Babcock & Wilcox Signs Agreement to Proceed with Work for Coal-to-Biomass Power Plant Conversion and Carbon Capture Project in Michigan

Rhea-AI Summary

Babcock & Wilcox (NYSE: BW) has received a notice to proceed (LNTP) from NorthStar Clean Energy for a project converting a former coal-fired power plant in Filer City, Michigan, into a Bioenergy with Carbon Capture and Storage (BECCS) facility. Utilizing B&W's SolveBright™ CO2 capture technology, the plant will capture up to 550,000 tons of CO2 annually and generate carbon-negative power. The project will extend the life of the power plant by switching to biomass fuel. Full contract finalization and notice to proceed are expected in Q4 2024. The project's scope includes engineering, design, and delivery of necessary equipment, with B&W Construction Co. managing construction and mechanical aspects.

This initiative aims to help plant operators comply with emissions regulations while ensuring energy security. The Filer City plant is jointly owned by Tondu Corp and NorthStar Clean Energy, a subsidiary of CMS Energy

Positive

• Babcock & Wilcox received a notice to proceed (LNTP) for a major project in Michigan.
• The project will convert a coal-fired plant to a Bioenergy with Carbon Capture and Storage (BECCS) facility, extending the plant's life.
• The new BECCS facility will capture up to 550,000 tons of CO2 annually, using B&W's SolveBright™ technology.
• The project aligns with emission regulations, making the power plant compliant and environmentally friendly.
• Full notice to proceed is expected in Q4 2024, indicating a clear project timeline.
• The use of sustainable biomass fuel and carbon capture technology positions B&W as a leader in clean energy solutions.
• B&W will manage the entire scope of engineering, design, and construction work.
• The project supports energy security by enabling the continued use of existing power generation assets.
• NorthStar Clean Energy is leveraging its expertise to develop one of the nation’s first large-scale biomass with carbon capture projects.

Negative

• The final contract for the project is yet to be finalized, indicating potential delays or changes.
• The full notice to proceed is not expected until Q4 2024, suggesting a long lead time before major project milestones.

Insights

Financial Analyst

Babcock & Wilcox’s latest agreement to proceed with a coal-to-biomass power plant conversion and carbon capture project in Michigan demonstrates a strategic pivot towards sustainable energy solutions. The move aligns with broader industry trends towards decarbonization and helps the company solidify its position in the renewable energy market.

From a financial perspective, this project can significantly enhance the company’s revenue streams, given the increasing demand for carbon capture technologies and renewable energy. The anticipated 550,000 tons of CO2 capture annually sets a high benchmark, potentially attracting further contracts and partnerships. However, investors should consider the cost implications of the project. The upfront capital expenditure for engineering, design and procurement can be substantial.

In the short term, the limited notice to proceed (LNTP) signifies a moderate positive impact as it initiates detailed design and procurement work, although full financial benefits will materialize only after the project's completion, expected post-Q4 2024.

Long-term prospects appear promising, as the successful delivery of this project could establish B&W as a leader in BECCS technology, opening up avenues for future projects in regions with stringent emission norms. However, financial risks include potential delays, cost overruns and the pace of regulatory developments in the energy sector.

Environmental Engineer

Transforming a coal-fired power plant into a bioenergy facility with carbon capture is a significant environmental achievement. The Filer City project will replace coal with sustainably sourced biomass, reducing harmful emissions substantially. The promise of capturing 550,000 tons of CO2 annually using B&W’s SolveBright™ technology highlights the plant's potential to not only neutralize its carbon footprint but turn it negative.

This project aligns with global efforts to combat climate change and meets regulatory demands for emission reductions. By extending the life of existing baseload generating assets, B&W provides a pathway for other coal plants to transition towards greener operations without sacrificing reliability.

However, the success of this environmental initiative relies on the consistent availability of sustainable biomass, effective integration of carbon capture technology and the permanent storage solutions for captured CO2. Potential ecological impacts of biomass sourcing and the long-term effectiveness of CO2 storage also warrant attention.

Market Research Analyst

The partnership between Babcock & Wilcox and NorthStar Clean Energy on the BECCS project positions both companies favorably within the clean energy market. As regulatory landscapes evolve, such initiatives become increasingly valuable. The ability to offer net-negative CO2 emissions power could serve as a critical differentiator for B&W, providing a competitive edge in a market where companies are keen to meet ESG (Environmental, Social and Governance) criteria.

Market trends indicate a rising interest in decarbonization technologies and this project showcases B&W’s capabilities in this domain. It also highlights the company’s commitment to innovation and sustainability, key factors that can enhance its market reputation and attract environmentally conscious investors.

