Advanced BioFuels USA

by Ted Niblock (Nexus PMG/Biomass Magazine)  … It takes very little time to learn the key elements of a successfully developed project, but a staggering amount of work to check all the boxes.

Since a decent project opportunity begins with a few key elements nailed down, it’s usually the easiest to achieve project opportunities that immediately explode into an endless horizon of details. It is to the benefit of all partners involved, whether finance, construction, operation, commercial partners, regulators or the community, that the developers organize the unorganizable. So, faced with a vast universe of constantly shifting project components, what does bringing order from chaos look like?

Development Defined
Before diving into how project development gets organized, it is worth reflecting on what “development” even means. I’ve been asked this question countless times. The best answer I have come up with isn’t pithy.

Imagine if every project you completed at your job needed to be a stand-alone profitable business.

Like any business, it will need:

● Sourcing and pricing for supplies and materials.

● Clear and compelling predictions of sales and revenue.

● Staff and service providers, and their respective costs and roles.

● A suitable site.

● Permits and permissions.

● Plans for maintenance and upkeep, including costs.

● The right to use needed technology.

● Design and engineering for the facility plan.

● A construction provider to build the facility.

● Support of local stakeholders (government, related industries, labor and commerce groups, site neighbors, advocacy groups).

● Financing.

It is turning the clay of opportunities, ideas, capabilities, market drivers and economic analysis into a useful piece of pottery that makes money.

Financing: Last But Not Least
It’s amazing how often that last bit gets glossed over or taken as fiat. Financing is last on the list not because it’s least important, but because all other items must be in place (or identified to the satisfaction of the financing party) before the project can begin construction.

Financing a project can involve hundreds of documents, pages and pages of Q&A, and very detailed checklists. At Nexus PMG, we’ve found the best way to achieve successful project finance is by borrowing a much-maligned educational term: teach to the test. While a short-sighted and harmful pedagogical approach for sixth-grade math, it is an excellent guiding light for bioenergy projects.

There are five pieces of end work product:

1. An independent engineer’s report.

2. An engineering, procurement and construction (EPC) contract.

3. An operations and maintenance (O&M) contract.

4. A financial model.

5. A data room.  READ MORE