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Waste2Energy (OTC: WTEZ.PK)

Waste2Energy, Inc. (OTC: WTEZ.PK) designs, builds and installs waste-to-energy (W2e) plants that generate a source of clean and renewable energy by converting biomass or other solid waste that typically heads to the landfill.

W2e is the process of creating energy in the form of electricity or heat from the incineration of waste source and represents a form of energy recovery. Most W2e processes produce electricity directly through combustion or produce a combustible fuel such as methane, methanol, ethanol or synthetic fuels. Once processed, the energy by product is electricity (from heat) and steam (also from heat generated during processing.

Below is an overview of the Company's core technology platforms based on its proprietary gasification technology, which offer end-users the flexibility of being modular, scalable, upgradeable, and expandable. In addition, W2e typically outsources manufacturing of the large, bulky equipment and systems outlined below on a partnered, regional basis since it would not be practical to transport these over long distances.

1.) Standard Batch Oxidation System (sBOS) is designed for on‐site waste destruction and the optional conversion to intermittent energy of facility‐generated waste streams from mines, oil fields, military, medical, hospitality, commercial, industrial or other installations.

2.) Continuous Batch Oxidation System (cBOS) is designed for the continuous, uninterrupted production of energy from batch loading of unsorted, mixed waste feed stocks such as municipal solid waste, tires, commercial wastes, construction debris, etc. that offers 24 / 7 cycling and intermittent loading features.

3.) Continuous Oxidation Reactor (COR) is designed for conversion to energy of consistent feed stocks such as sorted municipal solid wastes or biomass agricultural waste, rice straw, wood chips, energy crops, etc. COR has the capability to process up to 500 tons per day in a single unit with the flexibility to expand with additional units for greater capacity and process a variety of feed stock sources.

There is a growing need on a worldwide basis to shift away from the landfill model of waste disposal due to the unsustainable growth rates (landfill creep) combined with rapidly growing populations, urbanization, and limited real estate / land availability in densely populated cities. The initial market opportunity for Waste2Energy lies in Europe, which is an estimated 2-3 years ahead of the U.S. in terms of dealing with waste disposal in an environmentally friendly manner on a local basis.

In addition, multiple business models exist for end-user operators of W2e's proprietary gasification technology systems, including: tipping fees, the generation of carbon / renewable energy credits, ash sale (for use in concrete, roads, etc.), the generation of electricity that can be sold and desalinization to produce a source of clean water. According to Frost & Sullivan studies in this sector, the waste to energy market in Europe is growing and will continue to do so for at least 10 years. Europe's waste to energy capacity is expected to increase by around 13 million tons and it is estimated that 100 new plants will come on line by 2012.

According to BCC Research, the statistics outlined below apply to the global W2e market through 2014 with an estimated breakdown by region that includes 48% Europe, 31% Asia / Pacific, 11% North America, and 10% rest-of-world.

1.) The global market for W2e technologies was $19.9 billion in 2008 and is expected to increase to $26.2 billion in 2014.

2.) Thermal W2e technologies have the largest share of the market at $18.5 billion in 2008, which is expected to grow to $23.7 billion in 2014.

3.) The biological W2e segment generated $1.4 billion in 2008 and is expected to increase to $2.4 billion in 2014.

The landfill model is limited and nearing end of life cycle with little incentive for innovation due to high tipping fees from distant cities that may send their trash via rail / truck transport for remote disposal, resulting in the waste of energy for transport, expanding landfills, and the generation of greenhouse gas emissions. W2e offers a local, community-based solution for waste with useful by-products in the form of steam to generate electricity, clean water (desalinization), and local jobs while simultaneously solving the problem of waste disposal.

Other commercial opportunities lie in developing countries, desalinization for clean water, islands / cruise ship waste disposal, military camps, oil / gas exploration, metals / mining sites, and hospitals (this a near-term opportunity in the U.S. market). W2e offers a scalable, community-based solution that is customizable and easier to implement from the budgetary / financing perspective for local governments since it offers the flexibility to start out on a small scale.

W2e's units are currently used at a number of locations such as the Ronald Reagan Strategic Missile Base, Kwajalein Atoll for mixed and hazmat wastes, Husavik, Iceland-mixed municipal wastes, BP/ARCO - Alaska for drilling camp wastes, Pogo Gold Mine, Philippines for mining camp wastes, Cayman Islands - hospital wastes and Conoco-Philips for use in Alaskan drilling camp waste disposal. In addition, W2e designed, built, and installed a cBOS system in Scotland for Scotgen, which represents a $35 million facility that will officially open after commissioning and will continuously produce 6 megabytes of electric grid power from both unsorted municipal and hazardous waste sources.

