landfills, turning it into useful products, specifically energy and fertilizer. Blue Sphere is developing and acquiring two anaerobic digestion plants in the advanced planning stages. Blue Sphere, acting as project manager, has brought on world-class partners to develop and build these power generation facilities. Biogas Nord, AG, out of Germany, specializes in designing and building organics to energy plants. Biogas Nord has built over 400 plants in Europe, Africa and the Middle East. Biogas has partnered with Blue Sphere to build the U.S. plants through Bino Sphere, a joint venture between the two companies with Blue Sphere owning 75% and Biogas Nord owning 25%. The U.S. plants will be individual companies that are owned equally by investment partners and Bino Sphere. Blue Sphere’s first project is located in Charlotte, North Carolina. The Charlotte facility will have 5.2 mega watts (Mw) of generating capacity when completed. The project has long-term agreements for organic feedstock supply, a Power Purchase Agreement (PPA) with Duke Energy, the largest power holding company in the United States, to buy the electricity generated by the facility and an agreement with McGill Environmental Systems to purchase the compost. Blue Sphere is currently putting in place the financing and expects to have the ground breaking in the third quarter 2013. Blue Sphere’s second project, located in Johnston, Rhode Island, is a 3.2 Mw bio-waste to energy facility. Once again, the preliminary organic feedstock supply agreements are in place, as is the PPA with National Grid, one of the largest investor owned energy companies in the world based in London, England and the compost off-take agreement with McGill Environmental Systems. Blue Sphere expects to break ground on this project by the end of this year. Both facilities will generate multiple streams of revenues. The largest revenue stream will come from selling the generated electricity to the PPA partners, Duke Energy and National Grid. The second revenue generator is the “Tipping Fee,” which is a fee for accepting the waste streams and operating what can the company refers to as an “endless landfill.” After the organic waste is processed and the gas produced from this process is turned into heat and energy, what is left is compost, which the company will sell to fertilizer companies as a product additive. This is the beauty of the organics to energy facilities; waste goes in and energy, in the form of electricity, and fertilizer come out and both outputs are sold. This is a true clean energy production process that can be replicated many times in cities, towns, farms and ranches around the country. When the projects are complete, Blue Sphere will own 37.5% of both facilities and will be entitled to that percentage of the cash flow, as well as a management fee for managing each facility. Blue Sphere will also be entitled to receive its project development costs back at the time of the funding close. Blue Sphere expects to start receiving revenue in 2014 from the operations of these projects. Blue Sphere’s management is in the planning stage of additional facilities. They believe they can replicate the process over and over in a similar fashion, with the same partners, contractors, financiers and processes. With this approach Blue Sphere can become a leader in the growing organics to energy market over the next several years. Blue Sphere went public through a reverse merger in 2010 to participate in the carbon credit trading markets and to develop clean energy projects globally. The management quickly realized that the carbon credit market would not develop as expected and management shifted focus to renewable energy and organics. Management did not do much marketing of the company or its stock while they were refocusing their company on the clean energy project business. Blue Sphere’s primary focus is now on developing organics to energy facilities in the U.S. with their partners, although they do have some clean energy interests in West Africa with partners, as well. Due to the nature of the changing business focus, investors have not focused on the potential value that Blue Sphere is generating for shareholders and investors. These first two projects will generate substantial revenue for Blue Sphere, possibly over $1.5 million/year with large operating margins. As Blue Sphere adds additional projects the cash flow will give management the potential for higher project ownership levels, and allow management to pursue larger facilities. With this type of revenue, and strong profitability, Blue Sphere will not have a market cap of only $2.7 million for long. If Blue Sphere can get both of these facilities up and running on schedule next year it is feasible that investors could see a significant increase in the valuation of the company. Using the assumption that these two facilities could generate $1.5 million/year for 20 years the net-present value of Blue Sphere’s revenue, upon completion of just these two facilities, could be over $10 to 15 million. We will have to wait to see actual projections to conduct proper valuation analysis, but the basis for a