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Demand for Nexterra energy systems is driven by a growing industry trend toward self-generation of heat and power using low cost fuels, including wood residuals produced on site or available near the facility. This shift is due to fundamental changes occurring in energy markets because of higher natural gas prices, fuel price volatility, demand for renewable energy, electricity market restructuring and climate change. All of these factors are creating strong incentives for fuel switching and on-site energy production.
Nexterra's gasification systems are targeted at individual, plant-scale operations in the forest products, institutional, power generation, and pulp and paper manufacturing sectors where companies can reduce energy costs by producing their own energy on-site, with minimal impact to air quality. Nexterra is also targeting electric power utilities, independent power producers and energy service companies that finance and build cogeneration facilities or small scale power plants.
The market opportunity for Nexterra's gasification systems is substantial. In North America, several thousand industrial facilities currently rely on natural gas and grid-purchased electricity, despite producing sufficient residual waste to self-generate heat and power. Based on the changing trends, Nexterra estimates an addressable market of more than 500 facilities in North America over the next five years, representing a potential market value of over $3 billion.
Nexterra's business model is primarily driven by sales of turnkey energy systems directly to industrial customers. Systems are designed, supplied and installed by Nexterra's in-house engineering team. This team has extensive experience and a successful track record managing and implementing energy projects. Nexterra is also expanding its business model by establishing performance-based license and distribution agreements with energy project developers and energy service companies for specific market sectors.
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