Larger players in the space such as Covanta (NYSE: CVA) and Waste Mangement (NYSE: WM) (Wheelabrator subsidiary) are not focused on the highly customizable, small-scale installations that W2e plans to offer, providing a large market niche on a global basis that has the potential to become very profitable for W2e once it secures funding. Covanta estimates that 14% (37 million people) of municipal solid waste in the U.S. is processed at waste-to-energy facilities, which produces enough electricity for 2.8 million homes. In addition, waste-to-energy facilities are more widespread in Europe (where W2e will focus its initial efforts) and Covanta estimates a total of 600 such facilities worldwide.

 

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The average American generates nearly a ton of trash each year. Each suburban home annually produces 15 pounds of hazardous household waste including medications, paints, solvents and automotive products.

 

Where does all this waste go?  Most goes into the ground at landfills. According to the Environmental Protection Agency, only 32 percent of waste in the United States is recovered or recycled. Another 14 percent is burned at combustion facilities. These statistics don't count the enormous amount of waste that is illegally burned in barrels or buried in landfills constructed without permits.

 

This problem is compounded by over-population. Most experts believe that the ideal population for the United States ranges between 100 and 150 million people. This is compared to our current population of 308 million. The numbers will get much worse. The U.S. population, predicts the World Facebook, is expected to rise to 451 million in 2050 and then 595 million in 2100.

 

Waste management is already a huge problem for the United States. President Obama's economic stimulus package passed in early 2009 attempts to begin dealing with the elimination of waste and the creation of energy. It includes $3 billion for development of renewable energy projects, $600 million to cleanup hazardous waste and $6.3 billion for state and local governments to make investments in energy efficiency. The program will provide direct payments in support of an estimated 5,000 biomass, solar, wind and other types of renewable energy production facilities.

 

Waste management and energy production are also key to green building initiatives. An estimated 61 percent of America's contractors rate waste management the second most important aspect of green construction, just behind energy efficiency. This was found in a new SmartMarket Report released at the Greenbuild International Conference and Expo in November, 2009.

 

Well-positioned to tackle this environmental problem in the United States is Waste2Energy, a new company based in Greenville, S.C. that designs, builds, installs and sells waste-to-energy plants. These facilities convert biomass or other solid waste streams traditionally destined for a landfill into clean renewable energy.

 

In November 2007, the company acquired EnerWaste International Corp. and in May 2008 it bought Enerwaste Europe in Iceland. With these acquisitions, Waste2Energy purchased two state-of-the-art technologies based on gasification and the clean oxidation of waste.

 

Some background is perhaps necessary. Gasification is a technology that has been in use since the 1800s when it was first developed to produce town gas for lighting and cooking. During World War 11, wood gas generators were used to power motor vehicles in Europe during fuel shortages. It was called gasogene.

 

Gasification converts carbonaceous materials such as biomass, biofuel, coal, plastic, woodchips and other waste materials into carbon monoxide and hydrogen by reacting it at high temperatures with a controlled amount of oxygen or steam. The resulting gas mixture is called synthesis gas, or "syngas." A fuel itself, syngas can be used for heat production and for generation of mechanical and electrical power.

 

Traditionally, gasification technology has been used to process a specific type of waste material to generate a consistent output of syngas. This means the waste must be pre-processed first for use in the gasification process. Usually made into pellets or other usable form of material, the preprocessing of the waste requires using a large amount of processing and storage space, a complex transportation infrastructure and expensive operational logistics.

 

Waste2Energy employs a two-stage process that broadens the kinds of waste materials that can be fed into the system to generate clean energy. The company's technology is ideal as a smaller, community-based waste management-energy production solution that is efficient to operate and cost-effective. It is designed as a thermal treatment of waste that's an alternative to incineration.

 

In the Waste2Energy process, gasification is accomplished in stage one. The gasification is done at a high enough temperature to sterilize the waste, but at a low enough temperature not to change the molecular structure of the material. This stage produces syngas. A residual from this process is ash. Within this ash are traces of various inorganic materials-such as steel, plastics and other materials depending on the type of waste-that can be recycled if the operator desires.

