Transformer oil rerefiner Hydrodec announced it is forming a joint venture with a U.S. company that recycles electrical transformers and other utility equipment. The joint venture would add a recycling facility at Hydrodec’s refinery in Ohio, enabling it to obtain more used transformer oil for use as feedstock.
The name of the partner company, and the percentage of joint venture ownership for each company were not disclosed. Hydrodec said in a news release that it “has signed heads of terms with a U.S. industrial recycling company with significant experience in handling, decommissioning and recycling solutions for used, outdated or failed electrical transformers and other utility equipment.”
The planned joint venture will use part of Hydrodec’s existing site in Canton, Ohio, to establish a facility for dismantling and recycling pole and pad-mount electrical transformers. “The JV’s aim will be to combine the partner’s proven access to the utilities with Hydrodec of North America’s unique ability to produce re-usable transformer oil and generate carbon credits,” Hydrodec stated.
Hydrodec’s contributions to the joint venture will include the land, polychlorinated biphenyl licenses and permits, utilization of carbon credits and capital towards the construction budget. The group’s share of the capital expenditure budget is estimated at $400,000 – net of the contribution of land – and is subject to successful conclusion of proposed refinancing arrangements.
The joint venture will transfer all used transformer oil from Hydrodec’s facility at no cost, and the joint venture recycling partner will provide all the used oil it secures outside of the joint venture’s activities to Hydrodec at cost.
According to Hydrodec, the volumes of oil will constitute about 25% of its nameplate capacity of 12 million U.S. gallons. In return, the joint venture partner will be entitled to receive 10% of the annual net profits of Hydrodec of North America. The partner will also become Hydrodec’s collection partner for the sourcing of used oil and the associated carbon credit program, leveraging its established relationships with U.S. utilities.
The heads of terms are not legally binding, and the company cautioned there can be no guarantee that the joint venture and transactions contemplated will be consummated. Hydrodec said it will provide further details on the joint venture in due course.
Hydrodec Group PLC is based in the United Kingdom, but its only transformer oil rerefinery is the one in Canton, Ohio, which has capacity to produce 40 million liters of transformer oil per year.
Hydrodec claims the process produces transformer oil that tests better than new, and that it completely eliminates polychlorinated biphenyl, toxic chemicals banned under international regulations. Transformers switch electrical supply from low to high voltage for transmission over long distances and back to low voltage nearer to end users. Transformer oil insulates and cools transformers.