strong company and a good investment are in place. Currently, Blue Sphere trades at about $0.003/share and has approximately 800 million shares outstanding, but management is committed to adjusting the capital structure to make it more conducive to investing. An example of adjusting the capital structure would be if management conducted a 1 for 100 reverse split, the stock price would be $0.30/share with 7.7 million shares outstanding, a structure that would benefit all shareholders. The investor risks to Blue Sphere are mostly project related. These projects are not small undertakings. Issues could arise in the financing, permitting, construction, organic feedstock collection and operations of these organics to energy facilities, potentially delaying progress. Investors should be aware of these risks to protect themselves and their investments. Management has worked on these transactions for several years and has been meticulous about the details, but things can go wrong in any large construction project. From where the company stands now, if it is able to launch the two current projects, and announce the upcoming projects, it is easy to believe that Blue Sphere could quickly have a valuation of $10 to 15 million. This would equate approximately $0.015 to $0.02/share, which is an increase of around 400 to 700% from current levels. The milestones investors should expect in the near-term are the announcements of a strong financing partner for the Charlotte project, the delivery of the funding for the Charlotte project, the ground breaking for the Charlotte project all in the next 3 months. The next round of milestones would be the same ones, but for the Johnston project in the 4 th quarter 2013. Blue Sphere expects to generate value for its shareholders quickly between now and the end of the year. Investors would be smart to conduct due diligence into Blue Sphere quickly as the company expects it will reach the first set of these milestones by the end of the current quarter. Once Blue Sphere begins performing on these expectations investor interest will rise in this potential market leader, and it will be time for interested investors to take their initial investment positions in Blue Sphere. Continue reading
Crop Crisis: Why Global Grain Demand Will Outstrip Supply
To meet global demand, grain production needs to double by 2050. It’s not going to make it. International Maize and Wheat Improvement Center Since the time of Malthus, humanity has worried whether there would be enough food to feed the growing population. Such fears were always overcome and doomsayers all proven wrong: there was always more land to grow our crops when existing croplands failed to deliver, and new ways to get more yield from old crops. Today our planet appears very finite, and the only places to expand agriculture are in our remnant natural grasslands and tropical forests. And the demand for more agricultural crops is relentless, due to not only our rising population, but more importantly, our rising prosperity. The expected 4 billion new members of the middle class who will join the rest of us by 2050 will likely demand more dairy and meat. These require an enormous amount of grains to produce. Add to these the demands biofuel places on agriculture, and we need to boost global agricultural production by 60% to 110% by 2050. To put this challenge in a time perspective, that kind of increase took our ancestors 10,000 years to achieve. So how are we doing? My research team recently published an analysis in PLOS ONE of the local to global scale performance of maize, rice, wheat and soybeans. These are the top four global crops, collectively responsible for nearly two-thirds of all agricultural calorie production. We found that current rates of productivity improvements are nowhere near the rates of productivity gains (2.4% per year) required for growing demand. Instead of the required doubling of crop production by 2050, at this rate the yield increase will be only 38% to 67%, with the problem more acute for rice and wheat. Australia, is the ninth largest global producer of wheat and a major exporter. Its wheat yields have declined at 0.7% per year. In fact, we observed negative yield trends in around 80% of Australia’s wheat cropland areas. Productivity was rising in only a few of the important wheat cropland areas: the South Eastern statistical division in New South Wales; Darling Downs in Queensland; Goulburn, Western district and Central Highlands in Victoria; south eastern region in Western Australia; and outer Adelaide, Murray Lands, and Eyre in South Australia. Even in these regions the rates of wheat productivity improvements were below the 2.4% rate required to double wheat production, except for south eastern region of New South Wales, where we estimated the rate to be 3.4% per year. Does this mean Australians won’t be able to feed themselves, much less feed others, with wheat? It seems very unlikely at only 0.7% per yearly declines. This decline however may worsen as Australian agriculture matures. Australian wheat yields are limited by lack of nutrients and of water, with the latter being a bigger factor as