Pellet Mexico is nowadays developing the scarcely explored biomass and bioenergy market in Mexico. Utilizing residues from the forestry food and agriculture industries we are going to produce solid biofuel that can substitute fossil fuel consumption both in the industrial, tourism and domestic sectors. By covering the whole value chain of producing the biofuel, commercializing it and adapting the industry and domestic sectors for biofuel consumption, Pellet Mexico will contribute to develop a green economy by efficiently managing residues form the forestry, food and agricultural industries, transfer a competitive advantage to the industry by reducing approximately by 40% the thermic based energy consumption costs and minimize CO2 emissions, thereby contributing to a low carbon economy, to the diversification of renewable energies in our country and support the global commitment to combat climate change.
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Pellet Mexico
1.
2.
3. Pellet Mexico is a firm currently developing the solid
Biomass market in the country.
VISION
4. Chairman of the Board
Oscar Espinosa Villarreal
Chief Executive Officer
Oscar Espinosa Mijares
Chief Operating Officer
Luis Rodríguez Benayas
Chief Technology Officer
Alberto Bustamante
Founding Members
With a very broad experience in
both the private and the public
sector in México, Oscar was former
Tourism Secretary of State, Mayor of
México City, General Director of
Nacional Financiera, the country’s
most important Development
Banking Institution and President of
the National Banking and Securities
Commission.
Oscars’ knowledge of our Country`s
policies, his relation with
Government authorities both in
State, Regional and Municipal
territories, as well his outreach with
the Business Community in Mexico,
makes him an ideal Chairman, both
to identify opportunities and to
represent the company.
Business Administrator and
Masters in Finance
Expert in the development of
projects in the Biomass sector both
in Europe and Latin America, with
more than 20 different specific
developments in both continents.
He is owner of three pellet
production plants in Europe, co-
proprietor of three more in Ecuador
and already part of an important
project in Colombia for the
development of pellet for the
country’s biggest palm oil producer.
Alberto’s experience of more than
ten years in the sector and his
expertise in the building of several
projects in different countries makes
him an invaluable partner to
develop the Biomass market in
Mexico.
Administrator and Business
Manager. Professional
specialization in Engineering and
Renewable energies
Proprietor and former general
manager of two firms dedicated to
energy efficiency and cost
reduction. Acknowledged for his
e x p e r i e n c e i n t h e fi e l d o f
sustainable development, proven
managerial capacities, key
decision maker in formar business
and comercial knowledge and
background.
The capabilities of Luis as an
experienced manager, his ability in
the coordination of teams, decision
making capacity, his thorough
execution of projects and the
k n o w l e d g e i n s u s t a i n a b l e
development make him an essential
component for the operation of the
firm.
Graduate of the Superior Institute of
Security Studies. Strategic and
sustainable development
specialization.
Founder and 10 years CEO of
Contorno, a mexican consulting firm
with expertise in the fields of
tourism, communication, innovation
and urban development. Important
stakeholder in the entrepreneurship
and innovation ecosystem in
Mexico. Oscar’s executive and
managerial capacities are well
proven in the business development
world.
His knowledge of the public and
private sector in Mexico, as well as
the expertise in public policy in the
country, makes him a key player in
the company, both to identify
opportunities, manage the firm and
execute with efficiency its goals and
objectives.
Philosopher. Masters in
communication.
6. • Global warming is a fact. With disastrous consequences for the economy, society and the environment.
• The fight against global warming has really begun. Paris agreement is the first-ever universal, legally
binding global climate deal: a long-term goal of keeping the increase in global average temperature to
well below 2°C above pre-industrial levels.
Fight against global warming
Increase clean power to 50% of the electricity generated across North
America by 2025.
Reducing methane emissions from the oil and gas sector by 40-45%
by 2025.
This objectives are only viable if this economies move towards a clean
growth economy, which includes as their main actions renewable energy
generation, power transmission, and energy efficiency.
• In the case of Mexico, our country compromised the reduction of green
house gas emissions by a 22% and the emissions of black carbon by a
51%.
• In the recent (june 2016) North American Leaders’ Summit the economies
of United States, Canada and Mexico signed a North American Climate,
Clean Energy, and Environment Partnership including some of the following
actions:
7. • Energy transition to clean energies is not only a global trend, but a
mandatory development of the sector if the world wants to comply with
climate change agreements.
