Post by
no1coalking on Feb 07, 2008 11:57am
Analysis of Test Burn:
Pennsylvania test burn report analysis for investors
That latest test burn report tells us a lot about what's going on behind the scenes at Evergreen:
- You can bet that Evergreen didn't publish the report if the Pennsylvania utility had no intention of using K-fuel. Interest in K-fuel by utilities that operate old non-compliant coal plants is VERY serious.
- As the PR indicated, this test took a month to complete. Just think about that for a minute - it took an entire month for this utility to run this test. Imagine the logistics associated with a test like that. With such high barriers to entry into the utility business, a lot of potential competitors are going to think twice before entering the clean coal market. Progress is slow in this business, investors need to understand that.
- The Pennsylvania results are especially significant because they currently have the toughest mercury regulations in the country. If K-fuel can meet Pennsylvania's requirements, it can work anywhere in the country.
- Investors have been hungry for news. The intention of this report was to provide an update, and the news clearly looks good.
- It is true that Evergreen has had some significant plant ramp-up problems, but I believe the single biggest cause for utility inaction over the past couple years has been the delay in enacting tougher emission regulations. In all truthfulness, utilities are not going to clean up their act unless they are forced to by government regulation. This latest PR clearly indicates that there have been delays in implementing tougher new federal emissions standards, so much of the utilities recent "stall tactics" are not Evergreen's fault. It's just the nature of the current business environment in which they operate. (i.e., it would be hard to sell automotive seat belts if there was no government regulation to use them.) From the latest PR:
"The fuel and stack-based test results were encouraging, as well, for industrial boiler operators who must comply with new federal emissions regulations known as MACT (maximum available control technology) that were slated to take effect last fall but have been delayed by court appeals."
(I guess that strongly suggests that if you want to better gauge Evergreen's potential, you need to keep on top of the current legal situation with emissions control.)
- Even the independent test organization that supervised the test burn seems to think K-fuel is a good deal:
"The Pennsylvania DEP (PADEP) will enforce a rule requiring all plants to achieve an
80% Hg reduction or 2.4 lb/TBtu emission rate by 2010. According to the utility
personal involved with the test, the PADEP emission rate will be their compliance target,
which changes their required Hg to 90% in 2010. The K-Fuel Blend achieved an
emission rate of about 4.2 lb/TBtu, indicating that only another 43% would be required
for compliance. Minimal injection of activated carbon sorbent would be sufficient to
achieve the additional Hg reduction. We estimate that the cost of this pathway to
compliance would be reduced by 50 to 70 % by using the K-Fuel blend as compared to
the baseline coal."
- Notice the next compliance deadline - the year 2010. If that deadline holds, that is now less than two years off. It also corresponds to Bechtel's new plant construction guidelines of 18 - 24 months. That strongly suggests that we're going to be hearing about a deal in Pennsylvania very soon.