RWE proposes world’s largest pellet plant

Feb. 1, 2010 – RWE Innogy is to build a factory to produce biomass
pellets in southern Georgia, USA. The plant will
have an annual production capacity of 750,000 tonnes, making it the largest of its type in the world. The project will be
carried out in collaboration with Sweden-based BMC Management AB, which specializes
in the development of biomass manufacturing solutions.

The pellets will be used in pure biomass power plants as well as for co-firing with coal. The pellet plant is estimated to being operating in 2011. The total investment volume amounts to approximately
$180 million. Dr. Leonhard Birnbaum, member of the executive board of
RWE AG says, “Through this investment, RWE has taken a strategically
important step towards safeguarding the supply basis for the constantly
growing biomass market in Europe. This is because we will be unable to achieve the targets for reducing carbon dioxide emissions in Germany and Europe without biomass. But the European
wood market will not be able to satisfy the demand in this fast growing
sector on its own."

The biomass pellets will initially be burned in the
existing power plants of Amer in the Netherlands, where currently
already up to 30% of the hard coal has been replaced by solid biomass,
mainly wood pellets. The considerable volumes of biomass from Georgia
will help the company expand this co-firing to up to 50%. The carbon dioxide
reductions achieved will be of a corresponding level. The two power
plant units belong to Essent, which RWE took on after the companies entered a partnership in September 2009. The power plants have a total installed capacity of 1,245 MW electricity as well as 600 MW thermal.
They generate electricity for the equivalent of three million
households.

Forests in
Georgia provide enough wood to sustainably produce the pellets. Around
1.5 million tonnes of fresh wood are needed each year to produce
750,000 tonnes of pellets. Unlike Europe, the United States has a huge growth
surplus of wood that is not used. This is particularly true in the Georgia region, from which numerous
paper and pulp companies have withdrawn over the past decade, thus
further reducing the demand for wood. Wood growth is currently ahead of
consumption in Georgia.

The pellets are to be shipped to Europe from the port of Savannah. A
long-term transport contract has been concluded with Dampskibselskabet
Norden A/S, Denmark. Europe remains RWE Innogy´s core market because
it is the company's goal to reduce the carbon dioxide emissions of the RWE Group as
a whole. As long as the United States is not part of the carbon dioxide emissions trading
scheme, RWE will not – due to strategic reasons – invest in power
generation capacity from renewables in the United States.