CHOREN Biomass GmbH

CommercializationCommercializationof short rotation coppice

in Germany

Biocombustibles y su futuro en la matriz energética

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Michael Deutmeyer • general manager CHOREN Biomass Santiago de Chile, 5th of November 2009

CHOREN Fact Sheet

Privately owned gasification technology provider founded in 1990

Carbon, Hydrogen, Oxygen, RENewable, y g , yg ,Founded in 1990 by Dr. Bodo Wolf as former head of the DBIUnique know-how in coal and biomass gasificationgasification2003: 1st continuous non laboratory BTL production2009: 1st commercial scale BTL Founder Bodo Wolf

productionPrivate company (Shell, Daimler and Volkswagen as equity and strategic partners)partners)Based in Freiberg (Germany) with offices in Hamburg, Beijing, HoustonCapital employed > 200m €

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Approx. 300 employees

Gasification Application Overview

+ Industry Partners

CHOREN technology is the core for a broad universe of utilizations

Feedstock Prep and Handling

FT-Products (e.g. BtL)

Product Conversion

Technologies

Entrained Flow

Biomass

Waste

Methanol

Ethylene

Propylene

Acetic Acid

GasificationCarbo-V® and

CCG

Gas Cleanup

Coal

Waste

Ethanol

H2

Ammonia

DME

Utility Integration

Pet coke/ Residuals

Ethanol

Urea

SNG

Power / Steam

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Development stages at CHOREN

CHOREN Industries

Scaleup * 45 (one line)

Pilot plant withair gasifier

Alpha 1 MW O2

Beta: 15 ktpaBETA Freiberg

First commercial BTL plant45 MW

15 MW air30 MW O2

45 MW O2 HTV5

BTL Sigma: 200 ktpa

Scaleup * 4 (multiple lines)

Sigma plant 640 MW4 parallel gasifiers á 160 MW Operation

Execution

Scouting

FID

FED 1- 3

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1990 1995 2000 2005 2010 20154 parallel gasifiers á 160 MW Operation

Beta plant in Freiberg (Saxony/Germany)

World first commercial BtL facility

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45 MW thermal 65,000 t/a feedstock 18m l/a BtL

Proposed Sigma BtL plant in Schwedt

Envisaged capacity 200k t BTL per year (~ 5,000 BOPD)

4 parallel trainsScale-up x 4640 MWthAnn al feedstockAnnual feedstock requirement approx. 1m bdt biomassCapex volume

1b €

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> 1bn €

Biomass feedstock selection

Broad portfolio of potential feedstock material

Category I Category II Category III

• Timber/P&P IndustryWoodchips

• Energy Crop Plantations• Saw Mill Residues

• Forest Residues• Construction &

Demolition Timber• Agricultural Residues • Sludge

• MSW

• Waste Streams

g

RDF

I i L i ti Ch ll D i P liti l Ch ll

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Increasing Logistics Challenges Decreasing Political Challenges

Feedstock source supply curve 2012

Short rotation coppice one of the best biomass options

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EU-Targets for heat, electricity and fuels

Share of biomass from - 4.1% in 2004 to 12-14% in 2020

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Source: Biomass: a cornerstone in the strategy against climate change (Sept. 2007), European Biomass Association

Development plan for SRC

Temporary status of SRC strategy for BTL facility at Schwedt siteYear Area (ha) Average yield in bdt/ha/a in year

of establishment Yield in bdtof establishment1 500 10 02 3.000 11 03 4.000 12 04 5.000 12 15.0003 years 4 5.000 12 15.0005 6.000 13 99.0006 7.000 13 144.0007 6.000 14 195.0008 4.000 14 333.000

rotation periode

9 1.500 15 417.00010 1.000 15 447.00011 1.000 15 501.00012 1.000 16 484.50013 0 16 492.00014 0 17 546.00015 0 17 532.50016 0 17 482.00017 0 17 546 000

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17 0 17 546.000Summe 40.000

Schwedt BTL plant – SRC Supply (FNR scenario)

