First of Kind: Financing Advanced Biorefineries, Part II
by Tim Sklar (Biofuels Digest) In Part I of this three part article titled“On Identifying Risks”, discussions were included that focused upon the high risk nature of advanced bio-refinery projects, why financing is hard to obtain what can be done to improve the odds.
In Part 2 titled “On Quantifying Risks” a summary of due diligence inquiries that project developers can expect to be subjected to is presented along with a a list of typical concerns potential financial backers have with respect to perceived risks. In addition, a set of bio-refinery specific “what if” questions are included, because many of them will be asked. It was hoped that the material included in Part 2 will ultimately be used as a useful guide in assembling information and in conducting analyses that will be needed when preparing loan requests, applications for loan guarantees, investment memoranda and prospectuses.
What Due Diligence Requirements Are Being Asked
Overview ...(I)n financing bio-refinery projects, project sponsors are being asked to submit thorough and complete applications or risk being turned down. …
A Summary of the Due Diligence Information That Must Be Submitted …Applicants must submit a “Project Execution Plan (PEP) that shows how the project will be implemented. Being required are ”Work Breakdown Structures” (WBS) and “Resource Loaded Schedules” describing all the tasks and sub-tasks, key milestones along the critical path to completion, and demonstrations that support the case that the project can be completed on-time and on budget, even if certain milestones are not met as originally planned. …
Biorefinery Project Risks and
Potential Financial Backers’ Concerns …
…
Typical Biorefinery Project “What-if “Questions …
Re: Start-up and Ramp-up delays …
Re: Cost over-runs …
Re: Yields and Throughputs …
Re: Biofuels Prices vs. Conventional Fuels Prices …
Re: Types of Biofuels Produced …
What if a bio-refiner decides to produce a drop-in bio-fuel- …
What if a bio-refiner decides to produce a blend stock- …
What if a bio-refiner can only produce an intermediate product-…
What if Changes Occur in Government Subsidy Programs- …
What if Changes Occur in Government Incentives Programs- …
Re: Feedstock Costs and Competing Users …
Re: Costs of Additional Materials used in the Process, Direct Labor, Utilities and Fixed Operating Costs …
Re: Availability of Grant, Tax Incentives, Low Cost Loans and Government Loan Guarantees …
Re: Private Sector Equity… READ MORE See Part 1 of this series Part 3 of this series
Related posts:
- “First of Kind” – the Financing of Advanced Bio-Refineries, Part I
- The Name is Bond, part II: Financiers Find Biofuels Financing Options in Bond Market
- Biofuels Digest Publishes 5-part Series on the New Rules for Financing Bioenergy
- The Biorefinery Project of the Future: A 10-Part Series
- Report Predicts Biorefineries Will Offer a Solution to Significantly Reducing CO2 Emissions and Creating Economic Growth
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