NewNet Investor Profile: Gijsbert Nollen, Prime Energy Investments

13 August 2009

Gijsbert Nollen

Prime Energy Investments is a private clean energy fund investing in biogas and biomass projects in Asia.

Gijsbert (Bart) Nollen holds a masters degree in law from the Netherlands and has over ten years of experience in advising private and public sector clients on sustainable development projects. Most of his work takes place in South and Southeast Asia where he has provided project management services to develop, finance, manage and implement sustainable development projects in emerging markets. In recent years Bart has invested in projects with development interactions to effectively address the poverty-environment nexus. He owns and runs three companies and established Prime Energy Investments in January 2009.

Why clean energy?

‘We saw an opportunity as early as four years ago here in Southeast Asia to invest in this field. Groundbreaking legislation in Thailand was getting passed and put into effect – large biogas and biomass plants were being constructed for the first time in the region, starting this fund was a natural progression.

While there are many large renewable energy and cleantech funds active throughout China for years, Southeast Asia has lagged behind for quite some time in connecting capital to project developers despite a very favourable investment environment and technical know-how, especially in the bioenergy fields. There are great local and foreign companies operating in this space and their technologies have been field tested and adapted for over five to ten years now.

Clean energy is no longer a fringe investment area. There is not a day that goes by here in Bangkok where the national newspapers’ Business Sections are not publishing an article on carbon credits or renewable energy. The public and business community’s interest is tangible and we are excited to be at the right place and time.’

What made you focus on Southeast Asia?

‘Our core team has been operating in this region reviewing and structuring renewable energy projects and working directly with rice mill owners and starch factories, so it was a natural fit to focus our efforts on what we already knew. Additionally, Southeast Asia has various advantages over other areas.

For starters the region boasts enormous quantities of agricultural waste. So as a result we are keen on the biomass and biogas industries in Southeast Asia. Each year Thailand is one of the top producing sugar, rice, and cassava markets in the world. Malaysia and Indonesia make up the vast majority of palm oil in the world.

Behind every one of those rice mills, starch factories, and palm mills are large amounts, in some cases huge quantities of agro-waste that can be and have been for many years transformed into energy. As the individual markets develop and infrastructure improves there is a tremendous opportunity to make these plants produce electricity to be sent off to the national grids. vAsia is an incredibly fertile environment with tremendous amounts of agriculture making biogas and biomass the focus of most renewable energy development companies in the region.

Secondly the region has relatively stable governments. Over the past years the region has earned a strong reputation for registering carbon credits and passing supportive legislation like Renewable Portfolio Standards, feed-in tariffs, and import duties exemptions. Governments are embracing cleantech solutions for agro-waste because it not only creates clean energy and local jobs but also in many cases treats industrial effluent in the case of biogas and unsightly and troublesome waste in the case of Municipal Solid Waste treatment and biomass projects.

Finally, Southeast Asia boasts strong local technologies. There is no question that in the waste-to-energy bioenergy fields European technologies lead the world. Industrial sized biogas plants have been in operation for decades in Germany and Denmark. But the untold story is that these technologies need significant adaptation to work in Asian environments. Corn in Thailand and corn in Germany are simply not the same.

Clearly the environments are different with nearly consistent heat throughout the year in Southeast Asia in contrast to Europe. An anaerobic digestor which works to produce biogas energy in Holland needs significant adaptations to work in Cambodia. This is where strong local engineering companies can add tremendous value. We are currently reviewing over ten companies for our portfolio and the vast majority of them are locally based technologies and talent. I see no reason why Bangkok or Manila can’t be the future bioenergy cleantech hubs of the world, exporting their technologies to the Global South with similar feedstocks and climates like Brazil or India. Already you are seeing significant inroads from Indian cleantech companies selling their technologies to agricultural producers here in Thailand, and the Chinese companies are even more aggressive being backed by the Chinese EXIM bank. We have reason to believe that some of the most promising international companies from Thailand could be in the renewable energy fields in the next five to ten years.

In order of priority we look at Thailand, Philippines, Vietnam, Cambodia, Indonesia, and Malaysia. The reason for this is simple. Thailand has had the leading legislative environment probably throughout all of Asia to promote renewable energy market reformation. The tariff adder law is in many ways more advanced and certainly simpler to navigate than any American legislation – though I believe that with President Obama, it will likely improve.’

What are the challenges you face when looking to invest in this area?

