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Recycled Energy Development forms partnership By Jennifer Zajac
The partnership will serve as an investment platform to fund projects developed and managed by RED that seek to profitably reduce energy costs and greenhouse gas pollution. The Westmonth, Ill.-based company develops, owns and operates industrial power projects that harness waste energy to reduce greenhouse gas emissions and cut power costs for host companies. The company's mission is to profitably reduce greenhouse gas emissions, according to Sean Casten, president and CEO of RED. Casten said that RED spoke with a number of private equity firms, hedge funds and institutional investors about creating a private equity fund before striking a deal with Denham. "They have a lot of expertise in this space and a real understanding of not just the energy markets but also the deregulated side of the markets and frankly, they're good, ethical people," said Casten. The company seeks industrial facilities that consume large amounts of thermal energy or produce waste energy. This waste energy often, but not exclusively, comes in the form of heat that RED converts into clean electricity and steam, according to Casten. Those industries combined represent a $350 billion market opportunity in the United States for RED's services, he said. The bulk of the projects RED will pursue will cost between $10 million to $50 million to build and run on average $1,000 to $1,500 per kW, according to Casten. "It's pretty representative of where most of the opportunities are, which is interesting because that size project tends to be too big for the OEMs and engineering firms to go after but too small for the more traditional project finance structure development companies," he said. The company will work with its North American industrial partners to develop recycled energy projects that supply electricity and useful thermal energy to host manufacturing facilities, with RED providing the necessary capital for the projects. RED and its partners will then share the resulting energy cost reductions, along with profits from the sale of excess energy and emission credits. Currently, the company is working with a facility that manufactures silicon and uses 130 MW around the clock, Casten said. Plans call for recovering the waste heat that travels up the plant's stack to produce approximately 40 MW of power. "Essentially, we'll reduce its electricity consumption by a third without burning any additional fuel," he said. When asked about the competition in this field, Casten said that the playing field includes Duke Energy Corp., Chevron Corp. subsidiary Chevron Energy Solutions and EPCOR Power LP subsidiary Primary Energy Ventures LLC. RED is led by Sean Casten's father, Chairman Thomas Casten, who is the founder and former CEO of Trigen Energy Corp., Primary Energy Ventures and other energy companies. Sean Casten currently serves as chairman of the U.S. Clean Heat and Power Association and was most recently CEO of Turbosteam, a company that develops recycled energy projects. "The RED team brings an unparalleled mixture of power, industrial, environmental and regulatory experience," said Riaz Siddiqi, senior managing director at Denham Capital. The team's past clients include General Motors Corp., the U.S. Navy, Kodak, Coors Brewing Co., Cinergy, BP-Chemical, and Mittal Steel. The company's five-year growth strategy calls for deploying $1.5 billion and raising a larger amount of funds at the end of that term, Sean Casten said. "The goal here is to address the biggest single challenge of our time. Successfully deploying $1.5 billion in this space is a drop in the bucket, but it's a beginning," he said. ---------- Copyright © 2007, SNL Financial LC
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