 

In the second stage, the syngas goes into a second chamber where it is subjected to a very high temperature and has more than a two-second retention time. This cleans the syngas of toxic material and creates a clean hot flue gas. The composition of the flue gas depends on what is being burned, but it will usually consist of mostly nitrogen (typically more than two-thirds) derived from the combustion air, carbon dioxide(CO2), water vapor and excess oxygen.

 

The hot flue gas-the key product of the Waste2Energy process-can be converted to superheated steam to drive a turbine to create electricity. Or possibly it could be used for fuel cells, thermal desalination or other alternate forms of energy. The operator decides on the end product.

 

At the moment, Waste2Energy has a patent pending relating to its batch process for waste that allows the system to create a consistent flow of flue gas. What distinguishes the company's solution is that the preprocessing of the waste is not necessary. This allows the Waste2Energy technology to be decentralized, localized and community-oriented, with reduced transportation costs and far less road congestion due to waste dumping trucks.

 

To demonstrate its technology, Waste2Energy is a participant in building a new waste-to-energy plant which opened this summer near Dumfries in Scotland. It is the most advanced facility of its kind in Europe. When fully commissioned by early 2010, the new plant will initially process about 120 metric tons of mixed waste each day and generate about eight megawatts of power. It is capable, say its operators, of dealing with the waste from a community of 250,000 people.

 

The facility in Scotland will be the first showcase demonstration facility for Waste2Energy. It incorporates four intake chambers and will use a blend of different kinds of wastes for conversion to clean electricity. In industry jargon, waste product for feeding the system is called "feedstock."

 

Because the Scotland plant requires no preprocessing of the feedstock, it was built on less than two acres of land. Competing projects that must preprocess the same amount of waste require eight to ten acres of land for storage and facilities. The cost savings are huge.

 

Waste2Energy insists the success of its small plants lie with the skills of the operator who controls the feedstock. Their expertise is normally the measure of success or failure in making a facility profitable. Waste2Energy requires that prospective clients complete a comprehensive application that seeks to determine whether or not the client can use a waste-to-energy facility.  It's called a "waste characterization profile."  The results of the rigorous application have surprised many potential users, some who found they didn't generate sufficient waste to use the process.

 

Interestingly, the types of waste vary dramatically from place to place around the globe. Because of this fact, Waste2Energy-designed plants work better in some places than others. In some countries, the waste includes large amounts of discarded food- which includes much moisture-while others contain the remains of automobiles or demolition debris. The type of mixed waste determines the amount of electricity that can be produced from a facility.

 

Caribbean islands, and resort islands in general, find great value in the Waste2Energy technology. Islands tend to have a high electricity cost-usually from imported diesel fuel-and require transporting waste offshore to landfills or other processing systems in a garbage-adverse tourist environments. Hotels, hospitals, military bases and mining camps also generate their own wastes.. The company recently received a letter-of-intent from the island of Sint Maarten to design and construct a 300 metric ton per day waste-to-energy facility

 

Waste2Energy's technology has also been selected to be used in the construction of six new gasification resource parks to be located in the United Kingdom. The plants will treat in excess of 600,000 metric tons of commercial and industrial waste. The project is one of the largest ever committed to developing gasification capacity in the UK and, as planned, will produce enough electrical power for over 85,000 homes.

 

Waste2Energy doesn't see itself as a suitable solution for every project in a nation as large and diverse as the United States. For areas with vast space for landfills and cheap electricity, they admit they don't fit. If a city wants a central 25 megawatt power station driven by waste, a larger system would be a better fit. However, if a small town or group of small towns want to treat 60 to 360 tons per day and generate 2 - 15 megawatts of electrical power, Waste2Energy offers a very cost effective solution.

 

As towns and cities consider the possibilities of alternate technologies, the management of Waste2Energy see communities joining together for public-private partnerships with experienced operators. In some cases, it would involve the creation of a waste-to-energy industrial park where citizens would bring waste to be processed.  Such ventures may more resemble a real estate transaction than an industrial solution.

 

Whatever the final form, the waste management problem is not going away. As the U.S. population increases, landfills become harder to justify and costs rise. Solutions are going to be needed. 

 

"There are a lot of gasification companies out there and many of them scale up very well," said Christopher d'Arnaud-Taylor, chairman of Waste2Energy.  "Our philosophy is the exact reverse of that-our technology scales down. That's important. If you can scale down, then you can get a community-based solution, which is where we want to be as a company."

Waste2Energy Inc. is a client of ProActive Capital Resources Group, LLC.  Please see our disclosures and disclaimers page

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