Rob Stein: [00:00:25]
Hello. I’m Rob Stein, President of Skyline Clean Energy Fund. With about half of our revenue coming from our biogas assets, we thought we’d take this time today to dive a little deeper into that area of our business. Today, I have Deanna Martin, Director of Operations of both the Elmira and Lethbridge facilities, and Brent Boss, General Manager of our Biogas for Skyline Clean Energy Fund.
Rob Stein: [00:00:46]
Thanks for joining me today, guys.
Brent Boss: [00:00:47]
Thanks for having us.
Rob Stein: [00:00:48]
Awesome. Well, let’s jump right into this. With our biogas production, we take in organic, source separated organics into our facility. We process it into a usable fuel, and we sell that fuel to the grid, either through electricity or renewable natural gas. So today we have our experts here to really dive a little further into the technology and the biology behind what we do.
Rob Stein: [00:01:10]
So, Dee, can you briefly take us through the biogas process?
Deanna Martin: [00:01:14]
I’d be happy to, Rob. So, the biogas process is actually one of the oldest biological processes on the planet. We harness this process and optimize it using organic inputs and we break it down into its components, which is biogas. Essentially, it’s methane and carbon dioxide. And we can use those different streams for all kinds of beneficial use.
Rob Stein: [00:01:36]
Oh, really interesting. What type of organics do we receive, that really work really well in our facility to have the maximum benefit from that gas?
Deanna Martin: [00:01:43]
Yeah. So, as a general rule of thumb, when you’re looking at energy value in food, you think about it in terms of if you were to consume it, what would it do to your body? Would it give you a lot of energy? And if it does, it’s going to produce a lot of biogas. Our facility in Elmira is actually very unique because it specializes in depacking material. So, we’re exceptionally good at cleaning up dirty organic material, processing it, and retrieving value from it.
Rob Stein: [00:02:07]
So, Dee, what are the different ways a biogas facility can make a profit off the production of biogas?
Deanna Martin: [00:02:13]
So there’s two kind of primary streams of revenue for these facilities, the first obviously is its namesake, which is biogas. In Elmira, our facility uses this biogas to power combined heat and power units, so big generators that produce electricity. And we get a subsidized rate for that electricity because it’s green energy. The other output and the other possibility to use the biogas for it, which currently is in pretty hot demand, is renewable natural gas. So, we can purify it to line quality, inject it, and then sell it to some of the big gas off-takers.
Deanna Martin: [00:02:46]
Second is tipping fees. So, when this waste comes to our facilities, and particularly our facility where we specialize in depacking difficult to process material, we take a tipping fee for them to dump the material at our facility, at which point we process it and then move it into the biogas process.
Rob Stein: [00:03:03]
Dee, that’s really interesting. Obviously, we talk about our main revenue streams as being the tipping fees we receive from receiving the organics, and the second one is production of either gas, renewable natural gas or electricity. Are there any other ways we can monetize the off-put or any other ways we monetize, you know, environmental attributes or things like that in our process?
Deanna Martin: [00:03:25]
Absolutely. So there’s two other areas that we’re really putting focus on at this point. The first is our digestate, which is essentially the end product in the liquid phase of our process. In Elmira, it’s a registered fertilizer and in Lethbridge we use it as a fertilizer as well. And as of right now, we view it as an uncaptured market.
Deanna Martin: [00:03:44]
So, there is significant value in this material. So we’re trying to build demand for it in the local markets. So, the second is landfill diversion offset credits, which we can use, particularly in our Lethbridge facility, to supplement our income because we are producing green energy.
Rob Stein: [00:04:03]
Dee, that’s really interesting. I appreciate your providing more context for our unitholders on how our process works and how we monetize our process there. That’s great. We talk about energy trends in Canada and how our fund is situated to really maximize some of those benefits. So when we look at the expansion and rising demands for green clean energy, I’d like to understand really how you guys see our biogas assets fitting into the demand, the demand for new green clean energy in Canada.
Rob Stein: [00:04:30]
So, Brent, maybe you can take our first run at it. How do you see our biogas facilities fitting into the energy demand that’s happening in Canada?
Brent Boss: [00:04:37]
Right. So, the energy demand is largely driven around the world, for that matter, in energy security. So energy security has two fundamental principles; affordability and availability. In Canada here we have the ability to have abundant amounts of energy. It is increasingly getting more expensive. However, we have a third driver that our markets plan, and that is that of ESG concepts.
Brent Boss: [00:05:04]
So increasingly, governments, businesses, private sector businesses, and even residents for that matter, are accounting for the carbon that’s in their fuel. So, yes, we have a lot of fuel, but it is a dirtier fuel. And our biogas assets play an important role in providing clean and green energy locally and will serve to provide a lot of energy security for us locally as our markets and our government strategies change over the years.
Rob Stein: [00:05:31]
Amazing and does that fit into the way we contract our power through our feedstock and our off put contracts or how do you see we monetizing that? Is that through long term contracts?
Brent Boss: [00:05:41]
Yeah. So, we do develop long term contracts, as Dee was mentioning earlier, for renewable natural gas and or electricity. What we like to do is have flexibility in our contracts. The ability to produce things such as hydrogen, for that matter, is something that is new and novel. It’s maybe not there in the marketplace yet, but that’s what we’re looking forward to doing with our off-takers and our partners.