we reported in a paper published in Nature last year. In some areas of Australia wheat productivity was already at the maximum possible value. Looking beyond Australia, we found many countries where the gains in crop productivity are less than those required to keep pace with their population growth. In several countries – such as Guatemala and Kenya – productivity of maize, a significant source of daily dietary energy, is declining and population is growing. In Indonesia – the third largest rice-producing nation on Earth where rice provides about 49% of daily dietary energy – productivity gain is too low to keep pace with population growth. In India, China, Philippines and Nepal, productivity improvement rates in rice are just about enough to maintain per capita production at current levels. Although supply will not meet demand by 2050, all is not lost. We can close the demand–supply gap in one of many ways. We can invest more to boost crop productivity in the faltering regions that we identified. We can bring more of our remaining natural lands under production (but wheat alone would require 95 million additional hectares, more than the total area of New South Wales). We can reduce food waste, which already accounts for nearly half of global crop production (unfortunately, waste sometimes is difficult and expensive to reduce, as in developing nations where it occurs between farm and table due to lack of storage and transportation). Perhaps most controversially, we can change to more plant-based diets. Nobody really knows what members of the new middle class will choose to eat. History shows time and again that as people join the middle class, they look for more dairy and meat. But if they go against previous trends and decide to keep consumption of animal products low – if those of us already in the middle class reduce our meat consumption – we may all have enough to eat after all. 20 June 2013 Continue reading
Sustainable Agriculture — No Silver Bullets, But Maybe Some Silver Buckshot
by Elton Robinson in Farm Press Blog Agriculture’s future challenge is to provide enough food to feed 9 billion people by 2050. Environmental groups are sure to want more rules and regulations, but these rules cannot handcuff agriculture’s freedom to innovate, say experts. Producing enough food to feed 9 billion people by 2050 could be the biggest test sustainable agriculture has ever faced. The difficulty is balancing the preservation of natural resources with the technological development needed to meet these goals. To get it done, David Cleary, director of agriculture for The Nature Conservancy, says there must be collaboration between agriculture and environmentalism. During a panel discussion on sustainability at Monsanto’s Media Days, Cleary clearly understands that, well, we’re all in this together. “It is critical for the health of the world’s food system that the American agricultural system maintains yield and productivity gains over the past 40 years to 50 years,” Cleary said. “It’s also critical for the health of the world’s food system that the United States continues to play its historical role as the biggest center for technological innovation.” On the other hand, Cleary is unapologetic in blaming agriculture for not paying enough attention to the environment in the past. “Historically, yield and productivity gains have been bought at the expense of topsoil. You can extend that to water as well. The science is pretty unambiguous if you’re looking at hypoxia in the Gulf of Mexico, or algal blooms in the Great Lakes. There is an agricultural contribution to that. “Looking forward, I think there has to be some kind of grand bargain between agriculture and the environmental side of the equation. There’s a huge amount of devil in the detail. It’s not as though there is a single silver bullet. But there may be some silver buckshot. There are solutions out there that we can deploy.” Rick Tolman, chief executive officer, National Corn Growers Association, cited recent studies indicating that U.S. corn producers have discovered and implemented quite a few nuggets of agricultural sustainability over the last 30 years. “Since 1980, the land that it takes to produce one bushel of corn has declined by 30 percent, the soil loss per bushel has declined by 67 percent, the water used to irrigate a bushel of corn by 53 percent and the energy use to produce a bushel of corn has been reduced by 43 percent. “We have made continued improvement, we still have room to grow and improvement will continue. It’s been a great story of sustainability and it has been done scientifically,” Tolman said. The next 35 years will demand that agriculture continue to shrink its environmental footprint while doubling food production. Environmentalists are sure to want more rules and regulations. Agriculture – the freedom to be innovative. “We need to be very careful that we don’t take away the solutions to the problem,” Tolman said. “Some well-meaning proposals would take away some of the tools that have allowed farmers to intensify agriculture.” Hopefully, the twain shall meet in a reasonable place for everyone. Continue reading
