David R. Rubenstein - Imperial Valley Renewable Energy Summit

IVEDC’s 7th Annual
Renewable Energy Summit
March 13, 2014
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Originally formed in 2007
Produce low cost sugarcane ethanol and electricity in CA
Bring a sustainable and profitable crop to the I.V.
Create jobs and economic stimulus in the I.V.
Produce robust returns for stakeholders
Since then:
Poised to be a leader in low carbon energy products
Assist California in meeting AB32 requirements
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To produce products that will
assist California in meeting its
renewable energy goals
To use the Imperial Valley’s ideal
conditions to provide farmers with
a better option
To contribute to the Imperial
County’s economy, including
creating jobs
Reward investors with robust
returns
Finance, build, own, operate facilities
that convert:
 41,000 acres of sugarcane grown
year round
 33,000 acres of sweet sorghum
grown seasonally
• 66 million gallons of low-carbon ethanol
• 49.9 MW of renewable electricity
• 930 million cubic feet of bio-methane
All to be used within California
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Twice the ethanol yield per
acre than corn
Net energy yield 14 times
that of corn ethanol
Carbon intensity of 9 g/MJ,
vs. corn’s 91 g/MJ
Same water use as alfalfa
and other forage crops
 One of the best areas in the
world for growing sugarcane,
sweet sorghum
 On-call irrigation water,
sunshine, no disruptive
weather, free from pests
 Booker Tate: 40-50% more
productive than Brazil
 Partnership with Imperial Valley
based VBG Alliance to plan,
manage the agricultural program
Uni-Systems do Brasil, Ltda.
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Has engineered and installed numerous sugarcane-toethanol plants and biomass power plants in Brazil and the
Americas.
Applying commercially proven technologies, processes and
equipment adapted to meet California requirements.
Arranging $669 MM financing, with major Brazilian bank
export credit financing component
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160 acres under option to
purchase
Central to sugarcane, sweet
sorghum fields
Adjacent to power and
natural gas lines
Close to Highway 111, 86
and paved county road
Recently re-zoned for
heavy industrial use
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Property is under contract
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Contracts with Shell in place
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Excitement from both local & state agencies
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Recent expansion of sugarcane acres
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$37 million sales tax waiver from the state
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Applying for a $5 million grant from CEC
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Waiting for the projects financing commitments
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Ground breaking later this year
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Gasoline volume: 15 billion gallons per year
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10% ethanol blend in California = 1.5 billion gallons per year
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California is a net importer of oil. It produces only about 37.2
percent of the petroleum it uses
Petroleum-based fuels account for 96 percent of the state's
transportation needs
The dependence on a single type of transportation makes
Californians vulnerable to petroleum price spikes
Transportation is the largest emitter of greenhouse gases
California
Alaska
Foreign
Total
228.2
77.2
313.7
619
Million Barrels
Million Barrels
Million Barrels
Million Barrels
$22.8
$7.7
$31.4
$62
Billion
Billion
2012 numbers from US DOE. Estimated at $100 per barrel for illustration purposes.
Billion
Billion
2012 Foreign Sources of Crude Oil Imports to California
Barrels of
Crude Oil
Percentage of Total
Foreign Imports
At $100
per Barrel
SAUDI ARABIA
78,153,000
27.20%
$7.8 Billion
ECUADOR
54,222,000
18.87%
$5.4 Billion
IRAQ
52,526,000
18.28%
$5.3 Billion
COLOMBIA
34,279,000
11.93%
$3.4 Billion
ANGOLA
14,931,000
5.20%
$1.5 Billion
CANADA
14,245,000
4.96%
$1.4 Billion
BRAZIL
10,137,000
3.53%
$1 Billion
RUSSIA
9,528,000
3.32%
$953 Million
KUWAIT
4,659,000
1.62%
$466 Million
PERU
2,566,000
0.89%
$257 Million
VENEZUELA
2,370,000
0.82%
$237 Million
OTHERS
9,674,000
3.37%
$967 Million
Source
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Midwest U.S. corn-to-ethanol industry via rail car transport
(about 88% of total supply)
In-State Production (178 million gallons/year - about 12%)
Foreign imports of ethanol currently limited due to
economics
Source: CEC web site 3/9/14
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AE Biofeuls, Keyes: 60 million gallons/year
Altra Biofuels, Goshen: 31.5 million gallons/year
(plant currently idled)
Calgren Renewables, Pixley: 58 million gallons/year
Pacific Ethanol, Madera: 40 million gallons/year
(plant currently idled)
Pacific Ethanol, Stockton: 60 million gallons/year
Source: CEC web site 3/9/14
Well to Wheel
Wheel to Wheel
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Corn ethanol from Midwest
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Corn ethanol from California
80
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Brazilian sugarcane ethanol
58-66
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CE+P’s ethanol
(Projected pathway but still needs to be certified with the ARB)
90-98
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Guaranteed rent per acre
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Guaranteed profit per acre
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CE+P covers land prep fees
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CE+P plants and harvests the crop
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CE+P covers the crop’s maintenance costs
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Reduction in current work load & expenses
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For CE+P: It locks in the feedstock costs
20 Year Average Annual Operating Projections
Revenue
$378 million
EBITDA
$187 million
Net Income
$152 million
Description
Amount
Sources of Funds:
$669 Million
• Bank Funding (Brazilian Bank & Commercial Bank)
$586 Million
• Equity
$83 Million
Use of Funds:
$669 Million
• Construction of the Facility & Related Expenses
$375 Million
• Related Expenses
$294 Million
Project Ownership:
• Equity Partner(s)
20%
• CE+P
80%
Estimated Project Company Valuation
$2 Billion
Estimated Value of CE+P’s 80% Ownership
$1.6 Billion
Estimated Value of a 1% CE+P Membership Interest
$16 Million
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Third Investment Round: B Round
◦ $75 million valuation
◦ Less than $400k remaining
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Fourth (and final?) Round: C Round
◦ $100 million valuation
◦ Size of the round TBD
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Today
◦ $75k participation = 1/10 of 1% stake in CE+P
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When C Round Opens
◦ Value increases to $100k
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Uni-Systems Investment of $83 million
◦ Value increase to $332,000
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When Facility Begins Operations
◦ Valuation could be worth $1,600,000
For illustration purposes only.
All numbers and valuations subject to change..
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Low carbon ethanol, renewable electricity and “green” bio-methane
will play a vital role in meeting California AB32 mandates
Major economic impact in terms of jobs and economic output
CE+P will apply state-of-the art but commercially proven
technologies that will meet or exceed environmental requirements
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CE+P will provide a reliable, profitable option for local farmers
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CE+P will provide additional opportunities to the Imperial Valley
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Goal is to provide robust returns to stakeholders
David R Rubenstein
Founder / President / CEO
Direct Phone: (310) 545-8887
[email protected]