Nevertheless, investors should remain cautious about the broader market adoption of biomass energy. Factors like biomass supply chain stability, cost competitiveness against other renewable sources and policy support will influence the market success of such projects.

- Bioenergy with Carbon Capture and Storage (BECCS) facility will be able to capture up to 550,000 tons of CO₂ annually using B&W’s SolveBright™ technology while sending carbon-negative power to the grid

- Fuel-switching with CO₂ capture can help plant operators comply with emissions regulations while extending the life of baseload generating assets and safeguarding energy security

AKRON, Ohio--(BUSINESS WIRE)-- Babcock & Wilcox (B&W) (NYSE: BW) announced today that it has been granted a limited notice to proceed (LNTP) by NorthStar Clean Energy to begin work on a Bioenergy with Carbon Capture and Storage (BECCS) conversion of a former coal-fired power plant in Filer City, Mich., using B&W’s biomass SolveBright™ post-combustion carbon dioxide (CO₂) capture technology.

B&W is working with NorthStar Clean Energy to finalize the full contract in alignment with an extensive front end engineering and design study conducted by B&W for the project. The LNTP allows B&W to begin detailed design and procurement work while the parties finalize the contract. Full notice to proceed is expected in the fourth quarter of 2024. B&W’s full contract scope is expected to include engineering, design and delivery of equipment to convert the plant to use biomass fuel and add carbon capture technology. Babcock & Wilcox Construction Co., LLC, will manage the construction and mechanical scope of the project.

When the conversion project is complete, the Filer City power plant will use sustainable biomass as fuel – coupled with B&W’s SolveBright process – to generate power with net-negative greenhouse gas emissions. The plant will be capable of capturing up to 550,000 tons of CO₂ annually, which will be permanently stored underground.

“We are excited to work with NorthStar Clean Energy on this very important net-negative CO₂ emissions project,” said Jimmy Morgan, B&W Executive Vice President and Chief Operating Officer. “By pairing sustainably sourced biomass fuel with carbon capture, our customer will be able to produce clean energy while eliminating the environmental impact of greenhouse gas emissions.”

“As regulations require plant owners to significantly reduce or eliminate greenhouse gases from their coal-fired power generating assets, fuel-switching paired with CO₂ capture can allow these assets to continue to provide economical and reliable baseload energy for many years to come,” Morgan said.

“NorthStar Clean Energy is excited to bring our innovative spirit and development expertise to build one of the nation’s first large-scale biomass with carbon capture and sequestration projects,” said Brian Hartmann, President of NorthStar Clean Energy. “This project marks a step-change in real-world opportunities for our customers that are working to decarbonize and meet their business goals.”

The Filer City plant is jointly owned by Tondu Corp and NorthStar Clean Energy (a subsidiary of CMS Energy Corporation).

About Babcock & Wilcox

Headquartered in Akron, Ohio, Babcock & Wilcox Enterprises, Inc. is a leader in energy and environmental products and services for power and industrial markets worldwide. Follow us on LinkedIn and learn more at babcock.com.

Forward-Looking Statements

B&W cautions that this release contains forward-looking statements, including, without limitation, statements relating to a limited notice to proceed, and an anticipated final contract and full notice to proceed, in connection with a bioenergy with carbon capture project in Michigan. These forward-looking statements are based on management’s current expectations and involve a number of risks and uncertainties. For a more complete discussion of these risk factors, see our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K. If one or more of these risks or other risks materialize, actual results may vary materially from those expressed. We caution readers not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, and we undertake no obligation to update or revise any forward-looking statement, except to the extent required by applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240603763678/en/

Investor Contact:

Investor Relations

Babcock & Wilcox

704.625.4944

investors@babcock.com

Media Contact:

Ryan Cornell

Public Relations

Babcock & Wilcox

330.860.1345

rscornell@babcock.com

Source: Babcock & Wilcox Enterprises, Inc.

FAQ

What is the recent agreement Babcock & Wilcox signed?

Babcock & Wilcox signed an agreement to proceed with work on converting a former coal-fired power plant to a Bioenergy with Carbon Capture and Storage (BECCS) facility in Michigan.

What technology will be used in the new BECCS facility?

The BECCS facility will use Babcock & Wilcox's SolveBright™ post-combustion carbon dioxide (CO2) capture technology.

How much CO2 will the BECCS facility capture annually?

The BECCS facility will capture up to 550,000 tons of CO2 annually.

When is the full notice to proceed expected for the Babcock & Wilcox project?

The full notice to proceed for the project is expected in the fourth quarter of 2024.

Who are the owners of the Filer City power plant?

The Filer City power plant is jointly owned by Tondu Corp and NorthStar Clean Energy, a subsidiary of CMS Energy