Financing Biomass Energy Projects

Finding Funding and Financy for Biomass Energy Projects.

Sue Wyka wrote a great article on finding Project Financing for Biomass Magazine:
http://biomassmagazine.com/articles/2715/biomass-project-financing-solut...

To sum up there are opportunities for Pre-development Capitol, Development Capitol, Project Debt Financing, and Equity financing, for well organized projects, especially if the project can attract local support, and investment. An abridged summary of those types of financing descriptions are given below.

Predevelopment Capital
The first phase in the life cycle of a project is predevelopment. Predevelopment capital or risk capital is the first dollar amount raised for a project and, in the overall scope of the project, is relatively small. These dollars are used to determine the feasibility of the project. ...

Development Capital
Development capital is used for business planning, land acquisition, engineering, contracting with vendors and contractors, etc. The same attributes that bring in predevelopment capital can make raising development capital easier. Most project developers find it very difficult to raise development capital as the dollar amount is larger (up to several million dollars depending on the size of the project) and the risk is still high. ...

Project Debt Financing
Once the development equity has been raised, the next step is to find debt financing. One of the best alternatives in today's market is to pursue federal government guaranteed loans. There are many programs that provide government guaranteed loans through the Farm Bill, Energy Bill and the American Recovery and Reinvestment Act. The U.S. government, through various agencies, provides the underlying guarantee; but loans are made by private commercial lenders. The lender must underwrite the loan and present it to the government agency for its approval to provide the guarantee. Lenders set the terms but must work within program parameters. The process can be tedious and time consuming, but a limited number of lenders understand and are willing to work with these programs. Feasibility studies are generally required for all government loan programs. ...

Project Equity Financing
In conjunction with the senior debt, which can range from 50 percent to 70 percent of the project cost, depending on the lender and the guarantees, if any, sufficient equity must be raised the options for equity today are local investors, strategic partners, equity funds (not very likely) and tax equity. The ability for biomass-to-electricity companies to claim investment tax credits, production tax credits, bonus depreciation and accelerated depreciation opens up the door for tax equity investors.

For list members inside the USA the US Dept of Energy list of financing opportunities is a good place to find grants and other programs that support renewable energy projects.
http://energy.gov/funding-financing-energy-projects

--- older story information ---
Financing Biomass Energy Projects
John Lindsay, Biogasfinance, May 17, 2007

All energy projects require finance. If your customers have a project that produces energy in the form of heat, electricity, fuel pellets, bio diesel fuel or consumes energy in the process of water desalination, we would like to hear more about your project. We arrange finance for Biomass energy projects.

http://www.biogasfinance.com/