Charles Liebenberg, co-founder and CEO of BioTherm Energy (Pty) hails from a strong international finance background, with an equally impressive history of start-up energy project experience.
“I started in investment banking with Standard Bank Group in South Africa. I started their Project Finance business then relocated to London and spent a further four years with them there. Then I left and joined Investec bank which is also a South African bank listed in the U.K and started an Energy Project Finance team for them too” he recalls.
Liebenberg officially began BioTherm in 2003.
“Essentially the basis of the business was the C.D.M (Clean Development Mechanism) market on the one hand and the anticipated electricity deficiency in South Africa. I really thought that was going to hit the market and it did, last year in particular” he says.
“Kyoto Protocol was about to be ratified by Russia at that time which would have brought it into effect and I started the business a bit before that in anticipation that Kyoto would become effective.”
However Liebenberg’s predictions of electricity deficiency were just the beginning of BioTherm’s work towards capturing “intelligent energy.”
The Petrosa Biogas to energy plant
n 28th September 2007 the South African Minister of Minerals and Energy, Buyelwa Sonjica , opened the Biotherm-developed, owned and operated PetroSA Biogas to Energy Project in PetroSA, Mossel Bay.
That same year the plant received the Construction World’s Best Projects prize for Best Public Private Partnership.
But the road to this time of achievement and recognition was not without its challenges.
“When we initiated that project the energy supply in South Africa was fairly secure. However the Additionality Concept under the C.D.M was a very strong driver for us as it is in all of our projects because the electricity tariffs here in South Africa remain low even today. Economically low not only for us but also for Eskom the national utility” Liebenberg says.
“At the time it was quite difficult. There was never a thought in most corporate minds that electricity could become a scarce commodity in South Africa. But we managed to overcome the challenges and reached commercial operation in October 2007. We’ve been operational for almost two years now and with a high degree of success.”
It is Liebenberg’s keen eye for wasted energy potential which really set the ball rolling.
“To cut a long story short we were told we could get access to the flared gas – a methane rich gas which is really just a by product of the cleaning up process after the liquefaction of the natural gas at the PetroSA gas-to-liquids plant. We negotiated a commercial arrangement with them for how we might obtain the gas then sell electricity back to them at their prevailing electricity tariffs.”
The search for “intelligent energy”
In October last year BioTherm hit industry headlines with an extraordinary investment agreement.
“We raised $150 million U.S dollars (1.5 billion ZAR) in investment from an American private equity fund called Denham Capital and they’re specialised in the resource and energy sector” Liebenberg says.
“They committed to invest this money into BioTherm for our future progress. That changed the landscape of BioTherm quite significantly because now I have a very well capitalized business with access to equity. Being where we are with the prevailing global market conditions is very advantageous because we’re currently in a market where having access to capital is quite a scarce commodity. After we built our project at PetroSA which we will be operating for the next 15 years we managed to become the lead developer on a number of projects. We have 85 mega watts currently under development of which two projects have received environmental approval and we hope to financially close four projects this year.”
BioTherm’s various projects in development may vary, but they are all in pursuit of “capturing wasted process energy, and converting it into useable energy.”
“More importantly for me it’s intelligent energy because it is really capturing the waste which is significant in industry in South Africa because there are a lot of energy intensive users” Liebenberg explains.
“There is an incredible amount of wasted energy from processors and that’s our niche market. We’re generally below the 100 mega watt threshold on a single project. There is massive potential for us and we are negotiating a couple of 100 mega watt projects in the cogeneration sector in addition to the 85 mega watt project we have under development currently.”
BioTherm are set to work on a number of exciting projects.
“We are involved with two ferrochrome smelters. The one which is in the public domain is a company called Hernic. They are the fourth largest ferrochrome smelter in the world and of course have been affected by global recession as has everyone else but as was reported in the press recently they have started up their furnaces again. We’re doing a 25 mega watt project where we’re using the carbon monoxide which has been flared since they built the furnaces and we’re putting that through a boiler, running a steam turbine out of the back of it and generating electricity onsite” Liebenberg reveals.
