February 2, 2023 -- InvestorsHub NewsWire --
via NetworkNewsWire Editorial Coverage: It may seem hard
to believe, but the first solar panels were readily available to
homeowners who could afford them in the early 1980’s. Back then,
the U.S. government was providing incentives to try and encourage
consumer adoption. That focus on sustainability has continued — and
grown. Most recently, renewable natural gas (“RNG”), a carbon
neutral alternative to traditional natural gas derived from organic
waste, has been gaining substantial momentum. The honor for the
first RNG facility in North America goes to EverGen
Infrastructure Corp. (TSX.V: EVGN)
(OTCQX: EVGIF)
(Profile), which opened its first facility in
British Columbia, Canada, more than a decade ago. Whether investors
are interested in solar, RNG, wind, green hydrogen or any other
type of renewable energy that can reduce reliance on fossil fuels,
now is a time to be excited. In part, that enthusiasm can be
directly tied to the recent passage of the Inflation Reduction Act
(“IRA”), which earmarked $369 billion for infrastructure and
incentives to accelerate the use of renewable energies in a bid to
combat climate change. That’s big news for companies such as
EverGen, Brookfield Renewable Partners
L.P. (NYSE:
BEP), Clean Energy Fuels
Corp. (NASDAQ:
CLNE), Aemetis
Inc. (NASDAQ:
AMTX), Enphase Energy
Inc. (NASDAQ:
ENPH), and others emerging as stewards to
slashing carbon emissions with innovation.
- If the world is going to reach
net zero carbon emissions in the next 27 years, it is going to take
about $100 trillion in capital investment.
- EverGen Infrastructure is a
pioneer in the renewable gas industry, owning and operating the
continent’s first grid-connected RNG facility with a growing
portfolio of RNG projects.
- At EVGN’s three flagship
facilities in British Columbia, expansion plans will boost
production to 480,000 gigajoules of energy per year, with broader
potential for the company to reach 8 million gigajoules in coming
years.
- EverGen expects 2023 to be
financially transformational as it continues on its growth path to
adjusted EBITDA rising to $13 million for its core portfolio, which
equates to a highly attractive EV/EBITDA ratio compared to industry
peers.
Click here to view the custom infographic of
the EverGen Infrastructure
Corp. editorial.
The Greatest Commercial Opportunity of Our
Age
It took some wrangling to get the IRA through Congress, sealing
the deal for President Joseph Biden’s landmark legislation that
cemented his legacy as the most proactive president on the matter
of climate action. The IRA is the largest
investment ever by the U.S. government in renewable energies,
designating $369 billion to support renewable energies.
If the world is going to meet its carbon-reduction targets, BNY
Melon estimates that about $100 trillion in investments is
necessary to eliminate the 30 billion tons of carbon emissions
which are currently released to achieve net zero by 2050. On its
face, that figure may seem unobtainable, but a closer look shows it
is not out of the realm of possibility.
Presently, more than $1 trillion is invested annually in clean
energy as part of an estimated $20 trillion in in global fixed
capital investments made each year. The International Energy
Agency, whose estimates are aligned with BNY Melon, says green
energy investments will need to climb to $4 trillion per annum,
which is possible now that the massive government incentives are
starting to take effect.
Mark Carney, the former Bank of England Governor,
shared his
opinion on what the push for green energy means on full
display, calling it the “greatest commercial opportunity of our
age.” Carney, like most other experts, foresees capital pouring
into the renewable energy market as the transition away from finite
fossil fuels gains steam. The capital flow will lend to pricing
certainty for project and likely trigger additional merger and
acquisition activity in the RNG sector. Several high-profile
buyouts already occurred pre-IRA, including BlackRock buying
Vanguard Renewables for $700 million, BP acquiring Archaea Energy
for $4.1 billion and Shell paying $2 billion for Nature Energy
Biogas.
RNG is a renewable clean energy produced from decomposing
organic matter, such as wastewater, food waste, agriculture waste,
etc. It is pipeline-quality refined biogas that is
indistinguishable from and completely interchangeable with
conventional natural gas extracted from the earth through drilling.
RNG is a win-win considering it takes waste that typically is
expensive and pollutive to dispose of and turns it into useful
products that can power cars, create electricity, be used in
fertilizers and much more.
