I believe the key difficulty in finding finance is often poor quality businesses cases that are presented to the funders and that often the key elements of the project have not been fully addressed. These include:
- Is the project an energy or waste opportunity? A basic question but one that is often not thought through at the very beginning.
- Who is behind the project? Have they developed something similar before? What is the credibility of the delivery team? How much equity are the proponents putting in? The funders will expect a meaningful contribution.
- Is there a site available? Is there a good chance of achieving planning permission and is there a suitable energy grid connection nearby? How is the feedstock going to get to the site?
- What are the sources of the feedstock and how secure are the supply contracts? This is a particular concern for banks.
- Technology is at the heart of the project but does it suit the proposed feedstock? There are many technologies available but which one is the most suitable? Can and will the manufacturer provide the necessary guarantees? Who will build and commission the plant and manage it into the future?
- What about the end markets for the products, be they electricity, ash or digestate? Are long term contracts possible?
If all these points are fully addressed in a business case then funders will be interested.
Agencies, such as WRAP, recognise the importance of the business case and have developed business plan templates for AD projects for example.
But, finally, is essential that the technical aspects of the project including environmental impact, feedstock analysis, and technology selection are carried out by independent consultants that the funders will trust.
Similarly, the information memorandum and financial model must be prepared by recognized financial experts familiar with waste projects. The procurement process and contract arrangements will require experienced legal advice and do not forget that tax issues need to be addressed at this stage.
Nigel Mattravers, senior waste advisor, Golder Associates (UK) Ltd.