January 31, 2023 -- InvestorsHub NewsWire --
via NetworkNewsWire Editorial Coverage: The market for
renewable energy enjoys considerable tailwinds due to growing
concerns about climate change, energy security and global
initiatives to reign in carbon emissions. The tailwinds turned into
a tempest late in 2022 when the Inflation Reduction Act (“IRA”) was
signed into law. The IRA is the largest
investment ever by the U.S. government in renewable energies,
earmarking $369 billion to accelerate efforts to reduce dependence
on fossil fuels. According to some experts,
the IRA is expected to more than triple America’s clean-energy
production by 2030, resulting in about 40% of the nation’s energy
coming from sources such as wind, solar and renewable natural gas
(“RNG”). For this to happen, about 550 gigawatts of new energy
supply from green sources will come online over the next seven
years. Against the backdrop of this generational
opportunity, EverGen Infrastructure Corp. (TSX.V:
EVGN) (OTCQX: EVGIF) (Profile), a specialist in RNG, has positioned
itself as an emerging leader in the booming renewables sector.
Others in the space that are recognized as leaders include oil
juggernaut BP
plc (NYSE: BP), utility Fortis Inc. (NYSE: FTS),
cleantech 347Water Inc. (NASDAQ:
SCWO) and Anaergia Inc. (TSX: ANRG).
- To achieve net-zero carbon
emissions by 2050, it is estimated that $100 trillion in capital
investment is necessary, creating unprecedented upside for
innovators.
- EverGen Infrastructure, which
owns and operates the first grid-connected renewable natural gas
facility in North America that has been producing RNG for more than
a decade, has a growing portfolio of projects.
- Expansion at EVGN’s three
flagship facilities will result in the generation of ~480,000
gigajoules of energy annually.
- The company expects to
significantly grow its Adjusted EBITDA to $13M from its core
portfolio versus ~$3M in existing adjusted EBITDA, placing it at an
attractive EV/EBITDA ratio compared to peers.
Click here to view the custom infographic of
the EverGen Infrastructure
Corp. editorial.
The Global Green-Energy Transformation
According to a BNY Melon study, it will take investments of
approximately $100 trillion to reduce the current 30 billion tons
of carbon emissions to reach net zero by 2050, a figure that
closely mirrors estimates from the International Energy Agency
(“IEA”). While that figure may seem astronomical, it actually is
not out of line with global fixed capital investments every year,
which currently run around $20
trillion. More than $1 trillion annually is already being
invested in clean energy pre-IRA, a figure the IEA says needs to
rise to $4 trillion.
Former Bank of England Governor Mark
Carney calls this the “greatest commercial opportunity of
our age.” It is anticipated that additional capital will pour into
the space, lending to pricing certainty for projects as well as
supporting merger and acquisition activity across the RNG sector.
In 2022, jockeying for green-energy market share was on full
display in several high-profile acquisitions, 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 derived 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.
At the epicenter of the green-energy
transformation, EverGen Infrastructure Corp. (TSX.V:
EVGN) (OTCQX: EVGIF) is an emerging leader in the
renewable energy space, owning and operating a portfolio of biogas
and RNG projects across Canada. Joining the growing chorus of RNG
projects planned or
under construction in North America, EverGen’s subsidiary,
Fraser Valley Biogas, was the first facility to produce renewable
natural gas in Canada, running since 2011. EverGen’s initial
operations consisted of its Fraser Valley Biogas, Net Zero Waste
Abbotsford and Sea to Sky Soils businesses, all operating in
British Colombia. In 2022, EverGen began to expand across Canada
and acquired a majority position in GrowTEC in Alberta and a 50%
stake in a large joint venture in Ontario comprised of three
high-quality, on-farm RNG projects.
