Financing Anaerobic Digestion Projects...A Bankers Perspective - John Barker (HSBC)
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Financing Anaerobic Digestion Projects Financing Anaerobic Digestion Projects … … .. A Bankers Perspective. .. A Bankers Perspective. John Barker Corporate Agribusiness Manager
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This presentation formed part of the Farming Futures "Farm Biogas Developer: Expert workshop" 30th June 2009
Transcript of Financing Anaerobic Digestion Projects...A Bankers Perspective - John Barker (HSBC)
Financing Anaerobic Digestion ProjectsFinancing Anaerobic Digestion Projects…….. A Bankers Perspective... A Bankers Perspective.
John BarkerCorporate Agribusiness Manager
Key Issues…• Credentials• Construction Risk• Process Risk• Supply Risk• Output Risk• Environmental Risk
• The Economics
• The Deal Structure
• Financial Risk, Legal's & Security
• Today's World Of Finance
• Conclusions
Credentials …
• Track Record• Mix & Balance of
Skills• A Common Vision• Well Researched
and Prepared
Construction Risk …• Turn Key Contracts• Fixed Price?• Cost Over-runs?• Credentials and
Standing of the Contractor
• Performance Guarantees
Process Risk…
• Will The Plant Work?!
• Proven Chemistry?• Proven Technology?• Scalability Issues?• Due Diligence
Supply Risk…
• Feedstock– Imported ‘Waste’– Existing Under
Utilised Resource– To Be Grown– Continuity
• Contracts & Terms
Output Risk…
• Electricity Contracts– Length?– Value?– Price Ratchets?
• Heat Use? – Value?• ROCS• Digestate Disposal
ROC’S
Environmental Risk…
• Process Is Controlled & Fit For Purpose
• Plant Maintenance• Digestate Disposal• Site Re-instatement
costs?
The Economics …
• Your Business Model• Efficiency Factors
– Gas Quality– Engine Efficiency– Running Time
• Sensitivities• Payback Period
The Economics …UK Market Returns Are Changing
0
50
100
150
200
2007 -Actual 2008 - Actual 2009 Current
Total Income Per MW
EMB
LEC
ROC 2
ROC 1
Electricity
The Economics …Sensitivity Analysis - Profit Effect
5% Move In Performance
-10,00020,00030,00040,00050,00060,00070,000
EngineUp Time
ROCValue
ElectricityPrice
CapitalCost
ParasiticLoad
Profit Effect5% Move
The Deal Structure…
• Stake vs Debt• Structured Finance
– Asset Finance– Term Loans– Working Capital
• Repayment Period
Financial Risk, Legal's & Security…
• What Legal Entity?• Security
– Debenture– Land & Assets– Supporting Guarantees
• Facility Terms & Conditions• Covenants • Interest Rate Protection
Todays World Of Finance …
• Market Turbulence• Credit Availability