‘Understanding the pitfalls of local energy legislation is key. One question we often ask potential investees is if they have evidence that shows they can indeed strike an off-take agreement with the local utility. The Philippines is a great example, last December they passed the landmark Renewable Energy Act of 2008 RA 9513 that outlines investment support, establishment of tax credits and income tax holidays and a Renewable Portfolio Standard. These are great moves and to be amended, but we also know the nuts and bolts of this law will take at least a year to get settled and perhaps another six months to be well established across the various provinces. It’s key that investee companies are realistic in their project development timeline. While legislation and carbon provided significant boosts to bringing the market to maturity – we find increasingly projects do not require these supports to reach our internal hurdle rates.

If you were to look solely at the technical potential of clean energy from agro-industrial resources in Southeast Asia you would focus primarily on Indonesia. The country has tremendous biogas and biomass potential, along with geothermal. But for biogas projects to blossom in Indonesia there needs to be a strong grid network connecting the palm oil mills with the major city centers and this is still a quite some time away. We have seen some interesting project proposals coming out of Indonesia so we are ot shying away but it’s a tailored understanding of each countries quirks that allows us to navigate the investment climate efficiently here and find our niche. In no small part our knowledge is a result of long standing relationships we have built with local networks and partners. It is impossible to say we understand all of the nuisances of each country in this varied and dynamic region. What we can say is that we know the people that do know the answers to the inevitably difficult questions that arise.’

What areas are of particular interest?

‘We are looking closely at the biogas market in what you could term as the second generation biogas technologies for places like Thailand. In particular, creating biogas from slightly more difficult feedstocks like corn, fruit waste, and certain types of ethanol. Most biogas companies in Asia have over the past five years, focused on what was seen as the low hanging fruit such as utilising starch waste water or the effluent from palm oil mills. Now we are seeing many more projects open up as the technology improves. We are even seeing proposals from vhicken slaughter houses – it’s pretty amazing the multitude of ways you can make energy!’

Which investment areas are you less interested in?

‘Biofuels saw a tremendous push prior to the oil crash of 2008. A few companies in Australia were able to list on the stock exchange and that sent companies to Southeast Asia looking to set up large plantations. Having seen a few jatropha harvests I can say I was not too impressed. I see tremendous difficulty in foreign companies setting up management teams with enough capacity and expertise to convince farmers across a large expansive area to plant something they are oftentimes completely uneducated about.

In addition we are a triple bottom line investor and to convert agricultural land for fuel – we regard this as unsustainable and outside our investment focus.’

How important is government support in this area?

‘For the technologies to be adopted in the market – government’s are actually not crucial at all. There is a common misconception that government’s can make technologies come to market – in Asia government support for R&D is far behind Europe and America. What governments here can do is create customers for these clean technologies – an important distinction. By creating Renewable Portfolio Standards that force large scale energy producers to move into these emerging technologies and allowing net metering laws to take effect, governments in SE Asia can instantly launch new domestic industries in clean energy by providing more options for existing homegrown technologies to monetise.

If I invest in a biogas plant in Thailand I can, depending on the agreement with the host feedstock facility literally have many different customers all from one plant. The electricity can be purchased by the host facility or the government or even a nearby factory. Steam can be sold to the host facility. And all of the by-products from livestock feed to pelletized refuse can be sold to third parties.’

How can you see the space developing?

‘If the past two years is any precedent more and more Asian domestic companies will be established developing and refining their technologies in the bioenergy sector and ramping up development. We suspect only a few well-positioned anaerobic digestion (biogas) development companies from Europe and or with European management will make a significant impact in these markets. The real success stories will be centered around locally adapted and developed technologies and research and local business entrepreneurs.’

Copyright © 2009 NewNet

Tags: agriculture, biofuel, biogas, biomass, cleantech, jatropha, private equity, R&D, waste, waste energy

This story was published on Thursday, August 13th, 2009 at 5:47 pm and is filed under profiles. You can follow any responses to article entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Responses to “NewNet Investor Profile: Gijsbert Nollen, Prime Energy Investments”

1. Stephen Clark says:

   17 August 2009 at 1:33 pm

   I am a Principal Environmental Engineer, currently looking to fund an algal biomass commerialisation trial to produce biodiesel in South Australia. Residue biomass will be a feedstock for biogas, to cater for production needs.
   more info:
   http://www.fishace.com.au/algae.html
2. Uday says:

   17 August 2009 at 2:48 pm

   We are a group of ex bankers & professionals who do corporate advisory / financial consultancy job, we do syndication, PE / VC, M&A, JV, franchisee opportunities etc, besides this we also deal in properties basically for equity funds, , 3-4-5 star hotel and retail giants across India

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