EverGen is Canada’s leading RNG platform capitalizing on strong
decarbonization initiatives, while providing a solution to one of
the main greenhouse gas (“GHG”) emitting sources for
municipalities: organic waste. To capture these emissions and
produce RNG from organic waste, there is a significant need for
additional RNG projects and room for growth in the industry, with
only about 27% of organic waste in Canada currently being diverted
from landfill. Corporations, governments and utilities are
supporting EverGen’s growth through attractive, low-risk,
long-term, off-take agreements to purchase RNG and achieve
greenhouse gas emission reduction goals.
At EverGen facilities, organic waste goes into an aerobic
digester where it exits as digestate — where organic nutrients are
recovered and recycled as fertilizer and soil amendments — and
biogas, which is further refined into RNG and sold to utility
partners. The company faces an abundance of feedstock supply
considering that more than 144 million metric tons of food waste
are produced annually and there are more than 19,000 large farms
and dairies in North America.
Expanding Footprint
EverGen’s flagship assets are in British Columbia. Fraser Valley
Biogas (“FVB”) uses blended feedstock from agricultural and
commercial organic waste, and the operation has a current capacity
of 50,000 tonnes annually 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 an operational
organics-processing facility utilizing agricultural, municipal and
commercial organic waste. The plant has capacity of 40,000 tonnes
per year, which is being expanded to 135,000 tonnes. At capacity,
following the construction of an anerobic digestor, the plant will
produce RNG equal to 180,000 gigajoules of energy. (Note: To lend
some reference, consider one gigajoule is equivalent to about 277
kilowatt-hours of electricity. As a fuel, RNG is equivalent to 26
liters of gasoline.) FortisBC has a 20-year offtake agreement for
the RNG produced at NZWA.
Also in British Columbia is EverGen’s Sea to Sky Soils, an
organics-processing facility that produces up to 40,000 tonnes of
municipal and agricultural waste annually, with expansion plans to
increase to 60,000 tonnes.
Last year was a watershed year for EverGen as it expanded to
cement its position as a market leader. The company acquired a 67%
stake in GrowTEC, a multifaceted bioenergy venture of sustainable
agriculture near Lethbridge, Alberta. The facility is a biogas
operation with an anaerobic digester; additions are being made to
upgrade the system to process the biogas into RNG. An agreement is
already in place for FortisBC to buy the RNG, where it will be tied
into the local natural gas pipeline.
In aggregate, these facilities will generate approximately
480,000 gigajoules of energy annually when expansion is complete.
That’s about 133 million kilowatt-hours of electricity and
compelling upside with the current spot price for RNG above $60 per
gigajoule. According to the Energy Information Agency, the average
annual electricity consumption for a U.S. residential utility
customer was 10,632 kilowatt-hours, meaning the RNG from EverGen’s
three plants could power an estimated 12,509 homes with clean
energy.
Project Radius in Ontario is a model for growth at EverGen. The
cluster of projects is a late-development-stage portfolio of three
high-quality, agricultural RNG projects serving as the cornerstone
of EverGen’s RNG presence in Ontario. Collectively, these projects
are expected to produce about 1.7 million gigajoules of RNG per
year. EverGen is expected to announce a final investment decision
and notice-to-proceed early this year with construction targeted
across 2023 and 2024. EverGen is a 50-50 partner on Project Radius
with Northeast Renewables LP.
EverGen forecasts RNG production from portfolio projects
collectively at more than 2 million gigajoules per year, with the
potential to grow to 8 million gigajoules with consideration for
the 25-plus projects it is evaluating in its pipeline. Some of
those projects are abandoned plans in the fragmented industry that
EverGen can scoop up at attractive prices and integrate into its
ecosystem. The company has access to capital and the technical
expertise to optimize projects at any stage or condition.
EBITDA on the Rise
In its latest quarterly report, covering the quarter and nine
months ended Sept. 30, 2022, EverGen showed adjusted earnings
before interest, taxes, depreciation and amortization (EBITDA) of
$1.7 million year to date. Management has guided EBITDA of ~$2
million for 2022, which it expects to grow to $13 million from its
fully funded three core expansion projects.
