Environmental Power Corp. subsidiary Microgy Holdings LLC has achieved the initial delivery of pipeline-quality renewable natural gas (RNG) from the Huckabay Ridge facility in Stephenville, TX. The facility is able to generate biogas from manure and other agricultural waste, condition the biogas to natural gas standards and distribute RNG -- Microgy's branded, renewable, pipeline-quality methane product -- via a commercial pipeline.

"With the successful initial delivery of gas at the first of our large-scale RNG facilities, we believe Environmental Power is demonstrating its first-mover status in RNG production and has proved a uniquely valuable addition to the spectrum of commercially available renewable fuels, i.e., RNG, our renewable natural gas substitute that can be transported and used in any and all conventional equipment that consumes regular natural gas," said Environmental Power CEO Rich Kessel. "All the while, Environmental Power is becoming a dominant player in the carbon credit market."

At full build out, Huckabay Ridge will be the largest RNG production facility in the world, with output of approximately 2 MMcf/d, or 650 MMcf per year -- the equivalent of more than 4.6 million gallons of heating oil a year. In addition to energy production, Huckabay Ridge is also expected to generate approximately 200,000 tons of carbon offset credits annually, based on existing Chicago Climate Exchange protocols. Microgy noted that greenhouse gas capture is a rapidly growing environmental concern that is being supported by numerous state initiatives, including those in California and the Northeast, and is attracting significant attention among federal legislators pursuing restrictions that limit carbon output and create a market for trading carbon capture "credits."

The Portsmouth, NH-based company, which develops, owns and operates renewable energy production facilities, added that carbon credits, which have a value of approximately $4 per metric ton in today's voluntary carbon credit market, are expected to increase in value as a binding cap-and-trade system evolves in the United States.

"While making initial deliveries of gas into the pipeline is not the conclusion of the start-up process, it is a critical first milestone," Kessel said. "Now the process shifts to demonstrating fully reliable operation."

Currently six of Huckabay Ridge's eight digesters are producing biogas and are in varying stages of start-up and operation, with the remaining two digesters beginning start-up. Biogas has now been processed through the on-site gas-conditioning and compression equipment and, once the commissioning process is finalized, Huckabay Ridge is expected to be generating RNG at full capacity later this spring. The RNG produced by the facility has been purchased by the Lower Colorado River Authority pursuant to a previously announced long-term purchase agreement through September 2008 (see Daily GPI, Dec. 7, 2006).

"This phase of the Huckabay Ridge facility's start-up represents a milestone in the implementation of our business plan as we pursue our goals of accessing the commercial mainstream with our premium value renewable natural gas, even as we expand our revenue base with the increasing value of carbon credits," added Kessel. "All this is in addition to the environmental benefits we bring to the agricultural market. Well-conceived and directed renewable energy programs can benefit our economy through multiple channels of environmental value creation."

Microgy and its new technology is being implemented on farms in various spots around the country. Kessel said the Huckabay start-up will be "invaluable" as the company continues to develop other large-scale facilities in Texas, California "and other key markets. Our standardized modular plants will enable us to implement large numerous scale RNG facilities rapidly and in a cost-effective manner."

In October 2006, Pacific Gas and Electric Co. (PG&E) announced that it signed an agreement with Microgy to deliver 8 MMcf/d of RNG produced from cow dung at four Microgy facilities located on dairy farms in California (see Daily GPI, Oct. 13, 2006; Feb. 13). In January Microgy teamed with PG&E and Joseph Gallo Farms to help make Gov. Arnold Schwarzenegger's inauguration in January a clean energy gala (see Daily GPI, Jan. 8).

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