Pacific West Energy, LLC

Pacific West Energy LLC is currently developing the first sugarcane-based, integrated green-energy plantation in the world.  The sugar cane and ethanol components of the project are modeled on similar successful operations in Brazil and Central and South America.  The additional components of the energy plantation will make it a one-of-a-kind leader in the area of renewable energy.  The Company will convert a sugar factory on the island of Kaua'i into an energy facility by constructing a new power plant (approximately 20-megawatts), a 12-million gallon per year ethanol plant, and additional electrical generation facilities based on a variety of sources and technologies, including solar, hydroelectric, biodiesel, wind, algae-to-fuel, and municipal solid waste.  Hawaiian electricity and ethanol prices are consistently among the highest in the United States.

The new power plant will include significant increased boiler and electricity generator capacity to provide a significant portion of Kauai's electricity needs.  The Company intends to control a large percentage of its own feedstock for its power plant through the lease of existing sugar cane and other biomass lands and the expansion into former cane lands and eligible biomass lands on Kaua'i.  Near-term profitability is expected to be increased by augmenting the pressure capability of the existing boiler, allowing it to burn the increased supply of fuel more efficiently.  The Company is also considering addition of another boiler to generate additional electricity sales during the period before a significantly larger facility comes on line.

The 12-million GPY ethanol plant will be the first to be developed in Hawaii.  The Company intends to serve the in-state market for motor fuel ethanol by constructing multiple plants, utilizing the Hawai'i Ethanol Facility Tax Credit, a strong incentive put in place by the Hawaiian Government to promote the production and use of ethanol.

Unlike mainland corn-based ethanol producers, the Company intends to control a large percentage of its own feedstock for the ethanol plant, as well as for its power plant.  Sugar cane's conversion to ethanol is also significantly more carbon-efficient than corn-based ethanol, nearing carbon neutral.  The Company is pursuing integration of future technologies that are intended to make the integrated energy system carbon negative. 

 

Cane juice processed from the island’s sugarcane will provide feedstock for the ethanol plant while bagasse, the sugarcane fiber remaining after water and sugar is eliminated in the mill, and other boimass crops such as leucaena, will provide fuel for the power plant.  The Company intends to sell the electricity generated under a power purchase agreement (PPA) being finalized with Kaua'i Island Utility Cooperative (KIUC).  

Two State of Hawai'i mandates serve to enhance the market opportunity for the Company:  (1) a mandate for a 10% blend of ethanol into gasoline that has created a local market of approximately 45 million gallons of ethanol per year and (2) the new Hawai'i Renewable Portfolio Standard that requires all utilities to generate at least 20% of their electricity sales from renewable sources by 2020.

The Company also intends to maintain sugar production capacity for local consumption, refining, and export.

 

The Company has been funding its development of the Kauai project from existing investors in the Company.  The Company is currently in the process of seeking significant third-party investment to fund the next stages of the Kaua'i project, including construction. 

Commercial Partners

The Company is currently negotiating to lease and/or acquire sugar mill and related assets on Kaua'i.  Sugar plantations and mills have been operating on Kaua'i for over 100 years.  Of multiple mills that had operated in the past, only two remain operational, with one presently in operation.  The Company intends to operate one or both of the sugar mills.  The Company's management and directors have extensive experience in developing, owning and operating sugar plantations and ethanol production facilities.  ED&F Man, the world’s largest trader of sugar and molasses and one of the largest traders of ethanol, is also a strategic partner of Pacific West Energy and the Kaua'i project.  The Company has also developed a number of additional strategic partnerships, with solar, wind, algae-to-fuel, cellulose-to-energy, commodity trading, and other technology and development partners to enhance the Kaua'i project.

 
Competitive Advantages

 

Power – The island of Kaua'i is unique in its ability to provide sizeable amounts of locally-sourced renewable power to KIUC.  A number of former Kaua'i sugar mills have been dismantled and their cane lands have either been developed for other uses or lie fallow.  To try to construct a new mill, re-cultivate cane lands and source hundreds of workers would be subject to significant obstacles.  The operational or near-operational status and location of the Company's target mills provide unique and favorable opportunities to integrate cultivation from Kaua'i cane and biomass lands into the single mill, and the locations also provide the opportunity to produce solar, wind, and other green energy, such as from biodiesel and garbage sources, in an integrated manner.  The Company believes that it is uniquely positioned to provide KIUC and others with a renewable power source that is less expensive than they can otherwise source, including internally.

Ethanol – Unlike U.S. mainland ethanol producers, who are generally subjected to rising prices of corn, their primary feedstock, the Company is uniquely positioned to keep its costs low and controlled by growing its own sugarcane and other biomass crops.  The Kaua'i cane lands have historically been amongst the most productive in the world, generating up to approximately seven tons of sugar per acre per year, almost twice the average worldwide per-acre yield.  West Kaua'i benefits from rich volcanic soils, access to plentiful water, and abundant sunshine.  The Company believes it will have a significant price advantage in the Hawai'i market due to the added cost for competitors to transport ethanol from west coast and foreign ports, and due to high tariffs meted on ethanol produced in Brazil and certain other ethanol-exporting countries.  The Company also believes that local competitors face uncertainties regarding access to water and large capital outlays necessary to enter an entirely new market for them.  In addition, an existing sugar producer would have to determine that cane diverted into ethanol production is an economic trade-off against sugar production.  A local ethanol plant not based on local sugar production would likely be dependent on high-cost imported feedstock.

No Food-Versus-Fuel Trade-Offs – Unlike some other biomass electricity or ethanol production projects where there is concern that the energy or fuel production comes at the expense of reduced food production, the Company's Kaua'i facility is not expected to compete with any food production.  By contrast to other projects, the Company's Kaua'i project has the intended production capacity of food in the form or raw or refined sugar.  In addition, the Company also does not see future competition for food-based agricultural land on Kaua'i.  The Company believes that it and its commercial partners have carefully "right-sized" the biomass segment of the Kaua'i project, so as to eliminate any risk that there would be any real infringement on future food production.  As with a number of the other unique "next-generation" features of the Kaua's project, the Company believes that this forward-looking awareness of the collateral effects of the Kaua'i project, and the need to compatibly integrate with the existing economic and ecologic systems, will become a model for future green energy development around the world.