A look at the EverGen
corporate presentation is enlightening to the importance
of its EBITDA estimate. The company’s RNG peers are trading at
13-times multiple of enterprise value to EBITDA. EverGen is trading
at a substantial discount to peers at only three times 2023 analyst
forecasts, despite its strong and funded growth profile.
Utility Partners Onboard
The $369 billion commitment by the U.S. government is catalyzing
investments throughout the energy market, including gas utilities
hustling to catch up with electric utilities. In North America,
renewables currently comprise less than 1% of the gas market, a
figure that is expected to change dramatically soon. This change is
evidenced through legislation such as Oregon’s SB98 setting a
volumetric goal of 30% RNG by
2030. Utilities are on board, including EverGen partner
FortisBC, which is aiming for 15% of its volume to come from RNG by
2030.
FortisBC is not alone with its climate-friendly ambitions.
Energir in Quebec has a similar sustainability goal, and American
counterparts such as NW Natural and Vermont Gas are spearheading an
energy transition in the United States. As governments and
corporations strive for decarbonization targets, the shift to RNG
is logical and cost effective, putting EverGen in a position to
thrive.
Incredible Headroom for Growth
According to Rested
Energy, the oil exploration and production industry generated
$2.47 trillion in revenues worldwide in 2019. Fossil fuels (crude,
coal, and natural gas) comprise the lion’s share of the industry,
evidenced by renewable energy sources only accounting
for approximately 12.4% of total U.S. energy consumption
in 2021.
BP plc
(NYSE: BP), one of the biggest oil companies in
the world, is a pioneer in low-carbon energy. The company has
a broad
spectrum of initiatives centered on decarbonization,
including bioenergy, EV charging, renewables, and hydrogen and
carbon capture and storage. Its renewables pipeline has more than
quadrupled in three years. In addition, the company added 5,000 EV
charging points in 12 months, decreased its oil and gas production
emissions by 16% while shrinking its overall operational emissions
by 35%, growing its offshore wind energy from zero to 5.2
gigawatts, and kickstarting 10 different hydrogen projects, among
other things.
Fortis Inc. (NYSE: FTS) is a
pioneer in the RNG business, working with local farms, landfills,
green-energy companies and municipalities for more than a decade to
capture methane from waste and purify it to make RNG. In
2019, Fortis
announced its first-ever emissions reduction goal, its
“30BY30” target. This is an ambitious target to reduce Fortis
customers’ GHG emissions by 30% overall by 2030. The company’s
Clean Growth Pathway to 2050 sets out four key areas to help
achieve substantial GHG emissions reductions, including supporting
the growth of renewable gas.
347Water Inc. (NASDAQ: SCWO) is
a global clean-tech, social-impact company whose mission is to
preserve a clean and healthy environment. The company is pioneering
a new era of sustainable waste management that supports a circular
economy and enables organizations to achieve their environmental,
social, and governance (“ESG”) and sustainability goals. 347Water
was selected by
the U.S. Navy to utilize 374Water’s AirSCWO(TM) technology
to validate its efficacy in the destruction of “forever chemicals”
for potential remediation efforts at military bases worldwide.
Anaergia Inc. (TSX: ANRG) was
created to eliminate a major source of greenhouse gases by cost
effectively turning organic waste into RNG, fertilizer and water,
using proprietary technologies. With a proven track record from
delivering world-leading projects on four continents, Anaergia is uniquely positioned to provide
end-to-end solutions for extracting organics from waste,
implementing high efficiency anaerobic digestion, upgrading biogas,
producing fertilizer and cleaning water. Anaergia has built many
successful plants, including some of the largest in the world.
A carbon time bomb is ticking, and the world can’t wait. A
titanic energy shift has begun, and it’s time to recognize the
opportunities at hand and the companies that are stewards of this
change.
For more information about EverGen Infrastructure Corp., please
visit EverGen
Infrastructure Corp.
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