Bi d d f BTL l t 1 Mi bdt/

Theoretical biomass catchment area for 1m bdt ∑-BTL plant (100% SRC)

Biomass demand of BTL plant: 1 Mio. bdt/a

Demanded area:SRC yield: Ø 12 bdt/ha/a83 300 h

9 bdt/ha/a 12 bdt/ha/a

= 83,300 ha

SRC yield: Ø bdt/ha/a = 111,100 ha

Assumptions:1/3 of land area = crop land20% of crop land is used for SRC

Radius of catchment area:

At Ø 9 bdt/ha/a ⇒ Radius: 72.9 km

At Ø 12 bdt/ha/a ⇒ Radius: 63.1 km

11Courtesy of Dr. Gotschau - FNR

(1.67 million ha land area) (1.25 million ha land area)

The CHOREN SRC Team

Michael Weitz – Head of Project Development• Dipl.-Ing. Agr. – specialized in energetic use of biomass

• Development of feedstock strategy for the CHOREN group

• Implementation of European SRC cooperation network over past 4 years

Rainer Schlepphorst – SRC Expert• M.Sc. Plant Sciences

• 3 years SRC experience as project coordinator at the University of Applied 3 yea s S C e pe e ce as p oject coo d ato at t e U e s ty o pp edSciences in Eberswalde

Holger Hartmann – SRC ExpertHolger Hartmann SRC Expert• Dipl.-Ing. Forestry Management – specialized in SRC

• 3 years SRC experience as member and coordinator of SRC research projects

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OPTFUEL Project

SRC activities funded under the 7th EU framework programm

Planned large scale BTL plantg p

Assumed realistic SRC biomass catchment area

200 ha SRC demonstration fields in Germany and PolandFocused on target region of first large scale BTL plant and cooperation willingness of individual farmersp g1st 100 ha are successfully established

Innovation of CHORENs 200 ha project:Testing and demonstration of different varieties, clones and innovative planting and management methods to achieve optimized production cost per ton of dmEstablishment of economical scale, high yielding SRC plantations together with farmers in target region to be used as demonstration fields

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g g

Climate Specific SRC Differences

Cartography by ECBREC

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Cartography by ECBRECResults of EU 6th Framework„RENEW“ Project

Automated cutting / planting

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Planting of cuttings

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Planting of rods

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Mechanical weed control

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Harvesting technology

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Fields in Brandenburg 2008

20 ha in Schwedt (4 fields)

22 different willow and poplar clones

3 different planting methods

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Poplars after 3,5 month

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Willow after 3,5 month

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Plantations in BrandenburgPopplars – 5 month old

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Plantations in BrandenburgWillow – 5 month old

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BrandenburgWillow – 14 months old

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Brandenburg (June 2009) Popplars – 14 months old

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Northern Italy (left: 1 year old, right: 2 years old)

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Profitability of SRC

From a land owners point of view (no land lease and EU-subsidies)

Basis Optimization 1 Optimization 2 Optimization 3Gi P i d 20 20 20 20Given Periode 20 20 20 20Interest rate 6% 6% 6% 6%Cost of establishment (€/ha) 2.500 2.000 1.800 1.500Grant in % 25% 25% 25% 25%Own investment in plantation (€/ha) 1 875 1 500 1 350 1 125Own investment in plantation (€/ha) 1.875 1.500 1.350 1.125Annuity (€/a) -163 -131 -118 -98 Cost for recultivation (€) 1.000 1.000 1.000 1.000Discount present value for recultivation (€) 417 417 417 417Annuity for recultivation (€/a) -36 -36 -36 -36 Yield (bdt/ha/a) 10 12 14 15Cost for harvesting (€/bdt) -18 -16 -15 -14 Plantation managment (€/a) -80 -70 -70 -60 Fertilizer (€/bdt of wood chips) -5 -4 -3 -3 P i t fi ld id (€/bdt) 70 70 70 70Price at field side (€/bdt) 70 70 70 70Other expenses (€/ha) -70 -70 -70 -70 Land lease (€/ha/a) 0 0 0 0EU-allowance (€/ha/a) 0 0 0 0Profit (EBT) (€/bdt) 12 24 31 35