EverGen Infrastructure Corp. (TSX.V: EVGN)
(OTCQX:
EVGIF) is at the epicenter of the shift to
renewables. The Vancouver-based company owns and operates a
portfolio of biogas and RNG projects across Canada. After acquiring
the first Canadian RNG plant in its home province to add to its
portfolio of two other facilities in British Columbia, the company
started expanding east. EverGen’s BC assets include Fraser Valley
Biogas (“FVB”), which has been producing RNG since 2011; Net Zero
Waste Abbotsford; and Sea to Sky Soils. During 2022, EverGen
widened its Canadian footprint with investments to establish a 67%
stake in GrowTEC in Alberta and 50% ownership in a large joint
venture consisting of three high-quality, on-farm RNG projects in
Ontario dubbed Project Radius.
While capitalizing on a number of strong decarbonization
efforts, EverGen is also providing a solution to one of Canada’s
municipalities biggest greenhouse gas (“GHG”) emitting sources:
organic waste. Productive organic waste disposal is a tremendous
opportunity for EverGen, with roughly 73% of the country’s organic
waste ending up in landfills where it rots and releases GHGs. As
such, corporations, governments and utilities are supporting
EverGen’s expansion through low-risk, long-term, off-take
agreements to purchase RNG produced at EverGen facilities while
effectively working toward carbon targets.
At EverGen facilities, organic waste is used as feedstock,
entering an anaerobic digester, which is an oxygen-less tank where
microbes break down organic matter into biogas and digestate.
Digestate is recovered as useful farm products, including soil
amendments, fertilizer and animal bedding, while the biogas is
refined into RNG and piped into existing natural gas pipelines of
EverGen off-take partners. EverGen is likely never going to need to
look for any alternative feedstock considering 19,000-plus large
farms and dairies in North America generate more than 144 million
metric tons of waste every year.
The Name Brand and Growing
EverGen’s flagship projects in BC are cornerstones for a growing
franchise. FVB uses blended feedstock from agricultural and
commercial organic waste. FVB’s current capacity sits at 50,000
tonnes of feedstock per annum generating about 80,000 gigajoules of
energy. Expansion is underway to increase capacity to 100,000
tonnes per year for 160,000 gigajoules output.
Net Zero Waste Abbotsford (“NZWA”) is EverGen’s
organics-processing facility using a combination of agricultural,
municipal and commercial organic waste as feedstock. Current
capacity is 40,000 tonnes per year, which is being expanded to
135,000 tonnes. The renovation includes construction of an
anaerobic digester and boosting capacity to produce RNG equal to
180,000 gigajoules of energy. For reference, one gigajoule is
equivalent to approximately 277 kilowatt-hours of electricity. As a
fuel, it is equal to 26 liters of gasoline.
FortisBC, a unit of NYSE- and TSX-listed utility giant Fortis
Inc., has a 20-year offtake agreement for the RNG produced at NZWA.
Finally, the Sea to Sky Soils is an organics processing facility
the processes up to 40,000 metric tons of municipal and
agricultural waste every year. Expansion plans will increase that
to 60,000 tonnes.
With a firm grasp on the BC markets, EverGen made two
significant investments to capitalize on opportunities nationwide.
The company holds a two-thirds interest in GrowTEC, a multifaceted
bioenergy venture of sustainable agriculture near Lethbridge,
Alberta. GrowTEC’s facility produces biogas via an anaerobic
digester presently. The system is being upgraded to further process
the biogas into RNG, with an agreement already in place pursuant to
which Fortis is buying the RNG where it will be tied into the local
pipeline.
When the expansion is completed at the three B.C. facilities,
EverGen operations will generate about 480,000 gigajoules of energy
combined. That translates to 133 million kilowatt-hours of
electricity and a formidable revenue stream with RNG commanding
more than $60 per gigajoule. As for practicality, the RNG output
would provide enough clean electricity for more than 12,500 homes
based upon stats from the Energy Information Administration
indicating an average American home consumes 10,632 kilowatt-hours
of electricity per year.
While impressive on its own, the JV in Ontario with 50-50
partner Northeast Renewables LP has the potential for multiple-fold
growth while serving as a model for EverGen as an aggregator of
projects into clusters. Project Radius is three
late-development-stage agricultural RNG projects. Each of the
projects is theorized to generated about 550,000 gigajoules of RNG
per year. EverGen is expected to make a final investment decision
on the project this year with construction planned for 2023 and
2024.
Executing on this strategy, EverGen will have RNG production in
excess of 2 million gigajoules in its portfolio, with the potential
to expand that to 8 million gigajoules as the company makes
decisions on the more than 25 projects it is evaluating for its
pipeline. The company has a diverse group of projects to pick from,
including some that were started and abandoned that are looking for
a suitor to acquire at discounted prices. These are ideal
candidates for EverGen, which has access to capital and the
technical expertise to revive and optimize regardless of
condition.
