BioSyngas Australia said its generator would not proceed because Teys Australia had terminated all negotiations in relation to buying electricity and hot water for use at its beef abattoir.

“It is unfortunate that this potentially highly-beneficial project will not proceed,” BioSyngas said in a statement announcing the negative development.

“This decision has come as both a surprise and a disappointment.”

BioSyngas managing director, Merrill Gray, told The Daily Advertiser yesterday the company had poured close to $1 million into the Bomen project, but all was not lost because design work and experience gained would be used to develop other projects. 

BioSyngas has been working on its Bomen proposal for three years and announced in September 2011 that it was negotiating a supply contract with Teys.

The company said in its latest statement that Teys had given it two reasons for not going through to construction and operation.

The first was concerns about the future rate of price increases for natural gas and the impact it could have on the Bomen project power prices.

The second was discomfort in relation to power supply risks because the proposed dual gas engine co-generation of power and subsequent heat recovery was seen by Teys as innovative technology in the meat processing sector.

Asked to comment about its decision, Teys responded with a statement that said: “Teys Australia has thoroughly investigated the viability of working with BioSyngas at our facility at Wagga. However, after much research we have decided not to proceed with the proposed project. We continue to investigate alternative, commercially viable uses of the biogas we are producing to offset our energy use.”

BioSyngas initially planned to use biomass, such as woodchips and garden waste, to fuel the power plant from the start, but later decided it would be cheaper to initially generate electricity by burning a blend of natural gas and biogas produced by Teys’ effluent ponds. 

Ms Gray yesterday said it had been her company’s intention to switch from natural gas to biomass in the future, and Teys knew that was the plan.

“It was certainly communicated to our stakeholders,” Ms Gray said. 

“What I can say is we have had ongoing discussions with them over a long time.

“We have been clear and documented the approach we intended to take.” 

The company statement said the BioSyngas business model was highly focused on delivering substantially lower power and overall energy costs for its customers than available from the national electricity grid and other energy sources.

Wagga mayor, Rod Kendall, said it was always disappointing to learn a proposed investment in the city was not going to occur.

“We will continue to have regular contact with both Teys and BioSyngas as opportunities present that may change the current situation,” Councillor Kendall said.

BioSyngas was close to submitting a development application to Wagga City Council.