Clean Energies
“Technology will help solve our energy
issues. The urgency of climate change and
the energy needs in the poorest parts of the
world require an aggressive global program
for zero-emission energy innovation.”
Breakthrough energy coalition
8. According to Mr. Amin: Renewable power generation
technologies have accounted for more than half of all new
power generation capacity additions in every year since 2011.
Today, 164 countries have renewable energy targets, up from
just 43 in 2005. A record high of more than 130 gigawatts
(GW) of renewable energy was added to the global energy
mix in 2014 and investment in the sector increased from US
$55 billion in 2004 to more than US $260 billion in 2014. In
2014, new capacity additions of solar PV set a new record of
40 GW, while wind power also had a record year with 52 GW
added.
Director General of the
International Renewable
Energy Agency:
Renewable energy accounts for 13.5% of the world’s total energy supply, and only for
the 22% of the worlds electricity (iea)
Adnan Z. Amin
Barriers for their uptake: Market structures, a lack of understanding of emerging
renewable technologies, difficulty in accessing finance, high financing costs, inadequate
regulatory frameworks, lack of remuneration for offsetting fossil fuel externalities (e.g. carbon
and local air pollutant emissions), small markets and policy uncertainty have all played a
role in hindering the deployment of renewables.
9. • There are other renewable energy sources (RES) that have been developed successfully
in regions like Europe and North America, as the production of Bioenergy and specifically
of solid Biomass, as pellets, that have been ignored in other latitudes.
• Specifically the pellet sector has the
capacity to grow from a niche product to a
major energy commodity (Bioenergy
Report, AEBIOM, 2015)
• Biopower electricity comes primarily from
wood and agricultural residues that are
burned as a fuel for cogeneration of
electricity and heat in the industrial
sector. Accounts for 12% of all
renewable energy generated in the US.
(2014 Renewable Energy Data Book)
BIOENERGY
10. Source: EPC Survey, Hawkins Wright, FAO
• Globally 27,1 million tonnes of pellets produced in 2014.
• 13,5 million tonnes produced in the European Union
• North America slightly increased its production
• Russia & CIS and Asia have shown an important growth in
their production
EU28%
50%%
Other%
Europe%
4%%
North%
America%
30%%
Russia%&%
CIS%
6%%
China%%
5%%
Rest%of%
Asia%
4%%
Rest%of%
World%
1%%
• Producing 13,5 million tonnes but consuming
18,8 million tonnes, the EU is the biggest pellet
importer in the world.
• Imported pellets are mainly for industrial use
(Power plants and CHPs)
• The imported pellets are mainly sourced from the
USA and Canada
• Russia & CIS countries are gaining importance in
EU pellet supply to both the Industrial and
residential sectors
• Trade from North America to EU has slightly
increased from 4,69 million tonnes in 2013 to
5,15 million tonnes in 2014 showing a very
different trend in USA than Canada.
• US exports to EU have increased 41 % with 3,89
million tonnes, while Canadian exports have
reduced 34%.
• Exports from Russia & CIS countries to EU have
increased around 20 % from 2013 to 2015 to
reach 950.000 tonnes.
• The Baltic states and Russia produced 4.15
million tons during 2015
Source: EPC Survey, Hawkins Wright, FAO
WORLD WIDE PELLET PRODUCTION
11. MexicoNatural resources / Agriculture
Mexico is among the world’s leading agrifood
producer: ranked first in avocado, lemon and
limes, third and fourth respectively for
grapefruit and corn,fifth for beans, coconut oil,
oranges and poultry and sixth for sugar.
Mexico produces 24.5 millions of tons of maize
annually and 53.5 tons of sugar cane.
Biodiversity
Mexico has been recognized
as a mega diverse country,
ranked in the top 5 countries in
the world -after Brasil,
C o l o m b i a , C h i n a a n d
I n d o n e s i a - w i t h m o r e
Biodiversity. It is estimated
that more than 10% of all
world’s species live in this
country (CONABIO)
Green Growth
Green jobs creation.
Knowledge transfer.
