Friday, October 19, 2007

Imperium Signs Utility Scale Biodiesel Deal with a Hawaiian Utility

I was directed to this tidbit by the BiobasedNews....

If you haven't heard of Imperium Renewables they are the proud owner of the world's first 100 million gallon capacity biodiesel plant in Grays Harbor, Washington. Now they can chalk up another distinction. They are also the proud supplier of the world's largest single consumer of biodiesel in the world. The Hawaiian Electric Company.

Story Below:

HONOLULU - Hawaiian Electric Company filed an application Thursday with the Hawaii Public Utilities Commission for approval of a biodiesel supply contract for its new Campbell Industrial Park generating station.

The contract is the result of a competitive bidding process.
The biodiesel will be supplied on an exclusive basis by Imperium Renewables.

The contract will continue through the end of 2011 and provides that Imperium will supply Hawaiian Electric's total fuel requirements for the Campbell generating station, anticipated to be between 5 million and 12 million gallons of biodiesel per year.

I'm impressed. Not only impressed but I'm jealous. Friggin jealous in fact (I've totally been working on trying to get an energy project off the ground for years). I'll have to congratulate Imperium next time I run into them at a Northwest Biofuels Association even.

With what I assume is a five year biodiesel supply contract the only issue remaining is a long term palm contract to go with it. Being that palm production is expanding my guess is that they probably already have such a deal inked. Combine the safety of a contract for palm with a big off-take agreement with a utility, and the upcoming IPO expected to pull over $300 million in cash makes this looks like a home run.

They have cashflow, capacity, likely have feedstock from Palm growers, and now a guaranteed buyer for the fix cost portion of a spanking new Hawaiian plant. Looks good for them.
The only curve ball is the volatility of maintaining that large of quantities of through put. Allot could change very rapidly in relationship to their bid numbers (just a currency revaluation could really put a damper on the competitive price of palm).

As I heard when many first criticized the concept of Imperium's business model. Usually its not a good idea to bet against Martin Tobias.

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