Brent Boss: [00:06:02]
And we’re working with flexible, flexible partners in that regard.
Rob Stein: [00:06:06]
So, flowing out of the last question, we were talking about how the Clean Energy Fund and our biogas facility is going to take part in Canada’s expansion through clean, green energy. So speaking about biogas projects in Canada, do you have any examples of other facilities being built similar to what we’re cultivating?
Brent Boss: [00:06:23]
At present, I would say that large-scale facilities in Canada, there really are no facilities that are actively being constructed. There are a small number of facilities that are in the permitting stage or concept stage, but many of the opportunities are just ideas at this point in time. Challenges surrounding feedstock contracts and feedstock security are really what’s holding up these projects.
Brent Boss: [00:06:45]
So, at Skyline Clean Energy Fund, we’re working with our partners, our strategic partners, to provide that feedstock security and develop what we do and what we do best, which is produce green and clean renewable energy sources.
Rob Stein: [00:06:57]
Awesome! And that’s what I really like what you guys are doing. You’re pairing our feedstock contracts, which is receiving our organic waste, or manure in Lethbridge’s case, on long term contracts. And that pair really, really well with our long term off-put contracts. So, sizing those two things and making sure that they’re coterminous is really, really important to the success of our business.
Rob Stein: [00:07:18]
And you guys are doing a great job on that.
Brent Boss: [00:07:20]
Rob Stein: [00:07:21]
So, before we wrap it up, I have one more question that we get asked all the time of. We have a full pipeline, we have lots of opportunities and we’re really excited about a lot of the biogas space and where this industry is going. And I often have to answer where I think this market’s going.
Rob Stein: [00:07:36]
So, I really just wanted to ask both for your opinion of, you know, the next five years, ten years, what are you most excited about for the assets that we’re developing into partnerships, for the clean energy for the benefit of our unitholders? Can you name one or two things that you guys think either through optimizing our assets or a new construction builds?
Rob Stein: [00:07:55]
What do you most excited about for the Clean Energy Fund that you think is going to add real value for our unitholders.
Deanna Martin: [00:08:01]
At this moment in time, in Ontario especially, there’s a significant lack of organics processing capacity and I’m looking forward to filling that niche.
Rob Stein: [00:08:10]
And you’re doing that, and we’re doing that in our Elmira expansion.
Deanna Martin: [00:08:14]
Rob Stein: [00:08:15]
We’re going to almost double the size of Elmira, take it from about 70,000, 80,000 tonnes of processing capacity to 160,000 tons. What’s the timeline look like for that?
Deanna Martin: [00:08:23]
The timeline, I would expect, should we get everything properly approved with the ministry that we should be commissioning by 2025?
Rob Stein: [00:08:32]
Deanna Martin: [00:08:32]
I want to say I don’t know, is that too ambitious.
Rob Stein: [00:08:35]
About two, two and a half years? And what’s the capital spend?
Deanna Martin: [00:08:38]
Capital spend, I’m going to estimate at this point, and we’re in the process of refining it to present, but around 50 million.
Rob Stein: [00:08:45]
Awesome. So we going to hit a need that’s in Ontario, which there’s not enough organic processing capacity, we’re going to deploy $50 million through the fund of new opportunity, it’s an existing facility, so we keep our operations going while this construction is happening and it’s going to be a great return for our unitholders. Awesome! Brent, same question to you.
Rob Stein: [00:09:05]
You know, you, knowing our pipeline, knowing some opportunities that exist in Canada, what are you most excited about for the Clean Energy Fund?
Brent Boss: [00:09:11]
Yeah, I am the most excited about our ability to both grow through acquisition and through greenfield development. We have a number of opportunities in the pipeline. We’re looking at bringing on in excess of a million gigajoules of new renewable natural gas production or electricity production or hydrogen production. Really, the sky’s the limit with what we can do on this.
Brent Boss: [00:09:34]
This is just in the next five years that we’re hoping to bring this capacity on. We’re updating, as you mentioned, our current assets in Elmira. We’re also putting in a depackaging line in Lethbridge. We’re investing in facilities that we already own. We have the capacity to expand that facility as well. So we’re, we really have the ability to capture and be a significant player in this market, not just in Canada, but even more broad than that.
Brent Boss: [00:09:58]
And it’s the sky’s the limit really with what we can do going forward.
Rob Stein: [00:10:02]
Oh, I really appreciate your guys’ time Today. That’s great insight. As you can see, our investors, we have a lot of things we’re excited about. Our pipeline is full. We’re raising money as we speak right now to fuel these type of expansions through organic growth, through facilities we already own, and putting money into new infrastructure that is critical to Canada’s expansion and the need in Ontario that we have right now.
Rob Stein: [00:10:23]
So, we continue to need your support and appreciate your support through growing this fund, through growing great assets like this. And we take a lot of pride in investing your money into the green, clean space and the expansion that’s happening in Canada. So, thank you for that. And we are open for investment right now. If you have any questions about investing with Skyline, Clean Energy Fund, or like to learn more about our business, reach out to Skyline Wealth Advisors and we can connect you to the right people.
Rob Stein: [00:10:47]
Thank you for watching.