Low Cost Producer in Marketplace
Very substantial cost savings due to low cost waste heat, electricity, and CO2 from adjacent power plants allow Ag Energy to be the low cost producer in the marketplace. Unwanted real estate adjacent to power plants can also be obtained at low cost.
Customers Eager to Make Purchasing Commitments
Two supermarket chains and two major distributors of vegetables have proposed to purchase the Company’s produce at attractive prices. Each is capable of buying the Company’s entire output. The supermarkets seek to buy year round at consistent prices.
Large Market within Close Proximity
Produce will be sold in the Northeastern region of the United States (including the six New England states as well as New York, New Jersey and Pennsylvania), all within an 8-hour delivery zone, so that produce can be picked on one day and be on the grocer’s shelves or in a restaurant meal the next day. The output from the first greenhouse facility will make up less than 1% of the total fresh tomato or lettuce sales in this market.
Proven Innovative Greenhouse Technology
Produce will be grown using state-of-the-art greenhouses, equipment, and systems, much of which has been perfected in Holland, Belgium, and northern France. Sustainable hydroponic methods will be managed by growers with successful experience in achieving production results, including both volume and premium quality.
Several State Departments of Agriculture have expressed support for the proposed projects because of the opportunity to provide locally grown produce and increased employment to the communities. Grants and loan guarantees are available from the U.S. Department of Agriculture.
Berlin, NH has been nominated by New Hampshire Governor Christopher Sununu as an Opportunity Zone under a new national community investment program that connects private capital with low-income communities across America1. This program, put in place by the new tax law, encourages long-term investments in Opportunity Funds (funds set up to invest solely in opportunity zones), by offering the following tax advantages relating to capital gains: (a) permanent exclusion from taxable income of taxable gains from investments in Opportunity funds held for ten years or longer, (b) temporary tax deferral for capital gains reinvested in an Opportunity Funds, and (c) a step-up in basis for capital gains reinvested in Opportunity Funds wherein the basis of the original investment is increased by 10% if the investment in the qualified opportunity zone fund is held by the taxpayer for at least 5 years, and by an additional 5% if held for at least 7 years, excluding up to 15% of the original gain from taxation.
Using the waste heat from the power plants in the greenhouses allows for an increase in the efficiency of the operations by 10-15% for biomass fueled plants and 30-40% for natural gas fueled plants. This allows the greenhouses to save ~11,700 MMBtu per acre each year in heating (~3,000 barrels of oil).
Land and Water Utilization
The operation of greenhouses allow for significantly lower land and water utilization versus field operations. One acre of tomato greenhouses can produce more than 15 times as much as one acre of open field tomatoes in the United States. Greenhouses also allow for the efficient use of water via drip irrigation technology and recycling of rain water. Rain water is recovered from the roof of the greenhouses and stored in a pond providing nearly all of the water necessary for the operation of the greenhouses. Drip irrigation minimizes the amount of water needed within the greenhouses via efficiently distributing the water. Greenhouse production is over 500% more water efficient (grams of fruit per liter of water) than field grown production. The utilization of greenhouses in New England to produce crops year round provides for an efficient use of the land and resources.
Local Produce = Less Transportation
Currently much of the produce sold in New England is being transported from the West Coast and Mexico in refrigerated trucks. These trucks go back to the West Coast empty since New England does not have produce to ship back. Assuming the trucks have to travel 6,000 miles more than American Ag Energy and can carry loads of 40,000 lbs and achieve 8 miles per gallon of diesel, a reduction of ~360 barrels of oil per acre per year from direct transportation of goods can be made with local crop production in New England.
Key Strategic Benefits
Lower CO2 Emissions
As much as 5% of the CO2 that is emitted by the power plant can be sequestered by the greenhouse grown plants to substantially increase the produce yields. The sequestering of the CO2 along with the increased efficiency allows for significantly lower CO2 emissions per MWh. Biomass plants without greenhouses emit over 3,000 lbs/MWh CO2 compared to ~600 lbs/MWh CO2 for biomass/greenhouse projects. This assumes that during the life cycle analysis, 70% of the CO2 emitted by the power plant is sequestered by new biomass growth.
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