Improving Earnings
EverGen’s last quarterly report covered the three-month and
nine-month periods ended Sept. 30, 2022. Adjusted EBITDA (earnings
before interest, taxes, depreciation and amortization) for the year
to date was $1.7 million, which is in line with management’s
guidance to exit 2022 with EBITDA about $2.0 million. Looking
ahead, EverGen’s
presentation indicates intentions to grow EBITDA to $13
million from its fully funded three core expansion projects.
The presentation is informative as to the importance of its
EBITDA estimate as it relates to industry valuations. EverGen’s RNG
peers are trading at a multiple of 13 times enterprise value to
EBITDA. Looking at its guidance, EverGen is trading at a notable
discount (~3 times) compared to peers despite its current
operations and funded growth pipeline.
Major Utilities Want EverGen’s RNG
The U.S. government committing $369 billion to catalyze
investments in renewable energy has utilities highly motivated to
capitalize on this once-in-a-generation opportunity. Renewables
constitute less than 1% of the gas market in North America, a
paltry figure that speaks to the incredible upside. A real-world
example of the desire to move quickly at all levels is Oregon’s
legislation SB98 calling for a volumetric goal of 30% RNG by
2030. Utilities are setting aggressive targets for themselves
too, such as EverGen partner FortisBC aiming for 15% of its volume
to come from RNG by 2030.
Quebec-based Energir has a similar target, while American peers
NW Natural and Vermont Gas are shepherding change in the United
States. In a nutshell, the self-imposed mandates by governments and
companies throughout North America to make the logical shift away
from conventional natural gas to Earth-friendly RNG puts EverGen in
an optimal position to thrive.
Incredible Headroom for Growth
A look at the oil E&P (exploration and production) market is
mind numbing regarding size. Rested
Energy estimates the industry generated a stunning $2.47
trillion in revenues globally in 2019. Almost all of that revenue
comes from crude oil, coal, and natural gas, with renewable energy
sources such as solar, wind, RNG and other zero carbon energies
only accounting
for approximately 12.4% of total U.S. energy consumption
in 2021.
Brookfield Renewable Partners
L.P. (NYSE:
BEP) is a portfolio asset of Brookfield
Renewable, the operator of one of the world’s largest publicly
traded, pure-play renewable power platforms. Brookfield’s portfolio
consists of hydroelectric, wind, solar and storage facilities in
North America, South America, Europe and Asia. In December,
California Bioenergy LLC announced a funding partnership,
of up to $500 million, with Brookfield Renewable and its
institutional partners to scale CalBio’s growth in RNG and other
waste-to-energy opportunities.
Clean Energy Fuels
Corp. (NASDAQ:
CLNE) is the U.S.’s largest provider of the
cleanest fuel for the transportation market. The California-based
company’s mission is to decarbonize transportation through the
development and delivery of RGN. Clean Energy allows thousands of
vehicles, from airport shuttles to city buses to waste and
heavy-duty trucks, to reduce their levels of climate-harming
greenhouse gas, operating a vast network of fueling stations across
the U.S. and Canada. This month, Clean Energy was awarded a
contract by San Diego Metropolitan Transit System to
provide an expected 86 million gallons of RNG to operate its bus
fleet.
Aemetis Inc. (NASDAQ:
AMTX) is an RNG, renewable fuel and biochemicals
company focused on the acquisition, development and
commercialization of innovative technologies that replace
petroleum-based products and reduce greenhouse gas
emissions. Aemetis has launched the Carbon Zero production
process to decarbonize the transportation sector using today’s
infrastructure. Aemetis Carbon Zero products include zero-carbon
fuels that can “drop-in” to be used in airplanes, truck, and ship
fleets.
Enphase Energy
Inc. (NASDAQ:
ENPH) is the world’s leading supplier of
microinverter-based solar and battery systems that enable people to
harness the sun to make, use, save and sell their own power—and
control it all with a smart mobile app. The company revolutionized
the solar industry with its microinverter-based technology and
builds all-in-one solar, battery, and software
solutions. Enphase has
shipped more than 52 million microinverters, and more than
2.7 million Enphase-based systems have been deployed in more than
145 countries.
The carbon fuse is running short, and it is only a matter of
time before something has to give. Governments and corporations
know it and are moving with a purpose to make changes before it is
too late. Luckily for investors, these aggressive actions are
providing growth opportunities that may never be seen again in the
energy space.
For more information about EverGen Infrastructure Corp., please
visit EverGen
Infrastructure Corp.
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