Take advantage of taxation.
Green Portfolio standards.
Public private funding and incentives.
Increase value of organic,
agricultural and wood
residues
Ta k e a d v a n t a g e o r
Mexico’s biodiversity and
natural resources
Grant value to residues
that result of agricultural
production
Energy Reform and Climate Policy
Last year Mexico advanced in a constitutional
energy reform, which enhances the adoption of
non fossil fuel based energies.
Environmental policy is recently developing
incentives that favor the adoption and investment
in clean energies and the participation in green
bond markets and carbon offset programs.
12. Solid Biomass
opportunities in Mexico
Forestal and agricultural residues can be processed by undergoing
dehydration and compression to improve combustion performance
and energy density. Once processed, residues can be transformed
into higher value briquettes and pellets, which can cater for heating
and electricity-generation purposes, as well as be transported for
exports over transcontinental distances. In Mexico, agricultural
residues have a large potential to contribute to production of solid
biofuels.
Still there is no large-scale production or demand for briquettes and
pellets, nor a broad regulatory effort to promote non fossil (e.g.
biomass-based) cogeneration in the country.
Even with low prices of oil and natural gas, the demand for briquettes and pellets in large markets such as the European Union,
and the national consumption bring a good opportunity for this market.
Forestry land use, wood industry residues, forestal
residues.
Identified agricultural products that could contribute to
the solid Biomass market:
Sugarcane, Soy, Corn, Rice, Coffee, Sorghum, Agave,
oil palm rachis.
Based on the 13 products surveyed, bioelectricity could produce 10.55
per cent of the yearly national electricity consumption in Mexico;
second generation bioethanol could replace 6.33 per cent of gasoline
used (in energy terms); biomass-to-liquid biodiesel could replace
23.22 per cent of diesel demand and biogas could make up to 14.03
per cent of natural gas demand in the country.
Biofuels from residues could also deliver substantial employment to
Mexican agriculture. Bioelectricity from agricultural residues could add
over 39.000 new jobs (direct and indirect), bioethanol over 49.400 jobs;
biodiesel 71.700 jobs and biogas 4.000 jobs.
13. Pellet, projects and investments will develop the solid Biomass market in
Mexico, specifically through the production and commercialization of
pellets derived from forestry land use, forest and wood industry, organic
and agricultural residues.
Pellet production
and
commercialization
in México offers
solution to:
Reduction of CO₂
Emissions
Contribute to expand and diversify
the renewable energies market
Increase value of organic,
agricultural and wood residues.
Economic and Industrial
Development.
Green Growth
14. Fuel Market
The incremental tendency of oil prices has a negative effect on the product prices of different industries, transferring the oil costs to the
price of the product for the final customer, losing therefore market competitiveness.
Pellet can become an energy alternative given that it can substitute the calorific power of diesel with a significant cost reduction of
approximately 50%, it can become a stable market without the incremental price tendencies of oil, and can maintain competitive
advantage for the Mexican industries in the worldwide market.
Historical comparison of fuel price both in
the USA and in Mexico
In Mexico diesel use in the industrial sector is
equivalent to 475 million barrels of oil annually,
most of them used in thermic processes in the
industrial sector.
As can be seen in the graph, the oil prices in
the last 35 years have been incrementing
15. Pellet - Diesel equivalence
The national pellet market will be
directly related with the substitution of
diesel industrial use, in order to
accomplish a 100% substitution, 17
million tons of pellet would be
needed.
2,44 kg rice pellet
2,32 kg palm pellet
1,85 kg pine tree pellet
=
1 lt
Fuel Calorific Power
Diesel 8800 Kcal/L
Gas 9500 Kcal/kg
Rice pellet 3800 Kcal/kg
Palm pellet 3800 Kcal/kg
Pine tree pellet 4800 Kcal/kg
16. Pricing and Competing Industries
Up to date there are NO COMPANIES in Mexico producing pellets for the substitution of
industrial diesel consumption.
Even in its historic low price, diesel is still 40-60% more expensive that the approximate price to market of pellets in
Mexico. The up to date price (june 2016) of diesel is 13.77 Mexican pesos per liter. Oil estimates for the next 2
years show an upward tendency, which would make the diesel derivative more expensive.
