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Active Energy enters agreement with Lumino for CoalSwitch roll-out in SEA

Active Energy Group Plc (AEG), a UK-headed renewable energy, forestry management and timber processing business has announced that its affiliate company, Advanced Biomass Solutions Plc (ABS) has entered into an agreement with California-based Lumino Capital LLC (Lumino) for the financing, development, and operation of eight CoalSwitch advanced biomass pellet plants across South East Asia.

Active Energy Group (AEG), has announced that its affiliate company, Advanced Biomass Solutions (ABS) has entered into an agreement with Lumino Capital (Lumino) for the financing, development, and operation of eight CoalSwitch advanced biomass pellet plants across South East Asia. Using a proprietary steam explosion based process, the plan is to convert low-value woody biomass into a high-value advanced biomass pellet fuel for coal-fired power plants in Japan and South Korea.

According to a statement, under the terms of the non-exclusive Agreement, ABS and Lumino, a subsidiary of global financial institution Solariant Capital LLC, will cooperate with each other regarding the financing, development, and operation of each CoalSwitch plant. Each plant will be housed in a new legal entity and capitalised primarily by equity investments and debt financing from Lumino and a consortium of undisclosed financial institutions Lumino has been working closely with.

ABS will enter into a Construction Management and Services Agreement with each New Legal Entity and will be responsible for the construction and ongoing operations, the management and the maintenance of the CoalSwitch plants. Lumino will enter into a Management Services Agreement with each New Legal Entity, under which it shall provide sales, financial management and administrative services for each plant.

Construction of the first CoalSwitch plants is targeted for the first half of 2018. Each plant is to have a production capacity of between 20 to 30-tonnes per hour with a total annual production of all eight plants estimated to be in the region of 1.5 million tonnes.

We believe that CoalSwitch is a game-changing biomass product that has the potential to transform the energy sector.  We have been involved in the renewable energy sector for years, developing, constructing and financing renewable energy power plants and pellet mills across Asia. We see this Agreement as a terrific opportunity that works to our strengths and leverages our position and contact base. I am looking forward to working with ABS and being a part of the forthcoming commercial roll-out of CoalSwitch, said Daniel Kim, Managing Director, Lumino Capital.

Steam exploded with pre- and post-treatment

According to AEG, an essential difference between its proprietary processes and other biomass “beneficiation” methods is the pre-treatment and post-treatment processes that together with its steam explosion process effectively removes most of the soluble mineral contaminants.

This enables the use of very low-value, but plentiful feedstock and by leveraging these waste streams, AEG says that it is able to lower its production costs but still produce “top shelf” products that command a substantial premium over other biomass-derived products.

We believe this is a transformational agreement for both Active Energy and ABS. Lumino is a fantastic partner with immense experience within the renewable energy sector. Together, we intend to create a vertically integrated model encompassing the key components needed for the successful commercial roll-out of CoalSwitch. Lumino will utilise its network of finance providers, as well as source both woody biomass and long-term offtake agreements, whilst ABS will supply the technology and plant construction. The Agreement underpins the product’s immense potential as a biomass fuel of the future and we look forward to building a partnership that will dramatically increase the global reach of CoalSwitch, said Brian Evans-Jones, Director of Active Energy and ABS.

Feedstock and off-takes in place

Lumino and its affiliates will also supply woody biomass feedstock that will be used in the plants and processed into CoalSwitch advanced biomass pellets. Lumino has executed Agreements in Principal for two plantation sites in the Philippines totaling 20 000 ha.

In addition, Lumino will also source long-term off-take agreements with entities in Japan and South Korea. This including two 50 MWe biomass power plants currently under development by its parent, Solariant Capital in Aichi and Ibaraki Prefectures in Japan respectively. Both the Tahara City Biomass Plant and the Kamisu City Biomass Plant projects have received METI and utility interconnection approvals.

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