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Profit (EBT) (€/bdt) 12 24 31 35Profit (EBT) (€/ha/a) 120 293 434 531

Profitablitiy of annual agricultural crops

From a land owners point of view (no land lease and EU-subsidies)

Wheat 1 Wheat 2 Rape seed Mais for Biogas

without ensilingYi ld (t/ ) 6 5 6 5 4 0 40 0Yield (t/a) 6,5 6,5 4,0 40,0Revenues (net) (€/t) 140 200 300 30Revenues (net) (€/ha) 910 1300 1200 1200Cost for seed stock (€/ha) -65 -65 -45 -190 Chemical plant protection (€/ha) -120 -120 -130 -65 V i bl h i ti t (€/h ) 150 150 150 120Variable mechanisation costs (€/ha) -150 -150 -150 -120 Harvest (by contractor) (€/ha) -100 -100 -100 -240 Distribution of digestate (€/ha) -150 Fertilizers (€/ha) -180 -180 -170 -90 Hail insurance (€/ha) -25 -25 -60 -25 D i (€/h ) 30 30 30 0Drying (€/ha) -30 -30 -30 0Variable costs (€/ha) -670 -670 -685 -880 Labour costs (€/ha) -60 -60 -60 -60 Fixed mechanisation cost (€/ha) -150 -150 -150 -150 Fixed facility costs (€/ha) -25 -25 -25 -25 Oth t (€/h ) 70 70 70 70Other costs (€/ha) -70 -70 -70 -70 Fixed costs (€/ha) -245 -245 -245 -245 Land lease costs (€/ha/a) 0 0 0 0EU-allowance (€/ha) 0 0 0 0Profit (EBT) (€/t) -10 50 53 0

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Profit (EBT) (€/ha) -65 325 210 15

Cooperation with innovative farming companies

In order to develop know how pockets and increase land availability

Assessment of land it bilit f h t t tisuitability for short rotation

plantationsDevelopment of SRC concept and profitabilityconcept and profitability calculationsCoordination of plantation establishment and plantation management and harvestingMarketing of energy wood chips

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RWE started first investments in SRC

First German power company to get vertically integrated

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SRC needs project development

Fully integrated business models are needed for commercialization

- Planting material - Steady increase in EU biomass demand by:P ll l CHP i h- Equipment and machinery for:

Planting, weed and pest control, harvesting- Specialists / specific know-how

- Pellet plants, CHP stations, others- Long term contract possible- Little know-how / no time for SRC

SRC Fundamentals Demand

Integrator

Finance Land owner

(Project developer)

- Funding for SRC projects(equity, debt, grants)

- Insurance

- Generally interested in new markets- Lack of now-how - Risk averse / lack of equity

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- Cultural barrier to plant trees on crop land

Summary

Commercialization of short rotation coppice in Germany is immanent

A f SRC t bli h t i i iArea of SRC establishment is increasingTechnology for planting and harvesting exists but room for improvementEfficient and sufficient plant material for willow and poplar already availableSubsidies for establishment costs are developing, specialized p g, pbanks show supportIncreasing number of SRC service companies developing

However, land availability and project development biggest bottleneck at the moment

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Thank you for your attention

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Disclaimer

The document is incomplete without reference to and should be viewedThe document is incomplete without reference to, and should be viewed solely in conjunction with the oral briefing provided by CHOREN.

Certain statements that are included in this presentation are forward-l ki i t Th i t d i k d t i ti i h tlooking in nature. There are associated risks and uncertainties inherent in such statements and actual results may differ materially from those expressed or implied by the forward-looking statements.

CHOREN doesn’t assume any liability for those statements. There is no requirement or obligation for CHOREN to update these forward looking statements.

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