“We are not excluding conventional renewable energy from our portfolio in South Africa so wind and solar are technologies we may take interest in during the short to medium term. We think that in countries like South Africa Solar will make great sense in the not too distant future too.”
Investing in South Africa
Liebenberg’s understanding of the vast potential within South Africa coupled with the exemplary agreement between BioTherm and Denham Capital indicates a bright future for the regions’ industry.
“We’re very positive about the country. That’s why I started BioTherm and moved back from the U.K. We recognise the opportunities which will exist and because of the wealth of resources which still remain here it is an energy intensive economy. That’s what we focus on – capturing wasted energy – and that will continue for a very long time. Overall we’re very positive about South Africa and the environment we operate in” he says.
Liebenberg recalls the stringent measures with which Denham investigated every nook and cranny of BioTherm prior to investment.
“It was an extremely thorough process and I think that the commitment they made of $150 million dollars is not insignificant in a business like ourselves. Clearly they have a strong belief in the future of the country and the resource market here. As an objective endorsement we feel very positive about Denham’s attitude towards South Africa and the opportunities that lie in the country and in this sector in particular” he explains.
“South Africa is a very industrialized country. There is a lot of negative press from time to time about the various issues in the country. I can draw comparisons with Europe having lived there and South Africa is generally a very benign business environment with a lot of entrepreneurial spirit in the country with a very strong ‘can-do’ attitude.”
BioTherm people power
The wealth of natural resources is not the only strength Liebenberg recognizes in South Africa. In both the country and BioTherm itself, he places great emphasis on the people. In fact, when you are a part of BioTherm, the business is your own.
“Everyone has ownership of our business. Every employee be it the cleaners or myself has ownership of the business so it’s a very entrepreneurial, very responsible organisation. We all have aligned objectives which is important for success. We’re improving the status quo with regards to emissions, energy waste and avoiding it” he says.
“That’s a key value because people really have to accept responsibility for what they do. It’s not an enormous company where there are 15 other people who can actually do your job. People have to put their hands up which they do all the time for the benefit of the entire company. We’re very unique in the utility-type of markets.”
This people power reaches right through the BioTherm ranks and along with their current capital, bodes for a very bright future indeed.
“We’re probably the biggest team in the country and we’re definitely the most experienced in the power sector, well capitalized and I think few competitors really have that advantage. Our Chairman is a former CEO of Eskom so he comes with a whole career of experience and understanding of the electricity sector. He still serves on the board of Eskom today although he’s also our Chairman. We have a very strong understanding and appreciation but more importantly practical hands on experience of the power sector” Liebenberg explains.
And with all of these minds on the job, it is no surprise that despite Liebenberg’s’ agreement that “In South Africa in particular the enabling environment is still not what it should be” BioTherm is clear about how to tackle this.
“Being in the monopolized regulatory environment has been very challenging for everyone. The real challenge now that the regulator comes to grips with the enabling environment for private sector investment in the energy sector” he says.
“On the positive side we have a few programmes on the cogen and renewable side which have now been approved where Eskom under a single buyer model will be buying the power. There are still issues which need to be ironed out but it has progressed substantially in the last five years.”
Liebenberg looks forward to the changing potential for investment in South African Independent Power Projects (I.P.P’s).
“I think that for the first time in 15 years there are real opportunities for I.P.P developers to enter the country in the next three to five years.”
True to form, BioTherm continue their quest for “intelligent energy” with an eagle eye for future development.
“Our goal in the next five years is to have about 400 mega watts under construction and about half of that to be operational. That’s our five year goal because as you will appreciate we are building infrastructure, these projects do take a bit of time” Liebenberg says.
With their crack team of experts, unique investment agreements and a future-facing goal held by every company member, BioTherm and their quest for South African energy efficiency look set to soar.