The price estimate for Pellet depends on multiple factors as the guaranteed price of feedstock, logistics,
productive process, return of investment and utility margins. Given the up to date analysis of these factors and
based on the experience of projects in other latin american regions with similar conditions to Mexico, the price
estimate for pellets could vary between 6 and 9 Mexican pesos.
The natural gas industry has a more competitive price in respect to diesel, it's average price to date approximately
of 12.83 Mexican pesos. Still Pellet represents a cheaper option, with the competitive advantage that the
adaptation technology to natural gas represents a huge investment.
VS
17. Dryers:
• Rice
• Corn
• Coffee
• Wood
Industrial Use
• Furnaces
• Boilers
• Steam Boilers
• Heating
• Canning Industry
• Pharmaceutical industry
• Paper Industry
• Etc.
Industrial adaptation for Pellet
Consumption.
• Robust Equipment
• Local fabrication
• 96% Efficiency
• Quick installation (24/48
hrs)
• Easy maintenance
• Over 1,5 MGW/H
• Competitive prices
• Direct service centre.
Pellet Industrial Use
18. Pellet Mexico
Business Model.
The project in Mexico will replicate the Business
Model as well as the know-how imported from
Spain.
The pellet production will be based mostly for
internal consumption (and not for export). Where
important availability of feedstock is guaranteed
PIP will build a Pellet production plant. The
commercialization of the pellet will be for the
regional industries around the plant installation.
Mexican market of industries with intensive
thermic combustion are all PIP potential clients.
Even more now that an energy conversion
model to green energies is needed given the
compromise to reduce carbon dioxide
emissions.
Our managerial approach is based on the
construction of several plants and an
association model with the provider of feedstock
or a long term contract that guarantees the low
and stable price of the feedstock.
.
Main activities
Product plant installation and implementation.
Development of the business model, knowledge
and technical requirements, and equity participation
of the specific project, both with owner, local state
holders and or investors.
Development and implementation of projects for
medium and large companies for private use or
own consumption.
Development of energy conversion projects.
Engineering consultancy for companies that are
willing to substitute their fossil fuel consumption for
that of pellets.
Provisión of services related to the management
and maintenance of the production plants.
Distribution and commercialization of equipment
and biomass burners.
Consultancy regarding solid biofuels.
Business Development
Initial fase: Legal constitution of the firm.
Kick off and beginning of operations.
Undertake the implementation of five pellet
production plants in a maximum of two
years, which will mean an annual
production of 200 thousand tons a year,
substituting what will only account for the
1.17% of fossil fuels.
Expansion: Consolidate the business
model through participation in several
projects in different regions of the country,
substituting a wider margin of consumption
of fossil fuels. PIP Mexico would be by this
moment the number one positioned
company in the development of the
biomass market.
Put Option: Once the company is properly
developed and consolidated a put option
could be considered.
19. The six month period of work to date, has permitted us to work both on the assessment of the opportunity with both important stakeholders of the private and
public sectors, and the identification of specific projects of which the more important ones are:
- Pellet production plant in the State of Chiapas, known for the rapid growth of its palm oil industry and its expansion to neighboring states. There's and
advanced process of negotiation with the biggest producer in the state to either buy from him the palm rachis (which has no market or secondary use), or
work a partnering option.
- The State of Mexico presents several opportunities which have been discussed with key stakeholders both for the explotation of the corn residues, the
forestry sustainable explotation programs and an important wood industry which produces important amounts of sawdust that can be converted to pellet
- The tequila industry in the northern region of Mexico represents an important opportunity which has been already discussed with Grupo Cuervo, the
biggest producer of tequila in the world. The residues from the agave have no alternative use or market, and they could be converted to pellets with a very
good calorific power.
Identified Opportunities (to date)
20. • Given the Business Plan already developed, and the main income activities of Pellet Mexico the
objectives in a three year projection are as follows:
Revenue Stream
2016 2107 2018
Consulting 8 projects 8 projects 8 projects
Plant
implementation for
third party users
2 projects 0 0
Production and
pellet distribution 6,6000 tons
133,000
Tons
200,000 tons
Equipment
distribution and
maintenance
38 38 39
Anual income Anual utility